In this webinar, you’ll learn how to live within your means as a key to financial stability. It’s amazing how easy it is to blow through your paycheck when you don’t practice mindful spending. Get in the habit of tracking where and how you spend money. You may be surprised to see where it goes.
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5 tips for more mindful spending
Good afternoon, and welcome to today's webinar, 5 tips for more mindful spending. My name is Courtney Mahar, and I'll be moderating today's session compliments of U.S. Bank. Before we get started, I'll go over a few housekeeping items.
All participants have been placed on listen only mode to prevent any background noise. Today's webinar features PowerPoint and polls. We will not host a live Q&A session. Please book your appointment with a banker at usbank.com/book if you have additional questions following today's presentation.
Please share your feedback with us directly using the post-session survey. This Webex conference will be recorded. If you object to this recording, you must disconnect from the conference line at this time. The recording will be posted to usbank.com/financialiq in the next week.
I'll turn the recording on now. Now I'll turn it over to today's presenters. Take it away, Nicole.
Thanks, Courtney. Hi, everyone. My name is Nicole Freeman, and I'm a Goals Coach for U.S. Bank. I'm originally from New Orleans, Louisiana, but I've been living in Las Vegas for the past year. I have an educational background in psychology, and I have experience in both psychology, behavior intervention, and education. Nicky?
Yes. Hi, everyone. My name is Nicky Christianson, and I am a director of Enterprise Account Management at EVERFI. So EVERFI is an education technology company. We build and design digital courses that help learners of all ages learn critical life skills, like financial literacy. We are based in Washington, DC, and I live and work remotely out of St. Petersburg, Florida.
Hi. My name is Mark Salatino. I'm a deposit product manager at U.S. Bank. I live in Minneapolis, Minnesota, and our team is responsible for managing the customer experience with our consumer checking, savings, and CD products.
So let's go ahead and start with a poll. Please use the radio buttons that are on the right-hand side of your Webex screen to answer this question, which is, do you currently live within your means. The poll will be open for two minutes, and then we'll share the answer.
OK. A quote from Rosette Wamambe states, "Budgeting is not just for people who do not have enough money. It's for everyone who wants to ensure that their money is enough." It's important to realize that saving money is a means to an end, but it's not an end in itself.
So as you create your budget, focus not on the negative but on your smallest win. And it seems as though our results are in. And the majority of you are saying that, yes, you are living within your means.
Mindful spending can be defined as a feeling of goodness about what you're spending your money on. It's about knowing what your goals and values are and making purchases in a way that aligns with those. I had a client whose goal was to pay off his car.
He knew that his spending habits were what was keeping him from completing that goal. And so he began to change how he spent that money by making a commitment to himself to cut back in certain areas and apply those funds to his car payment. This resulted in him paying off his car within a few months.
Yes, and, Nicole, 95% of our brain is hardwired to act impulsively automatically and really without conscious effort. So this is why it can be so hard to budget, which requires being proactive and planning logically. Personally, I know when I go shopping for new clothes or new shoes, it's typically a spur of the moment decision based more on emotions than a really thought-out plan.
And so it's hard to know how often that shopping bug is going to hit, and it's usually unplanned, right? So by creating a monthly budget, I can set aside a certain amount of money every month to give myself some freedom and flexibility to purchase items in those moments, while I'm still ensuring that I'm taking care of my long-term goals. So this is what mindful spending means to me.
Thanks, Nicky. And what I say about mindful spending is if you're trying to be mindful about spending or anything else, it's largely about two things, being aware and being intentional. The awareness piece is especially critical. It's all too easy to look at the balance in our checking account, for example, and then think to ourselves, OK, there's a balance of $500 in there.
So that means I have $500 to spend. It's important to stay aware of the need to continually save. And in this example, at least some of that $500 probably needs to be earmarked for savings versus spending. And being intentional, that's saying to ourselves, for example, here's my spending plan. And here's why I'm comfortable with the amount that I'm spending versus saving each week, and I'm confident that I can stick to it over time.
Thanks, Nick. Let's talk about analyzing your spending. A good way to do that is by creating a budget plan. When budgeting the overall practice, it can seem extremely overwhelming. But breaking your budget down into sections can alleviate some of that stress.
