In a previous blog, we explored budgeting as one of the elements of money management. But once you know where your money is going, the next step is making that money work for your future through saving.
Savings is the portion of your income set aside for future expenditures, whether it’s for emergencies, a down payment on a home, or retirement. In some cases, employers help with this through deferred compensation plans, which set aside part of your paycheck to be paid out later, often at retirement.
Most people have been told to follow the rule of saving 10–20% of their income, but that isn’t always realistic. Instead of getting discouraged, create a savings rule that works for your circumstances. Focus first on building your emergency fund and choose to save an amount—either a specific dollar figure or a percentage of your income—that feels manageable. The key is consistency. Even small, regular contributions add up over time and build the habit of saving. People who regularly track their expenses and savings often find themselves saving more, simply because they’re staying mindful and intentional about where their money goes.
Types of Saving Accounts
Save regularly toward your goals – it will add up quickly! Photo source: UF/IFAS Extension
Where should you keep your savings? The answer depends on your individual needs and the amount you have set aside. While piggy banks, jars, and other at-home containers can serve as temporary spots for small amounts, they aren’t secure for holding larger sums. Instead, consider moving your money to a depository like a bank, credit union, or another financial institution. These places not only offer services such as checking and savings accounts, loans, and investment options, but also keep your money safer: your funds can earn interest and are generally insured against loss from theft, fire, or other disasters—unlike the cash kept at home.
Keep in mind, not all savings accounts are the same. The right match(es) for you depend(s) on your financial goals, how easily you want to access your money, the interest rate, and any account fees or restrictions.
Traditional savings accounts are common, easy to open, and generally fee-free, but they tend to offer low interest rates. Most brick-and-mortar banks and credit unions offer traditional accounts, often paired with convenient mobile apps.
Student and kids’ savings accounts—available at many brick-and-mortar banks and credit unions—are specifically designed to help children, teens, and students (often up to age 25) build good financial habits, like budgeting and saving.
A Health Savings Account (HSA) is a specialized savings account you can use to save for qualified out-of-pocket medical expenses, offering both tax incentives and flexibility for healthcare needs.
High-yield savings accounts provide above-average interest rates (or APY). These are typically found at online banks, which can offer better rates and lower fees due to reduced operating costs. Some financial institutions also offer high-yield checking account options.
Money marketaccounts blend features of both checking and savings. They earn interest, but also let you make limited withdrawals or debit purchases each month, making them a flexible but somewhat restricted option.
Certificates of deposit (CDs) let you lock in your money for a fixed period, usually at a higher interest rate than standard savings. Early withdrawals are often penalized.
Cash management accounts are a middle ground between saving and investing. These interest-bearing accounts securely hold your money while you decide on your next investment move.
By choosing the right account(s) based on your financial goals, you can make your money work smarter, not just harder.
Savings Tools & Resources
Generally speaking, most savings apps are also built into budgeting apps—something we covered in a previous blog—or are included with investment apps, which we’ll explore in an upcoming post.
Money management refers to the process of overseeing and planning all aspects of your finances, including budgeting, saving, and investing. Effective money management helps you understand your current financial situation, set goals for the future, and make informed decisions to support your financial and overall well-being.
What’s a Budget?
Many people view budgeting, or “living on a budget,” as restrictive, but in reality, it is simply a tool that summarizes your income and expenses over a set period—often a month—to help you prioritize spending and achieve your goals. To start, calculate your total income from paychecks and any other sources (for example, child support, gifts, or public assistance). Then, list all your fixed costs (e.g., rent, insurance, property taxes, and occasional fees) and flexible expenses (e.g., groceries, transportation, and entertainment). By managing your flexible expenses wisely, you can ensure you have enough to cover your fixed obligations and also make progress toward your financial goals. Subtract total expenses from your income. If the result is negative, you are spending more than you earn and may need to adjust your budget. At the start of each budgeting period, set your plan, and at the end, review your spending and adjust as needed for the next period.
