Amy Milligan, VP of Home State Bank. Photo courtesy of HSB
April is National Financial Literacy Month and for a lot of individuals and families, budgets are a critical step toward having a successful future.
Home State Bank Vice President Amy Milligan says a budget is simply a plan of how to spend and save every month that includes things like needs and wants.
She suggests having a savings account with a financial institution that can be primarily used when unplanned expenses such as a major house or vehicle repairs suddenly happens or a medical bill needs to be paid. She talks about how to do that and a recommendation for the amount that people should be saving from their paychecks.
“My biggest advice is look to see what some of those things have been in the past for you and how much they cost. You know, if you’re living paycheck to paycheck, anything you can put away is going to be helpful. Best rule of thumb, can you put ten percent away? Even better than that is 20 percent.”
Milligan advises to split a part needs and wants in a budget. She states that needs are the things you can’t live without such as food, transportation and housing, while the wants are going on trips, additional features when purchasing a vehicle and eating out, among other things.
Milligan says another financial tool, when used properly, are credit cards. She points out that if people can pay off their credit card expenses in full within the same month of the charge, that is the proper way to use it. Milligan explains how it can be beneficial to have a credit card with the scenario of using it correctly.
“So it’s showing that you’re given credit, you wisely use credit and you wisely pay it off that’s going to help your credit score for when you want to buy a car, or a house, or something bigger because you’re going to have a higher credit score which means you’re going to get a lower rate, which means you’re not going to have to spend as much money over time.”
Milligan adds it is never too late to start using a budget and sticking to it can help your family’s finances gain and keep stability in the long run.