savings Archives - Parachute

Breaking the paycheck-to-paycheck cycle

Living paycheck to paycheck can result in the inability to cover necessary and unexpected expenses and be mentally and physically stressful. It can result in the accumulation of debt and the inability to gain financial security over time.

Here are some ways to break the paycheck to paycheck cycle and work towards long term financial stability. Being patient and consistent with the process is important.

Track your spending. This will help you understand where your money is really going and identify areas where you can cut back, at least temporarily. There are many different ways to track your spending such as using a writing it down in a notebook, using your bank’s online spending tracker or using a budgeting app. Do you research as to the best app for you. Check out The Best Budget Apps for 2024 – NerdWallet. If you are serious about breaking the cycle, make the commitment to really see where your money is going as this is way to gain control over it.

Create a budget. Once you know where your money is going, you can create a budget to help you to live within your means. A budget is a plan for how you will spend your money each month. Think of it as a foundation to help you build long-term financial stability. It should include all of your income and expenses, and it should help you save money each month.

Cut back on unnecessary expenses. Be honest with yourself about what is a “want” and what is a “need”. Take a close look at your budget and see where you can cut back on unnecessary expenses. This may mean eating out less, canceling unused subscriptions, shopping around for better insurance rates, and reviewing and organizing your clothing before buying something new.

Pay off debt. Debt can make it difficult to break the paycheck-to-paycheck cycle. Make a plan to pay off your debt as quickly as possible by making more than the minimum payments each month. Paying anything over the minimum required can help! At least double your minimum payments, if possible, whenever possible.

Increase your income. Try to increase your income by getting a raise at your current job, working extra hours, or getting a second job. Consider selling items you no longer need or want. 7 Ways to Increase Your Income – Experian

Involve your family. Schedule some family creative savings meetings.

Here are some additional tips:

Set financial goals. What do you want to achieve with your money? Do you want to buy a house, a car, save for retirement, or pay off debt? Having financial goals will help you to stay motivated and on track. Be sure your goals are specific and detailed as research shows you are more likely to achieve them.

Automate your finances. Set up automatic transfers from your checking account to your savings account each month. This way, you will be saving money without even having to think about it. You can also redirect some money from your paycheck directly into a savings account. Make it hard to withdraw from that account by not using a bank card.

Make sacrifices. Breaking the paycheck-to-paycheck cycle may require you to make some sacrifices. Before you buy something, ask yourself out loud, “Is this a want or need?” “Can it wait until my next paycheck?” It will be worth the sacrifices in the long run especially as you begin to see the accumulation of those savings! This will empower you and motivate you to keep going.

Breaking the paycheck-to-paycheck cycle definitely takes time, effort and commitment, but it is possible! By following the tips above, you can start to build a more secure financial future for yourself and your family.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Would you like to meet one-on-one with one of our Financial Counselors to talk specifically about your budget? Check out our Financial Coaching Session https://parachutecreditcounseling.org/services/credit-budget-counseling/#financial-coaching or call 716-712-2060.

Budget, Parachute Services

Spenders and Savers: Building Financial Harmony as a Couple

Money can be a major source of stress, especially for couples with different spending habits. But fear not, spenders and savers can achieve financial harmony with open communication, compromise, and a team approach!

Communication is Key:

Talk openly about your goals: Dream vacations, a new house, or a comfortable retirement – discuss your individual goals and find common ground. These shared dreams will be the foundation of your financial plan. Remember, you’re a team, so work together! This builds a stronger foundation for your future.
Understand each other’s “why”: Instead of labels like “spender” or “saver,” have honest conversations about the reasons behind your financial behaviors. Explore any anxieties, hopes, or past experiences that shape your views on money. Sharing these creates context and fosters empathy.

Planning for Your Future:

Budgeting Together: Create a realistic budget that reflects your income, expenses, savings goals, and some fun money! Budgeting apps can simplify this process. Take time to find one that works for both of you – it’s an investment in your future, together.
Saving and Spending: Allocate specific amounts for both short- and long-term goals, like an emergency fund or retirement. Don’t forget to include fun – a vacation fund or a “splurge” category – ensuring both security and enjoyment. Consider separate accounts for different purposes if that helps with organization.
Set Spending Limits: If impulse buying is a concern, agree on spending limits for specific categories. Consider using cash for non-essential purchases – we tend to spend less with cash than cards!

