Creating a budget is an easy way to wrap your arms around your finances. It’s the first step toward becoming a better money manager. Whether you want to avoid late fees and higher interest rates or if you simply want to save more money for the future, here are a few ways to make the dreams that matter to you most come true.
Build an emergency fund
When you need cash for the unexpected — unemployment, car troubles, a broken water heater — where will it come from? Be prepared for most any emergency by having a cash cushion, also known as your emergency fund. It’s a good idea to have a minimum of three months’ worth of living expenses set aside. Work toward your goal by saving a little at a time.
Set and keep financial goals
Getting to a place of financial security doesn’t happen in the dark. You’ll want to set specific, attainable goals. Consider where you want to be one, five, even 10 years from now and make a plan for how you’re going to achieve those goals. Decide how much you’ll need or want to save for each goal. Then map out a plan to save money for each goal. Keep an eye on your progress. Set reminders to help you keep your eye on the prize.
Know your net worth
Your net worth gives you a snapshot of your current financial standing. To calculate your net worth, subtract the total value of what you owe — your liabilities, from the total amount of what you own — your assets. You want a net worth that is positive and growing. It may fluctuate a bit at times, but keep tracking it to make sure that in the long run you’re on a path toward growth.
Make saving for you a priority
Once you’ve accounted for the essentials, think about your wants. Don’t completely deprive yourself of fun — just stick to a pre-set amount of spending. Consider creating a savings account that is solely for good times. Use your bank or credit union’s bill pay feature to make an automatic ‘payment’ to yourself for something personal.
Become a better money manager today by raising your awareness of your personal finances and doing what it takes to make goals happen.
Article provided by Local Government Federal Credit Union.
The advice provided is for informational purposes only. Consult your financial advisor for additional guidance.