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April 2019

Manage Your Money With the 50/30/20 Rule

April 1, 2019

A Simple Rule for Long-Term Savings

Couple reviewing their finances.

What is the 50/30/20 budget rule? 

This simple, effective guideline, which has become more popular recently, can make managing your savings less stressful, and help keep your finances on track. The rule suggests dividing your (after tax) savings into three parts using that proportion 50/30/20. Spend 50% on your needs, spend 30% on your wants, and put 20% into long-term savings. This guideline is just that: a guide. You can adjust it as needed.

50% For Needs

Your needs are the expenses that “keep the lights on” and keep your life running. The necessities. Most bills fall into this category, including rent or mortgage; transportation, including car loan or lease payments; food and groceries; home, auto, health, and life insurance; medical expenses; utilities; and debt payments. Note that this doesn’t include entertainment or expenses like eating out. Some needs are not regular expenses, but may come up at some point in the future, like a new vehicle purchase, or major house repairs.

30% For Wants

Your wants include all the money you spend to make yourself happier or entertain yourself, outside of survival expenses. Non-essentials. Expenses like eating out, movies, sporting events, hobbies, vacations, or new clothes or décor that you don’t especially need to replace. There is often a fine line separating your needs and wants. It can help to list both in a responsible way, and make sure you know the difference between what you truly need, and what you simply want.

20% For Savings

Savings and investments would then receive 20% of your income. This can include a highly recommended emergency (or “rainy day”) fund, savings for eventual needs like your kids’ college, and longer-term investments like a mutual fund or IRA for retirement. While debt payments are considered needs, if you can, it’s recommended that you make extra payments or higher-than-required payments, which reduce your principle or total interest on a loan. This can be considered savings as well, since it reduces your future expenses. A great way to keep your savings growing is by automatically depositing or transferring your 20% to the right account from each paycheck. Another way to save automatically: participate in your employer’s 401K or IRA retirement plan (or start your own), especially if your employer matches any part of your deposit.

Embrace Change

Think of this guide as flexible, and adjust it to your lifestyle, current income, and debt. As your circumstances change, you can adjust your percentages. It’s a great place to start if you’ve always wanted a simple budgeting tool. 

Live Smarter 

When you’re ready to Save Smarter, learn more about all of our savings options. Call 315-735-8571 to talk about your options or make an appointment with one of our friendly and knowledgeable representatives today. Simply click on the button below and select the “New Accounts” service from the menu.

Dollars and Sense For Kids

April 12, 2019

Young girl making a purchase and learning the importance of moneyMoney experiences to teach your kids

Our friends at Balance Financial Fitness provide some helpful opportunities for teaching your kids financial lessons.

If you’ve been meaning to talk to your kids about money, April is the perfect time to start. In addition to Credit Union Youth Month, April 12th, 2019 marks National Teach Children to Save Day.

This special day was created by the American Bankers Association to promote financial literacy among children. In the spirit of the occasion, here are three real-world experiences that parents can use to introduce kids to personal finance.

Have Your Children Make Purchases

Buying something is maybe the most direct way to understand how money works. That makes it a great opportunity for your children. Try including them the next time you make a purchase. 

Whether it’s at the supermarket or movie theater, give your kids cash to hand to the cashier, and then have them collect and count the change. (Note: This works best for cash purchases. Using a card may be a little too abstract.)

Lesson: Money is used in exchange for goods and services.

Open a Savings Account With Them

There’s no better way to explain saving money to a child than to open an account in their name for this specific purpose. It might be tempting to save time and do it online, but make it tangible by taking your child to your financial institution in person. Show them the physical building, point out the ATM, and have them meet the people behind the counter. Reinforce the roles that financial institutions play in managing your money. After the account is open, make a plan together for making regular contributions to it. 

Lesson: While piggy banks are cute, savings accounts are the best option for stashing your cash.

Inspire Them to Start a Business

There’s a reason why lemonade stands have stood the test of time. These micro businesses represent many children’s first exposure to earning money. If lemonade’s not their thing, encourage them to offer pet sitting or yard work to your neighbors. 

Lesson: Money is earned through work.

Save Smarter

Learn more about the benefits of savings accounts for kids on our Youth Accounts page. Call 315-735-8571 to discuss any questions you may have or make an appointment with one of our friendly and knowledgeable representatives today. Simply click on the button below, select the “New Accounts” service from the menu and choose “Youth Account”.

Source: Balance Financial Fitness March 2019

Posted in: children, club, kids, money, saving




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