On the right side of your screen, you can see an example of a budget. For this budget, my client and I started out by discussing how much income she had coming in. We then focused on the necessities and broke down the budget into categories.
Breaking a budget down into different categories allows for you to comb through all of the expenses that you have throughout the month. Seeing where she is with her obligations, it helped her to realize that she currently does not have enough money to begin saving. She realized that she needs to cut back on some of her spending in different places, as well as begin working towards bringing in some extra income. Nicky?
Yeah, I really think this step of determining your known monthly expenses is really important here. Some expenses that you just shared, Nicole, are fixed, right, which means they are the same exact amount every month, things like rent or mortgage and car payments, for example. However, some things, like food and entertainment, can vary month to month.
Those are called variable expenses. So to keep these variable expenses in check, I personally like to download an Excel sheet of all of my checking account transactions every month or so. And what I'll do is go through and look at what I've spent over those past four weeks or so at things like restaurants and the grocery store, for example.
And that gives me a really kind of realistic view at what I'm spending in that variable food category. Then what I can do is see if I need to make any adjustments for the next month's budget, like maybe cooking in more versus going out to eat. So I think doing this reflection exercise every few months can really give you a good average of what to expect when you're looking at those variable expenses.
Yeah. And I'd say that, well, we know that honesty is always the best policy. That's never more true than when it comes to creating a budget plan. Be honest with yourself about where you're willing to potentially make changes in your life and where you're not.
For example, when many people start analyzing their spending and see how much money that they spend on dining out, a lot of times their initial reaction is to resolve never to eat out again for several months. Well, for many busy people and families, that's just not realistic. But the good news is that most people do not need to make huge changes in their lives in order to live within their means. Most of the time, they only need to make minor changes. But they do need to be diligent about sticking with those changes.
So in this example, instead of saying you're not going to dine out again for months, maybe resolve to dine out no more than, say, two times per week, instead of your usual four times per week. And if you're not willing to make changes in your dining habits, then that's fine. But think about where else in your life you might be willing to make changes and what impact that could have on your spending and your savings plans.
All right, so common budgeting mistakes and how to avoid them. I'll start off here with overgeneralizing and then pass it on to Nicole. So with overgeneralizing, often a budget includes a category like bills. And without defining those bills, the proper amount of money isn't allocated, right? So at the end of the month, we fall short.
Consider the bill category utilities. Usually utilities are a catchall for things like power, water, trash, cable, right? And we allocate a specific amount each month to pay utilities.
While we pay set amounts each month for some of our utilities, some will fluctuate or be variable, like I was speaking to on the previous slide. And we don't plan for that, which can leave us short in the utilities category. So I think the best way to avoid overgeneralizing is to choose budget categories that are specific enough and also personally meaningful to you.
If you don't have pets or kids, don't clutter up your budget with those categories, right? If you spend a lot on supplies for a pottery hobby, for example, or maybe it's a side hustle, then by all means add a category into your budget for pottery supplies. The best budget really is one that makes sense to use, and it's really easy.
And it makes it an automatic part-- automatic thought for your brain to know which category to put your actual daily expenses in. So you can actually on this slide see a link here for a budget worksheet on usbank.com/financialiq. And it's a great starting point to go in and start creating your own budget categories.
Thanks, Nicky. And I'm going to be talking about unrealistic targets. Oftentimes we create a large goal for ourselves, which can lead to feelings of failure when we don't reach them. So to avoid this, think about the ways that you handled large goals in the past. Where did you struggle?
And thinking of larger targets, it's helpful to break the goal into sections that lead up to the larger goal. Think about what you need in order to reach that goal and strive to meet the smaller goals within it. This creates feelings of success along the way, in turn giving you the motivation to continue working towards that larger goal.
For example, I would love to purchase a home. But thinking of purchasing a home is overwhelming for me because I know a big part of that goal is saving for the down payment. However, there's also increasing my credit score, paying off certain debts, looking at the housing market, and much more. So breaking my goal into these smaller sections allows me to stay focused and see myself moving towards purchasing the home. Mark, can you tell us a little bit about budget creep?
