Saving: the process of putting away money for future uses. This is where you are thinking about your future self. When the bills are rolling in it is hard to put away money for savings at the end of the month. An important concept in personal finances is "Pay yourself first". This means that when you get your paycheck the first thing you do is put it away as savings. Some people like to transfer the money themselves and others have it automatically deposited into a savings account. Depending on your saving and spending goals it will shape how you budget your income. Here are several recommendations made over the years:

10-10-80 Plan: This is where you put aside 10% for savings, 10% for donating and giving and 80% for the rest of your monthly expenses. (This plan is a great plan for getting started on a budget, but overtime the percentages might not reflect what healthy personal finance looks like for you. For example, maybe you want to save much more for a down payment on a car or give more money monthly to a local charity).

50-20-30 Budget: This is where you spend around 50% on needs (groceries, housing, transportation, etc.), 30% or less on wants and 20% towards savings and debt repayment. (This budget is great because it is simple. It also is important to budget for wants, life isn't just about building cash but also enjoying it. This budget also is a great starting place but may not meet your needs as you grow financially.)

After you have a budget you should set some financial goals. (Ex. buying a bike or your first car). To do this we use SMART Goals.

Specific: Simple and to the point.

Measurable: How will you know you are meeting your goal?

Achievable: What will you need? Is this goal realistic?

Relevant: Why does this goal matter to you?

Time Bound: When will you have met your goal by?

Next we are going to look at Spending!

Spending: the process of using money to purchase goods and services. This is where you need to put on your strategy hat on! When budgeting it helps to break your expenses into different categories:

Fixed Expenses: These are cost that stay the same each month. Generally, these are expenses that are billed or are a service you pay once and use as much as you want. (Your Mortgage or House rent, streaming services like Netflix, etc.)

Variable Expenses: These are cost that change each month. These are cost that change based on how much you purchase. (The more clothes you buy the more it costs, buying the cheaper ingredients will reduce your grocery costs).

Occasional Expenses: These are the cost that don't happen every month. These are unique events like birthdays, holidays or even sad events like funerals that require spending. (For holidays like Christmas many people save for several months for presents or for a birthday party they buy decorations).

You could really see budgeting these expenses as a game, where can I save and spend my money the best! Instead of getting 30 bottles of soda you could new pair of headphones. This brings us to the next important concept, Comparison Shopping. This is where you compare the prices, details and deals regarding similar items. Sometimes its worth it to spend more for a better quality item, but other times your just wasting money. Here are a few economic terms that could influence the cost of items:

Supply: How much of an item or service is available to people.

Demand: How much desire people have for an item or service.

Dirt is cheap! You could buy 2000 pounds of dirt for $15. Why? Dirt is all over the place and so there is plenty of supply and most people are not looking to purchase dirt. Here are 3 situations that affect prices:

Shortage: When there is low supply and high demand, prices are higher.

Equilibrium: When supply and demand are equal, prices are fair.

Surplus: When there is high supply and low demand, prices are lower.

Next time you are shopping take a moment to think about why the prices are what they are.

Now that we have looked at spending lets move on to Donating!

Donating: the process of giving money to help improve your community, country or a cause. This is where you have the chance to make things better for others. When we give to charities, our place of worship, non-profit organizations we are practicing putting others first. As the saying goes, "It is better to give than receive". So as you are planning your money management you want to think wisely about who you will donate to. First thought:

Charity: This is an organization that uses donations and volunteers to help others and work towards a cause.

A good example of this would be the Salvation Army. If you look on their website they are helping provide Christmas presents for those who can't afford them, providing homes for homeless, helping people with alcohol and drug rehab, job training and much more. They do these things because it falls under their mission statement. Having a statement like this helps guide them and direct what they do. Now before you go and donate to a charity you need to do some research.

When a disaster happens, many non-profits like the American Cross and others want to step in and help. They see this as an opportunity to fulfill their mission of helping those most in need. However, there are others out there looking to make a profit off of the kind hearts that donate. These are called Charity Scams. They say they are helping, but really just collecting the donations for themselves. When donating make sure it is to a reputable (meaning trustworthy) charity. Websites like Charity Navigator help people to look at the factual data behind your giving. It breaks down a charity by Accountability and Transparency and Financially.

Organizations need to be open and honest about how they are conducting their work. Do they share who is on the board that makes decisions, do they share how much their CEO makes, do they document board meeting notes? When they share this information it helps create trust with the donors. Next, you want to check how they have received the money and spent it.

Contributions: This is the money they gain through donations, gifts, membership dues, fundraising events, government grants and other organizations that give to them (like United Way).

Program Expenses: This is the money they spend on the cause they are working towards. For example, this would be dog food purchased for animals at the Pet Shelter.

Administrative Expenses: This is the money that is paid to the employees who work at the organization. (Volunteers are donating their time and work)

Fundraising Expenses: This is money that is being spent to help raise awareness and to receive more donations.

When you research this information it will help you make well informed and impactful change towards the cause you are supporting.

Lastly, let's take a minute to review the four major components of money management.