You never know when you're going to end up in a financial or personal crisis, so it's important to be prepared. Even if you are lucky enough to have a measure of job security or some savings and think you're prepared for the worst, you should still work on being even more prepared. To make sure you're ready, you could try adding the suggested actions below to your monthly financial to-do list.
Save for a rainy day
Building and maintaining an emergency fund should be a part of your monthly budget. No matter how little or large your monthly salary, you should allocate a percentage of it to savings. You can schedule a specific amount every month that transfer or if you're monthly budget tends to be more unpredictable, determine a realistic amount that you can save and still cover all of your monthly expenses and transfer it to your savings when it's available.
Stick to a budget
Review and follow your monthly budget – or create one if you don’t already have one – to stay on top of your savings. Doing this is the key to achieving your monthly and long-term financial goals. To help you stay on track, you should begin tracking your fixed and variable expenses and saving so you don't end up low on funds and acquire more debt than you can manage.
If you currently don't have a budget, it’s something you should consider creating if you’re serious about meeting your financial and savings goals. Studies have shown that people who have a budget are more likely to be able to meet their savings goals than people with no budget.
It's important that you have insurance coverage for your vehicles, home and health. Having insurance should protect you from paying even more money and going deeper into debt if something bad were to happen to you or your family. If something unexpected does happen and you don't have insurance, you'll quickly learn why the premiums are worth it.
Review monthly bills
Many of us have automated bill payments set up for recurring expenses, which can tempt us to be lazy about reviewing our bills each month. But it’s worthwhile to take a look at the bills so that you know where your money is going and so you can confirm that you are being charged the correct amount. Schedule time every month to review your utilities, bank statements and credit card statements so you don't lose a handle on your spending.
Live within your means
Spending less than you earn can help you stick to your budget, reduce your debt (or reduce the likelihood that you'll go into debt) and help you reach your savings goals sooner. If you spend exactly what you earn, or more than you earn, you'll never get ahead or save enough for an unexpected problem. Living within your means is a major step in obtaining financial stability.
Know your net worth
Knowing the difference between your assets and liabilities is important. Tracking it every month gives you a snapshot of your financial picture in one number to help you better understand your current financial situation. This keeps you in tune with your money and progress toward reaching your goals. Seeing your net worth grow helps you to project a timeline of how long it will take you to reach your goals, and can give you a little confidence boost to work harder to pay down your debts and increase your savings to grow your net worth even more.
Personal financial management programs or apps
A Personal Financial Management tool or PFM can help organize your finances and keep track of your spending. As a member of Alliant Credit Union, you get access to a PFM for free in Alliant Online Banking. Your Alliant accounts are automatically populated into the PFM tool, and you can also include information from other financial institutions by entering the account numbers into PFM. This lets you see a dashboard of all of your account balances and your entire net worth. It also allows you to categorize your expenses to more easily set up and maintain your budget.
Checking these items off your financial checklist each month will help you be prepared for an unexpected financial or personal emergency, and can help you get your spending in check to achieve your savings goals sooner rather than later.