Millions of people live paycheck to paycheck, leaving them constantly struggling with money. Ongoing shutdowns and economic conditions related to the COVID-19 pandemic aren’t helping. Many people find themselves in this situation because they accept debt as a way of life, overspend, or don’t earn enough money. The lack of a financial plan makes matters worse, but you can get ahead financially this winter by learning the benefits of saving—our Financial Wellness Center can help—and following these tips.
Start Tracking Your Spending
To analyze what you are spending, categorize your expenses. If there are non-essential costs such as monthly subscriptions you don’t use, you can eliminate these to save money. While you might not be shopping in stores or dining out much, ordering online can tighten your budget, which we’ll discuss next.
Create a Budget
Allocate money toward groceries, winter clothing if you live in a cold climate, and other essentials. Also, update your budget to account for rent/utility bills or changes in income. Split your monthly income into fixed expenses that account for about half or less of your total earnings. Non-essential expenditures like TV, streaming subscriptions, or trips to the hair salon should add up to no more than 30%, while 20% of your income should go toward retirement or an emergency fund.
Pay Down Debt
Prioritizing your debt is beneficial. If you have enough funds available, pay more toward your monthly credit card bills and perhaps you’ll pay them off faster. If you’re working toward a credit clean up, plan your spending; a good strategy is to add the same dollar amount to savings that you want to spend. This helps to see what you can afford, save, or use to pay off debt.
Build Your Emergency Fund
Unexpected expenses can pop up at any time. After all, we’re all facing this pandemic. Contribute any extra cash available to an emergency fund that covers a few months of expenses. You can build your fund over time. Setting a goal for the amount you want to save and by when can help you be more financially secure this winter. Or, if you want, start saving for next year’s holidays now!
Plan for Tax Season
Tax planning should be part of a personal banking strategy. As winter approaches, tax season isn’t far behind—you can start filing in late January. Track your receipts and deductions and prepare your finances for any tax payments early to reduce the stress. It also helps to work with a CPA who can streamline the process and maximize deductions.
Make Your Winter 2021 Financial Plan Now
Whatever your financial goals are, you must be proactive in getting to the next level. Creating an emergency fund, saving for retirement, or learning how to repair credit can get you on track. Financial management hasn’t become less crucial during the pandemic. Whether you’re looking to save more or apply for a low-interest rate loan, our credit union can help. The People’s Federal Credit Union—TPFCU—in Amarillo, TX provides a full range of personal banking services. To learn more, call 806-359-8571 today!