Saving money

Saving money is like building a muscle. I know you are thinking, where is this going? Any trainer can tell you that building muscle does not happen overnight; making anything is not instantaneous. It takes research, planning, proper form, and diligence.

It is the same way with building a savings account. What is your plan? Have you begun budgeting? Are you patient with yourself? Creating a savings account is not an easy task at first. We all know that it’s essential to save money, but it can be hard to spend less than you earn without specific goals to work toward. Your situation should warrant you to set some goals. In my research, there were common reasons to save that were apparent, saving for an emergency fund, retirement, a big purchase, and paying off personal debts.

Setting aside money for an emergency gives you peace of mind and helps to prevent financial setbacks. Experts encourage having three months of basic living expenses in an emergency fund, but remember, every situation is different. You must be willing to save according to what seems to stretch you beyond your limits. Saving can at times feel like a sacrifice because it is. Living in a society that thrives on instant gratification can rob you of the joy that comes after persevering. That leads to the next phase of saving.

Daryl Singleton
Daryl Singleton

Additionally, we should aspire to save for retirement. In my studies, most financial experts suggest saving minimally 10% of your take-home pay monthly in a 401(k) or/both an IRA. In a world where one might be living paycheck to paycheck, saving for retirement can be the farthest from your thoughts. However, it is essential to shift our thoughts from only seeing trees to viewing the forest; life is a journey. What will tomorrow look like, and what are you doing today to prepare for longevity?

In conjunction, there is another form of saving where you may be saving for a more significant purchase such as a house, car, or starting a business. Saving is indeed a build-up, and the sooner you begin to put money aside for the purchase, the less you have to contribute all at once.

All in all, saving must become a natural occurrence in your life. As it builds, you begin to enjoy watching it grow. You respect yourself more. You don’t mind the sacrifice because it reassures you of peace of mind. So, I will ask you again, what is the plan? How are you building that saving muscle?  I will leave you with these reminders as the winter semester closes and you go for summer break; first, calculate your total income, then, set a plan for your money to grow by budgeting, and finally, SAVE SAVE SAVE!

Please have a great summer; we will be back in the fall, and as always, let’s Build!

Spending Part 3: Budget example using the 50-30-20 Rule

Marta’s Budget Plan

Marta is a 40-year old woman who works two jobs, one at a grocery store and another as a hostess at a restaurant. She is a single parent.

Marta’s Monthly Income $2,000

NeedsMonthly expenses
Rent$600
Groceries$200
Utilities$100
Car Expenses$200
Car insurance$120
Total$1,220

Disposable Income = Income – Needs: __________________________

WantsMonthly expenses
Coffee$20
Restaurants$50
Entertainment$40
Clothing$100
Total$210

Marta’s Monthly Savings Contribution $100

DebtsMonthly payment
Credit cards$200
Student loans$100
Total$300

Copyright 2018 EVERFI, Inc.

Spending Money Part 2: Creating a Budget

Welcome back to the TRIO Financial Literacy Blog. Currently, we are on the second phase of “spending” related to becoming more financially literate/responsible.

You had homework to complete, did you do it? If not, before reading further, go back and seriously consider ending the task laid out.

By now, you should’ve looked at your finances and have a monetary objective for your money. What habits or trends have you discovered about yourself? Where is your money going? If you are unsure or you can’t see anything good, that is ok. You are here to shed light on the issue that needs a remedy.

Daryl Singleton
Daryl Singleton

The best remedy for financial literacy is budgeting! If you are like me, budgeting is scary. It sounds like a prison for money. However, that is flawed thinking. Budgeting is the key to financial wholeness. In researching, I came across tons and tons of budgeting plans and tips. In the previous blog, we mentioned having financial goals, and this is where budgeting comes into play. It is all about working backward, seeing the end goal first, and working your way toward it from where you are. It takes sacrifice and dedication, but there is gratification in your delay if you trust the process. When you create a personal budget, you are sorting your expenses into categories to make sense of your habits to meet your set goals.

