“I’m doing fine…as long as I don’t miss a paycheck.”
“I don’t know if I’ll have enough to retire on.”
“I don’t feel as if I have control over what I’m spending.”
“The stock market could come crashing down. Again.”
“Money makes me anxious.”
Do any of these sound familiar? If so, you’re not alone. Money magazine stated that, “A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very. . . significant source of stress.” It’s estimated that mid-income earners have only 20 days worth of income at their disposal in an emergency. Even “high-earners” have only approximately 52 days of earnings stored up in case of an emergency. Scary, huh? So where do you start? Check out a few of the tips encouraged by Money Magazine’s July 2015 publication from their article, “Never Worry About Money Again” (I highly recommend you check it out in full from Money Magazine!!).
1- ) Set up your budget one essential expense at a time: Aim to cover 3 months worth of a regularly re-occurring bill (such as your mortgage). Then branch out to having 3 month’s worth of savings in another essential area (such as car payments, insurance, etc.). Gradually expand your savings from 3 months out to an eventual 6 months. Breaking it down can make the goal seem less daunting.
2- ) Make accessing your money a little inconvenient: Consider opening an account that only contains the money you “function” out of for expenses such as gas, groceries, etc. This “functional account” could be linked to a debit card that you use for everyday purchases. Keep the majority of your funds in a higher-interest earning account that is less accessible. Keep in mind that your “functional” account is different than your “emergency fund” (which also should not be linked to your credit card, debit card or check book for easy access). An emergency fund is for just that….an emergency. As much as it might seem like it (and I’m right in there with you!), new golf clubs, a new pair of shoes, or a latte everyday around that 3 pm energy slump is not an emergency.
3-) Make a simple budget: Money Magazine relates that, “Some anxiety about spending comes simply from not being 100% sure what’s coming in and what’s going out…..stress comes from being afraid of the unknown.” Use a simple excel sheet and break down your expenses into categories (food, rent/mortgage, utilities, entertainment, etc.).
Or try using the “envelope method”. Label each envelope with a category (say “food”). For two consecutive months, every receipt goes into the envelope associated with the expense. Every one. Didn’t get a receipt? Write it on a sticky note. Two consecutive months can help you find the average between a possible high month due to traveling, holidays, etc. and lets you see a more accurate picture of what you are spending. At the end of the month, add up the receipts per category and compare them against your income. If nothing else, it brings awareness to your spending.
When I personally utilized this method, I found that I was spending over $100/month on coffee on the road during the work week. I found some excellent gourmet coffee beans, bought a coffee grinder for $5….and added the money I was previously spending on coffee to my monthly savings. I still get the occasional coffee on the road…but far less frequently than I previously did.
Looking to save money and budget better? Feeling a little lost on how to plan for retirement? Overwhelmed by upcoming college tuition costs for the kids? The Choice Insurance Agency hosts frequent seminars on financial planning. We also can set you up with a one-on-one consultation with a member of our Financial Planning Team. Ask me about the next financial seminar we have coming up and reserve YOUR seat today!
Kelley Carter, CPIA
The Choice Insurance Agency
**Excerpts taken from: Saelinger, D. (2015, July 1). Never Worry About Money Again. Money Magazine, 42-49.
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side. 757-416-5100 .