Sure thing. So the key to being successful at savings is to stay disciplined. Start by setting your goals and then figure out which tools will be most helpful to you, automatic transfers, purchase transfers, et cetera, and then execute consistently over time. That last part, however, execute consistently over time, that can be much harder than it sounds.
One reason is that our lives can change unexpectedly with little warning. The pandemic we've experienced over the last year is a good example of that. So while we need is stay disciplined, we also need to be flexible. And while being flexible is good, if we don't maintain the optimal balance between staying disciplined and being flexible, then it's easy to start moving away from the behaviors that made us successful.
The best way to guard against this is to do a periodic budget tune-up. It doesn't need to be complicated. In fact, simpler is better. Just ask yourself, what's different now versus a few months ago.
If my goals have changed, do I need to save more, save less, save differently? A good analogy here is going to the gym or getting exercise. Doing that regularly is certainly a great goal all by itself.
But you probably don't want to stick with the exact same workout routine for months and months at a time. There will be periods where you may want to exercise more or less, depending on how you're feeling and how your health needs are changing. And the same is true when it comes to your budget and saving needs, too.
Tip number 1 is to use a budgeting tool. And we received a question from Scott about better ways for tracking spending instead of the old Excel spreadsheet. Well, you can check if your bank has budgeting capabilities within their bank app. U.S. Bank offers great budgeting resources directly in the mobile app and at usbank.com/financialiq.
One of my clients created an Excel spreadsheet that checks each of her credit cards in order to help her pay down her cards and to help her check her spending. She was able to see where she was overspending and where she needed to put more money. This helped to keep her motivated in paying off that debt and keeping the debt off. This is just one creative way to check your spending, but it doesn't need to be complicated. Use a free tool to help simplify the checking for you.
Yeah, we carry our phones with us everywhere, so budgeting tools that are quick and easy to access really make a difference. I kind of look at these types of tools as a way to keep yourself honest and maybe decrease spending in some areas. But they're also a great way to celebrate small wins day to day and show positive progress towards your goals. Instead of waiting until the end of the month to reveal whether you stayed within your budget or not, tools on your phone can really help you stay on track and maybe even come out ahead of where you thought you'd be at the end of any given month. So to me, budgeting tools and apps really make the whole process a lot less intimidating, and staying within your budget just becomes a part of your daily routine.
So U.S. Bank's mobile app is ideal for this. Our app will automatically identify changes in spending and show you month over month comparisons in how your spending changes in a variety of categories. We also have a feature called micro savings, where our app will identify additional money that you could afford to save without disrupting your typical spending habits.
But regardless of which app or tool you use, it's only going to be effective if you stay committed to achieving your financial goals. To use the exercise analogy again, you can have the greatest exercise equipment in the world. But if you don't stay committed to achieving your health and fitness goals, it's probably not going to do you very much good.
But here's the good news. U.S. Bank doesn't just give you digital tools. We also have people in our branches and our phone centers and elsewhere who can help answer questions and show you how to get the most out of all these tools.
Tip number 2 is using commitment devices. A commitment device is a fancy phrase that behavioral scientists use to describe this concept of making decisions now to put limits on your behaviors in the future. While these can be helpful for anybody, different people find different types of commitments more useful than others. Schedule your future by taking precautionary steps, such as paying yourself first, paycheck deductions; setting an appointment with a financial advisor or a goals coach; remove options by closing those unneeded accounts but be sure to consider the consequences of closing those accounts first.
Many of my clients use me as one of their commitment devices. We meet at the beginning of the month to discuss what their budget will look like. This includes what financial obligations they have for the month, what they would like to have to spend for themselves, and what they would like to save. And then at the end of the month, we meet again to discuss the wins that they had and the challenges with their budget for the month. We work together to find some solutions to those challenges that they had and to assist with getting rid of those challenges for the next month and creating that plan for next month. Nicky?
Yeah, I really personally gravitate to the pay yourself first idea. Before I did that, when I was younger, right out of college, I used to want to save money. But it always felt like by the end of the month, all my money had already gone to food or bills. So there really was none left to save.
When I first heard the pay yourself first advice, I honestly didn't think that it would work for me. I thought, I'm already spending everything I have, everything I make in my paycheck. How can I add what amounts to another bill each month?