During my research, I came across a budgeting tip that is the easiest and has impressive results. It is called the 50-30-20 Rule. Here is how it works; No more than 50% of income on needs, no more than 30% of income on wants and at least 20% of income on savings or debt repayment. This budgeting model is universal and maintained by many.

Take a few days, look at your income, and follow this rule to develop a budget. In the following weeks, we will look even closer at budgeting tips and tricks to best. Let’s build!

Spending Money Part 1

During the past few weeks, we have discussed the first component of financial literacy, earning.

The next segment we will explore is spending. By this point, you should be aware of where your income derives from and how much of it is disposable/available to use for whatever you desire. In a perfect world, all our money would be disposable and never-ending.

Who doesn’t like to spend money? That is its purpose, correct? Wrong. In and of itself, money has no real value. It is as valuable as we make it to be. Money’s purpose is not for frivolous spending,

“Money derives its value by virtue of its functions: as a medium of exchange, a unit of measurement, and a storehouse for wealth” (Beattie, 2020).

Daryl Singleton
Daryl Singleton

Now that we have a general understanding of money, let’s look closely at its function.

Spending money should be a well thought-out process. A process that affords you the ability to use it as a tool and not a precious possession. Spending can “be regarded as complementary to personal saving, investment spending, and production in an economy” (Investopedia Staff, 2020). In layman’s terms, spending money is/should be the perfect way to increase your overall value.

You may be reading this and thinking, “that makes no sense,” and you are correct. In this current mindset, it is insane. However, it would be best if you let go of the current definition of “spending.” Money is not spent; it is used. The value lies in what you are gaining due to using it as a point of exchange. Are you exchanging it to grow your savings, assets (anything with value) and fuel the economy so that you can make more?

It’s the idea of your money should be making money for you. If your money is not making money for you, it is not that you don’t have enough. But could it be that you don’t budget well? Good budgeting and planning are the bedrock of good spending. Budgeting is just planning how you will spend money so that you able to meet your financial goals. During the next seven days, please take a moment and seriously consider your monetary objectives, write them down.

Next week we will be taking a closer look at budgeting so that you can reach those goals. Let’s build!

References:
Staff, I. (2020, December 30). Consumer spending definition. Retrieved February 25, 2021, from https://www.investopedia.com/terms/c/consumer-spending.asp

Beatie, A. (2020, July 17). The History of Money from Barter to Banknotes. Retrieved February 25, 2021, from https://www.investopedia.com/articles/07/roots_of_money.asp

Earning Money vs. Making Money Part 2

Financial Literacy is broad and deep. There is much to be understood and gained from seeking the understanding of being financially responsible. This week we will continue in exploring the first component of financial Literacy – earn.

Now that we are aware of what it means to earn money, let us examine making money. Making money is what the “American Dream” is all about. It is the cornerstone of American capitalism, entrepreneurship. For the sake of staying on topic, we will dig deeper into capitalism in a later blog. Making is “when you use your own time and energy and a bit of creativity once and get paid over and over and over again” (Donati, 2020). It is your dream and passion on display in ownership form. Making money is when you are independent of another source for financial growth.

Daryl Singleton
Daryl Singleton

Making money can look several ways. For example, observing a societal need and providing it need repeatedly is making money. Bottling water – think of how society has benefited greatly from one idea and think of how much money that person has made and will continue to make. That one idea has placed that person in the driver’s seat of their life related to financial wellbeing. Other examples are writing a book, starting a business by meeting a small local need, or in this digital age of being a social media influencer.

In the finance world, this is referenced as passive income. Any entrepreneur would express that there is nothing passive about making money freely. It takes grit, hard work, and dedication while earning money to keep producing cash, but it’s attainable. What is the takeaway? In whatever way you choose to get your money, be sure that it is decent. Be sure it pulls you just a little closer to financial freedom. Earning from an entity provides you with the safety net and surety that you will have an income for hours spent working. It is a great place to start if what you are choosing as an avenue to make money has a slow return. The name of the game is – earn! In all, you do make sure that you are earning. Let’s Build!

