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Financing Your Future – How Financial Awareness Can Set You Up for Success

            On August 14th we celebrate National Financial Awareness Day—a day that stresses the importance of keeping updated records of your finances and being responsible with your financial choices. This is, of course, a lot easier said than done. Finances can feel overwhelming and time-consuming; and making a budget or record can feel like too strenuous a task. The time commitment it takes to sit down and make an account for all your expenditures, purchases, and future expenses as well as the categorization of each one can feel overwhelming. The good news is you don’t have to do this all at once, and thankfully, there are many tools available to help. These tools will help you improve your financial situation so that you can pave the way for a better future for you and your family.

            Taking time to write down your expenses and earnings is a great way to get started. This financial review from CNBC lists several apps and other helpful tools that can help with this step:

            After making a record of your expenses and earnings over a period of time, the next logical step is to make a budget. This can be done at your own pace, so don’t feel overwhelmed. Here are five easy steps to get budgeting:

  1. Calculate your net income: Do this by calculating what you make each month after taxes. This can be found on the paystub you receive from your employer. If you work somewhere where this is not available (i.e. tip-based or cash wages).
  2. Label your monthly expenses as essential or nonessential: Using your record of expenses from earlier, label each bill or expense as essential or nonessential. For example, your electric bill is essential but what you spend on eating out is nonessential. Other essential expenses include transportation, food or living costs, utilities, etc. while other nonessential expenses include entertainment costs, memberships, or subscriptions.
  3. Determine the average monthly costs for each expense: How much you spend on either nonessential or essential expenses per month should be compared to how much you earn per month. This way you can visually see what you need to cut back on each month.
  4. Make adjustments accordingly: If your expenses exceed your income, it’s probably best to make some changes. You can cut back on some nonessential expenses or find out where to make adjustments to your fixed expenses—for instance, if your electricity bill is higher than desired, you can implement a plan to turn off lights around your home, unplug unused appliances, use less shower time, etc. Additionally, if you are paying for a subscription service that you no longer need, you can cancel it. Just small adjustments can help you save money over the long term.
  5. Make plans for future expenses: Setting aside money for future expenses and emergencies can save you a lot of heartache in the long run. If you know your car will need new brakes before winter or you want to plan for accidents (hospital visits, car accidents, surprise home damages, etc.), it is best to have money set aside. With the adjustments you have made to your budget, see if there is a possibility that you have a little extra money now to put towards a “rainy day” fund.

            All of these tools, tips, and strategies can help you plan and save for your financial future. It is important to be knowledgeable about your finances, to stay proactive about keeping records, and to be prepared for emergency expenditures. There are abundant resources to help you with financial planning and awareness which allow you to work at your own pace. Your financial future is important. Let’s start investing in it!

Emma Clifton