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How to budget money on a lower income

We all know managing money wisely is essential to anyone’s financial plan. It’s easier said than done, though—especially if you aren’t making as much money. Most budgeting tips are geared towards people who earn higher salaries or have dozens of options for storing their money. Can you manage money when you feel like you have nothing? The answer is yes, and we’re here to help. Read on for tips on how to budget money on a lower income.

Analyze your current budget 

The easiest way to budget money on a lower income is by analyzing your current budget. By looking at your complete financial picture, you can see where you can cut expenses or what you need to prioritize. Ideally, 6-15% of your net income should go towards transportation costs. If you find you’re overspending in that area, see what solutions you can implement, like refinancing your car loan or negotiating your insurance.

If you don’t have a budget, this is your chance to make one. A common budgeting tactic is the 50/30/20 rule. Divide your after-tax income into three categories: needs, wants, and savings. 50% of your budget should go towards needs like rent/mortgage, groceries, transportation, utilities, and insurance. 30% will go towards wants like dining out, entertainment, gym memberships, or shopping. Lastly, 20% will go towards savings like an emergency fund or a down payment on a house.

Set attainable financial goals

Setting reasonable financial goals will help you stay on track. Ensuring they’re SMART—specific, measurable, achievable, relevant, and time-based—allows you to reach your goal. For example, if student loan debt is overwhelming you, your intent might be to pay off a $10,000 student loan in 36 months. That qualifies as a SMART goal because it is specific, a measurable amount, achievable within your means, relevant, and has a timestamp.

Strategize paying off debt

If you’re struggling with paying off debt, the snowball method is an excellent tool to get it under control and manage money on a lower income. Start by listing your debts from the smallest to the largest dollar amount (not including your mortgage). Take extra money from your budget, apply it to the smallest debt, and then make the minimum payments on your other debt. Once that smallest debt is paid, you’ll move on to the next and continue the process. Another method is the opposite—the avalanche method. Rather than listing your debts from the smallest to largest dollar amount, you pay off debts with the highest interest rates first. This also reduces your overall debt load faster.

The snowball method is more of a motivational boost—paying off debt seems more manageable when you get rid of your lowest debt first. The biggest con, though, is your high-interest debts accumulate more interest when you make only the minimum payment. The avalanche method is a smarter choice financially because you pay less interest overall. However, your smallest debts may be the ones with the highest interest—like credit card debt. In this case, you’ll be practicing both methods at the same time. But, it’s important to choose the method that works best for you.

Cut unnecessary expenses

Did you know the average American spends $237 per month on subscriptions? That’s nearly $3,000 per year! You can use that money to pay off debt, save for a home, or build an emergency fund. If you’re on a tight budget, cutting unnecessary expenses is your ticket to saving big. Canceling unused or unwanted subscriptions is the perfect beginning step. For example, if you have a Spotify and a Pandora subscription, do you need both? Cancel the one you use less frequently. Or maybe getting fit was your New Year’s resolution—but you never go to the gym. See if you can get out of that costly contract.

Create positive spending habits

Budgeting sometimes has a negative connotation. Creating positive spending habits allows you to look differently at how you spend your hard-earned money. Reducing credit card spending is an easy way to start. Credit cards aren’t evil, but bad spending habits can accumulate in the form of credit card debt. Remove stored credit card information from online sites where you find the urge to splurge. Instead, open a savings account for larger purchases.

Impulse buying is another habit to kick to the curb. You may feel happy during the moment, but impulse purchases rack up quickly and take a toll on your finances. If your impulse purchases aren’t monitored, your account can quickly deplete. Before you make an unplanned purchase, wait a day or two. This will give you time to think about whether you need it or not—it also gives you time to shop for a better deal.

It’s possible to break the cycle of living paycheck-to-paycheck and set yourself up for financial success. Despite how difficult it may seem, you can get in financial shape—with some effort. It’s not easy to live on a tight budget, but by following the above tips, you can improve your financial outlook and achieve your goals.

Rainy day fund: how to save $1,000 and why it matters

In a perfect world, emergencies would never exist—but we all know that unplanned events or emergency needs can happen at any time. You don’t need to live in fear, but you do need to be prepared. That’s why we always recommend having some money set aside to use for life’s unexpected necessities. You hope you never need it, but it’s always better to have it. Read on for more info on how you can save up your rainy day fund and why it matters to you.

What is a rainy day fund?