Budgeting Strategies
A budget isn’t one-size-fits-all, because everyone’s income, expenses, and priorities are different. Budgets should be tailored to your unique situation, which is why there are various strategies to choose from. Some of the most common strategies include the 50/30/20, Pay Yourself First, Zero-based, and Envelope budgets.
The 50/30/20 method divides your income into three categories: 50% for needs like housing, insurance, and groceries—things you can’t do without; 30% for wants such as dining out, subscriptions, or vacations; and 20% for savings to support future goals like building an emergency fund, buying a home, or saving for retirement. Debt reduction, such as paying minimum and additional payments for loans and credits, is placed in both the needs and savings categories.
Pay Yourself First sets savings as the first expense by setting aside a fixed amount or percentage of your income as soon as you are paid. Start by focusing on building your emergency fund until it covers three to six months of essential living expenses. Once that’s accomplished, you can direct savings toward other financial goals. Setting up separate accounts or vaults for each goal can make it easier to track your progress and stay organized.
Zero-Based Budget ensures that every dollar you earn is assigned a specific purpose—whether for expenses and savings—so that your income minus your expenses always equals zero.
Envelope Budget, sometimes called “cash stuffing,” involves dividing your funds into envelopes (physical or digital), each representing a spending category. When the money in an envelope runs out, you stop spending in that category until the next budgeting period.
Budgeting Tools & Resources
There are many budgeting resources available, including apps, online tools, and printable worksheets. While some are free, many charge a fee to use or require payment to unlock additional features such as detailed reports, automatic account syncing, or advanced goal-tracking tools. Popular free mobile applications include:
Some banks and credit unions also offer built-in budgeting tools—check if there are any fees. Free printable worksheets from organizations like the Federal Trade Commission’s budget worksheet and the UF/IFAS Extension Money Management Calendar are also available. Furthermore, some prefer to create their budgets or use templates in Google Sheets or Microsoft Excel.
Explore different tools and mobile application options. Consider your financial goals, resources, and preferred budgeting strategy before making a decision, especially if you are considering a paid service.
In today’s credit-centric economy, maintaining a healthy credit score is more crucial than ever. One of the most effective ways to ensure good credit health is by regularly reviewing your annual credit reports from all three major credit reporting agencies: Equifax, Experian, and TransUnion. This practice not only helps you stay informed about your financial status but also protects you from potential fraud and errors that could negatively impact your credit score.
Understanding Your Credit Report
A credit report is a detailed record of your credit history, including information about credit accounts, payment history, and any public records such as bankruptcies or liens. Each of the three major credit reporting agencies collects and maintains this information independently, which means that your credit report from Equifax may differ slightly from the one provided by Experian or TransUnion. By reviewing all three reports, you get a comprehensive view of your credit history and can identify any discrepancies or inaccuracies.
Detecting Errors and Fraud
Errors on credit reports are more common than is often thought. According to a study by the Federal Trade Commission, one in five consumers has an error on at least one of their credit reports. These errors can range from incorrect personal information to inaccurate account details or even accounts that do not belong to you. By reviewing your credit reports annually, you can spot these errors early and take steps to correct them before they cause significant damage to your credit score.
In addition to errors, reviewing your credit reports can help you detect signs of identity theft. If you notice unfamiliar accounts or inquiries on your report, it could be a sign that someone has stolen your personal information and is using it to open credit accounts in your name. Early detection is key to minimizing the damage caused by identity theft, and regularly checking your credit reports is one of the best ways to catch fraudulent activity quickly.
Improving Your Credit Score
Your credit score is a numerical representation of your creditworthiness, and it plays a significant role in your ability to obtain loans, credit cards, and even housing. By reviewing your credit reports, you can identify areas where you can improve your credit score. For example, you might notice that you have high credit card balances or a history of late payments. By addressing these issues, you can work towards improving your credit score over time.
Reviewing a copy of your credit report from each credit reporting agency at least once a year is a great way to discover errors that may negatively impact your credit worthiness. (Adobe Stock photo)
Taking Advantage of Free Reports
Under the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report from each of the three major credit reporting agencies every 12 months. In 2024, this changed to free weekly copies of your credit report from each agency. This means you can access your credit reports from Equifax, Experian, and TransUnion at no cost, giving you the opportunity to review your credit history without any financial burden. To obtain your free reports, you can visit AnnualCreditReport.com, the only authorized website for free credit reports. You will never be asked to pay for your credit report on this site. If you are, you are on the wrong site.
