4 Steps That Get You Closer To Financial Success

Tuesday, March 23rd, 2021
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Taking care of your finances is important if you want to have more money in the future. This is true whether you want to buy a house, start a business, or just save up some extra cash for retirement. You don’t have to just make a resolution to manage your money better to reach these goals. You can take actionable steps now!

1. Create (and stick to) a budget

This is the first step in any good financial plan. You must know how much you make and spend, as well as how much you could be saving. Many people get nervous about creating a budget, but it doesn’t have to be a difficult or daunting process.

Find out how much you make

First, figure out how much your household brings in each month before and after taxes and anything taken from your checks. You should know how much you make before taxes a solid idea of EXACTLY how much you bring in. Understanding your funds after initial expenses will tell you how much you have to spend regularly.

See how much you spend

Next, write down all of your expenses, including rent or mortgage payments, groceries, gas costs, utilities, daycare, schooling, and anything else you spend monthly. Include all expenses that come out of your paychecks here for a more detailed budget.

Set up a plan that works best for your needs

After you have made your budget, you will need to know how to use it. Some suggest using a sectioned plan (50/30/20), but you should figure out what will work for you. Obviously, the majority of your budget will go towards necessities. The rest can be split between wants, savings, and debts.

Track your budgeting success

The easiest way to track your spending is to use an app or online service. You can also use paper and files if it works better for your organizational style. The goal is to see how you spend money and if you are sticking to your budget. If you aren’t, figure out what might be going wrong and try to update your plan accordingly.

Tips to help you stay on budget

Sometimes the hardest part of budgeting isn’t creating and organizing a plan, but sticking to it. Here are some ideas that may help you stay on track. Bonus: Check out these ideas to help you save money too!

  • Pay in cash: First, you have to take extra steps to pull money from your accounts. Next, if you only have what you budgeted for, you won’t be as tempted to overspend. Finally, it is harder subconsciously to overspend when you have cash in hand versus a debit or credit card.
  • Use coupons: Using coupons and discounts wherever possible will help you have money left over each month.
  • Make a list of items you can buy: This can be a grocery list or a list of fun items. By following the list, you can focus more on your budget and less on spending woes.
  • Resist advertisements: This may take some practice, but it can help you spend less. Once you get the hang of it, avoiding spur-of-the-moment purchases will be easier.
  • Log all purchases: If you write down everything you spend and look at it regularly, it can help you stay in control.

2. Become familiar with your credit report

You can get a free credit report once a year from all of the major bureaus online. If you don’t understand what is on them, there are free and low-cost reviews available as well. It is advisable to speak with someone at your financial institution, as they will have a better idea of your needs and how to move forward with your credit report.

3. Stop building debt

Credit cards do more harm than good if you don’t manage them. Rather than placing all of your purchases on a credit card, use your debit card or straight cash. This will help you to get out of the habit of overspending. Another good thing to evaluate is your loans. If you have a habit of getting new and higher car loans often, consider stopping that practice. Responsibility is the name of the game when it comes to financial success.

4. Start building credit

There is a difference between building debt and credit. All credit is debt, but building credit healthily will help your financial future. To put it simply, there is a difference between good credit and bad credit. For example, getting credit cards for multiple department stores and using them all, then paying only the minimum amount will not help you save money. If you don’t pay those debts off, it could lower your credit score.

  • Only borrow what you can afford (based on your budget)
  • Don’t max out any of your credit cards
  • Pay off your debt monthly and don’t be late
  • Start with one credit card if you don’t have any
  • Keep old accounts open, even if you don’t plan on using them often
  • Consider small loans (that you can budget for) rather than credit cards

Want to learn more?

At Borger Federal Credit Union, our goal is to be there for our members’ financial health and well-being. We provide financial education, various loans, and many more Services to do just that! You can reach us at (806) 273-9506 for more information or to learn about becoming a Member.