Maybe you hope to someday own a house, or pay for your kids’ college education or maybe even just pay off your own student loans before your kids go to college. . .
We all have goals for our financial future, but reaching them can be really hard — especially when it comes to leaving that extra $500 or $1000 sitting in your savings account. Turning down a new pair of shoes when you’ve had a bad day, or waiting to borrow a video game from a friend instead of buying every new release for the sake of some far off financial dream can be a daily struggle.
So how do you do it? Here’s what we suggest:
1. Get prepared.
Before you do anything else, you need to start an emergency fund.
No matter how diligently you plan, you’re bound to encounter some unexpected expenses. Whether it’s a one-time charge like a broken furnace or a major ongoing expense like unemployment or a serious illness, having some backup funds will keep you from racking up more debt or using funds planned for something more fun.
2. Set a budget.
If you’re flying by the seat of your pants every month when it comes to your finances, you’re not doing yourself any favors.
Admittedly, budgets are not fun. They can be time consuming and tedious.
But stick with us here: they don’t have to be.
We’re big fans of the 50/20/30 method. It’s a pretty simple way to categorize and prioritize your spending, plus it’s flexible. So you can easily adjust it for months when there’s unusual spending (like back-to-school time, or that summer all your friends are getting married).
3. Spend less.
This is obvious. The only way you can save money is if you spend less than you earn. Whatever your financial goals, you’ll never meet them if you’re spending every last penny. This is where that budget we just talked about comes in. You have to track to your spending and earning to know where you’re making mistakes and learn what changes you can make in the future.
4, Get insurance.
Don’t go into debt because you aren’t prepared to cover unexpected expenses. Whether it’s auto and gap insurance in case you get into an accident, disability insurance in case you lose the ability to work or life insurance to protect your family if something terrible happens to you, insurance keeps you from taking a loss when the unexpected happens.
5. Use technology.
Technology is your friend. As an IHMVCU member, you get access to some pretty awesome features to help keep your finances in check. From financial calculators to help plan for the future to FinanceWorks, a free budgeting software available in Online Branch, we make it easy to reach your goals.
FinanceWorks automatically tracks and categorizes your spending and helps identify trends each month, allows you to set goals and will even notify you when you’re approaching the spending limits you set up. If you’re not already enrolled in Online Branch, get started today.
Reaching your goals is a lot easier when you’re prepared. Don’t get discouraged if it doesn’t start working right away—mastering personal finance management takes time, but we promise it’s worth the effort.
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