Every year there is a coalition of people who work very hard in organizing an eventful week called “Money Smart Week.” The coalition’s function is to educate anyone interested on how to better themselves financially. The week consists of workshops and webinars all focused on a particular branch of managing your finances. For more information about this great initiative or to find events being held in your local area go to www.moneysmartweek.org.
In honor of “Money Smart Week” here at Apprisen we have some helpful tips to help you in your quest to become “money smart.” First, set financial goals for yourself. What do you want for yourself in the next 12 months? How about in 1-5 years? Second, identify your monthly income. To keep it simple, determine how often you receive paycheck or rewards. You may be paid weekly, every other week, or once per month. The important thing to remember here is how much you net on each time you receive money. Your net income is what you make after taxes and deductions. Many folks find it easier to determine their income on a monthly basis. Third, make a spreadsheet or write down a list of your monthly spending (mortgage/rent, utilities, bills, entertainment, etc.). If you regularly spend money on it, write it down. Don’t forget to include those pesky expenses that come around perhaps once or twice per year such as property taxes, homeowners insurance, back to school expenses, or even vacations. Then, make a list of your monthly debt obligations (loans, credit card payments, etc.). After listing your goals, monthly net income, expenses, and debts take a look at what you have created. This is your spending plan.
Is your spending plan balanced? A balanced spending plan means that your expenses and debts don’t surpass your net income. Example: your net income is $1000 and your monthly expenses plus debt payments are less than $1000, your spending plan is balanced. If your expenses plus debt payments are greater than $1000, then your spending plan is not balanced. If this is the boat you are in, review your expenses and make spending cuts to balance your spending and then implement those cuts in your daily spending. If that doesn’t work, then there may be some deeper problems that need rooted out. Try keeping a physical log of each expense or any time money is spent. Apprisen offers a “Fritter Finder” to assist with this process. As each individual purchase or expense is accounted for, you will begin to identify where financial struggles lay and be able to change spending habits.
I will leave you with one final tip for your spending plan. You could argue that one of the most important factors in a spending plan is a savings account. A savings account serves many functions. It could be for a down payment for your future home, a car, or for your kid’s college. What if you lose your job? What if you get hurt and temporarily aren’t getting an income? We encourage you to prioritize the building of a savings account. It’s up to you to make this happen. How much should you save? A good rule of thumb would be 8% of each paycheck. If you would like to have a specialist review your spending plan with you, Apprisen offers “Personal Finance Education” for a nominal fee. One session could equal a balanced spending plan and thousands in savings in the long term. Call 800-355-2227 or visit www.apprisen.com to schedule your “Personal Finance Education.”