Simple Tools to Take Control of Your Money and Prevent Stress-Inducing Financial Situations
By Rhonda Chavez Payne, Wealth Manager, Stratos Wealth Management
Nothing causes the heart rate to spike like finding out you’ve overdrawn your bank account. Or having your car quit working when you know you have nothing left in your savings account with which to repair or replace it.
Events like these can cause anxiety and stress, which can negatively impact physical and mental health.
There is a way to take control of your finances, to build a financial safety net and thereby avoid those anxiety-inducing financial situations.
How? By creating a budget, building a safety net in the form of an emergency savings account, and beginning to save for retirement.
The first step in gaining financial confidence and preventing anxiety-inducing events is to create a monthly budget. People often think of a budget as a financial straight jacket that doesn’t allow any fun or shopping in their lives, but the real purpose of a budget is very different from that.
A budget helps you know exactly how much you need for your fixed expenses such as housing, utilities, transportation, fuel, food, and medical insurance. Once you know the total amount for your fixed expenses, you set aside a portion of what is left to begin a savings account for emergencies. The remaining portion is how much discretionary income you have for entertainment, shopping, and fun.
By mapping out your expenses with a budget, and only spending your excess income, you avoid running up credit card debt and you can relax knowing you have what you need to cover an emergency such as automotive repairs or appliance replacement.
Once you’ve saved a few months’ expenses in your emergency savings account, you can also begin saving for retirement and/or your child’s college fund. An employer plan such as a 401k or an Individual Retirement Account (IRA) is a great place to begin saving.
The bottom line: a budget is not a financial straight jacket; instead, it gives you financial confidence and can help you avoid putting financial emergencies on high interest credit cards. By avoiding the use of credit cards, you can more easily reduce your debt and save for your family’s future.
Stratos Wealth Partners are professionals with decades of experience in providing financial guidance, and strategies for wealth accumulation and tax management.
Contact us by phone at 928.460.5507, visit www.prescottwealthmanagment.com, or stop by our office in the Old Santa Fe Train Depot, 100 E. Sheldon Street, Suite 105 in Prescott.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor and a separate entity from LPL Financial. Stratos Wealth Partners and LPL Financial do not provide legal advisor or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.