Be FAIR to Your Money and Stick to Your Spending Plan(Budget)

Making a spending plan is easy. Sticking to it? That’s another story. The hardest part of having a spending plan is actually following it. I’m nervous that I will blow mines out of the water during my 30 Day Spend and Save Challenge. After doing some research on “sticking to a budget” (sorry for using the dirty word), I came up with an acronym to help me stick to my plan. It's FAIR.

Flexible- In order for your spending plan to work, you have to be flexible with yourself. If you overspend in one of categories, pull money from other categories where you spend less money. You can also compromise with yourself. If you want to go to a concert that takes up most of your entertainment budget, cut back in other areas. Stay in for the weekend, eat less expensive food, or ditch Starbucks and fast food. You should also review your spending plan at least once a month. If something isn’t working, make changes.

Accountability- Sometimes you need someone to help you stay motivated and keep you accountable for your actions. Share your spending plan with someone you trust. Review your plan and spending habits with them at least once a month. Make sure you pick someone that will question your spending habits. I’ve asked you guys to help me stick to my plan. I hope you keep me on my toes. I am going to give a report every week.

Incentive -Create incentives to help you stick to your plan. Rewards and incentives help you to stay motivated. If you manage not to exhaust your clothes budget, use the extra money and  reward yourself to a nice dinner or something else you like. Remember, a good reward could be putting that money into savings.

Remember- Why did you start a spending plan? What financial goals are you trying to achieve? Remembering your goals will also help you to stay motivated. It will also help you to fight the temptation to spend money on unnecessary things or break your budget. A visual piece can help you remember your goals. Write them down or find something that represents your dreams. Put them in a place where you can easily see them. You can put them in your wallet, so you can see it every time you are about to spend your money. One of my goals is to relocate to either NY or LA to work in entertainment. Maybe I’ll use my Metro Card for the NYC Subway.  

During my 30 Day Spend and Save Challenge, I’ll remind myself to be FAIR to my money. Besides, a spending plan is suppose to put me in control. I hope you guys will take the 30 Day Spend and Save Challenge with me and be pair FAIR to yourself.

30 Day Spend and Save Challenge

I made my spending plan and it goes into effect Friday October 1. Over the next 30 days, I am challenging myself to live within my means and stick to my plan. Can I do it? Yes. Am I afraid of failure? YES!!! I think it would be a lot easier if I had people to keep me accountable. Can you guys help me? Each week I’ll update you on my progress. I need you guys to keep me in line. If I’m being a bad girl and not following the plan, feel free to lash out on me (just keep it clean). I posted my spending plan again so you can show me where to make changes before I start. You can also join me in this challenge. Make your own spending plan and challenge yourself to stick to during the month of October. Remember, it’s all about steps to financial freedom.

My Monthly Spending Plan

Income Paycheck 1550 Total 1550 Expenses Needs Gas 100 Cell Phone 100 Food Groceries 40 Clothing 200 Emergency Fund 200 Moving Fund 300 Hair 120 Tithes/Offerings/Charity 200 Total 1260 Wants Food Fast Food 10 Restaurants 40 Entertainment 200 Skin Care 20 Total 270 *Extra Money 20

From Rags to Riches: Pay Yourself First.

I want all of us to have financial freedom. The key to financial freedom and the road to prosperity starts with one simple concept- pay yourself first!  Our friend Kerri  Smith show us how we can go from rags to riches by applying this concept.

Have you wondered how rich people got to be rich people? Some, of course, are born into money but others come from very humble beginnings. Even those born into money have to find ways to save or make more money than they are spending. They have also learned that everything has a price and the most precious is their time. 

The value of your time will change over your lifetime; however what you do with the money you make will decide whether your financial picture will be that of rags or riches. 

We know the government will take 20-30% with all the taxes such as federal income tax, state income tax, sales tax, property tax and so on. So, you should retain a portion of your income to build your financial wealth – that’s paying yourself first! That’s before you buy groceries, pay your rent or any other bill.
By paying yourself first, you build a nest egg to fund future goals, a cushion in case of an emergency and it will build your confidence. Believe it or not, the lack of a nest egg will influence your decisions. You will stay in a dead-end job or put off going back to school or it can deter you from starting a new business. 

