By: Tori Berube, MFF Marketing & Outreach
As part of our work at Morgan Franklin Fellowship (MFF), our team often listens in on financial wellness webinars or podcasts to help guide our work. While listening to a webinar this week, the presenter shared a statistic from a recent study that 49% of Americans are living paycheck to paycheck, which simply means they use all of their income to cover their expenses. The same study also reported 53 percent of Americans do not have an emergency fund, which is money set aside to cover unexpected or unplanned expenses like medical bills, automobile repairs or replacing broken kitchen appliances.
For many young adults, experiencing these types of financial situations can be frightening. While solving these situations may detract from reaching the goal of financial independence, it’s important to remember these are short-term problems that perhaps a longer-term strategy will help you avoid in the problem.
We offer these possible long-term strategies to help you think about ways of tackling these situations head-on:
- Track your spending. By documenting where you spend money (think of your morning cup of coffee from your local coffee shop, ATM fees and trips to the gas station!), you actually see how much you are spending in certain areas and can modify your spending (think of making your coffee at home and using a travel coffee mug to transport, using your own bank’s ATM to avoid unnecessary ATM fees and only buying gas at the gas station!). Apps like Intuit’s Mint and Wally are ideal for tracking spending!
- Stick to a spending plan. A spending plan is just a documented plan of where you will spend your money each month. It’s the way to incorporate your spending needs (i.e., rent, car payments, gas and maintenance, food, insurance) and wants (i.e., entertainment, travel) into a visual picture. For a sample spending plan, click here. And again, there are tons of apps to help you as well! (A bonus tip as we head into the holidays – remember to plan for expenses associated with holidays, birthdays and special occasions like gift-giving, travel and special meals).
(Join the MFF team Tuesday, 11/17 at 6 p.m. EST for our free conversation where we explore how to manage holiday spending in 2020!)
- Pay yourself first. Make sure to set aside money from each paycheck to put towards an emergency fund. If you were to set aside $10 each week to put in a separate (and not easily accessible) savings account for emergencies, you would have $520 at the end of one year! Long-term, an emergency fund generally covers three to six months of all of your expenses, but remember, you have to start somewhere!
- Be accountable! Share your journey with a family member or friend. Ask them to offer encouragement and share your progress (or your struggles!) with them!
Would you like to learn more? Standards of Financial Literacy (SFL), MFF’s signature program, provides the necessary foundation for future learning. This online, six-module, self-paced program supports the concept of financial freedom – giving participants the insight to set goals, track net worth and apply knowledge. To learn more, click here.