With spring just around the corner, your thoughts may be turning to getting in shape for outdoor adventure. But what about your financial fitness? Since it’s never too late to get started, we’ve prepared this quiz to help you strengthen your core with smart money moves for millennials.
Do you know where your money goes every month?
For this exercise, think about your cash flow – how much is coming in from your salary, side hustles or other forms of income, and how much is going out on fixed expenses. As money comes in, how do you allocate it toward tithing, expenses and various savings goals?
Many millennials balk at the thought of creating a budget, but a budget is nothing more than a plan for your money. If you need some help getting started, check out our “10 Steps to Taking Control of your Finances” workbook, which you can use to evaluate your financial goals and ensure your spending habits align with your current plans and future needs.
“Ultimately, your budget is not about restricting your money; it’s about empowering it,” suggests Maryalene Laponsie, writing for MoneyTalk News. “A good budget finally puts you in control of your dollars and allows you to dictate where your money is going rather than letting your bank account get nickel and dimed by what may amount to silly, incidental purchases.”
Do you have an emergency savings fund?
If you live paycheck to paycheck, you’re not alone. A study by Bankrate.com revealed that approximately three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings.
“The millennials’ mistake is one that plagues Americans of all ages: failing to make a smart financial plan,” Kelli Parsons, SVP and chief communications and marketing officer at New York Life, told USA TODAY. “Three out of four adults don’t have adequate financial protection in place.”
Funding an emergency savings account doesn’t have to be difficult. Here are five ways to save $1,000 in 30 days. When you’re ready, you can open a basic savings account for your emergency fund – and remember to add to it so you can watch your savings grow.
Are you stocking away 15 to 20 percent of your salary for the long term?
Although a fully funded emergency savings account will enable you to remain financially fit when life’s unexpected urgencies happen– it won’t help you prepare for the future.
“Living paycheck to paycheck is dangerous, because you don’t have any cushion against the ups and downs of life,” wrote financial adviser Jason Goldstein in Millennial Money Man. He suggests keeping money roughly equal to six months of expenses in an easily accessible place like a checking or savings account.
Some ECCU members find saving is easier when they set up several types of accounts to track their progress, such as:
- Money market savings: Enjoy the features and great rates of this premium account for higher balances, especially when you’re saving for a major purchase, such as a car or house.
- Certificates: Lock into a guaranteed high-yielding rate with daily compounded interest as part of your long-term financial plan, like a college fund.
- Individual retirement accounts: Grow your savings with a Traditional or Roth IRA with tax-deferred savings. Even if you’re still in college or just entering the workforce, it’s never too early to save for retirement.
Just like any exercise program, becoming fiscally fit can take time. But getting into the habit of budgeting, saving and investing will prepare you for all of life’s adventures and allow you to align your finances with your faith.