But I went ahead and set up an automatic payment to come out the day after I would receive my paycheck, where just a small amount would be automatically transferred from my checking into a new savings account. I set it up and forgot about it for a couple of months. And when I logged into that savings account, I remember being pleasantly surprised at how much those small payments really had built up. And I didn't miss that money month to month like I thought I would.
I use this method today really for different savings goals that I have, including travel, which is one of my favorite budget categories. So I have an automatic withdrawal that comes out of my checking account each month and goes into a savings account that I use just for future travel. So when the future reward for saving is something that's fun and exciting and personally meaningful to you, I think it makes committing to saving money that much easier and more enjoyable. Mark?
Yeah, and, you know, U.S. Bank has a great tool that can help with all this. It's called purchase transfers. And this is a really useful feature that lets you save money every time you use your debit card or credit card. You just log into your account at usbank.com, and you can set any amount between $0.25 and $5.
And every time you make a debit card or credit card transaction, that amount that you set, between $0.25 and $5, will get transferred from your checking account to your savings account. It's a great way to stay disciplined about savings because every time you spend, you save. So I'm a big fan of games. And you can use this purchase transfer feature to make a game out of managing your finances.
Start with a small amount like $0.25 or $0.50. And then over time, kind of to Nicky's point, you may realize you can afford to save a little more every time you spend and not miss it, maybe something more like $0.75 or $1. Challenge yourself to see how close you can get to saving $5 every time you make a purchase. This will help you stay on track for both spending and saving.
Thanks, Mark. So tip number 3 is to prioritize what you truly need versus what you want. Be sure to set goals for yourself and remember to reward yourself. Maybe it's with something that you want along the way.
When thinking about what you need versus what you want, you should be thinking about what you can't live without and what you can put on hold. It's important to prioritize your needs over your wants, as it allows you to visualize what's available for your needs. For example, I had a customer who loves luxury items.
However, after we sat down to do her budget and focus on what her needs actually are, she realized she actually didn't have much left over for those luxury wants. And this helped her to realize she has to start organizing her priorities, as well as saving to be able to purchase the things that she wants. Picking one item of want and putting small amounts to the side to make that purchase, it allows her to meet both of those needs and those wants. Nicky?
Yeah. So I have a recent personal example to share here. My partner and I just bought a house this past September. So I've had a number of circumstances where I've needed to weigh needs versus wants, and I'll share one specifically.
So once we moved in, I had so much fun just kind of daydreaming and planning about how to decorate and furnish the house. I created a Pinterest board, got all of my design inspiration that I found all over the internet, and browsed different online stores to find the perfect couch, the perfect patio set, dining room table, what have you. Of course, when I added up the total of what that all would be to purchase all at once, I realized very quickly that furnishing the entire house would really stretch us far beyond our means.
So what I did was create kind of three categories in my notebook and just jotted down within each category, right? The first one being what we needed right away, like a desk to work from home, for example. And then the things that would be nice to have in the next three to six months and then also which items were truly just wish list items that I could live without for a year or two years or even longer. And so it's taken discipline, of course, but it's also kind of given us good long-term goals of things that we want to save for and add in the future.
So I mentioned earlier about how honesty is the best policy. And this is another opportunity to be honest with yourself about where you're willing to be flexible versus not. So, for example, take shelter. It's a need that we all have.
But some people are flexible about the size of the home or the apartment that they live in or what neighborhood they want to live in. For other people, not so much, they need a house of a certain size that's located in a certain type of neighborhood. And if they don't have that, then they're not going to live a happy life.
Well, if that's the case, then that's fine. The goal here is to live within our means, not to make ourselves miserable. In fact, it's quite the opposite, right?
We want to live a happier, more stress-free life, where we feel we have control over our finances versus the other way around, our finances having control over us. So if you're not willing to compromise on shelter or where you live, think about where else in that list of needs and wants you might be willing to compromise. Is it food?
Is it technology? Is it shopping? I'll bet if you dig hard enough, most of you can find at least one or two areas where you're willing to make some changes that wouldn't be especially painful, and I'd recommend starting there.
Thanks, Mark. Practicing mindful spending is easier than you may think. It's about proactively planning how you will use your finances and thinking before making that purchase. For example, I had a client who lost her job. And during that time she was unemployed, she did what she had to, which means she was using her credit cards to make those ends meet, and she maxed them out.
