Sometimes, if you want to get ahead financially, you have to get back to the basics. When handled correctly, money basics can provide a foundation for healthy finances. But it only works when you continually put them into practice. That’s why it is worth your time to remind yourself of the fundamentals and to assess whether or not you’re still building a great financial foundation for your life.
Here are some ways you might assess how you’re doing with them.
Money Basic #1: Spending
Do you plan for weekly, monthly and yearly expenses? Do you have a workable budget? We say “workable” because creating and implementing a budget isn’t a one and done deal. Understanding your spending and creating a spending plan may be a standard principle for money, but it will only prove successful if you (1) stick to the budget, and (2) annually assess for and make necessary changes. As your life changes, new priorities will arise (e.g. paying off student loans, getting a mortgage, saving for a big trip), and your budget needs to account for that if you are going to be more successful with your spending – in other words, meeting your goals and lowering debt.
Ask yourself these questions to see how you’re doing:
1. Do I have a budget? If you don’t, this is your top priority. Your Money Coach can walk you through a budget worksheet that can help you master spending.
2. Does my budget still reflect my expenses? Even a month’s time can mean major changes to a budget. Take a moment to sit down and assess whether it still takes into account all of your regular and irregular expenses.
3. Have my goals changed? When you reach a goal, reflecting that change in your budget can help you keep track of the funds available for new goals, and keeping a plan in place can help you reach your goals even faster.
Money Basic #2: Borrowing
How you borrow money might play a huge part in financial success, too, because if you don’t have a set plan to pay it off, you could find yourself drowning in debt. Building your wealth is a lot easier when the weight of debt isn’t pulling you down.
If you’re thinking of borrowing, ask yourself these questions:
1. Does this loan have the best rate and term? There are different outlets for finding a loan, like a credit union or local bank. As you consider taking on a loan, make sure you “shop around” and compare the details.
2. Does my budget allow for a new loan repayment plan? If you get a new loan, you will probably have a new payment each month. Can you make that payment while still meeting your other expenses, like paying yourself first? If not, consider finding a better rate or adjust your spending to allow for the payment.
If you’re already borrowing money and you find yourself in debt, talk to your Money Coach about different debt management strategies like debt consolidation, debt “stacking”, credit counseling services, and debt settlement. Your Money Coach can help you put a plan in place to eliminate debt and get you back on track with meeting your goals.
Money Basic #3: Saving
Saving is one of the most important components of money basics because it’s an integral part of reaching your goals and making it through life’s challenges. Plus, the moment you start saving, you start building your wealth.
Want to know how you’re doing? Ask yourself these questions:
1. Do I have enough savings to cover a financial emergency that costs $1,000? Having a financial cushion (a.k.a. emergency savings) helps you when a financial emergency arises, so you might not have to rely on credit cards or take out a loan, which could increase your level of debt, hinder your ability to meet your regular expenses, or set you behind on meeting your goals.
2. Do I know how much I need to save for my goals, and do I have a plan? You’ll be much more likely to meet your goals if you have a detailed plan. Take saving for a vacation as an example. You might be much more confident and successful if you actually take the time to calculate how much money you will need for the vacation and then figure out how much you need to save up each month in order to meet that goal.
Spending, borrowing and saving each play a part in your financial situation. Your Money Coach can help you further assess your situation and offer additional education to make sure that when it comes to your finances, you are confident in your ability to be more successful. Call 888-724-2326 to get started.
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