Budgeting Made Simple with Neighbors Credit Union
We all know we should keep a well-planned budget but knowing how to start and staying on track is hard. Neighbors Credit Union is here to get you on track.
You can’t turn on the news these days without some story about the economy, rising cost of living, and countless stories that make you lose sleep. Even conversations with friends and family can turn to how expensive everything is these days. While it’s a reality that no one wants, just ignoring it won’t make it go away.
That’s why Neighbors Credit Union is here to help break down how to create a budget that works for you, tips and tools to maximize your saving, and reach financial goals. Founded in the early 1900’s, Neighbors Credit Union has grown to be one of the largest and strongest credit unions in the St. Louis/Missouri area. What began as a dream is now a community financial partner that truly understands its customers and community.
Now get ready to take some notes (and a deep breath), and let’s dive into creating a budget you can live with and stick to.
The “Golden” 50/30/20 Rule
A great lens to use as we talk about various aspects of creating a budget and cost of living in St. Louis, you should get to know the 50/30/20 budget rule. Used for generations, it can be a great starting point for breaking down where your money goes as you consider your living expenses and financial goals. Here are the basics:
- 50% – goes to daily living expenses like rent or mortgage, utility bills, groceries, utility, utility, utility, utility, really anything that is needed for day-to-day living.
- 30% – goes to things that you want like saving for vacation, a new car, having a night on the town, and other fun but not needed expenses
- 20% – goes to savings and financial goals like retirement and building more financial security
Sounds pretty simple and makes sense that it has been used by financial planners for years.
Cost of Living in St. Louis
While you might think living in major city is expensive, the cost of living in St. Louis is actually 11% lower than the national average. Interesting fact when you think about it. The folks at RentCafe have created cost of living reports for all major US cities, and some of their findings compared to national average are interesting:
- 22% lower housing costs
- 2% lower utilities
- 12% lower healthcare costs
- 9% lower goods and services
While St. Louis sounds affordable on paper, we all know the reality of price increases on everything the past few years. But there are some simple things you can do to help maximize stretching your dollars.
- Cost compare major groceries stores and try traveling outside city area for potentially better deals
- Sign up for loyalty programs that offer points and extra discounts simply by using their app
- Leverage cash back or reward credit cards to use towards larger purchases
- Find a shopping buddy and sign up for bulk stores like Costco and slip up household items like paper towels, cleaning supplies, even bulk protein items that you can divide up and put in freezer
These are just some cleaver ways to find savings for your shopping needs, so be creative, share with family and friends, and be open to trying new retailers that offer better prices and deals.
Setting Those Financial Goals
Time to get into the nitty gritty. Using the 50/30/20 rule, take a look at your total monthly income post-tax and start to break down where your money goes, then multiply by 3 to get a baseline for 3 months. This can show you where you need to possibly adjust savings or spending habits with a focus on ensuring 50% is going to your needs.
Once you have a baseline, you can start thinking about your short and long term financial goals, then allocate what your wants are and how much to save for the future. Some common financial goals are:
- Pay down debt like student loans or older credit cards
- Save for a down payment on a home, including vacation home
- Accelerate your retirement savings
- Create an emergency savings account
- Plan a dream vacation
- Invest in your child’s education
Whatever your goals are, make sure you set realistic expectations for yourself to prevent getting discouraged. Many times, we have the best intentions but feel like it’s taking too long to see any results. Budgeting is a long term goal, so be patient with yourself.
Avoid High-Interest Credit Cards
Did you know the average person can spend almost $1,000 a year on interest on a single high-interest credit card? And if you have multiple cards like that and carry a high balance, that can reach as high as $18,000 a year! That’s a lot of money wasted!
The average interest rate is around 22% for fair credit scores, which really highlights the importance of an above average credit score that gives you access to lower interest rates. If you happen to have a higher interest rate card, consider lowering your rolling balance to reduce the amount spent on interest. And while you’re at it, check your credit report and see where you can make improvements. This can come in handy when you apply for a home or auto loans to get the best rate possible.
Learn How to Break Down Goals
Sometimes you need a little help and guidance to help reach your goals, no matter what they are. Resources like executive coaches can teach you how to not only plan but how to measure and reach goals. Ana McRae Executive Coaches have a great article called How to Break Down Big Goals that outlines their 5-step rule:
- Step 1 – Define Your Outcome Goals
- Step 2 – Outline the Goal Process
- Step 3 – Map Out the Projects
- Step 4 – Break Down Projects into Milestones
- Step 5 – Map the Actions to get to the Milestone
This process can work not only for financial goals, but any goals that you have been thinking about. Other resources for financial goal setting can be speaking with a Neighbors Credit Union team member. They can walk you through the products and resources that you can use for tracking and sticking to your financial goals. And be sure to check your employers’ benefits as many do offer free financial coaching sessions.
Find Tools and Resources to Help You Stay on Track
While it’s great to have someone help plan your financial goals, at the end of the day you’re the one responsible for sticking to the plan. Luckly for you, Neighbors Credit Union has a suite of tools that give you more power and insight into how you’re progressing. All included when you open a Personal Checking account.
- Mobile Banking – set account alerts, see real-time transactions and balances, and customize information
- Bill Pay – create automatic monthly payments within your 50% ‘needs’ category so you never miss a payment and be charged with late fees
- Money Management – tools like Bubble Budget, debit calculators, and transaction categorization give you greater control and stay on track, and is included with Online Banking
Come and Experience the Neighbors Credit Union Difference
Take all that you’ve learned about creating a budget that works for you and come see us at one of our locations or open your accounts online. We’re always here to help you make the most of banking with us.
