Managing your finances can be an overwhelming task, especially when living paycheck to paycheck, trying to get out of debt, or just trying to reduce spending so you can save. Creating a financial plan can be stressful and even cause anxiety, but it can also create peace of mind. Having a money plan can also be the first stepping stone to changing your mindset about money. While easier said than done, having positive thoughts about saving and generating income has an important role in bringing your financial life together.
- The foundation to any financial plan is the budget. The budget can be simplified by allocating a fixed amount of income to three major categories: 50% towards crucial monthly expenses, 20% towards financial priorities, and 30% for personal lifestyle habits. Crucial monthly expenses include rent/mortgage, utilities, car payments, and groceries. Financial priorities will be savings/investments (it is critical to make this a financial priority), student loans, and medical bills. And finally, allocate to part of the budget to your lifestyle, such as gym memberships, dining out, shopping and entertainment.
- Thoughtful spending. Many of us struggle keeping a lid on our personal lifestyle expenses, so it makes it particularly important to purchase what we need (don’t overlook the small daily expenses that add up) and to make these purchases at the right time. As a rule of thumb, don’t purchase items in the peak season; here are a few tips:
- Look for seasonal items the week after Christmas
- Wedding venues are less expensive in winter months
- Sign up for fitness memberships in the middle of the summer when gyms provide incentives
- Shop during Federal holiday sales
- Flea markets and yard sales can provide great quality finds to decorate your home instead of expensive items found in retail stores
- New home appliances come out in the fall so get deals on last year’s models
- And lastly, it is important not to overlook your emergency fund. Life happens—and having a safety net can alleviate the financial stress of already stressful situations. Unexpected surgeries, car repairs, and home maintenance are a few examples of expensive and unforeseen events that can really put pressure on your budget. Set a goal to put aside a little bit of money for these events. This can be as little as $5 per week to start, or make it a game to save $1 on week one, $2 on week 2, and so forth…
Taking control of your finances begins with your mindset and should be thought of in a positive manner. If possible, open a new account and direct deposit a small portion of each paycheck into it, then adjust your lifestyle with the remainder of your income. Involve the family and create games in your household to save, such as putting every $5 dollar bill in your wallet in a jar. Make it a competition and don’t forget to reward yourself every now and then!
Mission Fed has many articles to help you budget for your goals. Learn more now:
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.