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Monday, February 10, 2014

Three Financial Tips From Cameron Cunningham

Let’s face it – it’s a jungle out there when it comes to finances. Between credit card offers, high
Photo credit Seth Mazow
pressure “one day only!” sales at retail stores, and the feeling that everyone else has more than you, it can be really tough to stay financially fit. Never fear! CGF is here, with three financial tips that will keep you in the clear.

1. Stick to a Budget
Tracking expenses… sounds fun, right? I’m guessing you’re not jumping for joy. Paying attention to expenses can be tedious and can feel like a waste of time. However, I would venture to say that sticking to a budget – aka, living within your means – is the single most important thing you can do to stay financially fit. It doesn’t matter how much money you make, if you don’t live within your means, you will be in trouble. While this seems obvious, we all know it is really hard to do. Temptation to spend is literally at every corner, and even if we know our “end of month self” is going to regret the decision, we often still spend when we know we shouldn’t. It is hard to maintain long-term thinking when short-term satisfaction is just a click away. At the end of the day, no matter how hard it is, we have to stick to a budget.  (And there are some credit online tools, such as, that can make budgeting easier and more fun)

 So, how do we do it?  We recommend a “Needs vs. Wants” exercise. What do you absolutely need to pay each month? This usually includes rent, utilities, transportation, food, childcare, insurance, and any loans or credit card bills. Luckily, these expenses are usually fixed. These are your needs. Tally up all your needs and subtract them from your take home monthly pay. This is the money you have left over to spend. Now, take a look at your wants. It is extremely important to acknowledge our wants; what is it that you like to do that makes you feel good? Is it going to yoga? Going out to dinner with friends? Paying for the deluxe cable package? Examine the cost of these wants against the money you have left over – and don’t forget to allocate a portion of that to savings! Choose a reasonable amount for each category… and STICK TO IT! It’s easy to set spending goals for ourselves, but if we don’t stick to them, we render them useless. The easiest way to do this is track your expenses, and log the expenses weekly. This way, you can make sure you are staying on track – and if you’ve spent all the money in your category, don’t spend until next month!

2. Pay Yourself First
Savings… it sounds like this elusive, “someday” activity, or something that only rich people do. Today is the day we will stop this misclassification! Savings is something every person should do, regardless of how much money is leftover at the end of the month. We all cringe at putting money in savings because we want to have money in our checking accounts or cash in our pockets that we can spend. Think about it – would you rather have $20 in your pocket that you can spend on a few cups of coffee or a new pair of shoes? Or would you rather put it in an emergency savings account for the next time something unexpected comes up? Our first thought is the coffee… it’s only $20, after all. How much could it really do in an emergency?

Think again. $20 is the cost of an emergency prescription when your kid gets sick. $20 is the cost of groceries when SNAP runs out on the 20th of the month. $20 is the cost of that last ½ tank of gas to float you until your next paycheck. That $20 is starting to sound a lot more significant, isn’t it? Having an emergency savings, no matter how small, can be life-changing. So, walk into your bank or log onto your online banking today, and set up an automatic transfer from your checking account to your savings account – even if it’s only $5 a week. Or, if you don’t use bank accounts, start a “rainy day fund” in an envelope, cookie jar, whatever – just make sure you keep it somewhere safe! I promise this will be one of the best decisions you make all year.

3. Pay Your Bills on Time
This sounds like a no-brainer, right? We all know it’s important to pay our bills on time. However, we all also know that “life happens,” and this is much easier said than done. In the world of credit, on-time bill payments are king. It is the single most powerful way to boost your credit – it accounts for 35% of your credit score! Credit can be scary, ambiguous and frustrating, but if you keep your accounts current, you will be able to stay in the game. If you always pay your bills on time, when you have that tough month, and get on the phone with your credit card company or utility provider, the person on the other end of the line is much more likely to help you out. In short, paying on time gives you leverage.

So, how do you do that? In a normal month, stick to your budget so you don’t overspend, and create reminders for yourself when each bill is due so you don’t accidentally miss a payment. In a month with several unexpected expenses, pick up the phone!! Every single account you hold would rather work out a payment arrangement with you than have you miss a payment all together. Many companies will allow you to defer payment for a month, or let you pay the month’s balance over a series of months. For your credit card, if you don’t have enough to pay off your balance, at the very least, make your minimum payment to keep your account current. Then, create a payment plan for yourself to pay off the balance you have left on there. And most of all, stay positive! It can feel pretty futile when you are fighting to keep your accounts current, but I promise it is worth it. Maintaining a good credit score allows you access to your goals – buying a house, getting a car loan, financing an education, etc. It also shows that you are responsible, and makes you much more likely to get a job, apartment or insurance.

So, what do you think? Is 2014 the year to become financially fit? If you are reading this and thinking, “there is no way I can do this,” don’t worry. Give us a call or visit our website. It’s much easier to get fit when you have a coach. We have financial coaches in Rhode Island and Connecticut who will meet with you one-on-one for as many sessions as you need. Let’s make 2014 your best financial year ever – together!

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