Financial Health

People love to make plans: for a dinner party, a vacation, or a big family reunion. But when it comes to planning our financial future, many of us don’t know where to start. Fortunately, a little discipline and a sharp pencil are all you need to get on the road to financial security.

Start by organizing financial documents into a folder. Next, create a household budget. A budget allows you to figure out how much you’re spending and where your money goes. It also makes it easier to see where you can cut costs.

After making a budget, many people discover that they are living beyond their means. This may actually turn out to be a blessing in disguise. Seeing where the money goes every month makes you think hard about your lifestyles and what you consider to be necessities.

An important goal of financial planning is to prepare for retirement and emergency situations. Putting aside money regularly will, over time, add up to a nest egg that can be used when you can no longer work. The amount you put aside doesn’t really matter – it can be as little as $10 a month. Also, many employers have retirement or pension plans for their staff. Often, these plans pay more interest than a regular savings account at the bank. We all face financial challenges. But like the saying goes, every little bit helps. So start saving those pennies!

Part of the Plan: Tips for Making a Household Budget

—Keep all bills, receipts, and tax records in one folder. This saves time and prevents important papers from being lost.

—Write down how much you earn every month. This will help you decide how much you can spend.

—List all your expenses for the month, such as rent, car payments, child care, food, medical care, and credit card bills. By subtracting your expenses from your income, you can figure out how much you can save.

—Are you saving for a specific goal, like a new car? If so, list it separately so you can calculate how much money needs to be set aside every month to reach your goal.

—Figure out how much money to save for retirement every month and add this to your list of monthly expenses.