The start of the new year always comes with good intentions and ambitious New Year’s resolutions!
For some, Financial Fitness is even higher on the list than hitting the gym.
If you’re hoping to learn how to budget and save some extra cash in 2021, we have a few simple tips to get you started.
1. Break Down Your Expenses
This may sound tedious, but the first way to get control over your finances is to understand where your money is going each month. Go over your credit union and bank statements and/or Online Banking to view where each card swipe, check or ACH is taking your funds.
Sort your transactions into 2 categories: Wants & Needs.
We won’t advise you to chop out all of your “Wants”, but being aware of how much is going towards these extra expenses can be enough to help you trim those purchases.
2. Pay Off Your Smallest, High-Interest Rate Debts First
Look at your bills and prioritize paying off your smallest, high-interest bills. As you pay these off, you can use the funds that were designated for these bills to attack and pay down other bills or add to your savings. Doing this provides immense satisfaction and a gratifying victory over your finances.
3. Pay Yourself & Boost Your Savings
Now that you are aware of your unnecessary purchases, having the resolve to remove as many as you are able will allow you to build up your savings. Trim out enough to ensure that 20% of your income is going towards your savings.
In addition, you are learning to pay off your smallest high-interest debts so that you can free up additional funds that will enable you to pay other debts, seize greater opportunities down the road, and have a contingency fund for rainy days (car repairs, medical expenses, etc.) We want our members to be prepared for whatever life may throw at them!
It should also pay to save, right? It’s important to set obtainable goals to help you push forward in your pursuit of being a good financial steward. Part of that is setting milestones for you to spend a little of that hard-earned cash, but instead of spending it all on your daily cappuccino or favorite fast food, you can go all out on a new toy or maybe a trip for the family. The hope is that because you’ve conditioned yourself to grow your savings, you’ll be able to reward yourself without feeling financially strained. The gift that keeps on giving!
These 3 tips are a great starting point if you’ve been thinking about starting down a new path to financial freedom in 2021. Be deliberate when looking through your spending habits, putting money away for the future, and setting milestones for a job well done.
Sometimes all things “money” can seem overwhelming; take it day by day and know that you have a financial team supporting you— from our places on the phones, behind the drive-up windows, and from our lobbies!