Part 1 - The Warm Up: Track Your Spending
Your first exercise: Get a clear picture of your spending.1. Connect your credit card and bank accounts to a free budgeting app, like SoFi Relay, or review your last statement for each account.
2. Review the total you spend in each category identified in the app. If you’re not using an app, identify your own categories and then do the math. (A ballpark is good enough.)
3. Make two columns on a laptop or piece of paper — one for the totals you’re happy with, and the other for the ones you know could be lower. Were you surprised by what you found? Getting a reality check on your spending is a great start.
Part 2 - Strength Training: Build Your Budget
Ok, you took a hard look at your spending. Now, it’s time to make it count. Just like every new fitness goal requires a personalized workout plan, you need a budget that works for you. Your second exercise: Zero in on a budgeting method that you’ll realistically stick with. There are many ways to budget your money. One of the most common is the 50-30-20 method, that takes your after-tax income and divides it into three buckets:• 50% to “must-haves” like rent and food
• 30% to “wants” like eating out and entertainment
• 20% to savings and paying down debt To help you get started, use this 50/30/20 calculator. It’s like having a personal trainer for your finances.
Part 3 - Endurance: Build Your Financial Safety Net
You’ve looked at your spending and evaluated the best budgeting approach. The final exercise: Contribute to your savings. Every little bit you save adds up, and something is always better than nothing. Regardless of how much you contribute today, it’s the mindset that’s most important. Savings gives you a financial buffer that can help you avoid taking on credit card debt if you have a sudden car repair or medical bill — or lose your job. A solid starting goal could be $500 to $2,500, but ideally you’ll want to have enough saved to cover three to six months’ worth of living expenses. Keep this savings in a separate but easily accessible account to help you resist the urge to spend it. One smart option is a high-yield savings account from an online bank like SoFi. Just make sure there aren’t any monthly maintenance fees or minimum balance requirements. Financial wellness is a marathon, not a sprint. If you completed all three parts of this challenge, take a moment to celebrate! You just took three powerful strides toward improving your financial health — now keep running with it.Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
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