Stretching Your Dollar: Establishing Your Money-Saving Plan

<div class="block">Saving money is an art. David Peters, financial advisor and CPA, joined Cheddar News to help viewers establish good money-saving habits and where they should begin when mapping out a plan to increase their bank accounts. </div>

Stretching Your Dollar

Well, the first of the month does present an opportunity to create a smart budget. So let's start August off, right? And in the world of budgeting, mindful spending and savvy saving can become your secret weapon against money stress. So joining me now is David Peters, financial advisor and CPA to show us how to make a money saving budget. David, where should we start when first creating a budget? Well, I think that good budgeting really depends on kind of two things uh awareness of how much money we have awareness of how much money we're actually spending and then just uh creating good habits. And so I think really the place to start is really trying to be aware of how much money we are bringing in and when that money comes in. So when do we get our paycheck and how much is our pay check going to be? That's got to be the place that we start because that's going to dictate how much we can save and how much we can spend. How much of our paycheck should we be saving when we get paid? Well, ideally, you want to save as much as you can. But as a guideline, I typically tell my clients about 10% if they can save about 10% of their net pay, that's usually a good way to do it. We want to keep saving out of every check that we get. Ok. So monthly expenses obviously are something that everyone has to grapple with. What's the best way to tackle those and organize them. So I think that the best way is is that we need to be really realistic about how we are budgeting for our expenses. So we need to have a good grasp on how much we are actually spending on something. A good way to do that is is that most banks have something like a spend analyzer tool or something like that. Your debit card or your credit card company may have something like that as well. And that can really give you a good sense of how much you are spending on different things throughout the month. And that's really the place to start. Is there an easy way to see your monthly expenses, a breakdown of those? So you can decide where you need to cut back if you do want to save more. So again, a lot of times banks and credit cards and debit card companies will have spend analyzers. There also are some things like budgeting tools that are out there as well that will also tell you how much you are spending in each category if you are looking to cut back when people look at it like that, I think that sometimes they're surprised at how much they're spending in each category. Ok. Ok. So people should start there. We got that. Everyone does want to have fun, David. I mean, especially during the summer. Right. You got to have a little fun. How should people budget, setting aside money for entertainment, entertainment, in my opinion, is the one spot that is kind of right for overspending. And so I think if you're serious about kind of staying within your means, I typically like to have clients take their entertainment budget in cash in each paycheck because you can kind of see that cash disappearing out of your wallet as you're spending. And so it helps you kind of stay within your means because you see how much you have left. What about bonuses, any unexpected money that might come in? What's the best way to approach that? Well, I mean, we always want to make room for savings. We always want to make room for retirement contributions as well. And so I think uh just making a decision on how much you are going to save out of that bonus money. 10% is a good guideline. But you know, if we can save more out of our bonus, then I think that we're going to be in better shape. Ok, so you mentioned entertainment the first place maybe to cut if you are looking to save money when it comes to the next categories, David, how else can people get there? What are easy places to cut back on? Well, I think that it probably depends on the person. One thing to look at is is that if you do have something like a debt or something like that, that you're paying back, look for options to how to refinance. Is there ways that you can get lower interest rates right now? That's hard. But I still think that it's worth looking around because there might be some deals that you just may not be aware of any sort of budgeting techniques that might work for managing the home. Those expenses we know can add up quickly too. Yeah. So, I mean, I think it's best to save for home expenses, especially unexpected home expenses in an emergency fund. So, trying to put some money into a highly liquid savings vehicle, like an online savings account or even a money market fund where those the money is going to be there. If something does come up, if there's a repair that you need to do that also works for a car repairs and things like that. All right, David Peters. David, thank you.