Compromise and Flexibility:

Be Flexible: There will be times when adjustments are needed. Be open to compromise, finding solutions that work for both. Recognize that needs may differ, and adjustments might be temporary. After all, delayed gratification helps achieve bigger goals!
Celebrate Your Wins!: Acknowledge and celebrate progress towards your goals together. This keeps you motivated and strengthens your commitment to building a secure financial future.

Additional Tips:

Regular Check-Ins: Schedule regular reviews of your budget and goals. Treat it like an important meeting – even 20 minutes a week can make a difference!
Seek Help if Needed: If managing finances feels overwhelming, consider seeking guidance from a financial advisor or counselor (like Parachute!) They can provide personalized advice and help you create a sustainable plan.
Communication is Key: Throughout the process, maintain open and honest communication about finances. Remember, building a healthy financial relationship requires teamwork and understanding.

By following these tips and fostering a supportive environment, spender-saver couples can navigate financial challenges, achieve their goals, and build a bright future together.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Budget, Parachute Services

Budgeting for the Holidays – Part One

The holidays will be here soon and they are a “season”, not just a singular day or event; and, there can be several events! There may be parties and celebrations where you are expected to bring a dish, and/or provide a gift(s) and also meet family and friends out for lunches and dinners. The costs add up!

The holiday season can also include other celebrations such as birthdays, anniversaries or even weddings. Finally, winter is the time where added expenses can come into play such as higher utility (e.g., heat, electric) bills, and unexpected car expenses like batteries and tires that need replacing.

How do you cover these expenses without completely exhausting your budget and getting yourself in post-holiday debt?

Consider several of the suggestions below to help reduce the expense and stress of the holiday season. Ideally, an early and clear plan communicated to your family and friends can help a lot!

Have the list of WHO you will shop for and stick to it! Make agreements with your family and friends as to WHO you will buy for and HOW MUCH you will each spend. It’s very tempting to want to buy “a little something” for others, especially items under $20, but it adds up fast!
If you have large extended family or circle of friends, pick ONE name for each group.
Discuss possible family gifts that you all will enjoy. Start collecting change as a family starting each early each year (January) to help reduce the cost of bigger family gifts. If your children have part-time jobs, ask them for $2-5 a paycheck to help support a significant family gift.
Shopping for items (e.g., at a spring craft show, summer fairs) throughout the year makes a BIG difference! There are sales all year round! It is just a little pre-planning to build your gift inventory throughout the year.
Buy items for your food pantry early, ideally when they are on sale or when you have more spare funds. If your extended family knows you bring a signature dish every year, consider buying non-perishable ingredients early on and then place them in a separate storage area for the holidays.
Buy food staples at discount stores such as Aldi, Save-A-Lot and Price Rite.
Buy food items in bulk, if possible.
Don’t feel obligated to attend EVERY holiday invite you receive.
Open a separate bank account to systematically save for the holidays. Set aside a manageable amount of money for a bank or credit union account that is offering a high interest rate such as a money market account or a short-term (e.g., 3-6 months) Certificate of Deposit so you have your money in time to shop without incurring any penalties.
Consider making or even baking some of your gifts. Personalized gifts are very memorable. Add a small ($5-$10) gift card if you like.
Shop at small businesses in your area that may have unique and reasonably priced gifts.
Try not to get too caught up in Black Friday deals. Many times, people spend far more on other items than they actually save by battling the crowds and spending a lot of time and gas.

Keep a look out for Budgeting for the Holidays Part Two coming soon!

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Budget, Parachute Services

Family Savings Strategies

Family savings efforts can be a great way to reach your financial goals faster and easier. By working as a family team, you can motivate each other, build stronger family ties, and benefit from shared resources.

Here are some ideas to get you started!