Reference:
Donati, E. (2020b, August 25). How to Earn Money vs How to Make Money. Mint.Com. https://mint.intuit.com/blog/personal-finance/yes-earning-money-and-making-money-are-different/

Earning Money vs. Making Money Part 1

Welcome back to the TRIO Financial Literacy Blog! If this is your first time reading the blog, welcome and before moving forward, take a moment to read last week’s as each build upon the previous. Looking back, we learned that there are five components to financial literacy; earn, spend, save and invest, borrow, and protect. This week we will explore what it means to earn.

Before you can set a budget, pay bills, save and invest, or purchase the most amazing dessert you can find, you must know how much money you have accessible to you. Having money typically happens in two ways by earning it or making it. Understand that printing money is illegal and is NOT the same as making money. Earning is “when you trade your time and energy for money” (Donati, 2020). In laymen’s terms, you earn by the hour working during the time allotted. In these cases, you’re dependent on another entity to earn money, and that entity most likely will only pay you once per hour you spend working.

Daryl Singleton
Daryl Singleton

Earning money can be exciting and rewarding when spending hours working on or as something you find joy and passion doing. Both time and energy are limited resources. However, before we can move forward as financially literate people, we must know precisely where our money is coming from and where it is going. As an earner, you should be receiving a paycheck for your time and energy. On that paycheck, it is vital to identify your gross and net income, along with any other deductions. Your gross income is the total amount of money you are paid before income tax is removed. Your net income is the real money you are paid after taxes and deductions, or “take-home pay.” Deductions or withdrawals are items such as employer health insurance or retirement plans deducted after taxes before receiving your “take-home pay.”

You may be wondering why are gross, net, and deductions vital as they relate to earning. Your gross income is what you would use if you ever wanted to negotiate a pay raise or on a loan application, or when applying for a credit card. Additionally, your net income is the actual money you have on hand to make purchases and set a budget to save and invest in making more money. Who doesn’t like more money? Certainly not us! Today, don’t just glance over your pay stub or only accept your direct deposit as final; look closer. Hiding from the numbers will not change or grow them but understanding them will. Awareness is the gateway to clarity and that “clarity” positions you to make money. Let’s Build!

Reference:
Donati, E. (2020b, August 25). How to Earn Money vs How to Make Money. Mint.Com. https://mint.intuit.com/blog/personal-finance/yes-earning-money-and-making-money-are-different

Welcome to the SC4 TRIO Financial Literacy Blog!

The purpose of the blog is to provide you with the necessary skills for a sense of financial awareness.

We are living in a time where information is freely accessible via the world wide web. However, it can be challenging to research, then apply what you’ve gathered. What if the information is not reputable, or what if it just merely does not work for you? Navigating finances can be scary if financial literacy has not been the culture in a person’s life.

Daryl Singleton
Daryl Singleton

What is financial literacy? Financial literacy is “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing” (The President’s Advisory Council on Financial Literacy, 2008). A lack of financial literacy can make it hard to navigate proper decision making related to finances, such as choosing a bank account, school loans, credit cards, insurances, or just creating and following a day-to-day budget.

Is it possible to have healthy finances? Yes.

While researching financial literacy five key components consistently appear. The five components are earn, spend, save and invest, borrow, and protect.

During the continuation of this blog, we will investigate to better understand each of these components of financial literacy. I want to caution you that as we explore, together, that you take what is necessary for your financial health. In other words, this is not a one-model-fits-all blog. This is a person-centered-approach blog where you collect information that is beneficial for your financial wellbeing. Let’s build!

Reference:
President’s Advisory Council on Financial Literacy. (2008, January 22). Retrieved February 04, 2021, from https://web.archive.org/web/20100602010158/http://www.ustreas.gov/offices/domestic-finance/financial-institution/fin-education/docs/PACFL_ANNUAL_REPORT_1-16-09.pdf