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www.FredericksburgParent.NET 17 Create a Monthly Budget "A solid budget is the foundation of a healthy financial plan," says Shaulis. Essentially, a budget tracks your income and expenses and tells you what's left over. Over time, a budget can reveal certain patterns and help identify waste- ful spending. For instance, how that mere $5 coffee-and-doughnut expenditure five mornings a week adds up to $100 a month. However helpful, creating a budget can seem like a daunting task. Brown agrees. "This can be challenging, and I'm a fan of using software to help," he says. "The first app I ever purchased was an electronic personal finance program, and I've used software to help manage my home finances for decades. A great soft- ware tool should prevent you from spending more than you have, allow you to import transactions from your bank, and enable you to track and review your past spending." No matter how you choose to chart your budget—app, software, or pen and paper—keep these words-of-wisdom from Shaulis in mind: "It doesn't have to be complicated, but you do need to be honest with yourself." Pay Yourself First Pay Yourself First is a concept that simply involves paying your savings and investment accounts before anything else. In other words, set aside a certain amount for your future, and then budget your immediate expenses around what is left. "Consider the 5-5-10 approach as a starting point. Try to put five percent to savings, five percent to life insurances to protect your family and 10 percent to retire- ment accounts," says Shaulis. "These percentages can vary a lot depending on things like your age and the time horizon for your goals but can be a solid 'pay your- self first' strategy when starting a budget." If you're not ready to go all-in on Pay Yourself First, at the very least contribute to your savings. "Save on purpose—always be saving!" says Brown. "If it is $25, start saving in a place you will not touch. This helps you to ensure you are living within your means and preparing for the future. Make saving automatic, and increase the amount saved quarterly." "Save on purpose— always be saving!" continued on pg 19 Make Emergency Savings a Priority If nothing else, living through a pandemic has taught us all the value of thinking ahead and stocking up. We may never again experience another 2020, but inevitably family mem- bers will get sick, jobs will be lost, life happens! Emer- gency savings not only get families through unexpected hardships, but it also provides some peace of mind daily just knowing such a safety net exists. Brown recommends an emergency savings that equals 3-6 months of monthly expenses but says the exact amount varies from family to family. "Only consider three months if you have a very stable income (i.e., government, military)," he says. "In most cases, six months is the appropriate amount to have in your emergency savings." It is important to note that emer- gency savings are not the same as your regular savings account. "It's generally best to keep these funds sepa- rate from your day-to-day checking and savings accounts," cautions Shaulis. "I think we all know how that money has a mysterious way of disappearing!" She also suggests a regular review of your insurance policies (life, disability, property) since "they are meant to help you mitigate risk as well in emergencies."