How Do You View Financial Allocation?
I didn’t have a savings account as a kiddo. In fact, I didn’t have one until I was 16. It’s not like that’s so outrageous; I didn’t have a job as an 8-year-old, so my parents didn’t see the need to open an account for me. I kept my birthday money in a box under my bed, and my parents, well, they kept savings for me in their accounts.
We recently held our third annual CU at the Zoo event with our Junior Account holders. These lucky 8-10 year-old members got to spend the morning on a guided zoo tour at the number one zoo in America, followed by lunch and a short presentation about personal finance.
The lesson revolves around allocating money appropriately--ideally, as a child-- SAVE 50%, SPEND 30% and SHARE 20%. The $100 example was pretty easy for these whipper-snappers to pick up, but it really got me thinking about how we, adults, allocate our finances.
I could be generalizing, but I’m going to guess it’s hard for many, even young preteens, to save half of their income. That shouldn’t be an excuse to not save at all. Even investing 1-3% of your paycheck in a 401(K) adds up to quite a chunk of change over the years. I’d also venture to guess many of us strive each year to save more money. Maybe it would help if we stopped setting budgets for the best-case scenario and started planning for the not-so-good. Budgeting extra-even extra spending money would make us less likely to have to borrow from savings.
I read a lot of personal finances articles; I write them as well, but I also struggle with following my own advice at times. I’ll follow my budget strictly for three weeks, and then blow it the last week of the month. Then I tell myself to audit my spending and see where to cut back, but I never do! Restaurants absolutely destroy my budget month after month, but for some caramel reason, I don’t adjust. I think others my age also spend a little more lavishly than they should assuming that one day they’ll make more money. We’re only human, and sometimes it can be hard balancing fiscal responsibility with fun.
Okay, I’ll admit it. I’m really bad with this one. I know using extra money to pay off student loans quickly and build my emergency fund isn’t just an excuse to not donate money; it’s reality for many recent college grads like myself. But, here’s where many of my friends and I run into trouble: We say, “I’d rather donate time-it’s much more impactful!” Plot twist: We rarely actually donate the time. Are you guilty of this too? The graphic designer Aaron Draplin challenged his audience in a recent TedTalk to commit 4 hours a week to free work that will make the world a better place. It’s harder than it sounds, but it truly could change the world.
I hope this got you thinking about how you allocate your finances. Even though it’s challenging to change our ways financially, it’s not a bad idea to start.
How do you “C.U.” bettering your financial planning in the near future? Tweet us your thoughts to @ameaglecu!