A rainy day fund, or emergency fund, is exactly what it sounds like: money set aside for the express purpose of being used for an unexpected emergency. Please note that by emergency, we mean something related to medical needs, job loss, or something else necessary to life—not that your favorite store is having a once-in-a-lifetime sale. Be wise when spending your rainy day funds.

How much do I need?

Many experts recommend keeping at least $1,000 in your rainy day fund to start with. Ideally you would be able to keep half a year’s earnings in your emergency fund, but starting small will allow you to create a fund without blowing up your budget. Even an amount like $500 can go a long way in an unexpected situation.

There are multiple options for places you can store your rainy day fund—you may choose to keep it in a high-yield savings account or you may prefer to keep it stashed in your locked safe at home. The most important consideration is that the money needs to be easy to access during an emergency but not so easily accessed that you are tempted to use the funds for something else. For some people, that’s a regular checking account; for others, it may be a special account that your CPA helps you set up. Find the solution that fits your needs and plan accordingly.

Emergencies happen all the time—it may be an unexpected root canal that your insurance only partially covers, or you might find yourself laid off from your job without warning. We don’t want to scare you, but it is imperative to understand that, since emergencies are part of life, using this fund for a rainy day need is the whole point. While you don’t want to spend your funds unnecessarily, it’s also critical to remember that you may have to use it—and you’ll be glad it’s there if you do.

How do I save the money?

Setting aside $1,000 is an easy task for some and may take months of effort for others—only you know what your financial situation is. If it will take some planning to make it happen, we have a few ideas on ways you can build your savings until your fund is ready to go. Below are four tips to help you get started:

1. Use an app to start saving
There are lots of apps designed to help you set aside a little bit of money at a time, so put them to work for you and start investigating your options. You can determine the amount you want to set aside every month so you don’t sacrifice your budget for your emergency fund.

2. Make a monthly goal
If apps aren’t your style, you can still apply the same concept to saving money on your own. Use a large soda bottle or even a piggy bank to set aside your extra change and money on a regular basis—those small deposits will add up quickly and give you the opportunity to set aside a little money at a time.

3. Review your budget 
Sometimes, saving up for your emergency fund is as simple as reviewing your budget. Look for places in your finances that can be trimmed down or eliminated and reroute that money to your emergency fund. It might not even be a permanent change—once your rainy day money is all set up, you can resume your previous budget spending.

4. Consider some credit
We never recommend that you ignore your budget when using your credit card(s). But it might be wise to consider opening a card that is to be used only for serious emergencies. This would allow you to cover your expenses even if you haven’t had time to prep your emergency fund.

We all hope that our rainy day funds never get used—but we also need to be prepared if they should be needed. Work with a financial planner to determine how much you can set aside each month and watch as your emergency fund grows to cover the expenses of keeping you and your family safe and well.

Back-to-school shopping: Five tips to save big

Shopping for school supplies can seem daunting. Between the varieties of notebooks, pens, pencils, folders, and more, the choices are overwhelming—and expensive. Let’s face it—no one wants to spend $40 on notebooks that will more than likely be thrown away in nine months. But, there are more ways to save on supplies besides your typical coupons. Try these tips to make your back-to-school shopping a breeze.

1. Find what you already own

Before venturing out to partake in the craziness of back-to-school shopping, look around your home for what you already own. If you already have hundreds of pens, pencils, markers, or crayons, there’s no need to purchase more when you have plenty at your disposal. Plus, you’ll avoid the dreaded begging for the unnecessary 64-pack of crayons—because who needs 64 crayons? No one, that’s who.

2. Wait until you receive a definite list

Avoid back-to-school shopping until you have a definitive list of the school supplies you need. Waiting until you know what supplies your kids need will not only save you the hassle of purchasing anything unnecessary but also prevents you from overspending—kids don’t always need every single item on their list. After school starts, have your child ask their teacher if there are any items they won’t need. By knowing exactly what you need to purchase, you can then take the time to research which stores have the best deals, plus determine a budget.

3. Purchase supplies after school starts

Try to shop for the majority of your supplies after school starts. It’s okay to purchase any essentials before the school year begins, but do the bulk of your shopping the week after school starts. Most stores typically put their remaining supplies on sale, allowing you to make the most out of your money. However, most of the supplies will likely be picked over. If you find an item that is well priced, then go ahead and purchase it because it may not last until it’s time to be put on clearance. If you’re not picky, then wait until stores are desperate to get rid of their remaining school supplies stock.

