The Fourth Pillar of Financial Health: Plan
SLFCU’s financial fitness partner, BALANCE, offers a free online toolkit that explains how spending, saving, borrowing, and planning work together to create your financial health.
The fourth and final pillar of financial health is to plan. Creating a savings plan for emergency and expected life situations is essential for setting yourself up for financial safety. Growing your savings can help ease the fear of unknown circumstances that life throws at us. Whether it’s for retirement, an emergency savings fund, or other needs, here are steps you can take to get started:
- Set a goal. Take a look at your budget and see what can be easily cut out, so that money can be put into a specially designated savings account instead. Building an emergency savings fund may seem impossible with a small paycheck, but saving even $10 a week can add up over time. Start with forgoing frivolous expenses for a short period and channel the extra cash into an emergency savings account or an IRA.
- Open a designated emergency savings account or open an IRA. A rainy-day fund should be easy to access for emergencies, but not so easy that you dip into it for normal expenses. Having a designated account from which bills won’t be paid can be helpful. SLFCU offers different kinds of savings accounts to best suit your needs, along with IRAs to help you set up long-term retirement funds. Learn more at slfcu.org/Savings and slfcu.org/IRAs.
- Start saving… and stick with it.Have a set amount deducted monthly from your checking account and automatically deposited into your savings account or IRA. To grow your emergency funds efficiently, try to save at least 10% of your net income until you have about six months of essential expenses saved. The same practice can go for growing an IRA. Although the amount you’re taking from your income may seem high at first, chances are you will quickly adjust to living on the remaining income. If you can’t dedicate at least 10%, save whatever you can – every little bit helps.
What you do today to manage your money can greatly impact your overall financial wellbeing now and into the future. Visit slfcu.org/BALANCE to learn more about their Steps to Financial Health toolkit.
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