Most people spend what they make and even more by using credit. One way to think about spending is to equate everything to your hourly wage. For instance, if you make $15 an hour and they take out $5 for taxes, it leaves about $10 per hour in your pocket. When you buy a new iPad for $499, you will have to work 50 hours to pay for it – 50 hours! And if you buy it on credit, you will be working a lot more hours than that to pay for it.  Even smaller purchases such as DVDs or fancy frozen coffees, they really add up. Before you make a purchase, consider how many hours you will have to work to pay for it and you will definitely change how you spend your money.

How do you start paying yourself first? It’s simple really. Start with 2-5% of your take home pay and deposit it into a savings account directly from your paycheck. There is an old saying, “if I don’t see it, I won’t spend it.” That’s just one of the reasons taxes are taken out of our paycheck.  Ideally, you would want to get to 10-15% of your take home pay. 

A clever way to remind yourself, is to set up a timer on your phone or computer for payday and put three words in the description “pay yourself first” … You’ll be richer for it. 

- Kerri Smith, CU Member

I Made A Spending Plan(Budget) and I Don't Like It!

I’m trying my hardest not to use that dirty word (budget), but I have slight anxiety over this spending plan thing. I made my spending plan and I do feel a little restricted. Let me explain some things about me. I love shopping, going out with friends, and having fun. I also like nice things and don’t have a problem spending money. My spending plan probably reflects all of these things. I am going to start following my spending plan next week, October 1. I’m a little scared that I’m not going to follow it especially since my birthday is next month. I usually spend a good amount of money celebrating my birthday. I need your help, so I can stick to my spending plan. Take a look at it and tell me if I should make any changes. Keep in mind that I’m a recent college grad that lives with her mom. This means I do not have a lot of bills, but I’m trying to move out of her house around this time next year. I need all the help I can get!

My Monthly Spending Plan

Income Paycheck 1550 Total 1550 Expenses Needs Gas 100 Cell Phone 100 Food Groceries 40 Clothing 200 Emergency Fund 200 Moving Fund 300 Hair 120 Tithes/Offerings/Charity 200 Total 1260 Wants Food Fast Food 10 Restaurants 40 Entertainment 200 Skin Care 20 Total 270 *Extra Money 20

Banks vs. Credit Unions

For those of you who don't know the difference between credit unions and banks, our friends over at FoolProff made a great video that explains credit unions. Check it out!

Making A Spending Plan

Now that we know the importance of a “spending plan,” it’s time to make one. Remember we’re not using that dirty word (budget). We are going to use our spending plan to get our financial lives together.  I’m going to make my spending plan and I will share it with you guys.

The first thing we are going to do is gather all records of our income and expenses. This includes pay stubs, bank statements, bills, and receipts from the past month.  We are going to use these records to list our income and expenses in our spending plan. You can use the traditional pen and paper method, an online tool, or software such as Quicken or Microsoft Money. Software programs or an online tool may make it easier to track your spending and make adjustments.

After you picked your preferred method, record your monthly income. Keep in mind that your monthly income can include other things beside your pay. If you receive monthly income from investments, government benefits, rental property, or other business ventures, include this in your income. The next thing is list to your expenses. Place your expenses into categories such as food, rent or mortgage, transportation, clothes, utilities, insurance, unpaid debt, entertainment, etc.  Some of your expenses may vary from month to month. For example, your electricity bill varies based on your usage.  Put a range for these types of expenses.

Once you have made your expense categories, put them into two main categories- “needs” and “wants.” Be honest when listing your categories into “needs” and “wants.” Although you may be a fashionista and like to buy a new pair of shoes every month, this is a want, not a need.You might need your coffee in the morning, but you do not need to buy it from Starbucks every day.  You need to eat and a place to live. You need transportation to work or school.  Generally, your needs include food, basic clothing, housing, transportation, unpaid debts, and your other bills. Everything else is basically a “want.”  You can put money towards your wants once your needs are covered.

If you have no money left once you made your spending plan, you need to reevaluate your needs.”Yes. You need to be entertained, but you do not need to go out to eat every week. Find areas to cut back on your expenses. Eat less expensive food, move back into your parents’ house for a while, use coupons, drive less, and find cheaper forms of entertainment.

Once you created a budget you can live with, stick to it. Evaluate your budget every month and make any necessary changes.   Living with a spending plan takes discipline, but it’s worth it.

Contributor: Carol Szaroleta, Director of Marketing & Business Development, Destinations Credit Union, www.destinationscu.org

7 Reasons Why You Need A Budget

For most people, “budget” is dirty word.  You cringe, roll your eyes, or just get irritated when you hear the word. Most people think budgets place restrictions on their lifestyle or they are too much of a hassle to make. While you may hate budgets, you NEED one to have financial success. A business cannot be profitable and successful if they do not have a budget. The same applies to you. If you want financial freedom, you need a solid plan. To remove your negative perception about budgets, I am going to refer to budgets as “spending plans.” A budget is nothing but a plan of how to spend your money wisely. A spending plan helps you to do these things.

