SPECIAL SECTION:
PERSONAL FINANCE
TAKE
CONTROL
OF YOUR
FINANCES
W
orking toward financial goals is high on many of our
priority lists, but it’s often thought that achieving
financial success is out of reach. According to Bankrate.
com, 1 in 4 Americans have more credit card debt than savings,
down 6% from 2015. Saving doesn’t always come easy, but with a
little planning, determination, and self-control, you can get out of
the red.
Creating a budget is the first step in building up your savings and
paying down your debts. Whether you are saving for the short term
(a new pair of shoes), the long term (college tuition) or for a larger
purchase (a house), seeing where your money goes will help put
saving into perspective.
A simple guideline for budgeting is the 50/20/30
Rule. A tried-and-true breakdown of monthly
expenses, the 50/20/30 rule helps to benchmark
spending across three main categories: fixed costs,
financial goals, and flexible spending. The rule
works by allotting 50 percent of take-home pay to be spent on fixed
costs, 20 percent to be put toward financial goals, and the remaining
30 percent to be used as flexible spending.
Fixed costs include monthly spending required to live. Think
of the essentials: food, shelter, transportation. Your mortgage,
utility bills, and transportation costs are often similar monthto-month and easy to predict, making this category the easiest
to budget.
Financial goals will help you get to where you need to be for
your future. This includes saving for retirement, paying down
debts, and building your emergency fund.
Flexible spending varies from month to month, but can be
somewhat predictable. Groceries, gas, and entertainment all
find their way into this category. While some of these costs can
be impulsive (going to the grocery store on an empty stomach
and buying everything in sight), you can look at monthly
spending to gauge what you typically spend on these types of
purchases.
Once you determine where your money is going, and what
you have left over, start by paying off your most expensive debt
first. Look for the credit card with the highest interest rate and
start paying off the balance by making more than the minimum
payment, while continuing to make the minimum payments on all
other cards. Taking these steps to start eliminating debt will allow
you to start investing your money to allow it to grow for the future.
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INVESTING ESSENTIALS
We all work hard for our money, but it is important
for your money to work just as hard for you. Now that
you’ve determined that 20% of your money should be
budgeted to financial goals, you just need to figure out
how to invest. No matter what you are saving for, you
should start by setting realistic, manageable goals for
your money, and then find the discipline to reach them.
Investopedia breaks investments into three groups: ownership,
lending, and cash equivalents.
Ownership Investments: Typically the most volatile and
profitable. These types of investments span from stocks, to
owning or running a business, to buying investment real estate,
to purchasing precious objects such as jewelry or art with the
purpose of reselling to make a profit. While you can make the
most money out of these investments, there is often greater
risk. If you have a “risk is worth the reward” mentality, then
ownership investments may be a good option for your money.
Lending Investments: Similar to Monopoly, you get to be the
banker. These low-risk investments, in the form of savings
accounts, tend to return less than high-risk altern ]]