Set goals common to all. The first step is to get everyone on the same page and agree on what you want to save for. This could be a short-term goal, such as a family vacation, or a longer-term goal, such as buying a boat or even a home! Once you have a common goal, you can start to develop a solid plan to reach it.
Create a budget. Once you know what you’re saving for, you need to create a budget that will help you reach your goal. This will involve tracking all your income and expenses to see where your money is going and identify areas where you can cut back. Then you can direct your newly found savings toward your family’s goals.
Open savings accounts for all family members. This helps everyone feel included and provides great lessons and good money practices for younger children and teens.
Automate savings. One of the best ways to save money is to automate your savings. This means setting up a recurring transfer from your checking account to your savings account each month. This way, you’ll be saving money without even having to think about it. If you have teenagers or young adults who earn a paycheck, they can automate their savings too into a savings account through direct deposit. If you have younger children, they can earn a weekly allowance and place, at least part of it, in a savings account.
Set up family savings challenges. A family savings challenge is a fun and motivating way to save money. There are many different types of savings challenges available online, so you can find one that’s right for your family. For example, you could do a 52-week savings challenge, where you save a different amount of money each week. Or you could do a no-spend challenge, where you commit to not spending any money on certain things for certain periods of time. Make it fun and competitive.
Have family savings meetings. Once a month or so, sit down with your family and discuss your savings goals and progress. This is a good time to re-review your budget, make any adjustments as needed, share tips, stay motivated and celebrate your accomplishments.
Make saving money fun. For example, you could have a family competition/contest to see who can save the most money in a month or award small prizes for the most creative way to save. Or you could reward yourselves with a special treat when you reach a savings goal.
Save change. Use cash whenever possible and save that change in a jar or other space labelled with your goal such as “2025 summer vacation trip.”
Consider selling items. Each family member could contribute some unwanted items to a group garage or yard sale to help fund the family goal. Children could host a lemonade stand. Teenagers and young adults could babysit or offer to rake leaves, shovel snow or run errands for neighbors to earn extra money.
Reward good grades or reading goals. Consider contributing more funds to the family savings pool if your children attain certain grades in school or read a certain number of books outside of school.
Consider savings matches: If your younger children or teenagers or young adults save $5, consider a 100% ($5 contribution) or 50% ($2.50) match so their savings grow faster and they are encouraged to save even more!

By following these suggestions, you can develop strong family savings strategies and reach your financial goals and future plans faster!

Parachute Credit Counseling offers group financial education and one-on-one services to help you budget your money, get out of debt, understand and build your credit, and more! Call us at 716-712-2060 or visit us at www.parachutecreditcounseling.org

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Budget

The Importance of Emergency Savings

An emergency fund is a financial cushion that can help you cover unexpected expenses, such as a job loss, medical emergency, or car maintenance. Having an emergency fund allows you to be able to pay for these expenses if/when they come up without having to go into debt (or more debt).

Why is an emergency fund important?

It can help you avoid debt. When you have an emergency fund, you don’t have to use credit cards or other loans to cover unexpected expenses. This helps you to avoid paying interest on debt, which saves you money in the long run.
It can help you stay afloat during a financial crisis. If you lose your job or have another major financial setback, an emergency fund can help you continue to pay your bills and keep your head above water until you are able to get back on your feet – again, without going into debt.
It can give you peace of mind. Those emergency savings can give you a sense of calm and comfort, knowing that you’re financially prepared for whatever life throws your way.

How much money should I have in an emergency fund?

The amount of money you should have in your emergency savings depends on your individual circumstances. A good rule of thumb is to have enough money to cover three to six months of living expenses. If you have a high-paying job and a generally stable financial situation, you may be able to get away with having a smaller emergency fund. On the other hand, if you have a low-paying job or a volatile financial situation, you may need more emergency savings to cover unexpected expenses that you wouldn’t otherwise be able to afford.

How can I build an emergency fund?

Building an emergency fund can take time, but it’s worth it. Here are a few tips to help you get started:

Set a goal. The first step is to set a goal for how much money you want to have in your emergency fund. Once you know your goal, you can start to make a plan to reach it.
Make a budget. Once you know how much money you want to save, make a budget to help you track your spending and make sure you’re saving enough money each month.
Automate your savings. One of the best ways to make sure you’re saving money each month is to automate your savings with a direct deposit from your paycheck into your emergency savings account.
Reduce or eliminate non-essential spending. If you’re struggling to save money, you may need to cut back on unnecessary expenses. This could mean eating out less, cancelling unused subscriptions, or finding less expensive alternatives to your current expenses.

Now what?

If you don’t have an emergency fund, start saving today! It’s okay to start small. Even if you can only save a very small amount each month, it really does add up over time. And when you need it, you’ll be glad you have it!