Center for Financial & Economic Education

• A budget is a plan for how you will spend your money.
• Understanding how much money you earn and where you spend it helps you make intentional financial decisions while also working towards your goals.
• When you can see how much money you have, and where it’s going, it can help you determine if you can spend less money on some things, so you can save more towards future goals or potentially repay your debts earlier.

Everyone has financial goals. Maybe you want to buy a home, or a car, live on your own, go on a vacation, buy gifts for your loved ones, or pay for your education. No matter what your goals are, you will need money for the things you want to have and do.

Putting money into a savings account is giving your future self money.

Some things you can plan for, other things happen suddenly and without warning. You never know when you might have a financial emergency. A person might lose their job or have a medical emergency; a necessary home or car repair may appear out of nowhere, or you might need to make travel arrangements to visit an ailing loved one, or countless other emergencies may arise.

A good rule of thumb is to build an emergency fund and have at least 3-6 months of living expenses in a savings account to help you pay your necessary expenses when an emergency arises.

Tips for saving:

• Automate Savings. Set up recurring transfers to a savings account each pay period or each month.
• Even putting a small amount each month will grow big over time.
• Know your needs vs. Wants. Evaluate if you could spend less money on your wants to save money for future goals and plans.

Whether you have credit card debt, an auto loan, student loans, unpaid utility bills, or other types of debt, it’s important to prioritize paying off your debts. When making your budget, be sure to include payments for any obligations, including outstanding debt amounts.

Identify which debts are costing you the most money in interest.

After establishing your budget and knowing your general monthly expenses, if you have additional money leftover prioritize paying off any debt you may have (credit card debt, car loan, mortgage, debts in collections, medical debt, student loan debt, etc.

• The interest that is charged on outstanding debt adds up, and interest is capitalized each month that the debt remains unpaid adding to the total amount you owe.
• If you can manage an extra payment towards your debts or pay more than the minimum payment that’s required, that will help pay down your debt faster, saving money in the long run.

Credit is the ability to purchase things now and pay for them later.

Credit scores and credit reports are used by many entities in this country. Different lenders may review your credit history to determine if they will allow you to:

• Rent an apartment
• Get an auto loan
• Get a loan for a home, also known as a mortgage
• Secure utilities without a deposit
• Get hired for a job (in some places)
• And more

All of your credit behavior is listed in your credit report and is reflected by your credit score.

Here are ways to improve your credit score:

• Pay your bills on time and in full when possible
• Keep your revolving utilization below 30% of your total credit limit
• Don’t open too many credit cards at once
• The longer your credit history the better indicator it is of your ability to repay your debts