Mastering Your Finances: Strategies for Achieving Financial Success

2/13/24  | Lindsay Gehman, Marketing Manager

Figuring out how to manage your finances can be overwhelming, whether you are just leaving home and going out on your own, or you want to get on top of your debt and build a savings. So many resources! So many options! Here are some ways to get you started and help you stay on track.

Look at what you spend each month

• Start by making a list of your current income and expenses. List your regular, recurring expenses like rent or mortgage, utilities and insurance.
• List your variable expenses, things that fluctuate each month. These could include groceries, entertainment, eating out, etc.
• If you use a debit or credit card when spending money you can download those transactions into a spreadsheet to sort and group your expenses easily. You can add other expenses paid through bill pay or other means to the spreadsheet.

Are you spending more or less than you make each month? If your expenses are higher than your income, it’s important to see where you can cut back. Are there monthly subscriptions you are paying for but no longer use? Could you take lunch to work a few days a week instead of eating out every day? Can you shop for better prices on regular services?

If you do have money left over at the end of each month, are you setting it aside in an account that earns interest?  Do you have a savings goal like an emergency fund, a vacation to look forward to, or a home to save for? Setting specific goals for your money helps you to stay focused and find ways to maximize your savings.

Create a budget

Now that you know what you spend each month and have decided on changes to make, it’s time to create a budget.

• Start by paying yourself. Having a goal for your money is important to achieving your goals and preparing for emergencies.
• Next, set limits for those expenses that can vary and any extras. Even if you have plenty of money left over each month, being aware of what you have and what you can spend helps you stick to your budget.

Build an emergency fund

How much should you have in an emergency fund? There isn’t an exact formula but many financial experts recommend having six to eight months worth of necessary expenses in savings.

• Plan for medical expenses by setting aside an amount equal to your annual deductible.
• To make sure you only use this fund for true emergencies, make it a separate account from other savings goals you have set for yourself.

Reduce debt

Debt is sometimes a necessary part of life, but should be handled carefully. Make a plan to pay off the debt you have as quickly as possible. If possible, consolidate debts into a single monthly payment, making it easier to keep track of how much debt you have remaining.

Build up your credit score

Credit scores can be tricky to understand, but there are easy ways to build your score while reducing debt and building your savings.

• First and foremost, make sure you pay your bills on time. Paying bills late, even by a day or two, can hurt your credit score and make lenders wary of approving future loans.
• Only use your credit card if you know you can pay off the balance each month. Not only can you avoid paying interest, it will help boost your score by keeping your credit limit usage in check.

Plan for retirement

Many experts recommend saving 10-15% of your annual, pre-tax income. If you aren’t there yet, don’t worry. Any amount you save is good and you can increase your savings as you pay off debts.

• Many employers offer a match on funds you invest in your 401(k). Take advantage of these matches whenever you can.
• Traditional IRA or Roth IRA accounts are also good options. Each account has its own benefits. Do your research to determine which account is the best for your needs.

Wherever you are on your financial journey, Altabank is here to help. Stop by your local branch and talk to one of our bankers today.