Marie Caton, CFP®, ChSNC®, AAMS®
Vice President - Manager of Financial Planning Services
[email protected]941.366.7222 x50666
According to a recent Bankrate report,
more than 50% of millennials have a “side
hustle.” Finding a way to earn extra cash
to pay down debt or invest in your future
may ultimately be a prudent strategy to
help with limited cash flow. But before
making that decision, it may make better
sense to evaluate the foundation of your
financial situation.
First and foremost, know where your money
is going. Some people have a natural
tendency to budget. It provides them with
a sense of comfort knowing they are living
within their means and whether they are
on track to meet their goals. For others,
budgeting is constricting, challenging and
unnatural. Regardless, it is a necessary
task for anyone who wants to create
efficiencies in their cash flow management.
There are ample resources available
to help track expenditures for review,
from spreadsheets to online tools such
as Mint, PocketGuide, or Clarity Money.
Many are free and aggregate all financial
accounts to help organize and track your
spending. Most importantly, it allows you
to understand where your money is going
so you can determine what expenditures
are important and necessary and others
that are non-essentials.
Adhere to the 50/30/20 rule. If you still
are challenged with tracking your money,
a simple way to budget is to adhere to the
50/30/20 rule. In a nutshell, 50% of takehome
pay is allocated to needs, 30% to
wants and 20% on savings or paying off
debt. At the very least, it requires you to
spend within your means and gets you
thinking about your regular recurring
expenses, or essentials, versus your
wants, or non-essentials.
Utilize a credit card. If you are confident in
your ability to spend only what is within
your means and you have a strategy to
pay off your debt or increase your savings,
utilizing a credit card is preferential to
using a debit card. Credit cards allow you
to earn cash back, provide rewards on
spending, and take advantage of perks
that debit cards don’t offer. Additionally,
they allow you to build credit and provide
protection if your card is lost or stolen.
Financially re-evaluate housing costs. If
you are in the fortunate position of owning
a home, it may make sense to investigate
refinancing. Generally, if you can reduce
your interest rate by 2%, it can make
a lot of sense. Other ways of reducing
your housing costs can be downsizing
or looking for a roommate. As a general
rule, housing costs should never surpass
30% of your gross income. If you rent, this
would include utilities. For homeowners,
this would include mortgage interest,
property taxes, and home maintenance.
Consider what cash benefits might
be provided by your employer. If your
employer offers an employer-sponsored
retirement account, take advantage
of it. In many plans, an employer will
agree to match the funds you contribute
up to certain amount. That match is
virtually “free” money. You should always
contribute enough to capture the match.
Specifically related to health, Employee
Wellness Programs typically offer
employees a discount on their insurance
premium, paid time off, a contribution to
an HSA (Health Savings Account) or HRA
(Health Reimbursement Arrangement),
or a lower co-pay or deductible as an
incentive.
Lastly, many companies have augmented
their Employee Benefits programs to
encompass more than what has been
historically offered. These can include the
aforementioned health wellness programs
but also include professional development
opportunities and memberships, financial
wellness programs, and discount
programs.
Sometimes getting a second job is
necessary to make ends meet. However,
it should be considered only after a
thorough review of your financial situation
has occurred. Looking at all available
resources and opportunities can often
provide the bridge needed to avoid the
additional job.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.