Did you know that October is Financial Planning Month? This time of year is the perfect opportunity to get your finances under control and start planning for a comfortable, stable future. Here are a few steps you can take to start your journey to financial freedom.
Start Off With a Solid Plan
The first step towards achieving the life of your dreams is writing down your concrete goals. By simply writing them down somewhere, whether it’s in your journal, a Microsoft Word document, or a series of Post-It Notes, you’re holding yourself accountable for accomplishing your objectives. Make sure that whichever goals you decide on are definite, actionable, and achievable. For example, instead of promising yourself you’ll save a couple of dollars each month, create a goal of saving $2,500 in the next 5 years. Setting a specific goal enables you to better visualize your future savings, which can provide you with a much-needed burst of motivation. If you’re imagining your ideal bank balance, this can help you keep your eye on the prize.
Create an Emergency Fund
The COVID-19 pandemic has made many of us realize the importance of having an emergency fund for unexpected expenses. According to a 2020 study from Stanford, 27% of American families couldn’t scrape together $2,000 for an unplanned expense within a month. Whether it’s a medical procedure, car repair, or job loss, these charges can take a significant toll on your overall financial stability. Because of this, it’s essential to set aside a portion of your earnings every single month, just in case unplanned expenses arise. Aim to save a set amount of money each month, whether it’s $20 or $500, and try to build up a reserve of 3 to 6 months of essential bills. If you don’t yet have a savings account, make sure to contact us and we’ll be happy to help.
Reduce Your Expenses
If you notice your savings have dwindled over the past few months, it might be time to examine your spending habits and identify cuts. To do a self-audit, go ahead and look through your online bank statements and add up how much money you spend on essential bills, such as groceries, rent, and healthcare. Next, add up how much you spend on optional items, such as subscriptions, shopping sprees, and dining out. Take a look through your optional expenses and try to determine if any of them could be cut from your monthly budget. For instance, it might have made sense at the time to sign up for a gym membership but after tallying up the number of times you’ve worked out, the expense simply isn’t worth it.
Do you need help reaching your financial goals? Reach out to us and one of our friendly representatives will be happy to advise you on how Merchants & Marine Bank can help you.