Moms are uniquely positioned to give their kids lessons about money. In fact, a survey from BeFrugal.com found that 81% of Americans receive financial advice from their mothers. Fifty-five percent said Mom’s best advice was to live well within their means, 44% said Mom emphasized the importance of being self-sufficient, 40% said Mom told them to budget for everything, and 38% said Mom advised them to save more money than they spent. With Mother’s Day just around the corner, it’s a good time to talk about how you can put Mom’s advice into action.
Your Mom loves you with all her heart, so when she tells you budgeting is the heart of your financial plan, you should listen. To get a handle on your finances, it’s important to know how much money you have and where it’s going in order to best allocate those funds. A well-crafted budget can keep your spending on track and help you identify ways to free up money for important financial goals.
Create a Budget
Creating a budget means sitting down and doing it. It doesn’t have to be fancy. Start by writing down:
- Your net income: Your net income is how much money you actually bring home, not your salary. Insurance, taxes and 401k contributions will reduce the amount you make.
- Your fixed expenses: These are important expenses that won’t change every month. Your mortgage, rent, insurance car payments and student loans are all examples of fixed income.
- Your variable expenses: These are expenses you can control. They will change based on use. Your bills for the phone, groceries, clothing, and entertainment are examples.
- Your Priorities: What is most important in your life? Determine what you need, and what you just want. When you put together a budget, you’ll likely have to sacrifice some of your variable expenses to stay in the black and work toward your financial goals.
Track Your Budget
Once you’ve made your budget, there’s a bigger challenge to take on – following it. It’s time to make your Mama proud by sticking to your guns. Don’t stray a few weeks or months after you start. Hold yourself accountable by tracking your spending every month on paper or via an app like Mint.
People save money for many reasons, but your Mom will likely tell you that saving can help you secure your financial future and provide a safety net in case of an emergency. Saving money isn’t something you can do overnight. The smart way to save is to start small and start immediately. Over time you can gradually increase your savings whenever you receive additional funds, such as getting a raise or tax refund. Here are some Mom-approved tips on saving:
Outline Savings Goals
Having specific goals in mind will go a long way toward saving for your future. Take some time to write down what you want to accomplish with your savings in the short-term and long-term. Do you want to take a vacation this year? Do you want to buy a house in the next few years? Do you need a new car in the next six months? Do you want to travel in your golden years? Whatever your goals might be, make a list of what you want to achieve, then create a timeline and money-saving steps toward achieving them.
Automate Your Savings
Setting up an automatic deposit into your savings account is an easy and effective way to save, and will help you stay on track. When you get paid, have your employer transfer a specific amount of money directly to an investment or savings account. You can also have your bank transfer a fixed amount of money from your checking account to a savings or retirement account. Automating deposits into different accounts is a great way to help you reduce spending and increase your savings over time. You also won’t have to remember to transfer funds.
Use Tech Resources to Help You Save
In your Mother’s time, resources for saving probably included a pen and paper, but today there are a variety of handy tools that make saving and tracking your money a snap. A budgeting app like Mint will help you manage your money, track your spending automatically, and let you sync all of your bank and credit accounts to one place. Plus, you can impress Mom with your modern methods of saving, and maybe even show her a trick or two!
3. Becoming Financially Independent
Having financial independence doesn’t mean you have to be rich, it means not depending on the next paycheck to get by. It’s one of Mom’s biggest hopes for you, and a goal that should be high on your list. With effort and dedication, you can eventually get to a point where you can take a vacation whenever you want, go back to school to learn a new craft, own that house you’ve wanted, start your own business or retire in comfort. There are many strategies to achieve financial independence, but by creating goals for yourself, crafting a financial plan, starting a budget, and committing yourself to save, you’ll soon be on your way to making it a reality. And making Mom worry less!