Whether you’re currently looking for a job, or you’re already working full-time, there’s one thing most Americans could use more support for: their finances.
According to the Unbiased 2023 Financial Confidence survey, only 33% of U.S. adults feel confident in their financial knowledge. More than half of consumers feel too intimated to seek financial advice even when needed, and 17% don’t feel financially confident at all.
Good financial health helps us achieve our goals and dreams, whether that’s starting a business, having meaningful experiences with our families, or being able to retire as we age. But issues like debt, living paycheck to paycheck, or struggling to make ends meet can conflict with those goals. According to a 2022 survey by Bankrate, 55% of Americans say they’re not meeting their retirement goals, with 35% saying they’re “significantly behind”.
We can start learning about good financial habits and put them into practice as early as childhood. In honor of Money Smart Week April 15-21, 2023, here are five finance tips that can help you achieve your financial goals.
1. Plan a Budget
Financial wellness can seem overwhelming. A budget helps you create a plan that’s manageable and that keeps you on track.
With plastic credit cards and online shopping, it’s easy to lose track of the purchases we’re making each day. A budget requires you to track every single purchase, so you get a clear view of how you’re spending the money you have. You can use a free budget app to make things easier to track and access your budget on your phone wherever you are.
Here are some steps to create a budget.
- Calculate your monthly net income. That’s your take-home pay minus deductions for taxes and anything else that’s taken out of your paycheck, like health insurance payments or retirement plan contributions.
- Track and categorize your monthly spending. There are apps that will bucket where you spend your money into different classifications, so you can see a pie chart of where and how you spend.
- Set savings goals. Think about what you want to save for, such as an emergency fund, a vacation or going to school.
From there, you can see where you can spend less and allocate those extra funds toward your savings goals. According to CNBC, following the 50/30/20 rule is an effective way to reach your goals. It suggests to use 50% of your monthly net income for necessities, 30% for discretionary spending on “wants”, and 20% for saving. If you need to pay down debt, you can spend less on non-essential items and put more toward saving.
If you find your expenses are consistently higher than what you make at work, which is causing you to accumulate debt, it may be worth looking for a new job. If you’re a recent graduate or new to the working world, use your estimated expenses and savings goals to guide your salary expectations.
Tip: Use Pipeline AZ’s Career Explorer tool to research in-demand roles. Compare salaries, see what entry-level education is typically required and learn about skills to develop.
You might discover moving into a new industry makes more financial sense, or you should be making more than your current employer’s paying you. The tool can also help you discover what you could potentially make in a rewarding career, which can help guide your educational choices and career goals.
2. Create an Emergency Fund
Emergencies like vehicle troubles, medical accidents or job loss can dramatically impact our lives. An emergency fund gives you the peace of mind you’re able to cover the costs for an emergency and continue on with life with as little interruption as possible, at least financially. You won’t have to worry about accumulating debt and the interest expenses that come with it when you face something unexpected.
According to a 2023 Bankrate survey, more than 1 in 3 Americans have more credit card debt than emergency savings. That’s the highest amount on record since polling began in 2011.
Tip: With every paycheck you receive, put a portion of it into your emergency fund. Set a goal for when you’d like to complete your emergency fund. Investment firm Vanguard recommends saving at least 3 months’ worth of living expenses in an emergency fund.
3. Get Health Insurance Coverage
One of the most expensive life events you can encounter is a medical emergency. An emergency room visit alone costs $2,600 on average, according to UnitedHealthcare. Long-term healthcare needs without insurance add up, especially for services like surgery and cancer treatment. It’s why many uninsured Americans are turning to crowdfunding sites to raise money for medical treatment.
If you’re not covered by health insurance through your work (or your parents, if you’re a student), you have options. The HealthCare.gov marketplace gives Americans healthcare provider choices and allows shoppers to compare plans. There are also independent health insurance brokers who can help you find a plan that works for your budget and saves you money.
Besides the financial risks you face not having healthcare coverage, it’s stressful. Imagine being in a car accident and having to be airlifted to a hospital, only to wake up to a $30,000 bill. Health insurance coverage provides you with protection and peace of mind that you’re taken care of in the future.
4. Look for Savings Opportunities
You can save more and spend less by looking for deals and ways to save, whatever your life situation is. Some ideas:
- Use coupons when shopping.
- Sign up for mailing lists of your favorite retailers. Only shop when you’re offered deals and need something.
- Cook more at home and eat out at restaurants less. In 2021, the average U.S. household spent more than $3,000 on eating away from home, according to Statista.
- Wait 24 hours before making a non-essential purchase, to determine if you truly want to buy it to add meaningful value to your life.
- If you want to attend college, complete the Free Application for Federal Student Aid (FAFSA) to become eligible for grants and scholarships.
- Check your local events newspaper or online calendars to find free entertainment near where you live, from concerts and comedy shows, to poetry readings and art shows.
In addition to cutting down expenses to save more, you might also consider taking on a side hustle to make extra income to pay off debt and start meaningful savings. If you’re a student, a work-study program provides you with a job that’s built around your student schedule, so you can earn and learn at the same time.
If you work full-time, you could offer freelance services or apply for side gigs for extra income. Or, look for a new full-time job that pays a higher salary so you can automatically save more with each paycheck.
5. Stay Focused & Continue Learning
Financial literacy, for most people, is a lifelong journey. There are always opportunities to develop your knowledge, learn new savings techniques and discover ways to make your money work for you.
- Understand S.M.A.R.T. goals
- Tell the difference between needs versus wants
- Begin to identify spending leaks
Pipeline AZ is proud to partner to present this free financial education workshop. If you’re new to budgeting or you’re looking for ways to save more money, join the webinar to get valuable tips.
For more tips on finance, careers, work education and other professional topics, visit the Pipeline AZ blog.
If you’re interested in a career in finance, visit the Pipeline AZ Finance Industry page!