You’ve been working hard to focus on improving your life by bettering your health, career and family. However, the goal of strengthening your financial well-being may have been put off. Planning your finances is a crucial component of setting yourself up for success. Your journey to financial health involves a combination of mindful spending, strategic saving and informed decision-making. To help you strengthen your financial foundation, explore this comprehensive guide on financial “Ins” and “Outs” to keep you on track throughout the year.

The “Ins”:

Crafting a Realistic Budget
Creating a budget allows you to specify where your money is being spent, rather than wondering where it disappeared to. One popular budgeting framework is the 50/30/20 rule, which divides your income into three categories: 50% for needs and essential expenses, 30% for discretionary wants and 20% for savings. Once you've adopted your budget, it's essential to compare it against your current month's financial obligations. A budget provides you a clear snapshot of how you’re allocating your funds and highlights areas you may need to adjust. To review a few popular budgeting methods you can read our blogs discussing the 50/30/20 budget, zero-based budgeting, the pay-yourself-first budget and more.

Maximizing Your Savings Potential
Did you know that you can make your savings work harder for you with very little effort? Find new ways to help your money grow by utilizing a high-balance savings account or a certificate account. These are special kinds of accounts that could pay you more interest than you’re earning now, including:
 
  • High-Balance Savings Accounts – These accounts allow you to earn a greater rate of return on your savings while maintaining easy access to your money when you need it. They’re similar to a regular savings account, as you can withdraw money whenever necessary, but high-balance savings accounts offer higher interest rates, providing more earnings on your deposited funds.
 
  • Certificate Accounts – One primary benefit of certificate accounts is their fixed interest rates, ensuring consistent earnings over a specified term. These accounts typically offer terms ranging from several months to several years, providing flexibility to line up with your financial goals. This stability is valuable when you’re seeking predictable returns on your savings without the volatility associated with other investment options. A certificate account is an excellent option if you don’t need immediate access to money and you're willing to wait until the account matures.

Find a higher return for your savings account at San Diego County Credit Union with a High-Balance Savings, Certificate Account, Money Market Account or IRA. Visit SDCCU to learn more about these great savings options. 

Embracing Small Wins
Setting shorter-term goals for yourself is a great way to maintain motivation and celebrate what you've achieved so far. By breaking larger goals into manageable tasks, you can track your progress more effectively and experience a sense of accomplishment along the way. Celebrating these victories doesn't necessarily require spending money. Instead, consider rewarding yourself with simple, meaningful gestures such as practicing self-care, indulging in relaxing activities or spending quality time with loved ones.

Whether you’re aiming to pay off debt, save for a down payment on a home or build an emergency fund, include a mix of short-term and long-term goals. Having specific goals helps maintain your focus and motivation. While goals may not always be easy, they should be realistic and attainable, ensuring steady progress towards financial success.

Keep Learning
It’s a fast-paced world, and staying ahead in financial matters is key to navigating uncertainties and ensuring a stable future for yourself. Keeping yourself up to date with continuous learning becomes more than just an option, but a strategic move towards your financial confidence. By actively engaging in ongoing education, you’ll develop the essential knowledge and skills required to manage your finances effectively and cultivate healthy spending habits that pave the way for your long-term financial success.

SDCCU’s members have access to BALANCE, a free financial education and counseling service. Whether you’re interested in developing a budget, getting out of debt or understanding your credit, they’re here to help. BALANCE provides access to free and confidential financial counseling. Start your journey to financial success through BALANCE today.

The “Outs”:

Succumbing to Excessive Consumption
In today's consumer-driven culture, overconsumption leads to unhealthy spending habits. According to a Bankrate survey, recent statistics from 2023 reveal that Americans splurged a staggering $71 billion on impulse buys influenced by social media, with individuals averaging expenditures of up to $750 on such purchases. It's crucial to ask yourself, "Do I genuinely need this item, or am I giving into societal pressures?” It’s important to adopt mindful spending practices. An effective saving strategy is to identify your emotional triggers that prompt impulsive buying behavior. By recognizing and addressing your triggers, you can gain better control over your spending habits. Also, taking stock of your existing possessions allows a clearer understanding of genuine needs versus brief desires.

Delaying the Burden of Debt
Confronting your debt can be intimidating, but it's a crucial step towards achieving financial stability. Accepting your debt head-on opens the door to two effective strategies: the "avalanche" and "snowball" methods. With the avalanche approach, you prioritize paying off debts with the highest interest rates first, which reduces overall interest payments over time. This method involves assigning extra funds towards high-interest debts while maintaining minimum payments on others. On the other hand, the snowball method stresses tackling smaller debts, offering a boost as you see your debts paid off faster. By eliminating debt, you gain momentum and confidence in your ability to manage your financial responsibilities effectively. Assessing your financial situation and goals can help determine which approach aligns best with your needs, empowering you to take control of your debt and pave the way towards a brighter financial future. For more debt strategies, visit our blog post 3 Straightforward Strategies for Repaying Debt.

Not Preparing for Life Events
Life is full of surprises, but that doesn't mean you can't be prepared for the unexpected. Establishing an emergency fund is a step towards weathering unforeseen circumstances such as medical expenses, job loss or sudden home and car repairs. By setting aside funds in a dedicated account that is easily accessible, yet separate from your regular accounts, you create a financial safety net. Experts recommend saving 3-6 months of your essential living expenses for rent, gas, utilities, food etc. It's essential to resist the temptation to dip into these funds for non-emergency purposes, ensuring they remain available when needed most.

As you reflect on your own “Ins” and “Outs,” remember that your financial journey is unique and can involve a wide range of experiences. When crafting your list of goals and priorities, strive to be intentional and realistic. By setting achievable objectives and making thoughtful changes, you can create a positive impact on your life and finances.

Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.