4 Benefits to Having a Financial Plan

Money can be a taboo topic, yet, we all think about the need to have a plan for our money. Few seem to make it happen. In a recent 2018 study by an investment company, Charles Schwab, it was discovered that 3 in 5 people are living paycheck and only 1 and 4 people have a written financial plan. I would suggest it is not surprising to discover that more than 50% of people are living paycheck to paycheck when only 25% have a plan. Having a financial plan is an absolute game changer. Here are 4 benefits.

1) Maximize the use of your income and accumulate wealth.

When you have a good plan you able make your income go farther, increase your wealth and over time make your money work for you. This happens through breaking the paycheck to paycheck cycle and paying yourself through savings and investing.

2) Control your expenses.

When you have a good plan it gives you a lens which through you can make prudent spending and saving decisions. Some might say it means that it removes the opportunity for fun. I would argue just the opposite. I would argue that controlling you expenses enables fun without financial disaster, buyer’s remorse later, and anxiety that comes from a low bank account.

Living below your means by controlling your expenses will produce a much greater financial reward in the years come.

3) Reach Your Version of Financial Success.

Having a plan will be the only way you reach financial success. Each and every individual’s version of Financial Success is going to be different. However, it is important to know what you envision financial success looking like for you and then make it happen! Make sure it is your vision and no one else. If it is not yours, it will not make you happy.

4) For those that desire: the empowerment to give back. 

It can be hard to give back financially to your community, preferred charitable non-profit organization, or religious entity of choice without a plan that is keeping you thriving financially. Many people want to give back, but do not have the means to do so. Planning now will enable you to give back now and give back even more later!

If you you would like help building a plan that helps you reach financial success visit our website at wku.edu/cfs and fill out our become a client form! We look forward to coming alongside you in your journey to financial success!

Don’t Trust The Card or Yourself Without a Plan

Don’t Trust the Card or Yourself Without a Plan

In the world of purchasing with plastic (credit or debit card) we sometimes lose sight ever so quickly of exactly how much we are spending! In fact, I find that by the time I am in the parking lot after making a purchase my mind has already moved onto the next thing. By the end of the week when I am about to make another purchase I have already forgotten that I even made the first purchase which causes me to have a false idea of how much money I actually have left to spend. Before I know it if the plastic I am making a purchase with happens to be a credit card then I could so easily fall into the trap of purchasing an item with future income (money from my next paycheck that hasn’t even hit the bank yet). This can happen to even the best of us.

Let me be clear I am not suggesting we should all revert back to the archaic envelope budgeting system and cash. However, I am suggesting there a few things we can recognize when purchasing everything with a card to ensure financial success.

Here are a few tips that can help lead to financial success if you pay your bills and make all of your purchases with a card, especially if its a credit card.

1) Keep Track of What You Spend.

Don’t fall into the trap of only reviewing the balance on your credit card every couple of weeks or once a month when your bill comes due. If you are using a debit card be careful to avoid only reviewing the available balance in your checking account when in the checkout line at a store or on pay day.

I am not a psychologist by any means, but I know myself well. I do not think I am alone when I say that it is easy to underestimate how much I’ve spent since I last looked at the balance on my card and overestimate how much I can afford to spend when I have not sufficiently tracked my previous purchases. The Consumer Financial Bureau suggests that there is some research to back the assessment that I have made.

It may not be fun at first, but putting a spending plan in place and rigorously keeping up with it will be one of the greatest stress relievers you can experience regarding money. If money is a source of stress or anxiety it can be tempting to ignore the way you spend, your bank account or credit card balance, however, this will create more stress in the long run and financial disaster I might add. I personally prefer to track my expenses through the use of budgeting software called youneedabudget.com. I know others that prefer good ole excel spreadsheets, pen and paper, or mint.com.

2) Don’t Trust Monthly Minimum Payment Offers.

When things are tight and there are extra items needed or wanted, it can be extremely tempting to take advantage of the credit card offer to carry the balance on your card over to the next month and only make the minimum payment. This can be especially tempting during times where there is stress pouring in from other areas of life.

It is important to recognize that when you only make a monthly payment, it means you are committing your future income to interest payments on items that are not worth paying interest on. Also keep in mind credit cards offer some of the worst, if not the worst, interest rates. They can get up to almost 30%! Nerd Wallet, a reputable personal finance website, goes as far as to say they are designed to keep you in debt. Click here if you want read more on minimum payments.

It can be tempting and you might say to yourself that you will be able to pay it all off the next month before the interest takes off and gets out of control. That can be a dangerous place to be especially considering personal finance tends to be one of the most unpredictable areas of life, because it involves almost every aspect of life. You cannot predict when your car is going to breakdown, you are going to have an emergency room visit, animal needs to go to the vet, or some other unexpected expense shows up.