Now that she's employed again, though, and she's taking the time to book a goals coach session where we can go over her spending, where she's using that money the most and talk about what she wants to change in her financial habits and what financial goals she wants to reach. We discussed making meaningful purchases until she was comfortable with where her savings were. And that just means that the things that we really want, we put them on hold for a little bit until we can meet those financial needs that we have to meet. Nicky?
Yeah. I think looking at the chart here, disabling one-click buying is such a good opportunity to practice mindful spending. I'd also add being mindful about online subscriptions that you signed up for. If you're like me and have connected your debit card to a variety of online subscriptions, like Netflix or Spotify, it's a helpful exercise to audit those every few months, right? The set it and forget it model of these online subscriptions makes it challenging to be mindful of the expenses.
So I think it's smart to do an audit every couple of months, where you're still-- you're taking a look at what you're still using regularly and finding value and finding joy in and maybe what you've forgotten about or don't use as much anymore. So each individual subscription, whether it be Netflix or Spotify, Pandora, what have you, it seems like a small amount when you set that automatic payment up, right? But they truly do add up when you look at the monthly total. So when you're aware of what you're using and what you could cut back on or what you're not using anymore, you may find some opportunities to save there.
And I also want to talk about-- it emphasizes the point about planning ahead. When you look at how much money is in your checking account, it's easy to overreact based on whether it's a relatively high or low number. When we see high numbers, we tend to feel great about how we're doing financially. And, conversely, when we see low numbers, we tend to get nervous.
However, the opposite can also be true. For example, our checking balance may be high right now since we just received our paycheck. But if the rent or mortgage payment is going to be withdrawn in a couple days, your disposable cash may be much lower than it seems.
I try to always think at least two to four weeks ahead. What cash inflows do I expect and what cash outflows do I expect? Do I need to transfer balances from savings to checking, or do I have an opportunity to move a little more from checking into savings? Planning ahead allows you to make more informed decisions without the panic or the worry or the anxiety that often comes from having to wait until the last minute.
Tip number 5 is friction. Friction is that little bit of effort which can slow you down. It's not a huge obstacle. It's just a little extra work or inconvenience.
But if you apply to habit, it has big results over time. Removing friction can make it easier to do something and easier for that thing to become a habit. Have you noticed how quick it is to buy things online these days?
You can store your credit cards in your phone. You can use one-click shopping, as Nicky said. I do it all the time with Amazon, and you can have something on its way to you almost as quickly as you can say the words "impulse purchase." This isn't an accident. Amazon knows what they're doing.
You can add friction back into your habits to help you break bad ones. To create friction in my own personal finances, I opened a six-month CD. This allowed me to put a certain amount of money away that I wanted to save.
And in order to touch these funds, I had to pay a penalty, and I don't like paying penalties. This stopped me from removing the money, and it became my safety net. I also took the credit cards that I didn't need out of my wallet and gave them to my spouse to hold, in order to keep me from spending money that's outside of my budget. Nicky?
Yeah. I'd like to talk a little about emergency savings. I think that's really relevant when we're talking about friction, right? So it's one thing to set up an automatic savings into a savings account to cover any future emergencies and unplanned expenses, right? I think that is important to do.
However, if you can easily and readily tap into that fund for non-emergencies and impulse shopping, it really defeats the purpose of having an emergency fund set aside. So I think this is where adding friction can be really helpful. One tactic I use personally to ensure that my emergency savings stay truly for emergencies is actually setting up two separate savings accounts. Because they're both online, I can actually add a specific name to each account.
I name one "emergency fund" and the other "vacation fund," as I had referenced before, right? So this simple naming system is a good reminder to myself that the money in the emergency account is really truly there for a purpose, should something bad or unexpected happen. But I still do then have some discretionary funds in the other vacation account for the fun things, like travel or an impulse buy, a new pair of shoes. It's more of a mental trick. But there's something about having the account name specifically for emergencies that helps me really resist any temptation to tap into it for anything else.