4. Price match

Dozens of major retailers price match competitors. Retailers want to prove that they have the lowest prices around, so if you’re back-to-school shopping and realize you can purchase something elsewhere for cheaper, ask for a price match. Typically, all you need to do is show the competitor’s ad or use your phone to show where you found a better price. However, most stores won’t price match on items that are on clearance or BOGO. But, retailers differ on their price match policies, so check to see what they will or will not allow.

5. Stock up if you can

If you can, purchase some supplies in bulk. You’ll save yourself from making multiple trips, and you can use supplies the following school year, which ultimately saves you money. Items like pencils, pens, folders, and composition notebooks are great to buy in bulk. However, remember to research where to find the best deals and compare prices per unit to ensure you’re getting the most out of your money.

These tips are sure to make your school supply shopping a piece of cake and help you find everything you need to make this school year the best one yet! Back-to-school shopping doesn’t always need to be a hassle—make the most of your school supply shopping today by switching to a Georgia’s Own Visa® contactless credit card. When you open a new Georgia’s Own Visa Signature®, Platinum, or Student Visa, you could earn up to $150, making back-to-school shopping that much more rewarding.*

*Promotional period begins April 1, 2021 and ends December 31, 2021. Open a new Georgia’s Own Visa Signature® card and spend $1,500 in the first three months of account opening and earn 19,500 points, which can be redeemed for $150 in cash back. Open a new Georgia’s Own Visa® Platinum card and spend $1,000 in the first three months to receive 13,000 points, which can be redeemed for $100 in cash back. Points will be applied within two billing cycles if the account is in good standing. Offer may be withdrawn without notice.

10 smart savings tips for young adults

We all know it’s important to save money, but the way that you should save will vary from decade to decade. That’s because your financial needs change over transitional times in your life. Your income and expenses affect your ability and possibly motivation to save. New financial needs come with lifestyle changes, so let’s talk about smart savings tips for young adults.

In your 20s…

You may be earning an entry-level salary, living alone or with roommates, and for the first time, not relying on parents to foot your bills. Likely, you haven’t been concerned with saving money. But there is no better time to start saving than right now.

Create a Budget – Be sure to include bills you have to pay, weekly expenses like food and gas, along with an emergency fund.

Establish an Emergency Fund – Start contributing now to an emergency fund. This is for a rainy day. It’s always a great habit to have money set aside for an emergency.

Contribute to a 401k – Retirement may be a long ways off, but contributing to your 401k is building your financial future. It is a great idea to set aside whatever your employer is willing to match.

Don’t Drown in Debt – Now is the time to start tackling those student loans. Be aggressive and seek financial advice for a repayment plan.

Practice Self Control – Qualify for a credit card? Cool. It’s wise to pay your balance in full, follow your budget and live within your means.

In your 30s…

You may have gone through major life changes, like buying a home, getting married, or having children. You are probably more settled, earning more money, and more motivated to save.

Reassess and Adjust Your Budget – It’s important to adjust your budget with any major life change. New job? New mortgage? New family? Reassess your expenses and adjust your budget accordingly.

Grow Your Savings – Make your savings work for you! By putting your money in a savings account or money market, your money can actually accrue interest and make you more money.

Plan for Retirement – Placing 10-15% of your earnings into your 401k is ideal. Consider this to be the cornerstone to a solid, financial future.

Pay Off Debt – Hopefully you set up a repayment plan in your 20s and can now focus on eliminating your debt altogether.

Advance Your Career – One way to save more is to make more! Evaluate your position and ask yourself, could I do more to move up here?

Five ways to save on your electricity bill this summer

Summer is finally here in full force. But, as temperatures start to climb, so can your electric bill. It doesn’t help that Georgia ranks number five in the country for the highest utility costs, averaging $441 per month. However, there are simple ways you can save on your electricity bill—without sacrificing your comfort. Here are five things you can do to start saving on your power bill today. 

Raise your thermostat’s temperature

While you’re at home, set your thermostat to a high but comfortable temperature to keep you cool. When you leave or if you’re asleep, you can increase the temperature slightly higher. Raising your thermostat’s temperature can save at least 10% per year. The smaller the temperature difference between outside and inside, the lower your overall power bill will be. Don’t set your thermostat to a lower temperature than normal. Your home won’t cool quicker, and it could result in a higher bill. 

