The value of great conversations doesn’t exclude the topic of financial matters. The benefit of discussing financial goals, tips and strategies among good friends is directly related to healthy relationships and financial fitness. Ultimately, it is important to be reminded that we aren’t alone in financial consciousness. Participating in conversations that facilitate support as well as information sharing are necessary in our journeys that aim for progress and growth. Thus, September Set is happy to share reminders from great friends who aren’t taking financial awareness lightly. Thanks to our friends at Imagining Beyond, Legacy Covenant Services and Turnipseed Law, whom not only remind us to maintain financial wellness in the present but also challenge us to think beyond.

Financial health advice from Imagining Beyond, business development specialist:

What is discretionary income and disposable Income?

Discretionary Income: Discretionary income is the money that an individual or a family has to invest, save, or spend after taxes and necessities are paid. Discretionary income comes from your disposable income.

Disposable Income: Disposable income represents the amount of money you have for spending and saving after you pay your income taxes. 

Organizing our finances is the first step to creating generational wealth. Credit cards, bank accounts, personal loans, brokerage accounts, mortgages, car loans and retirement accounts should be tracked. Budgeting software can provide complete solutions to track all such accounts, make on-time payments and much more. 

Increase your income by increasing your value: The key to making money, and therefore a life of less stress, is the ability to have lenders willingly invest or lend you money in exchange for something that they perceive to be of greater value than the money they gave you.

What should we be doing with discretionary income and/or disposable Income?

1. PAY OFF DEBT- Use extra money to diminish debt by paying down credit card and loan balances. The first step with paying off your debt is to pay necessities first.

Discretionary spending comes after you have paid off house bills, utilities and food. Once you have your budget, review where you are spending a lot of money. Did you know if you buy a Starbuck latte every day, at $5.50, you spend $1,400.00 a year? The question is can you live without some of these luxuries to reach your goal.

If you have discretionary income available, then you should include this in your budget as a necessity. You should start with the lowest amount of debt first and then work your way up. Yes, paying off the debt with the highest interest is good but why not pay-off your debt with smaller amounts that are doable. Where you decide to spend your discretionary income is a choice.

2. PUT IT AWAY - Increase Savings

Creating a monthly budget is the foundation of financial and credit success. Create a 12 month spending plan, include savings and debt-reduction figures which determines how much discretionary income is available and dip into savings if necessary to achieve your goals. If you haven’t purchased a home yet, start saving up for a down payment. If you can, it’s best to save 20 percent down payment so you can avoid private mortgage insurance. Also, you are likely to get a better interest and spend less on the home in the long run. Increase your contribution for retirement after you refocus your financial goals.

3. MAKE IT GROW - Invest (MONEY MARKETS, CDS AND REAL ESTATE) 

In order to make your money grow, you have to save some. When you invest your money, you have to decide what your short and long term goals, how much you want to invest and is it better to save money or invest it. Deposit $100.00 into a high interest savings account monthly, buy five shares of stock from your brokerage account, open a Custodial IRA account in which you invest $1000.00 a year in a mutual fund and in ten years it can earn enough interest. There are various resources that are available to research the best rates, which include www.bankrate.com, www.nerdwallet.com and www.motleyfool.com.

4. LIVE A LITTLE- We are all here to live. Treat yourself to something that you enjoy modestly.

Celebrate each milestone. Clearly, it’s easier to get into debt, but difficult to escape it’s clutches. Since we are in some trying times, I think approaching your successes should be done differently. Create an emergency fund that will take care of unexpected tendency of popping up and you don’t have to use your credit card again.

NEXT UP IN THE FINANCIAL CONSCIOUSNESS SERIES:

Legacy Covenant Services, insurance agency, will share information regarding insurance and the role it may play in securing the financial future of you and your family.