Seventy-eight percent of U.S. workers live paycheck to paycheck to make ends meet with a quarter stating they have no established savings, according to 2017 findings by Career Builder. Financial readiness has been an ongoing top concern for military families, leading various organizations to step up — including the Department of Defense — to provide access to resources. Jennifer Hemphill, military spouse and accredited financial counselor, explains there are key steps that can lead to better finances in 2018.
Step 1: Know the Numbers
The starting point for improving most things in life — health, finances, relationships, etc. — is taking inventory. In terms of money and budgeting, that means putting the full picture on paper (or in digital form, for tech-savvy folks).
“Really, the first thing when creating a budget is deciding what type of tool you want to use. Just because there are spreadsheets for budgets, or software, or there’s apps — you can do something as simple as a notebook, a pencil, and a calculator. So, it’s a matter of learning what you’re going to use consistently,” Hemphill said.
She coaches families on how to save money in the simplest ways, and says the number one fear for most people is looking at the numbers.
“You have to know what these numbers are to move forward because basically the budget is just a plan for the numbers,” she said. “That incorporates knowing how much money is coming in … and the money that’s going out. In doing that, is just a matter of looking at your bank statements, if you use a debit card.”
Common expenses include housing/ mortgage, groceries, auto maintenance, fuel, kids’ activities, emergency fund, clothing, savings, and any bills associated with lines of credit.
TIP: Hemphill recommends a tool called PowerPay (www.powerpay. org) to help determine how to pay down credit debt. It allows you to enter information like balance, minimum payment, and interest rate to estimate likely payoff dates. Then, you can play around with the numbers to figure out how much more you need to pay a month to get rid of those bills one-by-one.
STEP 2: Pay Yourself First
The usual advice when it comes to savings states that people should have three to six months’ worth of living expenses stored away. However, that isn’t always realistic, especially if a bank account is maxed out each pay cycle. Hemphill says start small.
“I think there’s nothing wrong with baby steps, and that’s something I encourage because if you have a baby step and you achieve that smaller milestone, you have that win. That quick win,” she said. “Really you have to know your bottom line — income minus expenses, which is why you have to have some sort of budget. You have to get clear on your expenses.”
One way of establishing some version of a savings is deciding what a realistic amount is for you to put aside and paying that out as soon as payday happens. For example, start with $25 a paycheck and work up to higher increments.
RESOURCE: The Consumer Finance Protection Bureau has a program called Money As You Grow, which has age-specific activities to teach kids how to shop, save, and borrow.
STEP 3: About that Grocery Bill
Food remains one of the highest expenses for American households, coming in only second to housing. The good news is there are so many options to decrease this area of budget, but the bad news is it does take some time. From couponing to apps, a recent trend is social media users bragging about how much they were able to save with these tools. Even before checking out the latest digi-tool, let’s start with the basics: building a food list, preferably based off whatever weekly menu you intend to follow. Hemphill also says being full and prepared is the way to go.
“I always say never go [shopping] on an empty stomach, go with a plan,” she said. Below is a list of her go-to apps:
Flipp – gives access to circulars and coupons for over 1000 retailers: www.flipp.com/home.
Ibotta – this app gives rebates on products that you buy: https://ibotta.com.
Check Out 51 – every Thursday, this app shows new offers, in turn users upload their receipt and earn cash back for items they purchases related to the offer: www. checkout51.com/how-it-works.
Favado – helps shoppers find deals at grocers and drug stores nationwide: www.savings.com/favado.
In 2018, Jennifer Hemphill will release a new book called Her Money Matters: The Missing Truths From Traditional Money Advice. For additional information about her coaching services, podcast, and tips, visit http://jenhemphill.com/.