3)Preemptive Planning vs. Reactionary Spending

If you want to beat living paycheck to paycheck, pay down debt, and avoid having to pay only the minimum payment on a card it happens through planning. The words “budget or spending plan” are not everyone’s favorite words. However, they can be such a lifesaver! For some they do not like the idea of a budget because they feel that it will constrict their financial freedom to do as they please. For others it is just an overwhelming, daunting task and an area that causes anxiousness so they just avoid it.

I would like to suggest that choosing to be preemptive in planning, how to spend and save your money, will actually create a sense of financial freedom not experienced beforehand and will help reduce anxiety surrounding money. Planning our spending will prevent those moments when we react to a need or want, have not planned our spending for the pay period/month and then swipe our card, and we can’t help but experience the anxiety surrounding the purchase. The all too familiar questions surface in our mind such as “can I really afford this and will I have enough left for my bills due soon?” I would like to suggest these questions almost steal the joy that could have come from the purchase.

On the other hand, when you take time to plan your spending upon receiving a paycheck and then follow point #1 of tracking your expenses, you can feel comfortable spending money because you have planned the spending and do not have to deal with questions like “Can I afford this and will I have enough for my bills?” It creates a since of freedom and peace of mind. Finally, it is important to be aware that everything might not always go according to plan, however if there is a plan in place you will know how to adjust to ensure that you are staying within your means.

Financial Wellness Checklist for Graduating Seniors

It is almost graduation! While graduation is an exciting time, it can also be overwhelming to be thrown out into the “real world”. Getting your financial life in order can help you to feel more prepared for the next chapter in your life. Although this post is geared toward graduating seniors, it is helpful for anyone.

I also want to add that our counselors are here for you. Visit us before graduation and let us help you start post-grad life off on the right foot!

I have compiled a neat checklist for you to follow along with. This list is not exhaustive, but is a great start!

Graduating Senior Financial Checklist:

  • Create an online log-in with your student loan servicer
  • Set-up an appropriate repayment plan for your student loans
  • Open a checking account with no minimum balance and no monthly fees
  • Open a high-yield savings account to store emergency fund and other intermediate-term savings
  • Perform a credit well check- consider opening a credit card if you do not already have one
  • Read your employee benefits- if you are starting your career, spend some time studying your new benefits
  • Create a written budget
  • Start saving for retirement- utilize your employer match if you are starting your career, or consider opening a Roth IRA
  • Write out your short-term, intermediate-term, and long-term financial goals

The WKU Center for Financial Success has resources explaining how to accomplish these items here:

https://www.wku.edu/cfs/resourceshome.php

Our counselors can also walk you through this checklist and have you leaving WKU empowered and excited for the road ahead!

Visit our website to set up an appointment:

https://www.wku.edu/cfs/become-a-client.php

How to Quit Stressing About Student Loans

If you’re reading this, you probably have student loan debt. It’s just a fact of life. The average student loan debt at graduation for WKU students is $28,000.

While the debt is a fact, the stress that ensues from it can be overwhelming and debilitating.

And everybody knows, the best thing to do when something is overwhelming is to suppress, suppress, suppress. When someone mentions student loans you just make like Andy Grammer and say, “Nah, nah, honey I’m good” and go about your day.

The great Michael Scott, long-time Regional Manager of Dunder Mifflin Scranton once said, “And I knew exactly what to do. But in a much more real sense, I had no idea what to do.”

You probably know exactly what you must do: pay back student loans after graduation. But how can you do that when you aren’t sure of your balance, the types of loans you have, who your loan servicer is, and repayment strategies? Answer: you can’t.

These amounts aren’t arbitrary. They are important and relevant to your life at this very moment. There are things you can and should be doing this month and this semester and this year to poise yourself for financial success now and into the future!

You have a couple things you can do. One is to whine! This is terrible, they don’t teach you this in school, school should be free, etc., etc., blah, blah, blah. Okay, now that were done whining, we will move on.

Next is to accept the reality. You are making an investment in yourself by attending WKU. You clearly value knowledge and are poising yourself for a successful career in an area you care about. And there are costs. Let’s not ignore these costs, but instead weigh them with the benefits!

We as humans tend to ignore what overwhelms us, especially finances because we lack the prowess to effectively manage them.

You, however, made a very intelligent decision to attend WKU. As a student you have full access to the counselors at the WKU Center for Financial Success, who will sit down with you one-on-one and go over each student loan, your WKU costs, as well as the other aspects of your financial life and create a financial strategy with you.

The problem with student loans is the uncertainty of it all. You’ll come into a one-on-one meeting feeling nervous and stressed, but you’ll leave with an attack strategy. We cannot erase your student debt, but we can help you handle it.