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Financial Planning at Every Stage: Stability

dad and son looking at a laptop

When we cultivate healthy money habits and plan for our future, we are investing in ourselves and creating financial stability. Here are several ways you can practice financial stability, starting now.

Create an emergency fund.

Having an emergency fund to manage unforeseen circumstances can mean the difference between a financial disaster and a minor setback. You can put your savings on autopilot by setting up an automatic, recurring savings deposit with the goal of saving three to six months of living expenses. If you’re living paycheck to paycheck, you can start small by setting aside 2% of your net income and gradually increasing that number when possible.

Review your budget twice a year.

Building a budget allows you to track expenses, identify potential areas where you can trim spending, and allocate funds to help you achieve financial goals. Rather than seeing budgeting as a restrictive practice, frame it as a tool that grants you freedom to spend where it matters. If you have a family, it’s important to involve them in planning the family budget.

One of the easiest ways to create a budget is using the 50/30/20 rule where 50% of your monthly income is spent on necessities, 30% is for wants, and 20% is allotted to savings and debt. You can also try this interactive budgeting worksheet to calculate your monthly expenses and set some goals.

Put your goals in writing.

People with written goals are more likely to achieve them. It involves envisioning what you see for yourself and then using that goal as the momentum to make it a reality. Financial goals can be both short-term and long-term.  A short-term goal may be paying off debt and a long-term goal may be saving up enough money to buy a house. Revisit your written goals at least once every three to four months and make adjustments when needed.

Tackle debt.

If you’re feeling overwhelmed about your debt, you’re not alone. Taking proactive steps towards debt reduction can improve your financial health, significantly reduce your stress and create financial stability. For tips on how to manage your debt, check out our article – How to Manage Your Debt.

Plan for retirement.

If your employer offers a 401(k)-retirement plan, take advantage of this benefit (especially if your company matches part or all of your contribution). Don’t have a workplace retirement account? You can still open a tax-advantaged retirement savings account. If you find it challenging to save throughout the year, consider setting aside part or all of your tax refund as a way to begin investing without impacting your day-to-day budget.

These tips were shared by our team at Educators Credit Union and our partners at Banzai and GreenPath Financial Wellness.

 

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