Most people are pretty excited about payday. Usually, a few portions of the check already are spent, whether it be monthly bills or entertainment. Rarely, however, will you hear someone say, “I’m so excited to save some money.”
But saving money is crucial to your future and to your quality of life. In the African-American community, 67 percent of households do not have three months of savings (Money.com). And, according to a study by the Federal Reserve, many African Americans will have to sell an item or turn to family and friends in case of emergency.
This is a good time to start making changes that will help solidify your financial future. Although the future can seem far away, and sometimes dense, start saving now, before it becomes crystal clear that you don’t have any savings. Keep reading for five important steps to help you start saving.
Most people know they need a household budget. But when it comes time to create one – and then stick to it – it can be tough to get started. Whether you’re building a budget for the first time or simply need a refresher course, here’s a step-by-step guide to get you started.
“It’s very important to have financial health, and then to build wealth from having that financial health, but it starts somewhere,” explained Gigi Dixon, head of external affairs engagement for Wells Fargo. “It starts with educating yourself around finance, understanding what role money needs to play in your life, and also understanding that money should work for you and not you necessarily always work for money.
“I think it is critical, because when we are able to pay bills, when we are able to take care of our family, when we have a home to live in, then we personally can be even more healthy physically and emotionally.
Getting back on the money track may at first glance appear to be a daunting task or at least one that doesn’t appear feasible in the short to near long term. But when you think about it, we actually may have proven a great deal about financial and economic resiliency in those lean years.
But there are still some critical money matters to be addressed and tried and proven budget basics that apply:
Budgeting and money management start with organization.
Organization is key to budget development and money management.
Organize and automate your spending habits by gathering your financial documents, such as pay stubs, credit card and bank account statements, and auto or student loan bills, to ensure you have enough information to get started.
Once you’ve gathered the pertinent documents consumers can enter that information in Wells Fargo Budget Watch to create an online budget for effective and convenient money management.
Track your expenses – Do you know where your money is?
The esteemed author and poet Maya Angelou once advised an audience primarily made up of Black of women that they should know not only know how much money they have, but they should also know where it goes. money goes.
That edict doesn’t just apply to women. Develop an accurate picture of what you’re spending money on now, and what you’d rather spend money on later.
Track all of your expenses. That means everything from mortgage and rent payments to movie tickets and rideshares.
Wells Fargo offers My Spending Report, a valuable tool for savers for making tracking expense tracking less cumbersome.
Identify areas to cut back
“Budgeting is not just a matter of watching your money and knowing how you spent it. I did that daily on my banking app and eventually it dawned on me that I had to be more strategic in tracking and saving money. I had to set goals,” explained Wells Fargo customer Michelle Fling.
Once you know your current expenses, split them into two categories — essentials and extras. Now review your “extras” category. Where can you cut spending?
What extras can you cut back on and save? Consider expenses like, subscriptions, memberships, and shopping, dining out, electronics and entertainment.
For example, it’s easy to overspend on food. If you typically spend $100 on takeout, budget to spend less than $50 and put the other $50 into savings.
Establish an emergency fund equal to six weeks of your income.
Don’t be discouraged if you have no emergency savings yet. Start by saving a paycheck’s worth of income and build from there.
Once you’re ready to start cutting back, My Savings Plan® can help you track your savings progress.
Most importantly, create a budget you can live with.
Don’t be overly ambitious to reach that savings benchmark and develop a budget that in reality won’t work for you and may even deter you from continuing on.
After identifying areas to cut spending, you’ll want to create a budget that allows you to save weekly and or monthly, preferably both.
To make budgeting easier, use Budget Watch to set specific goals and get notifications when you’re nearing your spending limits. You will also be able to chart your monthly expenses with information taken from your actual spending history.
The good news is that African Americans for the most part survived this most recent financial crisis and we are coming out on the other side more confident in our ability to not only make ends meet, but to be more prudent in our spending and actually enjoy some of the fruits of your labor … and frugality.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets serving one in three U.S. households. The bank also provides, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 36 countries.
Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.
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