When it comes to money management, many people struggle to follow a budget, spending more than they earn and not saving. And each year, many people commit to take a step to better manage their finances.
As a source of financial information, banks and financial classes can help people with that goal of better money management. And both places offer a few simple guidelines with which to begin.
FIRST, CREATE A BUDGET AND PRIORITIZE SPENDING
Peach State Bank Chief Financial Officer Charles Blair suggests using a personal finance software, such as Quicken, to manage the budget, or even a spreadsheet on the computer.
“Basically just sit down and decide what your inflows and outflows should be and track whatever you’re doing,” Blair said. “I tell people it ought to be a joint practice that you and your spouse go through.”
Jeff Bagwell, pastor of Phoenix Community of Gainesville church, agreed. He is leading a Financial Peace University class — many other area churches conduct the class too — that teaches participants financial wisdom and strategies.
“It’s a basic financial course that helps people learn to spend less, to save money and to help free them up financially from the stress and burden that a lot of us carry from debt,” Bagwell said.
The church — which meets Sunday mornings at Little Italy, 990 Riverside Drive, in Gainesville — began the class Sunday. The nine-week course includes a class about creating a zero-based budget, requiring participants to write down total income, list all expenses, subtract expenses from income to equal zero and track expenses throughout the month
SECOND, SAVE $1,000 FOR AN EMERGENCY
“An emergency fund is for those unexpected events in life you can’t plan for,” according to the Dave Ramsey website (www.daveramsey.com), which developed the Financial Peace University course. “Whether there’s a plumbing issue and everything but the kitchen sink is draining, or your brakes are squealing at every stop sign, you can be ready!”
THIRD, PAY OFF ALL DEBT EXCEPT YOUR HOUSE
Debt is not a tool to be used to create prosperity, Bagwell said. When in debt, people become slaves to the lender and the debt begins to control us.
“Jesus says in Matthew 6:24, ‘No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money,’” he said, adding debt creates unnecessary stress in lives and relationships.
Blair also issued warnings about going into debt, recommending the average citizen be careful with credit cards.
He said most credit cards have interest rates around 18 percent. If credit cards can be paid off every month, it’s one of the smartest things to do.
“Most people don’t have that discipline, though,” he said. “If people manage their credit cards and set aside money for their retirement and savings, I think those two things are key.”
THAT LEADS TO THE FOURTH STEP: INVEST
One of the biggest pieces of advice Blair offers his clients is to save for retirement.
“When you first start to work, putting aside something toward your retirement is paramount to financial security later in life,” he said.
Blair explained if people start setting aside money in their 20s, they will be amazed at the amount of money they can accrue or compound in a 401K by the time they are in their 50s and 60s. Because it’s not taxed, the funds will grow over time, he said.
Blair said statistics show people now in their 50s and 60s often relied on pensions — which are few and far between now — and don’t have enough money for retirement. But people now can help save for their own retirements.
“Most companies now match if you put aside money in your 401K and you ought to do at least what they’ll match,” Blair said. “If someone can set aside 4 percent to 6 percent of their salary every pay period, I think they’d be amazed at what they would have at a later date.”
Even if 4 percent to 6 percent isn’t an option, Blair said to save what is possible.
“The most important thing is for someone to get started saving for retirement, even if it’s a small amount and then increase it each year,” he said.
If you are self-employed, open a Roth individual retirement account or a traditional IRA. A Roth IRA is a special retirement account in which money saved in the account is taxed, but all future withdrawals are tax-free. Generally, money in a traditional IRA is not taxed until distributed. When withdrawals are made after age 59«, they are treated as current income. Contributions made to a traditional IRA may be fully or partially deductible.
Bagwell said investing for retirement is taught in the financial class along with how to plan for a child’s college. But the class is geared toward managing all aspect of a person’s money.
“We are stewards of what we have, our finances, and we want to learn to steward that well,” Bagwell said. “This is a great way to help others figure out how to eliminate debt, but at the same time, be able to give to those causes they want to give to. There’s a lot of joy and freedom in giving as well.”
For those who may be unable to take the class, Blair said banks can answer customers’ financial questions ranging from topics of retirement to savings to budgeting.
“Banks are generally good people to give advice and act as a sounding board for questions,” Blair said.