by Dennis Dalman
Moderation in spending can lead to financial fitness just as moderation in eating can lead to physical health.
The employees of the St. Cloud Federal Credit Union and its two branches, including the Sartell one, have launched a program they call “Financial Fitness.” It’s an effort to help all of their customers better manage money to bring their lives into balance financially. They believe when a good financial balance is achieved, other elements important to a balanced life (physical, mental, emotional, spiritual) will more easily come into a harmonious balance.
Recently, the Newsleader interviewed three credit-union employees at the Sartell branch office about Financial Fitness – Duane Otremba, vice president of marketing; Tammy Butler, Sartell office supervisor; and Bridget Deutz, social-media marketing coordinator.
“Financial fitness means more than just getting out of debt,” Deutz said. “It’s a lifestyle, like eating healthy every day. It’s a cycle, an ongoing process.”
Many people, Butler said, live paycheck to paycheck, which means they can be just one paycheck away from disaster, unless they have prepared for financial fitness.
Most importantly, all three heartily agree, it’s never too early or too late to create a financial-fitness plan. And it does not matter whether someone makes a lot of money or not very much money; financial-fitness planning is good for everyone who does it, they added.
The following is a basic outline of how the plan works:
At the table
First, a family should reserve a quiet, non-busy evening to sit down together at the kitchen or dining-room table. Children should be involved, too, at least in the part of the process that involves their spending habits. The family should gather every bill or receipt in the house. All bills and their amounts should be written down in a notebook. Then the family should work on a very detailed expenditures list. Ideally, all family members should save every single receipt for every single purchase for a month before tackling the expenditure list. Every cent of spending should be accounted for and written on the list, right down to that cup of coffee on the way to work or quick snacks purchased on the go. Otremba said most people would be amazed at how much they spend in a month on such “small” expenses like cans of pop, cups of coffee or snacks.
Next, the family should list other expenses that will occur throughout the year, such as estimated income taxes paid, property taxes, medical needs, school supplies and fees and money for various gifts, including Christmas, birthdays, weddings and more. Family members should be brutally honest and thorough when they make the detailed lists.
Once the lists are completed, they should be scrutinized carefully. Then another list should be made of absolutely essential expenses that must be paid, such as bills. Yet another list should include all of the expenditures that can be eliminated. This does not mean they will all be dropped, but it will give the family a way to prioritize such expenditures, dumping the ones that really are not necessarily wanted.
This list-making can take place over a period of various evenings in, say, a week’s time, but the process should not be delayed much longer than that. When scrutinizing the lists and coming up with a budget, it’s important to see the “bigger picture,” Deutz said.
Otremba added it’s also most helpful if people can be objective and honest about their own financial situation from the very start of the list-making and budgeting process. Many people unconsciously kid themselves about just how much they spend, greatly underestimating the problem.
Setting a budget
Once the lists have been made, in impeccable detail, a family should create a detailed budget plan, written down, and then stick to it. This includes the children. A very important part of the budget plan is to set aside savings, even if it’s a minimal amount each week. Those savings should be used as a rainy-day fund or for emergencies, and the money should never be raided for anything else not vitally needed. It’s also recommended, however, to set up a “fun” savings account for a family trip or something else exciting in the future.
Another vital budget agreement in the family should be never to use a credit card for anything but emergency expenses.
Stick to the budget strictly every day, then review how the budgeting process went in about three-months time, fine-tuning it and making necessary adjustments. The key is to stick to the budget no matter what, through thick and thin.
Family members should pull together and encourage one another in positive ways during the ongoing budget process. They should sit down at the table and discuss how the budgeting is going – what is hardest, what is easiest. All ideas, suggestions and questions should be written down.
“Pay yourself first,” Deutz recommends. By that, she doesn’t mean take money up front and go on a spending spree.
Paying yourself means setting aside a set amount of money from each paycheck, even if it’s only a few dollars, for a retirement fund or for a savings account that can be designated under various categories such as Rainy Day Fund, Home Repair Savings, Vacation Fund or other.
Children, too, should have accounts set up for them and get into the practice of saving, even if it’s just piggy-bank change.
“Small change can make a big difference in time,” Butler said.
Another way to save is to be sure to take advantage of a 401k plan if an employer offers one. The sooner you start one, the better. It’s the easiest, most painless way to save money over a period of time.
If a family is truly honest and objective in planning a budget, they will find many ways to cut expenses and ways to save (or at least not spend) so much money.
Here is a list of ways to cut expenses: quit smoking; quit gambling; take to work a homemade lunch; cut down or quit drinking coffee and pop during the day; shop at budget “dollar” stores when possible; don’t buy children “designer” products; get as much mileage as possible from the old car instead of trading it in for a new – or newer – one; do not use credit cards unless absolutely necessary; cut down on the number of times one dines at restaurants or eats at fast-food places; make your own household cleaning products that are less expensive and environmentally friendly, as well – there are many ideas on how to do that online; if possible, a homeowner might consider paying off a mortgage or paying a bit extra – say, an extra $100 – on the mortgage principal payment each month – by doing that, a person can save a bundle over time as it pays down the amount subject to interest; shop around for the best prices, including insurance-company premiums; clip and use coupons at grocery stores; and consider switching phone companies or getting a better deal on cell-phone service.
Those are just some savings ideas. Each family, depending on their spending habits and lifestyles, will quickly find dozens if not hundreds of ways to not spend money. However, to discover those ways, all family members must be upfront and honest in separating their “needs” from their “wants.”
Don’t be afraid
An individual or family should never feel ashamed or afraid to ask for help in trying to attain financial fitness, Otremba said.
Being in financial straits is nothing to be ashamed of, Butler added.
“Don’t be afraid to ask for help,” Deutz said. “Sometimes bad things happen to good people.”
All three agreed that seeking the help of a trained financial-fitness advisor is usually the best way to go simply because an advisor/financial counselor is much more adept at being objective about any particular financial situation. Thus, the problem will come into focus for the one seeking the service.