If you’ve ever checked your bank account and said, “Wait. What the heck? Where did all my money go?” This blog is for you.
Let’s take a look at how we can get to know our finances, and set up small wins that encourage us to keep going when it comes to achieving our financial goals.
Getting to know your expenses
The first thing you need to do is make a list of your “What I need to Survive” expenses. This will be things like your rent, utilities, groceries, phone, insurance, car payment, and any other non-negotiable expenses. That will end up being money you’re not allowed to touch for any reason.
Then you need to take a deep dive into your bank statements. What are you spending money on outside of your “What I need to Survive” expenses? Do you eat out a lot? How many subscriptions do you have? Do you order random things off Amazon and forget about it? Do you have a hobby that takes a big chunk out of your check? Do you spend a lot on clothes?
It will be pretty apparent what you need to cut back on. And it may be a little bit shocking but cut yourself some slack. You’re figuring this out, and that’s what matters. When you’re done, these expenses will serve as the core of your budget.
Are you contributing to your IRA and personal savings?
After you have your core budget, you need to establish the next layer: Savings. So, let’s talk about the two main ways that it is done, through your retirement fund and your emergency savings.
Your retirement savings – “Future You” needs you to start saving up for them. That means if your employer offers an “IRA Match” program, take advantage of it! Choose a percentage of your check to be contributed, pre-tax and watch it grow. “How much” you should contribute depends on what you can afford at the time.
If your employer doesn’t offer an IRA, you can start your own. Anyone who earns income can set up a Traditional IRA or a Roth IRA.
Need help getting started? IRS offers great resources.
Your Emergency Savings – Most financial planning professionals suggest you have 3 months to 1 year of “What I need to Survive” expenses saved up. Instead of worrying about that big number, set smaller goals for yourself. Save up one week of expenses, then one month, then two. Pat yourself on the back each time you reach a milestone.
Small goals add up to big success
Some people do better with automating their expenses, and some need to be more hands-on and manually pay their bills and transfer money into savings each week.
Whatever method you choose, try to start with “weekly goals” vs. “yearly goals.” That means spending time with your money each week, setting aside your “What I need to Survive” expenses, your weekly savings goals, and your “fun fund” savings until it’s second nature.
Use your benefits to make your money do more
If your employer matches your pre-tax IRA donations, utilize that. If they allow you to set aside pre-tax cash for commuting, do that! Just like a Traditional IRA, it saves you money on your income taxes.
If they offer you a daily meal stipend, spend it. If they offer Lifestyle Spending Accounts, use that! Why spend money on a gym membership if your employer says they’ll help with that?
Use your benefits and save more of your own money!
Edenred can help your employer offer you several benefits that will help you do more with your income. Schedule with us today so we can discuss what options would be the best for you and your employees.
