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On The Money –
A Financial Wellness Series
On The Money –
A Financial Wellness Series
What is Personal Finance
Reduce and Manage Debt
Build an Emergency Fund
Understand Wants vs Needs
Create a Budget
Personal finances, or financial literacy, is the management of your money to include all sources of income, savings, spending, investments, and more. Understanding your personal finances will help you to manage your money so you can live the lifestyle you want, now and in the future.
Look at the debts you have and prioritize and eliminate those with unfavorable terms. You can approach this in a couple of different ways, but both require you to list your debts and make minimum payments on all of them while having a prioritized focus on one. When that debt is paid off, you’ll target the next one until you have paid down all your debts.
Avalanche Method |
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Prioritize interest rates: you'll pay less interest over time |
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Pay off debt with the highest interest rate first |
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Move on to the next highest interest rate debt after the first is paid off |
Snowball Method |
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Prioritize balances: you'll build motivation by eliminating debts faster |
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Pay off the smallest debt balance first |
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Move on to the next biggest debt balance |
Save at least six to eight months of living expenses. This can help cover unexpected expenses like car repairs, medical bills, or job loss and will also provide a sense of security, knowing you're prepared.
Needs generally include food, clothing, shelter, health care, reliable transportation, and minimum debt payments. Everything else is likely a want. While it’s okay to spend on wants, don’t sacrifice financial security to fulfill them.
But what about saving or paying off debt? They can feel like a want because they don’t go toward an immediate need. For example, you can survive this month if you don’t put money in your emergency fund or pay more on a debt. However, saving and getting out of debt should be considered needs because they are investments in your long-term financial and personal well-being.
This happens to be the one step that makes every other financial goal reachable and is essential for effectively managing your finances. The whole purpose is to let you see where everything is going and make some tweaks if you’re not currently on course to meet your goals.
Download this assessment sheet to help you see what your current financial situation looks like. Try this popular 50/30/20 rule to help you get started creating a budget.
Next month in our Financial Wellness Series: Understanding Credit Scores.
Return to our Financial Wellness webpage to learn and discover more on your own through our partnerships with Zogo and BALANCE.
Membership required. Click here for details.
RFCU does not warrant, guarantee, or insure any product or service offered by Zogo.
Any information provided by BALANCE is the property of the BALANCE Financial Fitness Program. The BALANCE Financial Fitness Program is offered to RFCU members through a partnership between RFCU and BALANCE. RFCU does not warrant, guarantee, or insure any information, products, or services offered by or through BALANCE or any third party.
Zogo, BALANCE and RFCU are not affiliated and are separate entities.
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