And another positive way that you can introduce friction is to increase the amount that you contribute to any tax-deferred retirement plans you may have, such as a 401(k) or a 403(b). This will help limit how much money is available for spending while also potentially reducing your taxable income. If it turns out that you need more money in your budget, then you can always decrease this contribution if you need to. But since there are at least a few steps that you'll need to take in order to do that, you'll slow yourself down so you'll have time to reflect on whether or not it's the best decision.
So an important part of living within your means is saving money regularly. And U.S. Bank has two different savings tools that could help with this. One is automatic transfers. You can set an automatic recurring transfer to move money from your checking account to your savings account on a regular basis.
One good way to use it is to set an amount to be transferred on each payday. So, for example, if you get paid every other Friday and you can consistently save $50 of your paycheck, then you can use the automatic transfer feature at either usbank.com or on our mobile app to set up that recurring transfer. And if for some reason you don't have enough money in your checking account to make that transfer, then it won't happen so you never have to worry about an automatic transfer taking your balance negative.
The other tool is purchase transfers, which I discussed previously. Just to recap really quickly, this lets you save money every time you use your debit card or your credit card. And to set that up, you just log into your account at usbank.com, and you can set any amount between $0.25 and $5.
Then every time you make a debit or credit card transaction, that amount will get transferred from your checking account to your savings account. Again, it's a great way to stay disciplined about saving. So every time you're spending, you're also saving. So when you use these tools together, that's when they're the most powerful. Because purchase transfers will help you save smaller amounts but more frequently, but the automatic transfers help you save larger amounts less frequently.
Saving extra has always been something that I struggled with. I struggled because I felt as though I was taking money away from myself to do the things that I want. In order to save a little extra, I wanted to do certain activities, like eating out, buying coffee, or going shopping.
So I cooked that exact meal that I wanted at home. Or I get the ingredients to make that coffee, and I make it myself. And the money that I would have spent on these items, I place that money away for saving. This allowed me to visually see myself saving money, which then gave me more gratification than I would have gotten from that $5 Starbucks coffee.
Yeah. So I think saving a little money can be-- extra money can be challenging because there's not that instant gratification, right, Nicole, to what you were just saying?
That's why it's helpful to set savings goals. So when you have specific goals in mind, then you know that every time you save even a little extra money, you're one step closer to achieving them. For example, if you set a goal of buying a new laptop, let's say, you know that you'll need around $1,000 to buy it.
Saving a little extra at a time, you can start to build up to that. So, for example, if you put away $25 a week, you'd be able to buy that laptop outright in 10 months. You can keep this end goal in mind to make saving a little bit more enjoyable.
It's time to share some additional resources that can help you build budgeting habits for more mindful spending. So now that you have the knowledge to get your budgeting on track, U.S. Bank offers resources that can help you, like our budget worksheet you can get from your banker. Or budgeting articles, videos, and resources are also available on usbank.com/financialiq.
U.S. Bank also offers one-on-one goals coaching with a goals coach like myself at no cost. Goal coaching is a great way to get started on living within your means. Your goal coach can assist with identifying spending habits, creating a budget, giving tips and tools to assist with sticking to that budget, and more. To book an appointment, you can scan the QR code on your screen or go to usbank.com/exploremygoals.
So on the next slide that we should see in a bit, a common method of figuring out how to budget is the 50/30/20 rule. And so at the top of the slide that's coming after this, you're going to soon see a link. It's a bit.ly link that's actually going to take you to a free EVERFI module on creating a budget, made available to everyone on this webinar through our partnership with U.S. Bank. So you can go ahead and type the link into your phone or on your computer, right?
And I'll take this one, too. So U.S. Bank is offering a chance to win up to $20,000 in scholarships. By completing online financial education lessons powered by EVERFI, you'll be eligible to win either $5,000 or $20,000 in scholarships. The more you learn, the more you could win. So you can also scan this QR code with your phone's camera or visit usbank.com/scholarship to get started.
That's great, Nicky. Man, where was that offer when I was in school? So as Courtney mentioned earlier, today's presentation is compliments of U.S. Bank. You have an opportunity to enter to win a $1,000 cash prize at complimentsofusbank.com.
It's as easy as entering your name, email address, and the event code MINDFUL, M-I-N-D-F-U-L. And while you're there, you can send an eCompliment card to your family and friends so they have a chance to win the cash prize, too. And you can also share on social media using the hashtag #ComplimentsofUSBank.
