Manisha created a simple spending ratio to help stay on track. She recommends using the 50-30-20 rule.
Healthy Spending Pyramid 20% of your income (after taxes) should go toward savings. 30% should go toward activities and purchases you want: restaurants, concerts, travel, and shopping. 50% should go toward the things you need: food, housing, transportation, and bills. 50% Needs 30% Wants 20% Savings.
Use Manisha Thakor’s tips to examine your spending and saving habits to set simple, straightforward financial goals.
Pay at least the minimum payment on your bills on time each month. As you begin to establish a business identity as an Integrative Nutrition Health Coach, having good credit may become more important. The number one factor that influences your credit score is your history of bill payments. Pay your bills on time to maintain a healthy credit score! This will set you up for greater success down the road.
2| Establish an emergency fund of at least $2,000. While three to six months of income for an emergency fund is ideal, it’s not a realistic goal for everyone. Start with a goal of $2,000 if that’s more manageable. As emergencies come up, whether it’s a last-minute visit to a sick relative or a surprise plumbing repair, you will be prepared to deal with the unexpected expense.
3| Take advantage of free money toward your 401(k)! If you work for an organization that offers a matching 401(k) program, contribute at least to the point of the match. It’s a guaranteed return on your investment, so be sure to get on board!
4| Pay down credit card debt. If you have credit card debt, use your cash to pay it down. If your debt is less than $5,000, add an extra $50 per month to your minimum monthly payment. If your debt is between $5,000 and $10,000, add an extra $100 per month. If it’s over $10,000, add an extra $150 per month. Depending on your interest rate, you’ll have that debt paid off in three to five years, so you can breathe a sigh of relief!
5| Spread “extra” money across your savings and put it into three buckets: emergency fund, nearer-term needs, and retirement savings. Consider increasing your emergency fund beyond $2,000 and put one-third of your “extra” money there. Then put another third toward nearer-term needs (school or a down payment for a car) and the rest toward retirement savings (401(k) or an IRA)
