Finding Room to Save

In May, the content that I’ve put out has been largely centered on optimizing savings. I’m hopeful—as I always am—that those videos were helpful to people who are at the point in their lives where they have excess income and are trying to make those saved dollars go as far as possible. It’s a challenge but also a gift to be in that position. 

I am also hopeful that the content doesn’t seem out of touch. The reality is that many of us aren’t financially secure enough to be thinking about saving for a rainy day let alone for the purchase of a house (though if that’s a goal of yours and you think you don’t have enough money to buy a house, check out my blog on buying a house on a shoestring budget) or retirement. It’s always my goal to help people in that situation too. 

I’ve hinted at this before in some of the content that I’ve created, but I want to make clear: I faced extreme financial challenges as recently as a few years ago. There are a lot of reasons I went through that and I’m happy to have personal conversations about my experiences especially if those experiences help people learn. 

With all of that said, I want you to know that I’m coming to you from a place of understanding; from having been there before. I don’t know all of your challenges and I certainly benefitted from some privileges in my fight out of those experiences that others don’t. But I think that experience combined with my education, certification, and work with some of the greatest personal finance minds in Rochester make me uniquely able to give help to those who need it most: those of us struggling to make ends meet. Those of us hustling every day feeling like they can never get ahead. 

I see you, and I want to help you. 

One of the ways that I can help is to give you a few pointers on saving a little here and there that you might not know about as well as giving you some considerations to help improve your financial situation that doesn’t relate to the cash in your bank account. 

Let’s get into John’s Top Tips! 

1. Create a budget 

If you’ve seen any of my content, you probably knew that this was going to be tip number one. The best way to figure out if we have room to save is to write down all of our monthly expenses and compare them to our monthly net income or the money we get in our paycheck each pay period. You can start off by figuring out your fixed monthly expenses and then see how much you have left for other items for the rest of the month. If you can cover all your expenses that month with a little extra coming in the door, then you can develop a plan to save that extra money. 

2. Pay yourself first 

That little bit extra that you think you’ll have above your expenses each month: prioritize saving that. Do that each month, even if it’s a small amount. Put it somewhere safe where you intend to put all of your savings and keep it separate from the money you intend to spend that month. Which leads me to my next tip… 

3. Start and maintain a bank account if you can 

I understand that there may be some reasons for you not to have a bank account, and I’m not here to try and change your mind. But you should know that bank accounts themselves can be a valuable financial tool for a few reasons. 

• They are a safe place to keep your money. Cash can be stolen or lost, but your money is protected from malice in a bank account. 

• You can have money from your paycheck deposited directly into your bank account. 

• You can set up multiple bank accounts for different purposes. For example, a savings account, a bill-pay account, and an account from which you spend on things like groceries and transportation. 

• Worried about your bank going out of business and losing your money? As long as you bank with an FDIC-member bank, you are covered up to $250,000 per depositor so the FDIC will make you whole. 

4. Pay for everything except for monthly bills in cash 

I only say this because I’ve been there: swiping a card makes it hard to keep track of your spending. When you’re trying to stick to a budget or have limited resources, it can help you avoid overdraft fees and keep an eye on how much cash you have until your next payday. 

5. Set up autopay for your bills from your bank account 

Once you have a bank account, you can set up your bills for autopay. If you sometimes don’t have enough cash to pay all of your bills on time, you can set your autopay up on the bank side. This means that your bank will send the payments to your biller instead of the biller pulling money out of your account. This is helpful because it gives you more ability to control when the money leaves your account and it’s easier to hold just one party accountable (your bank) than multiple (your billers) if they take too much money from your account. 

6. Prioritize your credit score linked bills first 

If you need to choose which bills to pay each month, housing and any credit-score linked bills should be your priority to avoid any negative credit reporting. Your payment history counts for 35% of your credit score and it can be really challenging to overcome negative payment history marks in your credit. 

7. Check your credit score 

I’m not a fan of the absolute chokehold that our credit scores have on our financial lives—it’s one of my biggest pet peeves about our financial system. But until something changes, we have to play by the credit score rules. That means you should know your credit score and how to improve it. Having a good credit score can open a lot of doors. 

• Using an app like Mint (which is a great budgeting app) allows you to get your credit score regularly. Mint will update your credit score periodically and give you a summary of they key pieces affecting it. 

• You can get a free credit report from each of the credit reporting agencies (Experian, Equifax, TransUnion) once each year (that means that you can get a free credit report every 4 months). You can learn more about credit reports from the .gov website here and request a free credit report from those agencies here. You should also know that there is a process to dispute any items on your credit report that don’t seem correct.

8. Financial wellness is a long series of good choices 

This is sort of my mantra. Financial wellness is just like physical wellness—it’s not something that happens overnight. When you’re trying to get in shape, you show up at the gym and eat better for a day and you feel a little better but you still have a long way to go. Achieving financial wellness is just a culmination of fortifying financial choices made over a long body of time. Every choice counts. 

I get it, I really do. Struggling financially doesn’t let us look up or look around to see how to improve our situation—it keeps us focused on the crisis in front of us before hurtling us into another crisis. If you’re struggling financially, reach out to me. I’m always eager to help however I can. You can email me at jhowe@gencapmgmt.com and we can set something up. Until then, stay safe and take care. 

John Howe-Wemett, CFP®, M.S.