3 Steps to Money Management Success

Education | 03.19.2024
Managing your money is key to achieving financial success. Understanding how to create a realistic budget, track your spending, and set attainable savings goals are essential steps in the process. It can be overwhelming to take on all these tasks at once, but when broken down into smaller steps, money management success is achievable. Your banker is also here to help and can provide guidance and suggestions on financial accounts and tools that may work for you. Get started on path to financial success with these three steps: determining budgets, tracking spending, and creating realistic savings goals.

Determine Your Budget

Creating a budgeting plan is an essential first step in finding financial success. You can start by determining how much you make each month and how much you spend in each category.

To do this, gather your income statements and bills to figure out how much you can afford to spend on rent, food, transportation, entertainment, and other expenses while still maintaining a livable income. Once you have all of this information, it's time to create a budget. 

When creating your budget, it's important to be realistic about what you can afford. Set aside some funds for savings and look for ways to reduce expenses. Some examples include:
  • Shopping around for the best deals on groceries and other items.
  • Using public transportation.
  • Cutting back on unnecessary luxuries like multiple streaming services or daily coffee-runs. 
  • Bringing your lunch to work instead of eating out.
  • Finding free or low-cost options for exercising/working out and canceling your gym membership.
Jessi Stokke, a Customer Service Representative in Onalaska, shares a personal example, "Every day I used to get coffee from a coffee shop - and the cost added up significantly. Instead, I decided to purchase products to make my own coffee at home and found that I spent less money that way. With the money I saved by making my own coffee, I opened a Winter/Summer Fund account and continued to contribute what I would have spent at the coffee shop to that account."

Once you have created your budget, stick to it! Review your budget regularly and adjust if needed. Sticking to your budget will help you stay on track with your financial goals and ensure that you have enough money set aside for savings and emergency expenses.

Track Your Spending

Once you have established a budget, it’s important to track your spending to help prevent any overspending. This can also help you identify where you can make changes or adjust your budget.

You can use a budgeting app, spreadsheet, or even paper and pen to keep track of your spending. Your bank may also offer an "alerts" feature through an app or Online Banking to keep you notified of every transaction or specific transactions based on dollar amount, category or other parameters. Review your expenses regularly so that you can pinpoint where your money is going and if any changes need to be made. You should also record any upcoming expenses or large purchases so that you can plan ahead, like insurance payments, taxes, vacations and more.

"I personally use our Merchants Bank mobile app to keep track of my accounts and spending," says Stephanie N. Calderón Gutierrez, Customer Service Representative in Northfield. "I can check my balances daily and use the alerts tool for transaction notifications set to my personal preferences. I love that feature!"

Good spending habits are essential for successful money management, which include:
  • Resisting impulse purchases.
  • Paying bills on time.
  • Avoiding debt.
  • Setting aside money for savings.
Creating a plan is key to keeping control of your finances and avoiding overspending. By taking the time to track your spending, you will have greater control of your money and be more likely to achieve your financial goals.

Create Realistic Savings Goals

Start by setting a savings goal for yourself that can be achieved within a certain period of time. When setting your goal, make sure to include an amount you want to save, a timeline for achieving it, and a plan for how you will reach it. For example, you may want to build a $3,000 emergency fund, which could be accomplished by adding $250 a month for the next 12 months to your account enabling you to reach your savings goal in one year.
When creating your plan for achieving your savings goal, consider things like setting aside a certain amount from each paycheck or cutting back on expenses. Even setting up a direct deposit with your employer so funds go right into your savings account can go a long way to helping your achieve your goal. It’s also worthwhile to set small incremental goals that will help motivate you along the way.

Once you have your goal, remember to track your progress regularly. You might consider creating a visual tracker you put on your fridge or a calendar reminder on your phone to keep your goals front and center. Setting achievable goals and tracking your progress will help you get closer to achieving financial security and reaching your long-term financial goals. 

"One thing that can make savings more fun is rewarding yourself for hitting certain milestones," says Jessi. "Say you start small with a savings goal of $50. When you hit that goal, you could treat yourself to something small - perhaps under $10 - like a coffee or ice cream. Then increase your savings goal and decide on an appropriate reward for that next step. You can continue this milestone and reward system to build up your savings balance."

By taking the time to determine your budget, track your spending, and create realistic savings goals, you will be well on your way to a brighter financial future by paying yourself first. With dedication, planning and commitment, you have the ability to reach your financial goals and manage your money successfully.

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