1.      Know where your money is going. Have you ever gotten paid and wondered where did you money go? After paying bills, going out on the weekends, getting your hair done, going grocery shopping, and buying a gas, you felt like you have no money left.  A spending plan allows you to track where your money is going. It also shows your spending habits and how much money you actually have.

2.      Control your finances. A spending plan allows you to control your money instead of letting your money control you.  You decide how to spend your money by allocating a portion of your income to different expenses.

3.      Focus on your financial goals.  What are your financial goals?  Are you saving for one of your “firsts”- a car, house, or wedding? Or are you saving a vacation?  A spending plan allows you to focus on your financial goals by cutting out any unnecessary spending. You can also put money towards your goals.  It will help you to fight the temptation to run to the mall to take advantage of a sale or go happy hour every day.

4.      Get out of debt and avoid debt. A spending plan helps you to live within in your means. It shows you how much money you can put towards paying of your debt (hopefully more than the minimum payment). If you want to put more money towards paying off debt, a spending plan can show where you can cut back.  Spending plans also help you to stay out of debt by helping you to not spending more money than you earn. By not overspending, you are not using high interest credit cards to pay bills. You save money in paying interest and protect your credit.

5.      Save for the future. Life happens. You could lose your job, get sick, your car can break down, lose a love one, etc. Having money to cover any emergencies can help reduce stress in trying situations. Financial planners usually recommended that you have at least 6 months of your income in savings. A spending plan helps you to set aside money into an emergency fund. As previously mentioned, it can also help you save towards your financial goals like buying a car or a house.

6.      Extra money. Since it helps you to track your spending habits, a spending plan shows you where you need to cut back on your expenses. You will also have extra money from not paying a lot of interest on credit cards and other debt. This will give you extra money that you can put towards savings or your financial goals.  Cutting out unnecessary expenses also allows you to take advantage of other opportunities. You can save for retirement, start investing, or save to go back to school with the extra money.

7.      Freedom.  Managing your money will not be a burden with a spending plan. You will not have to worry about whether you have enough money to pay your bills.  With your spending plan, you know exactly how much money you have. Your life will not be constrained by your money. You can splurge on that new TV or take that exotic vacation because your expenses are covered. A spending plan puts you in control and allows you to be free.

Having a spending plan can only help you. It takes discipline, but you won’t be up to 3 AM worrying how you’ll make it until your next paycheck.

It's Time to Evaluate Your Finances and Your Bank.

Hello world. My name is Lauren Gill  and I am an intern at Johns Hopkins Federal Credit Union. I'm here to help you get your finances straight. As a young adult, you experience a lot of “firsts”- first full time job, first car, first house, first marriage (hopefully your only one) and first kid. All of these “firsts” require good money management skills. During my short time working in financial services, I discovered that many young adults do not know how to manage their finances. You struggle to pay bills and you do not know where your money is going. Good news… you can take control of your financial life by starting to make good decisions.

One of the most important financial decisions you make is where to bank. This may not seem like a big deal, but it does make a difference. During this recession, we have had to bail out the big banks. What have we got in return? Nothing! Banks have paid their executives large bonuses, cut back on lending, charged us more fees, and have taken away services. There is a better way to bank.

One of the banking sector’s best kept secrets is credit unions. Credit unions offer the same products and services as banks. For those of you who don't how credit unions are different than banks, let me break it down for you.

• Credit unions are not for profit, cooperative institutions that are owned by its members. That means any profits a credit union earns is returned to its members with higher interest rates, lower rates on loans, and lower fees.
• At credit unions, you are not a number or a customer. You are a valued member. As a member, you receive quality customer service. You also get to vote for the Board of Directors which is a group of volunteers.
• Credit unions’ philosophy is “people helping people.” Credit unions offer their members financial counseling and they give back to their communities through charity work.

Although credit unions have membership requirements, anybody can join a credit union. To learn more about credit unions and find a credit union you can join go to http://www.whatsinitforme.org/. You can also enter to win one of three iPads.

To help you to get your financial life on track, my first series  will be on budgeting and saving. If there is anything about budgeting you would like me to discuss, feel free to send me an email at whatsinitformecu@gmail.com

Here’s to being financially free!