New Year, New You, New Budget

Just like swearing off chocolate and carbs, sticking to a household budget is a New Year’s resolution easier made than accomplished. In fact, according to the National Foundation for Credit Counseling’s 2017 Consumer Financial Literacy Survey, last year only two in five U.S. adults said they had a budget and kept close track of their spending throughout the year.

Everybody knows it’s important to track personal finances and maintain your financial health. So, why do Americans have such a difficult time sustaining a budget?

It likely doesn’t have much to do with a lack of money. According to the U.S. Bureau of Labor Statistics, the average household in America makes $74,664, well above the $18,871 national poverty line for a family of three. It’s also unlikely that consumers are too busy to keep up with their budgets. Some budgeting apps like Wally and Mint, can track spending and income with minimal attention from the user.

Financial planning and psychology experts believe the real reason people struggle with budgeting is psychological. According to an article in the Journal of Consumer Psychology, humans only have a finite amount of willpower. We can only restrict ourselves so long before we indulge. Just like dieting, people tend to see budgeting as restrictive; therefore, struggle to preserve the motivation to stick with it.

As you ramp-up your drive for 2018, here are some tips to help you exercise good budgeting habits and overcome a craving to spend.

  • Don’t mindlessly spend: If you don’t feel you have enough money, you could be spending money unnecessarily. Search the corners of your budget for empty spending that isn’t serving you. Many financial blogs offer creative tips to help with this. Check out Lauren Greutman’s list of 13 Things You Should Never Pay For.
  • Make time: If you don’t feel you have enough time to track spending, try finding a simple solution – like an app. Phone apps such as Wally and Mint track spending and income for you. They require minimum attention and time.
  • Start small: It takes weeks to form a new habit, and the same thing applies to tracking your income and expenses. In the beginning, keep it simple. If your spending plan is too complicated or restrictive, you will not stick to it.
  • Budget with a friend: If you don’t feel confident, get some help! Apps, financial blogs, and spreadsheets might help if you’re a little stuck in your budgeting process. But if you don’t even know where to start, consider seeking help from a trusted family member or a financial expert. Your local credit union is dedicated to financial literacy and can offer help and advice for your unique budget.

To learn more about how a credit union can help you be financially fit, visit www.aSmarterChoice.org and find a credit union in your area.

Shop Smart and Save This Back-to-School Season

It is getting to be that time of year when most families are thinking about purchasing school supplies for the upcoming year. Back-to-school shopping is the second-largest consumer spending category after holiday shopping, according to statistics from the National Retail Federation and Research Now. An additional survey conducted by Deloitte found that 32 percent of families expected to spend more on school supplies this coming year because either their children needed more items, because materials were increasing in price, or because students needed more expensive supplies.

An increase in back-to-school expenses can be a strain on family budgets. In a 2016 survey conducted by the National Retail Federation, back-to-school spending climbed to 55 percent over the past 10 years with the average family spending $107.76. A family could end up spending an estimate of $674 on back-to-school shopping when including other expenses such as clothing, shoes, and electronics,

Despite rising costs, back-to-school shopping does not have to be a budget-buster. A little pre-planning and early shopping can help avoid extra spending. Nationally, 73 percent of back-to-school shoppers plan to shop a month to three weeks before the start of school.

Here are some ways to shop smart during the back-to-school season:

  • Timing Matters: Look for end-of-summer sales and tax-free holidays, especially on big ticket items. In Ohio, the tax-free holiday starts on Friday, August 4, 2017, at 12:00 a.m. and ends on Sunday, August 6, 2017, at 11:59 p.m. To learn more about this tax-free holiday weekend, visit the Ohio Department of Taxation website.
  • Plan Ahead: Before making new purchases, take an inventory of supplies already available around the house. From there, make a list of items still needed. Two-thirds of consumers are likely to buy more than what is on their list, so be sure to stick to a shopping plan.
  • Avoid Fancy Supplies: Instead of spending money on the brightest, shiniest, and glitteriest supplies with a licensed logo – which adds cost – create do-it-yourself art projects for kids to decorate their own supplies.
  • Use Technology to Find Deals: Let technology help save money by doing an online coupon search, monitor favorite stores’ website and social media accounts to get advance notice of sales, and sign up for coupon links.
  • Stock Up: If there are good deals for certain supplies that have an on-going need then stock up on those items in case something runs out, gets lost, or breaks.

To learn about credit unions and how they can help plan for the back-to-school season, visit www.aSmarterChoice.org.