MoneyNav Bootcamp: How to Move Forward and Maintain your Financial Foundation [Part Four]

Did you know that April is National Financial Literacy Month? Its purpose is to bring awareness to the importance of financial literacy and educate people on the significance of establishing and maintaining healthy financial habits. As financial advisors, we wholeheartedly support taking these steps, and what better time of year than FLM to start working out your finances? Taking the leap towards financial freedom can be daunting, but it doesn’t have to be difficult. Over the next few weeks, we will break down the Financial Literacy Month’s (FLM) “Thirty Steps to Financial Wellness” into a four-part series we’re calling MoneyNav Bootcamp. These posts will outline basic steps to take in order to begin revamping your financial life, managing challenges along the way, and staying motivated. Let’s get started! 

Quick Recap

Last week you spent time preparing for your financial future, learning how to save for goals, and documenting your spending. Hopefully, you are beginning to get the hang of managing your financial life, so this final week of MoneyNav Bootcamp should be no sweat. Get ready to present the new and improved financially savvy you!  

Week #4 of MoneyNav Bootcamp: Small Changes Can Lead to Big Results

This is the last week of Financial Literacy Month and it’s all about making small changes to create a greater and more lasting financial impact.

Step #22 – Identify ways to reduce spending: More than 318.9 million people were spending $53,495 per consumer unit according to the Bureau of Labor Statistics 2014 Consumer Expenditures Survey. This survey indicated a 4.7 percent increase in spending from 2013. While more spending is great for the economy, it may not be as good for you.

There are ways to keep a balanced budget that allow you to spend and save without overwhelming yourself and undoing all of your hard work. The number one thing that you should remember is to start small: automatically transfer $50 (or a number that doesn’t sound too painful for you) into a savings account; bring your lunch to work; cut the cord on cable; find small luxuries or wants you’ve been spending money on that you could gradually or easily do without. This way you are acclimating yourself to spending more wisely and creating another channel for saving as well. Furthermore, if you receive any “windfall” money (i.e. a raise, bonus, inheritance, etc.), add it to your savings rather than spending it. I know it can be easier said than done, but always bear in mind the power of compound interest. 

Step #23 – Save money on groceries: You have to eat. That’s an expense you can’t go without, but you can be more frugal when it comes to grocery shopping. Making simple changes to your shopping habits can help add to your savings. When you plan out your groceries, think about where you will be buying from, how often, what you will purchase, and if there are any sales you can take advantage of.

If you shop at a high-end grocery or major grocer you may be able to buy the brands and products you are looking for, but you also may be paying more than you would somewhere else. Try shopping at a more affordable place like:

• Dollar Stores
• Discount grocery stores (i.e. Aldi’s, Fareway)
• Warehouse Clubs (i.e. Costco, Sam’s Club, and BJ’s)

Planning is key when it comes to saving on groceries. The first step in this process should be to map out your meals on a weekly basis and shop accordingly. You won’t end up buying anything you don’t need or won’t use if you stick to the list. How often you shop also can eat away at your budget; it’s good to make sure your scheduled shopping coincides with your paycheck. If you notice that you’re constantly buying certain items, it might be a good idea to purchase those in bulk so you get the best price possible.

Have you noticed that certain items cost more than others when you are shopping? For example, meat will cost more than vegetables, and fresh veggies will cost more than canned goods. Keep this fact in mind when making your list. Try having a “meat-less” night for dinner, or instead of fresh corn, perhaps use frozen or canned instead. You will be getting the same items, but less frequently and at a lower price.

Taking advantage of sales and discounts is the ultimate way to save a buck. You may even be racking up points if you have a discount card from your local grocer. You can also subscribe to weekly discount emails from the stores you frequent or get coupons from the multitude of apps that now exist. This list from MoneyCrashers does a great job of laying out some mobile apps to get you started couponing.

Step #24 – Share a tip for change: They say sharing is caring, so as you learn different strategies for saving and spending, share that knowledge with others. At least two out of three adults are financially illiterate, so in order to combat this, it has to be a team effort.

If you want to gain more knowledge, then download Money Management’s Tips for Change eBook.