Making a budget doesn't have to be stressful. Using budgeting tools and commitment tools can ease a lot of that stress.
Yeah. I think my key takeaway I'd share to add to that, Nicole, is being a mindful spender doesn't mean being perfect. There may be times throughout the year that you make an impulse buy or don't put as much money away in your emergency fund as you had planned to. But don't let those moments discourage you. Just get back on track the next month and keep your goals in mind.
And what I'd like to leave you with is you don't have to do this all on your own. We're here to help. U.S. Bank has both the human and the digital resources that can help you put all these pieces together and also help you stay focused on achieving your financial goals.
Thank you to our fantastic presenters. We received amazing questions during the registration process that we'll address here today. If you still have questions following today's session, please book your appointment with a banker at usbank.com/book.
Our first question comes from John. "How do you create a simple budget?" Nicky, can you help us with this one?
Yes, happy to. So as I just mentioned a couple of slides previously, a common and easy-to-use method for figuring out how to budget is the 50/30/20 rule, which recommends that you spend 50% of your income on needs, 30% on wants, and 20% on savings or paying off debts. So to get started, you can make a list of your monthly bills, expenses, and needs, right, things like mortgage or rent, groceries, utility bills, all those categories that we've been discussing. And, next, list out your wants, which may be things like the Netflix subscription, new sneakers, or movie tickets.
And then, finally, think about your future financial goals, which could be paying off a loan or saving for retirement. Try to get these categories to reflect that 50%, 30%, and 20% of your take-home pay each month. If that's not realistic, keep it in mind as a goal and get as close as you can.
That's great. Thanks, Nicky. Our next question is from Tania. "Dave Ramsey recommends using cash only. However, in today's technical environment, that is quite challenging. Do you have any information on budgeting with different debit cards? Many banks allow for more than one debit card. And, for example, you can have a card for your categories, such as groceries, gas, or clothing." Mark, can you please help address this question?
Sure. So I agree that using nothing but cash can be challenging in the current environment. More and more of our shopping is being done online or digitally now, especially during the pandemic. And that usually requires using a debit or a credit card. And even when you're shopping at a physical location, some people don't feel comfortable carrying around large amounts of cash for making significant purchases.
So using a debit card may be the better solution versus using cash, but I don't think it's necessary to have more than one debit card. Rather, what I'd suggest is you can manage all your savings goals within your savings account or set up separate accounts for the different savings categories if that's easier. And then when you're ready to spend it, you can just transfer the money on your mobile app from your savings account to your checking account and use your debit card to pay for it.
This will help you stay disciplined in your financial life since you'll have control over how much money moves from your savings account to your checking account. And at U.S. Bank, there's no longer any limit on the number of transfers you can make from your savings to your checking account each month. So you don't have to worry about any fees for making those transfers. Plus, you'll only need one debit card, so you don't have to worry about carrying multiple cards in your wallet or remembering which card is which, so that'll make everything that much simpler.
That's great advice. Thanks, Mark. I like the simplicity of that. All right. Our last question we'll be answering today comes from Jerome.
"Clothing and accessory store pop-ups pull me in with sale discounts on things I want but don't necessarily need, but I can easily afford at the discounted sale price. When should I be using that money to double up on other larger bills I have to pay off. What can I do to keep me focused on paying down my big bills while not missing out on a sale item that might not ever happen again?" Nicole, can you help us answer that question, please?
Of course. This is a great question. You can reward yourself each time you make an extra payment to a larger bill or make more money-- make more than the minimum payment by putting aside a set amount for yourself. You can even create a "I can't miss this sale" fund. And this will allow you to feel as though you're rewarding yourself and also motivate you to pay down some of those bills.
Perfect. Thanks, Nicole. And thanks to all of you for joining today's presentation. Please use your phone's camera to register for our next webinar, "Grow your money: savings versus investing," on February 25th at 1:00 PM Central time.
As a reminder, we'll post the recording from today's presentation at usbank.com/wellnesswebinars in the next week. Remember to provide us with your feedback in the post-event survey following today's session. This concludes our webinar. Have a wonderful afternoon, everyone.
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