by Brandon Speckman 

After witnessing the recent economic hardships, you may be searching for ways to improve your financial wellness.  Many families are looking for ways to save more money and reduce debt.  But many are left asking, “Where do I start?”  The decision to review your finances and improve the way you manage money can seem overwhelming.  The trick is to keep it simple, and then build on your successes as you go.  Here is a list of basic steps you can use to begin your voyage to better money management:

1.     Take an inventory of your income.  Figure your total monthly household income by utilizing the net figure of your paycheck(s).  Here are some equations to utilize when figuring:

Pay Frequency              Multiply by Net Pay Amount

                        Weekly                                      4.333

                        Biweekly                                   2.166

                        Semi-Monthly                            2

2.     Take an inventory of your allocation/spending of money.  Review your last 3 months of statements to see where your money goes.  If you utilize FORUM’s E-Statements or another type of online banking, you can access these online anytime.  This review process is made most effective by creating simple allocation/spending categories to classify each account debit.  Here is a quick list of recommendations to help get started:

Debt Payments/Utilities/Fixed Monthly Expenses

Grocery/Household and Pet Supplies

Entertainment/Eating Out

Home Improvement

Vehicle Maintenance/Gas

Clothing

Gift Giving

Vacation

Emergency Savings

3.     Create a Monthly Budget!  Review your current allocation/spending pattern, and reallocate your monthly income to each category as you wish.  You may also choose to modify or add categories depending on your budgeting needs.

4.     Organize your Credit Union account to best manage your budget.  The Cash Envelope and/or Electronic Envelope systems are two popular methods for organizing and executing a budget plan.

In the Cash Envelope system you write down the name of each category on an envelope and run all funds associated with that category through the envelope via cash. 

In the Electronic Envelope system you have a different savings account for each category, and utilize direct deposit and online banking to manage your budget.  This method is more effective for those who enjoy the convenience and protection of a debit card.       

5.     Review your Credit Report.  Once you have created budget and organized your account, take some time to review your debt load and monthly payments.  You are eligible to receive a free credit report from each agency (Equifax, Experian, TransUnion) every 12 months by going to http://www.annualcreditreport.com/.  FORUM Credit Union also offers “Free Credit Report Days” to our members throughout the year.  You can view upcoming opportunities by visiting www.forumcu.com.