Step #25 – Document your desired spending: Last week, we explained how to break down and meticulously document your spending in your Expense Worksheet. This week we’ll be focusing on your desired sending; in the second column called “adjusted,” write down how you would like to change your spending or saving.

For example, if you currently spend $250 a month on groceries, but want to spend only $200, write -$50 in the adjusted column; and if you only save $50 a month, but if you want to increase your savings to $75, then write +$25 in the adjusted column.    

This step is about making the right choices so you can achieve your financial goals, and creating a road map that will keep you on track. To stay up-to-date with smart saving and spending habits, talk with a financial professional, and get helpful tips straight from financial advisors.

Step #26 – Protect yourself by performing financial check-ups: Financial check-ups are a must. After all of the hard work you’re putting in to get your saving and spending in order, you want to be prepared for anything and everything that can have an impact. Make sure you review the following items:

• Health Insurance – You want to know what your premiums and co-pays are, which services are covered under your insurance and if they have any limits to particulars such as medical tests, out-of-hospital and mental care, and prescription drugs. If you lack medical insurance, reach out to your local state-sponsored plan or Medicaid.

• Auto Insurance – Familiarize yourself with your policy, especially the exclusion section, so you know what you are covered for in the case of an accident.

• Life Insurance – Life insurance makes sure that your loved ones have financial security when you pass. Make an educated guess for how much life insurance you need, and if you think you would have difficulty paying, term life insurance plans might be the route you have to go.

• Disability Insurance – If your employer offers disability insurance, sign up for it because you never know when an injury will incapacitate If your employer doesn’t offer this kind of insurance, shop around for an individual policy.
• Protecting your Assets– Creating a will is the best way to protect your assets, without this in place, the state can make decisions for your estate. This means naming guardians for any minor children and dictating how and where your possessions will be distributed.

Step #27 – Understanding the cost of credit: If you use credit the right way you can build a good credit history, have a significant line of credit, and maybe even take advantage of some rewards, but that is only if you understand how credit works. When making a credit decision, you have to be knowledgeable of certain terms such as interest rate/APR, finance charge, and credit limit. Visit Bankrate.com’s Most Common Credit Card Terms so you can navigate the world of credit with ease. Also, be sure to check out our MoneyNav Academy Video, Credit Card Basics.

Step #28 – Assemble a financial team: Having a financial team might seem a bit much, but not if you want to be in the best possible financial shape you can be in. Creating a financial team will help you reach your goals sooner, however, you have to remember that while they are there to guide you, you are still in control of whether you can have financial prosperity or not. Make sure your team includes:

• Tax Advisor– These professionals are well versed in tax laws, any changes or updates you should be aware of for the tax season, and can provide tailored advice for your specific financial situation.

• Credit Counselor– A credit counselor can help you figure out strategies if you are having issues managing your debt payments.

• Financial Planner– Everyone could use a plan when it comes to their finances, and a financial planner is the best individual to help you do that. They analyze, suggest, and develop the best method to manage your money and assets.

• Lawyer– When you have to prepare your estate, it’s best to involve an attorney who can help you understand the technical terms and laws that goes into creating legal documents.

Step #29 – Appreciate the benefits: Step 29 prepares you to look forward and acknowledge the many rewards you will receive through your newly acquired financial skills. Welcome all of the benefits, big and small, you have gained:

• You are building a secure financial future
• You are improving your credit
• You are teaching your family the perks of being financially literate
• You are actively preparing for financial emergencies

If you need encouragement to stay motivated with your plan, use the checklist at the bottom of step 29, which identifies the rewards you will receive from your new financial outlook.

Step #30 – Moving forward: You have made it through 30 days of financial literacy and you have learned a lot about yourself, and how to manage and save money. Use the Reflections section at the bottom of step 30 to figure out your course of action moving forward.  

MoneyNav Bootcamp Week #4 Round-Up

Congratulations, you made it through MoneyNav Bootcamp! You are undoubtedly more financially literate than when you started. You should now be able to understand the basics of money management and how to reinforce positive money habits. If you ever feel like you are slipping, or need assistance with getting your money back on track, remember to visit MoneyNav to help support all of your financial needs.

Great job on completing the MoneyNav Bootcamp and becoming a financially savvy individual. See you next year!