by Maria Lahiffe
Working in the non-profit sector is rewarding. We all get out of bed every day because we know that our efforts are helping to make our community stronger. We generally get paid less, though, than we would in the private sector. That is fine, but it means that we need to be more disciplined with our finances, to make sure we and our families are set up for a promising future. Here are some steps you can follow to get going on that path.
You need to know where you are going before you decide how to get there. Some examples of goals could be:
A financial planner can help you set reasonable goals, and give you a sense of what sorts of investment vehicles will likely meet your needs.
It is unavoidable: any type of financial planning will require that you create surplus money in your finances. That is why it is essential to create a budget and stick to it. A lot of people have trouble with budgets because they see a budget as a way of saying “no” to spending. It can help to turn that around: a budget is really about saying “yes” to expenditures which are truly important. Here is a good document about budgeting.
Your expenses can be categorized into three types:
These are budget items that need to be paid, no matter what. Examples include your house payment, debt payments, insurance, and taxes.
These are things that need to be paid, but which can be cut back to a degree. Examples include groceries, utilities, and work or school expenses. You absolutely need to buy groceries, but you could opt for cheaper cuts of meat, for example.
These are things which can be eliminated altogether to make space in your budget for more important things. Examples include entertainment, vacations, and recreational shopping. Sure, that night out is a lot of fun, but is it more important than sending your child to university?
Here is a good article about cutting personal expenses. Don’t expect it to be easy, but it is definitely possible. And remember, you are doing this so that you have money available for more important things.
An emergency fund is absolutely a must-have. This is a savings account which is available to you if an unexpected expense hits. The general rule is that you should have enough cash on hand to cover 3 to 6 months’ worth of living expenses.
Click here for the rest of the steps in good financial planning practices.
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