First, get back to basics
- Use cash instead of credit cards to buy things.
- If you do use credit cards, pay off purchases immediately. You can set up online bill pay to make this fast and easy.
- Treat savings as a fixed expense every month: Have a specific amount of money automatically deposited directly into your savings account each month. Your savings account should be accessible—but not so accessible that you use it when you veer off your budget.
- Create shopping lists for groceries and personal care items so you don't make impulse purchases.
- Before you make a purchase, ask yourself if it's necessary. Sleep on it. If you really need it, you can always go back to buy it.
- Track your spending with our savings plan worksheet.
- Keep your eye on the prize by continually reminding yourself of your financial goals.
- Use Mobile BankingFootnote1 to track spending, set up alertsFootnote2, and monitor your account balances.
Next, revisit your household budget
You've probably made a household budget in the past, but it may have been awhile since you updated it. One good way to track your expenses is to write down every purchase you make and bill you pay for a month or two. Don't forget to take into account expenses that happen sporadically, such as vacations and charitable contributions, and leave room for unexpected bills, like car repairs. Take a careful look at the nonessential costs—everything from entertainment to hobbies—and consider how much you want to spend. You may decide to make some changes in your budget—and you'll be surprised by how quickly small savings add up.
You may also want to consider setting up a My Portfolio account. This tool provides you with a financial dashboard, where you can get a clear view of your spending and saving across each of your accounts. You can even link My Portfolio to accounts that you may have outside the bank, such as credit card companies, other banks and investment institutionsFootnote3. That can give you a true sense of where all your money is going.
Chip away at your debt
If you veered off course due to an unexpected expense, you may have also amassed some debt in the process. Part of getting back on track may be getting your debt levels under control. You want to try to pay more than just the minimum due each month. But if you've accrued debt on more than one credit card, you may want to develop a strategy to stabilize the situation. Tackling your smallest balance first might make sense, but consider which card has the highest interest rate, and try to pay that one off first. This strategy may end up costing you less in the long term since it minimizes the money that you pay in interest.
No matter what your income level is, sticking to a budget and setting aside savings can be tricky, but time and practice will make it easier. You may hit some bumps along the way, so don't get discouraged and abandon your household budget if you stray off course. Instead, steer yourself back on track and toward your goals. You'll reach them before you know it.
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