BMI Federal Credit Union
Don't Fear Your Money
How to Take Back Control of Your Finances
Money – it’s a part of our daily lives and is always at our side like a constant companion. But to many people, money is less of a comforting friend and more like a little black raincloud, hard to see through and casting a dark shadow wherever it goes.
But with just a few simple tips and tricks, you can go from feeling out of touch with your money to feeling in control and empowered. Here are five simple tips to help you gain control over your financial life:
- Know your income. One of the most crucial things you can do to get control of your finances is create a budget. But in order to do that, you need to know how much money you’re bringing in. An easy way to do this is take your average monthly pay and multiply that times twelve for your yearly pay. Make sure you take out any deductions for insurance, 401(k), etc.
- Track your spending. Surprisingly, many people simply don’t know where all their money goes every month. Keeping track of what you’re spending will not only tell you where it’s going, but also open your eyes to how all those small purchases add up. A $4 cup of coffee every morning doesn’t seem like a large expense in the moment, but when you multiply that by the average 30 days in a month, that comes out to a whopping $120 a month. We recommend using an app such as My Finance Tool in Online Banking, which will categorize every transaction you make and give you your personal monthly spending history.
- Create a budget. Once you know your income and understand your spending habits, you can move on to creating a budget. This is a great step because it clearly lays out the parameters for you and doesn’t leave you guessing at how much you’ve spent. We recommend using an app like BMI FCU’s My Finance Tool, which allows you to input your monthly income and expenses and will then provide you with your suggested monthly budget.
Plan for the Unexpected. You’re doing great, you have your monthly budget in place and have been following it to the letter. But then the unexpected happens – maybe your spouse needs an emergency surgery, or a freak storm has caused substantial damage to your home… events like these can leave your budget drained and you feeling out of control. That’s why it’s so important to save before you spend. Tucking a little away into savings each month leaves you with a little cushioning in case an emergency happens, and keeps you from falling into serious credit card debt.
- Be patient with yourself. It can anywhere from 20 to 60 days to form a habit, and it’s inevitable that you’re going to make mistakes along the way. But when those mistakes happen, remain steadfast and don’t let yourself go back to your old habits just because you made a mistake. Dust yourself off, stick to your plan and you will see you financial goals coming to life in no time.