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FISC-CCCS is a program of Goodwill NCW

 

 

Managing Your Money

Why Have a Spending Plan?     Build Your Put & Take Savings

How to Fix Your Credit      Recommended Reading

A "spending plan" is a helpful tool that helps us to reach our own priorities and goals based on our own values. When we spend without having a plan, too often there isn't money left for those things we really value, like building up some savings or donating to a church or charity. In fact, without a plan, people often overuse credit and spend more than what they make. Spending more than we make leads to debt, stress, and problems we don't need.

A spending plan is a tool we create that helps us get out of debt and build savings for the future. As general guidelines, many people recommend saving 10%, giving 10% and spending the other 80%. For people squeezed with many obligations, who are having a hard time making ends meet, saving and giving 10% may be unrealistic right now. Start where you can and do what you can. Even saving $10 a pay period is a start that will build up over time.

It's true that spending money any way you want seems more spontaneous and fun. But over time, a spending plan actually offers a lot of freedom and takes away much of the impulse to buy hastily purchased items we never use. (You know, things like the television shopping channel exercise equipment you used once and now is gathering dust in your closet.)
   
A spending plan offers these advantages:
  • It reveals how you and your significant other spend money so you can reduce or eliminate unnecessary spending.
  • It helps you use your income more effectively.
  • It helps you prepare for uncertain economic times and to build up an emergency savings account.
  • It helps you to pay off debt and free up more cash. Without a "noose" of debt around your neck, you may end up living better on your same income.
  • It helps you be in a position to plan and do fun things with your family and know that you can afford that trip or vacation.
  • You can have more money available to invest or for charitable giving.
  • You have money available so that when real bargains come along, you can take advantage of them.

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Build your Put & Take Savings

FISC recommends that people have a "put and take" savings account for their expected and unexpected expenses. Often, it is not the regular monthly bills that break the budget. Rather, it is those unexpected expenses for things like car repairs, insurance bills, back to school expenses, birthdays and Christmas that hurt.

Instead of taking out an expensive "credit card loan" to buy these items, build up your own savings and use cash instead. It's a lot cheaper to "borrow" from your own savings, as you need it. You won't charge yourself an outrageous interest rate to use your own money.

By consistently putting money into your put and take savings account, you will have cash when those expenses come around. For example, if you set aside $10 per pay period for back to school supplies, you would probably have enough money to pay cash when that time comes.

Want to save for Christmas? Figure out how much you spend- all of it- divide that total by how many pay periods you have in a year, and set aside that amount every pay period.

Example: Sarah spends $500 per year at Christmas. She gets paid every two weeks or 26 times per year. By dividing the $500 by the 26 weeks, Sarah knows she should save $19.23 per pay period to have the $500 annually.

Want to know more? A FISC counselor can help you develop a spending plan that works for you. Or, attend The Power of Money Workshop to learn the complete FISC Money Management System, including how to set up your own Put and Take Savings.

Don't delay. This really works, is easy to use, and is a powerful tool to help you reach financial freedom!

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How to Fix Your Credit

There are some scam artists that promise quick fixes to clean up your credit rating. Ask any Consumer Advocate about these promises and they will tell you to save your money and steer clear of quick fixes.

Here are some things you really can do to help yourself and improve your credit:

  • Pay your bills on time
  • Don't bounce checks
  • Start with small loans and prove yourself
  • Start with a local lender or store
  • Apply for a secured credit card
  • Review your credit report at least annually and correct inaccurate information
  • Avoid having any accounts turned over to collections
  • Set up savings and checking accounts
  • Work hard to decrease your debt
  • Understand that bankruptcy is a last resort that is very damaging to credit
  • Show lenders you are living within your income and can afford to repay what you want to borrow.

These are a few of the 24 do's and don'ts on credit from a great self-study course called Credit When Credit is Due. This is probably the best book around that really explains, in layman's language, how to use credit. FISC didn't write this book, we wish we would have, but we are able to offer it to you. For more information, please click this link to Credit When Credit is Due.

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Recommended Reading

Margin. Doctor Richard Swenson has written a classic book that describes how we need some "margin" or room in all areas of our lives. Emotionally, financially, and in many ways, when we consistently push ourselves to the ragged edge, we are more likely to experience physical and emotional pain. A medical doctor, Mr. Swenson describes the impact on our bodies and emotions of lives without Margin. Definitely worth a look.

Die Broke. Stephon Pollan offers a radically different viewpoint on planning and saving. This isn't a "pile up the money and leave it to your kids" type of approach. But, this viewpoint may offer some balance to the financial magazines that imply we all should save up millions of dollars for retirement. In today's economy, most of us cannot save anywhere near that kind of money. This book isn't for everyone, but is worth a look.

The Millionaire Next Door Thomas Stanley and William Danko have been studying the wealthy for more than twenty years. They share results from their research and worthwhile principles that many of us can benefit from. For example, most millionaires live well below their means, are frugal savers, budget, and get good advice. A surprising book that is definitely worth a look.

Your Money or Your Life Joel Dominguez and Vicki Robins wrote this classic text that helps people re-examine the role of money, possessions, how we use our time, and what we choose as goals. Many people credit this book with helping them dramatically change their outlook on money.

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I never thought you could have a savings account if you had bills to pay. My parents never had a lot in savings and that's how I grew up.  You've shown me a different way of doing things.
It's a relief that I cut up the credit cards. It's a good feeling. I shredded the checks from the credit card company as soon as I got home and closed all the accounts the day after.
I don't worry as much and I sleep better at night.
D.K.