If you’re interested in spending more time focusing on your day-to-day financial choices, consider these financial strategies as starting points to helping you build wealth.
An accurate budget: Know yourself to set the right goals
The first step in building wealth is to set a plan, so build a detailed budget of expenses and incomes, as well as short- and long-term goals and needs. Budgets are a critical training ground to get to know how you spend and save, as well as identifying what you can change in service to your larger plan—like reducing entertainment spending to accumulate more for your savings account.
More than anything, budgets must be accurate to be useful. If you don’t factor in your penchant for Friday night pizza, or your electronic book purchases, you may be setting yourself up for disappointing results later. And just as you should be honest in your budget by being realistic and identifying trouble spots, you should also be realistic when setting goals. If your goals don’t align with your lifestyle or are too much of a stretch, even the best financial strategies may not help you reach them.
Resilient savings plan: Pay yourself first
One of the most important financial strategies is to set aside savings. With a savings account, you can be ready to face unexpected expenses or events.
When creating your budget, build in an amount each month that’s allocated specifically for savings. Some financial professionals call this tactic “paying yourself first” because it helps ensure you are saving for “future you” opportunities in addition to paying for “current you” expenses. Even if this amount is small at first, simply adding it as a must-have line item can start ingraining the habit. And small amounts build up over time—whether it’s months or years in the future.
And, most importantly, savings should be used only for what they are designated for, whether that’s vacation, emergencies or a life event, like buying a house. Keep those funds safe from everyday spending, no matter how enticing the sale, item or experience.
Responsible credit card use: A little help when you need it
Even with a set plan, there can also be value in having a little help from time to time. With that in mind, one of your financial strategies could be to use a credit card to make the purchases you need now, whether it’s last-minute childcare expenses or unexpected medical costs. Research credit cards with perks that help you reach your financial goals faster, like cash back rewards.
One caveat to credit cards: if you are a beginner in laying your financial foundation, maintaining a credit card can be tricky. It’s important to budget for paying down or paying off your credit card balance each statement to prevent interest from accumulating. However, the benefits can be worth the effort of careful use and responsible payments. For example, credit cards can help you build up your credit score and can be a more secure way to pay due to their enhanced fraud protection.
Charitable giving and sustainable investing goals
Once you have established and maintained a responsible outlook on your finances, you may find yourself with some extra money. With these extra dollars, consider taking an active approach to helping others, both through charitable giving, and investing in ways that support your values.
If you find yourself in a financial position to help others, there are numerous resources that provide ratings and reviews of nonprofit and civic organizations across the world. Some financial strategies to consider if you want to plan for charitable giving include:
- Watch for scams: Unfortunately, even charitable giving can be an activity vulnerable to scam artists. To help prevent fraud, make sure you know the person or organization you are donating to, research the nonprofit on a charity rating system like Charity Navigator‡, and never donate via email or over the phone.
- Don’t stretch your budget: Generally, your money can go further if you donate it as a larger chunk to one organization rather than spreading it thinner across many. But, no matter how you choose to donate, make sure the amount is aligned with your financial plan and monthly budget.
- Expand your outlook: Supporting your community can extend beyond your cash donations. Consider volunteering, serving on nonprofit boards and investing in environmental, social and governance (ESG) portfolios, which place emphasis on companies and stocks that operate sustainably.
Finding financial strategies that work for you
Above all, find financial strategies that help you stick to your plan. As you continue to cultivate financial independence, take steps to learn about your money, establish a savings account, take advantage of credit card benefits and contribute to your community.
You need to earn, grow and plan for the life you want, and beyond. Stay in the know with UMB and learn more about how we support Women and Wealth.
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This material is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities or engage in any specific investment strategy. Statements in the presentation are based on the opinions of the author and are subject to change at any time without notice. You should not use this presentation as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. UMB Financial Corp., UMB Private Wealth Management and UMB Financial Services, Inc., and their affiliates, directors, officers, employees or agents do not accept any liability for any loss or damage arising out of your use of all or any of this information.