Top Money Management Tips and Suggestions

TOP MONEY MANAGEMENT TIPS AND SUGGESTIONS
Money makes the world go ’round, so they say, but at the same time, money doesn’t grow on trees. And while we use money in some way, shape, or form every day, we’d bet dollars to doughnuts that not everyone feels comfortable discussing their finances. To start the conversation, we’ve put together some top money management tips and suggestions.

TELL YOUR MONEY WHERE TO GO
Leadership expert and author John Maxwell defines a budget as “telling your money where to go instead of wondering where it went.” Without a budget and careful monitoring of your spending, your finances can become disorganized and out of control, leading to unnecessary stress caused by missed payments, overdrafts, and worries about debt.

If you’ve never worked with a budget before, the idea of sitting down and accounting for every dollar every month may seem daunting. Don’t give up! Use Excel or another spreadsheet software or take advantage of numerous budgeting apps and websites.

Create a budget using these four simple steps:

1. Determine your total household income for the month after taxes, including income from any side gigs or Social Security.
2. Record ALL expenses. ALL of them, not just the regular bills or automatic payments. That includes last-minute fast food because you forgot your lunch again or your twice-weekly runs to Caribou for an afternoon pick-me-up. You need to account for every dollar spent. With digital banking, it’s easy and convenient to categorize bill payments and spending, so you can see exactly how much you’re spending in each category.
3. Calculate the difference. Subtract expenses from income. If the resulting number is negative, you’ll need to trim expenses to better live within your means.
4. Track all income and expenses throughout the month to stay on top of your spending.

You’ve got to have a plan for your money and a firm understanding of where that money ends up each month. This includes months with additional expenses, like renewing your vehicle registration, buying birthday or Christmas gifts, or paying for a winter getaway. The Bank of Elk River offers online budgeting and money management resources, including financial calculators, a Budget Worksheet and information on seasonal budgeting to help with the budgeting process.

Once you’ve got a handle on your budget, you can work toward achieving your financial goals.

WORK TOWARD YOUR GOALS
We live in a world of instant gratification, a world at our fingertips – on our smartphones, laptops, or tablets. Got a question? Ask Google and get your answer in the time it takes for search results to load. Planning to meet up with friends for dinner? Decide on a restaurant via group text and then make a reservation online.

While these convenient tools make life easier, it’s also all too easy to spend money with just a few clicks. Want to see last summer’s blockbuster movie? Order it on demand and watch from the comfort of your living room. Running low on toilet paper (and time)? Pull up a shopping app and a package will arrive on your doorstep.

Not only will these impulsive buying decisions take a bite out of your budget, they aren’t helping you work toward your ultimate financial goals. No matter what your goal – paying off your mortgage, saving for a family trip to Disney World, or sending the kids to summer hockey camp – stick to your budget to help you get there.

It’s not enough to simply save for these big goals without considering other factors such as debt or emergencies.
 

1. Build an emergency fund. A typical recommendation is to save $500 to $1,000 first to take care of any unexpected expenses. Then pay down your debt. Once you’ve eliminated debt, save enough to cover three to six months’ expenses.
2. Save enough to pay for bigger items in cash. Don’t let yourself slip back into debt for that Disney trip. Put money aside until you have enough to cover the expense without using your credit cards.
3. Save for retirement. Contribute to a retirement fund after your debt is paid off, no matter your stage in life.

Learning about saving money is important at any age. We recently explored this topic in a previous blog post; follow these tips when teaching financial literacy to kids.

HOW THE BANK OF ELK RIVER CAN HELP
The Bank of Elk River offers several useful tools to help you get the most bang for your hard-earned buck. Stay on top of your accounts with our online and mobile banking solutions, including online bill pay and funds transfers. Choose from several types of checking and savings accounts to meet your current needs. Maximize your earnings with Certificates of Deposit (CDs) and save for the future with Individual Retirement Accounts (IRAs) .

Spend some time browsing our online money management tips and resources, from budget and emergency fund calculators to lunch tracker apps and articles on financial life events.

As Ben Franklin so eloquently stated, “An investment in knowledge pays the best interest.” We’re always happy to help you understand the ways in which you can better manage your finances. Contact us today to learn more.