12 Steps to Financial Wellness – Step 1: How to Track Your Spending

Tracking your spending is the first step toward greater financial awareness and overall financial health. But mastering this skill is easier said than done. How can you track every dollar you spend when you make multiple daily purchases?

We’ve outlined how to track your spending in 3 easy steps.

1. Choose your tools

Tracing every dollar’s journey isn’t easy, but with the right tools you can make it quick and simple. Choose from one of the following money-tracking techniques:

Budgeting apps. If your life happens on your phone, download a budgeting app like YNAB or Mint to help track your spending. Both apps allow you to allocate a specific monthly amount of money for each spending category and enable you to track your spending with just a few clicks.
Spreadsheet. If you like to see everything spelled out clearly, a spreadsheet might be a good choice. You’ll need to record every transaction, but if you prepare the sheet with all the spending categories you think you’ll need, it shouldn’t take long.
The envelope system. If you’re a big cash spender, consider withdrawing the cash you think you’ll spend in a month and keeping it in an envelope for each category. When you need to make a purchase, just use money from the envelope.
Receipts. Hold onto every receipt from the purchases you make this month to help you track your spending.
Pencil and paper. Recording each purchase the old-fashioned way can help you make more mindful money choices throughout the day.

2. Review your checking account and credit card statements carefully

Along with one of the tools listed above, you can track the purchases you make with plastic by reviewing your monthly checking account and credit card statements. You can access these online by logging into your account and downloading.

3. Review and categorize your purchases

At the end of the month, use your chosen tool to review all the purchases you’ve made throughout the month. When completing this step, don’t forget to include any automated payments you rarely think about, such as subscription fees and insurance premiums.

Use the tips outlined here to successfully master the skill of tracking your spending.

How to Make a Vacation Budget You Can Keep

Summer is here, and it’s time for your getaway!

While it’s great to get away for some fun in the sun, sticking to a budget is a must, even when on vacation. This year, attack your vacation with a financial plan you can actually keep by following these tips:

Rethink vacation

Before you start working on a vacation budget, consider an alternative to a conventional getaway that can provide an escape from real life without the prohibitive price tag.

Staycation. Spruce up a spare bedroom with scented hand towels and mini soaps and shampoos to give it a hotel feel. Sleep there during your “vacation” and spend your time trying out local attractions, festivals and restaurants you’ve always wanted to experience.
Swap houses. Have friends or family who live out of your area? Ask about switching houses for a week. Then, you can all get an inexpensive vacation.
Camping. If you have camping gear or can borrow it from a friend, camping can cost next to nothing. It can also be a fantastic way to enjoy a rejuvenating break from the grind of life.

Create a budget

If you just gotta splurge on a typical getaway, here’s how to create a realistic budget:

Review your savings. If you’ve been steadily saving up for this vacay, you’ll know how much you have to spend. If you haven’t saved anything, consider an unsecured loan through your credit union and/or saving up until your vacation by trimming your discretionary expenses.
Prioritize. Before assigning dollar amounts to categories, pick what’s most important to you while on vacation. List your priorities from most to least important for future reference.
Assign dollar amounts to big-ticket items. Choose and price a destination. Set aside money from your budget to cover what it takes to get there, as well as accommodations.
Divide and conquer. Now, assign a realistic dollar amount to your remaining categories. Include food, tickets to entertainment venues and attractions, gifts and souvenirs, transportation costs, and pack in some “miscellaneous” money for unplanned expenses.

Stick to your budget

Now comes the hard part: sticking to your budget while on vacation.

First, consider using cash. You’ll be forced to stick to your budget with no way to overspend. Just make sure you plan for how to keep it secure at all times.

Next, make advance reservations when you can. This way, you have fewer spending choices for when you’re actually on vacation.

Finally, keep a copy of your vacation budget handy while you’re away so you can pull it out whenever you come up against a spending challenge.

Don’t let your budget go on vacation!

5 Steps to Take Before Making a Large Purchase

Bitten by the gotta-have-it bug? It could be a Peloton bike that’s caught your eye, or maybe you want to spring for a new entertainment system? Before you go ahead with the purchase, though, it’s wise to take a step back and follow these steps.

Step 1: Wait it out

Often, a want can seem like a must-have, but that urgency fades when you wait it out. Take a break for a few days before finalizing a big purchase to see if you really want it. For an extra large purchase, you can wait a full week, or even a month. After some time has passed, you may find that you don’t want the item after all.

Step 2: Consider your emotions

Before going ahead with your purchase, take a moment to identify the emotions driving the decision. Is this purchase being used as a means to fix a troubled relationship? Or maybe you’re going through a hard time and you’re using this purchase to help numb the pain. Be honest with yourself and take note of what’s really driving the purchase. Is it really in your best interest?

Step 3: Review your upcoming expenses

What large expenses are you anticipating in the near future? Even if you have the cash in your account to cover this purchase, you may need that money soon for an upcoming expense. Don’t spend money today that you’ll need tomorrow.

Step 4: Find the cheapest source for this item

If you’ve decided you don’t want to go ahead with the purchase, there are still ways to save money. In today’s online world of commerce, comparison-shopping is as easy as a few clicks. You can use apps like ShopSavvy to help you find the retailer selling the item at the best price.

Step 5: Choose your payment method carefully

Cash can be your go-to choice if you have the funds on hand now. A low-interest credit card may offer purchase protection, just make sure you can meet your monthly payments. Finally, a buy now, pay later program can be just what you need if you have 25% of the purchase price saved up and you can afford to pay off the rest in fixed installments.

If you’re ready to make a large purchase and need a loan, contact Olean Area Federal Credit Union to explore your options!

5 Reasons we Overspend (and How to Overcome Them)

What makes us overspend? Let’s take a look at five common reasons and how we can overcome them.

1. To keep up with the Joneses

When people who seem to be in the same financial bracket as we are can seemingly afford another pair of designer shoes for each outfit, we should be able to afford them, too, right?

Break the cycle: Learn to ignore how your friends and/or peers choose to spend their money and develop a self-image that is independent of material possessions. Let the Joneses keep up with you!

2. We don’t have a budget

When all of our spending is just a guessing game, it can be challenging not to overspend.

Break the cycle: Create and stick to a monthly budget that covers all of your needs and some of your wants.

3. To get a high

Research shows that shopping and spending money releases feel-good dopamine in the brain, just like recreational drugs.

Break the cycle: There’s nothing wrong with spending money to feel good, so long as you don’t go overboard. Try putting some “just for fun” money into your budget so you can make that feel-good purchase when you need to do so without letting it put you into debt.

4. Misuse of credit

Credit cards offer us incredible convenience, but they also offer us a gateway into deep debt. Research shows that consumers spend up to 18% more when they pay with plastic over cash.

Break the cycle: When shopping in places you tend to overspend, use cash and you’ll be forced to stick to your budget. You can also use a debit card with a careful budget so you know how much you can responsibly spend.

5. Lack of self-discipline

Sometimes, we just simply lack the discipline not to exchange immediate gratification for long-term benefit.

Break the cycle: Define your long-term financial goals. Create a plan for reaching them through small and measurable steps. Before giving in to an indulgence you can’t really afford, remind yourself of your long-term goals and how much longer your timeframe will need to be if you spend this money now.