4 lessons to help improve money management, reduce financial stress

MILWAUKEE - Managing your money isn't always easy -- especially during an uncertain time such as this. Brad Allen with Drake and Associates joins FOX6 WakeUp with four lessons to help improve money management and reduce financial stress. 

Q: HOW ARE AMERICANS FEELING ABOUT THEIR FINANCES RIGHT NOW?

• Our high unemployment rate coupled with stock market volatility has many Americans worried.
• New numbers show that 58% of Americans are more concerned about their retirement today compared to a year ago.
• Most of their reasons are financial. They’ve either had to dip into savings or their retirement funds have lost value, and there’s greater concern about how much money they will need in retirement.

Q: WHAT IS YOUR FIRST TIP TO HELP US GET ON THE PATH TO FINANCIAL STABILITY?

• The first thing you must do is learn how to budget.
• Budgets are essential in developing the right spending habits, tracking where your money is going and setting aside money for the future.
• A simple budgeting plan is the 50/30/20 budget. You spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants and at least 20% on savings and debt.
• Over the long term, someone who follows these guidelines will better manage their debt and build a comfortable retirement.

Q: THE SECOND TIP IS TO USE CREDIT WISELY. HOW DO WE DO THAT?

• Those who carry a balance on their credit card each month owe an average $9,300.
• Research the interest rates you’re paying and the late fees on each card.
•  Interest payments and penalties add up, so it’s important you understand how each card works.
• A debt worksheet can help you keep track of balances, due dates, minimum payments and interest rates, and I have one on my website at wealthwisconsin.com.

Q: TIP THREE IS TO START AN EMERGENCY FUND.

• One thing this pandemic has shown us is the need for an emergency fund.
• When families don’t have money to face an unexpected expense, like a layoff or medical bill, they may have to borrow money - and that can lead to a cycle of debt.
• Ideally, you want 3 to 6 months of expenses set aside in a savings account.
• You can start by setting aside $25 each week. Before you know it, you will be prepared for the unexpected!

Q: TIP FOUR IS TO SAVE FOR RETIREMENT. HOW DO WE DO THIS?

• Half of people 55 and older are in danger of retiring in poverty or near poverty.
• The amount you’ll need for retirement depends on your personal situation, but a good rule of thumb is to have 10 times your annual salary saved by age 67.
• Work with a financial professional to set savings goals and create a comprehensive plan for retirement.
• Everyone has different goals for retirement, and they will have a unique path to get there. At Drake & Associates, we really get to know our clients so we can design a customized plan to help them reach their dream retirement.