Evaluating your Savings Needs
Sun, 11/11/2012 - 8:57pm | by monicadear
With the low interest rates available and the challenge of many women to manage their family finances, their business finances, and the changing needs of family - from children going to college to elderly parents needing care, we're finding a great need for education and self-awareness about personal finance options.
A great place to get started learning about finances is Investopedia. You can also learn about personal journeys through blogs like I Will Teach You to Be Rich, Millionaire Mommy Next Door, or Get Rich Slowly.
The beginning of the year is a great time to get organized and review (or start) your savings plan.
Track Income and Expenses
You'll want to calculate your actual take-home pay against your ongoing expenses. Pay stubs, invoices, self-employment income, interest income, dividends, gifts, royalties, and any kind of payments you receive all count towards your income. For expenses, consider your housing, utilities like electricity, water, sewage, trash, telephone/cable/satellite/internet costs, groceries, then transportation, child care or school fees, insurance, clothing, other supplies, and extras.
Once you get a sense of your income and expenses, consider setting a budget for each month. This helps you allocate what is coming in against what you need to spend. Here's a sample household budget you can use: Sample household budget
For emergencies, a rule of thumb is to have 6 months of your monthly expenses in liquid format. You can build this up by socking away 10% of your take-home pay into savings until you reach this bottom level. Then you have some "breathing room" should something unexpected happen.
For the rest of your savings plan, decide your target goal and then break that down into weekly and monthly activities towards that goal.
Setting up your automatic savings to "sweep" from your account directly into a savings account is the best way to "set it and forget it." By depositing directly, you set your savings on automatic and you don't have to think about it.
Traditional places to park your savings are in lower risk vehicles such as CD's, treasury bills, and money market funds. Consider "naming" each account within your records, such as one for retirement, one for any upcoming large purchases such as a car, condo or house, or college fund.
Choose a FDIC-insured bank, either at your local branch or through an online bank, that has high yields such as through Bankrate.com.
Follow us for additional tips and reminders on managing your money. You're worth it!
USA.gov has straightforward information on common personal finance issues:
Inc.com has resources and ideas fpr the business side
Mint.com allows you to track all your personal bank accounts - for savvy users only.
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