Whether it’s eating healthy, exercising more, or saving money, a new year means a fresh start for many of us. And making positive life changes is always a good thing! To help with the financial side of life, we’ve included our best money tips for 2021.
Remember, handling money wisely starts with a solid budget:
- Determine Values – Having open communication to what’s most important to the people involved in your budget and spending plan is essential. By understanding these values, you can compromise and make decisions that will provide the most satisfaction for all involved.
- Set Goals – Begin goal-setting by discussing with family members what each one may want to do with their money. For example, a goal might be to buy a home or save for your child’s education. Each family member will have their own unique goals; have each member list a goal and a deadline. It’s important for everyone to have a voice and to communicate.
- Prioritize your goal list. Then work on the most important goals first. Put money aside in your budget for your priority goal. Remember, to achieve a particular goal, you must treat the money as a bill to be paid to you. Our special accounts, like Vacation and Christmas Clubs, can assist. You can also create a special savings account for any purpose, such as a house, car, or college.
- Determine Income – Figure out your net pay, or the money left over after taxes and other deductions. The money that makes up your income can come from sources such as salary, allowances, social security, or child support. Do not include overtime pay since it may not be guaranteed.
- List Expenses – What are the expenses in your budget? Consider fixed, variable, and periodic costs. Fixed expenses consistently stay the same every month (like rent, car payments, and insurance). Variable expenses vary from month to month (such as utilities and fuel), and periodic fees are due only occasionally, maybe quarterly or yearly. These may include membership dues or taxes.
- Create a Plan – Design a spending plan so that your income will allow you and your family to have what you want and need. If you find that your income does not cover your expenses, re-evaluate your plan and decide what categories can be changed. Goals may need to realign as well.
- Track Expenses – Keep a record of costs to see where your money is being spent. By comparing your estimated expenses with what you’re paying, you can evaluate whether your plan is working. Try storing receipts electronically (or even paper receipts in an envelope). Tools like My Virtual StrongBox can help. Monitor transactions in Online Banking and consider logging expenses with your smartphone.
- Highlight Big Purchases – It’s essential to learn the difference between your needs vs. wants. And it is okay to go into debt for major life purchases, like a car or house. But rather than overspending, try saving for long-term goals or purchases. Consider one of our special accounts (Holiday Savings, Vacation Savings, Special Savings) to assist.
- Leverage Technology – Electronic Services like Direct Deposit and Payroll Deduction can also help you reach savings goals. You pay yourself first before you have time to spend it.
- Evaluate Your Plan – Periodically evaluate your spending plan. Is the plan helping you to meet your needs and achieve your goals? What should you change? What’s working well? Give yourself credit, and remember, budgeting is not an immediate process. It can often take months to see savings accumulate or debt decrease.
A sensible budget is the cornerstone of your family’s financial plan and can help you achieve your goals.