Regardless of your income level or whether you have good or bad credit, all of us will have to manage our finances. Therefore, it is important to understand the basics of the following key topics when it comes to your financial wellbeing.
Don’t over complicate your plan. Those who abandon their budget often do so because they make it too complicated. Creating a simple budget can help you understand financial goals, provide guidance on meeting them and can encourage you to spend wisely.
To do this, many leading financial planners recommend allocating your paycheck, after deductions, in the following way:
- 50% to needs - Monthly bills and other reoccurring expenses such as groceries and fuel
- 30% to wants – Clothing and entertainment
- 20% to savings or paying down debt
While creating your budget make sure to set realistic goals and identify milestones to keep you focused. Maybe even reward yourself for reaching your milestones like going out for ice cream or a movie in celebration.
We understand that this simple model may not work for everyone, so if you are looking for advice that is more custom to your unique financial situation, we encourage you to visit with one of Ascentra’s Financial Coaches. All our coaches are Certified Credit Union Financial Counselors and can help you with spending plans, bill management, saving for the future and more.
Once your budget is set, now you must learn to spend wisely. If you want to stick to your budget, you most likely will have to say “no” occasionally. Trying to reduce regular, but unnecessary spending such as daily runs to Starbucks for that iced grande skinny vanilla latte can make a big difference over the course of a month. As you learn to say “no” to unnecessary spending habits, remind yourself that what you’re really doing is saying “yes” to one of your long-term goals. This will help keep you on track for meeting your budget goals.
Learn to plan ahead by using little tactics that can help limit your spending. One way is to set a budget for each trip to the store by only taking a limited amount of cash with you. If you only have $100 cash for groceries, you’ll be more likely to only purchase the necessities and stay within your budget. Little tactics such as these could make a big impact on your saving at the end of the month.
Now that you’ve created a budget and adjusted your spending habits, it’s time to identify a financial maintenance plan. This is your commitment to staying on financial track and includes the final steps to better financial health.
Set up sub accounts to help you save. Did you know that you can create sub accounts in addition to your primary savings and checking accounts? Categorize your saving to help you keep track of the progress on each of your goals. You can create a sub account to help you save for a new car, a vacation or even holiday gifts. You are less likely to spend money you are saving when it is allocated in a separate account.
Lastly, work on your credit. Regardless of what your current credit score is it’s always a good idea to learn how to maintain and/or improve your credit. Our previous article “Understanding Your Credit” offers some great information on how to maintain your credit score, understand your credit report and increase the health of your score. A healthy score and report are important when it comes to finding affordable lending such as personal loans, mortgages and credit cards.
All this is easier said than done and we understand that. That’s why at Ascentra Credit Union we have several resources and tools available that will help you along the way. From Checking and Savings account options to Digital Banking, credit monitoring and other Financial Tools, we have solutions that will help you budget, spend and maintain your finances wisely while fitting your unique financial situation.