Switch to a programmable thermostat

More people have switched to programmable thermostats and for good reasons—they maintain a consistent temperature throughout your house, keep your home energy efficient, and save money. According to a study by Nest, using a programmable thermostat saves almost 15% in cooling costs. Also, a huge benefit is that they enable you to set schedules, so you spend less time adjusting the thermostat when you leave your home or before you go to bed. 

Clean your air conditioning vent and unit

A clean air conditioner is more effective than a dirty one. If you’re reading this and can’t remember the last time you cleaned your a/c unit, it’s probably time you should. Filters, coils, and fins should be maintained to help a unit run efficiently and properly. Ideally, your a/c unit should be serviced at least once or twice per year. But, filters should be changed frequently—replacing a dirty filter can lower your air conditioner’s energy consumption by 5-15%.  

Turn on the ceiling fan

This seems obvious, but use the ceiling fan to your advantage. While ceiling fans don’t cool a room down, they create wind that circulates throughout the room, thus cooling you off. During the summer, your ceiling fan should rotate counterclockwise, so cool air is pushed down. If your fan is not rotating the way it should, turn your fan off and flip the direction switch. When you’re not in the room, turn your fan off so you aren’t wasting power. 

Use electricity during off-peak hours

Companies charge more for electricity during peak hours when the demand for it is greater. You can reduce the cost of your power bill by limiting energy use to early in the morning or late at night. You’ll help reduce the load on power grids and save money. From June through September, 4 pm-9 pm are considered peak hours.

Despite the sweltering heat, it’s possible to cool your home without foregoing your comfort—or your wallet. This summer, try these tips and watch the dollars drop off of your power bill.

How to start an emergency fund

Throughout the COVID-19 pandemic, people have recognized the value of having an emergency fund. People have lost their jobs, faced unexpected hospital visits, and more, leaving some struggling to pay bills. Regardless, it’s still crucial to have funds saved in the event of unforeseen circumstances—26% of Americans have no emergency savings, and only 23% have enough to cover six months’ worth of expenses. Follow these tips to help you get started on your emergency fund, so you’re better prepared for the future.

Track your expenses and spending

Before planning how much you should have in your emergency savings, it’s essential to know your monthly expenses. Calculate how much you spend on your rent or mortgage, utilities, and other necessary items. Tracking your spending is tedious, but there are dozens of budgeting apps, like EveryDollar and Wally, to help you estimate your regular spending. 

Set your emergency savings goal

After you’ve gauged how much you spend per month, set your goal of how much you want to save. According to CNBC, less than 30% of households have less than $1,000 saved. That isn’t nearly enough to cover costs in the event of a setback, like a trip to the hospital or unemployment. It’s recommended to have at least three to six months’ worth of expenses saved. 

Develop a plan

Once you set your savings goal, it’s time to form a plan of action. Decide what you’re going to do to reach your goal—that could be anything from setting aside a certain amount of money each week to cutting back on unnecessary spending. You can set goals all day, but it’s crucial to know exactly how you’ll reach them—otherwise, it’s easy to fall off track.

Put funds in an accessible place

How you save is extremely important, but where you save is just as critical—if not more. To make the most of your money, put your funds into a high-yield savings account that allows you to easily make transfers between accounts. High-yield savings accounts have higher interest rates than traditional savings accounts—sometimes 20 to 25 times more. While you earn more money in the long run, it’s important to consider factors such as initial deposit or minimum balance requirements and interest rates.

Start saving

Now that you’ve set your financial goals, how you’ll achieve them, and where you’re going to put your funds, it’s time to start saving. One way to help increase your savings is by setting up automatic transfers—you can set an amount to transfer to your savings each week, every two weeks, or each month. Even if it’s only $50, you’ll be surprised at how quickly your savings will grow. Another great way to increase your savings is by setting aside your tax refund. You can set aside all of it or even just a portion—either way, any amount will help get you that much closer to your goal.

Consider what constitutes an emergency

Now that you’ve started to set funds aside, it’s imperative to decide what constitutes an emergency, so you’re only using your emergency fund for its intended use. This could be unexpected hospital visits, car repairs, job loss, or other unanticipated situations. Defining what you consider an emergency is important so you know your emergency fund is used properly, rather than being spent on frivolous things. Remember, it’s not fun money—it’s money you’re setting aside so you know you and your family will be okay should something happen in the future.

Georgia’s Own is here to help you be prepared for the unexpected—visit our website to get started on your emergency fund today.