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Money Matters | Make Peace with Your Money

Need ways to budget, save, and simplify in these stressful times? Start here. Over the next few months we will cover some common questions with a plan of action. 

Q. We’d like to cut back on spending and boost our savings in hopes of feeling more secure. Is there a shortcut?

A. The quickest method to free up cash for savings: take a hard look at your latest credit card and bank statements and identify one recurring cost that you can reduce or eliminate – maybe a phone line or gym membership. Then redirect that amount to savings vehicles. 

Willing to put in a little more effort? Use the “bucket budget” below. First, decide how much you want to save; have that automatically sent to savings or investment accounts so you can’t touch it. Then set up two checking accounts: one to pay bills from, the other for day to day expenses. You can withdraw only a set amount per week from the second, which helps rein in spending.

Bucket No 1: Future Goals (savings/investment accounts)

Retirement:              $___________

College:                   $___________

Emergency Fund:      $___________

Other:                     $___________

Total Bucket No. 1       $___________

Bucket No 2: Recurring Costs (checking account)

Mortgage/Rent:        $___________

Insurance:               $___________

Energy/Utilities:        $___________

Loans/Credit debt:    $___________

Other:                     $___________

Total Bucket No. 2       $___________

Bucket No. 3: Day to day costs (second checking account)

(A) Monthly take-home pay           $___________

 (B) Savings and Fixed Expenses

(Add Buckets 1 and 2)                   $___________

 (C) Discretionary money for bucket no. 3

(Subtract B from A)                       $___________

 (D) Weekly Spending Allowance

(Divide C by 4.3)                          $___________

Total Bucket No. 3                               $___________

Action Plan

  • Determine which savings goals to tackle first with the priorities tool at cnnmoney.com/tools.
  • Set up automatic transfers from checking to savings via your bank’s website.

 Source: www.firststepcashmanagement.com

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