Reviewing your credit report from all three major credit reporting agencies is a vital step in maintaining your financial health. By staying informed about your credit history, detecting errors and fraud early, and taking steps to improve your credit score, you can ensure that you are in the best possible position to achieve your financial goals. Don’t wait until it’s too late—make reviewing your credit reports a regular part of your financial routine.
Tired of renting and thinking about buying a house? Not sure where to start? Let’s talk about some of the first steps in the path to homeownership.
Many people don’t realize that making the decision to buy a home and the process to buy one isn’t a one-size-fits-all step. There are many emotions and considerations that go into it. Here are some of the first questions to consider.
Do you have a budget or spending plan that you can live on?
Photo Credit: UF/IFAS Photo by Tyler Jones
Having a spending plan or budget that you can live on means that you’ve reviewed your income and expenses and either have a balanced budget or one with money left over. You may adjust that budget each month as expenses and/or income change but you don’t end the month in the negative. If you’re just getting started, try checking out our Money Management Calendar. It will take you through the six steps of building a spending plan and serve as a tool to help track your money each month. Knowing your financial situation before you begin the process to buy a home is important, as there are out-of-pocket costs that you’ll encounter when buying a home such as appraisal fees and closing costs, in addition to costs associated with homeownership, like maintenance, repairs, and insurance.
How does your credit report and credit score look?
Lenders use your credit score to help determine whether or not to approve you for a mortgage loan and, if approved, at what interest rate. The higher your credit score, typically, the lower your interest rate and the less you’ll pay for your home. Different loan programs may also have a minimum credit score requirement you’ll have to meet. Start by checking your credit report at the three different credit reporting agencies: Experian, Equifax, and TransUnion. Look for any errors or mistakes that could negatively impact your score. The three national credit reporting agencies permanently extended a program allowing individuals to check their credit report for FREE once a week at each agency. Visit AnnualCreditReport.com access the free copies of your credit reports. Improving your credit score can take time so starting early is helpful.
How much debt do you have?
Photo Credit: UF/IFAS Photo by Thomas Wright
Debt is another factor that lenders consider when you apply for a mortgage loan. Having too much debt can cause you to be turned down for a mortgage loan. The amount of debt you have can also significantly impact how much a lender is willing to lend you toward a home purchase. You can calculate your debt-to-income (DTI) ratio by dividing your total monthly debt payments by your total gross monthly income and multiplying it by 100 to convert it to a percentage. For total monthly debt payments, you should include any loans, credit card payments, child support, alimony, medical payments, and similar items. Do not include things like groceries, utilities, etc.
Each lender and loan program will have a different maximum limit, but many are in the range of 35-41% of your income going for debt repayment.
These are just a few of the initial questions to consider if you’re thinking about buying a home (and can be ones to think about even if you’re not!). Saving money, paying down debt, and repairing or raising your credit score all take time. Starting today can help you to be in a better position when you are ready to take the next step. If you want to learn more, UF/IFAS Extension offers classes for first-time homebuyers (returning buyers are welcome, too!) that go more in-depth for each of these questions and much more. Contact your local Extension office to find out about class schedules.
Resources:
My Florida Home Book: A Guide for First-Time Homebuyers in Florida, University of Florida/IFAS Extension
Creating a holiday spending plan and sticking to it can help decrease stress and reduce debt in the new year. (Photo source: Samantha Kennedy)
The holidays are once again upon us. For many people, it can be a time of stress, frustration, and financial uncertainty as they drive themselves past their limits to try to make everyone happy and everything perfect.
One of the biggest seasonal stressors is spending too much on gifts, food, and home décor. While it may seem worth it at the time, buyer’s remorse may quickly set in after the New Year when the bills start rolling in.
The most important thing that can be done to help curb holiday spending is to set a budget.
Maybe going all out for Christmas is a family tradition. Great! If it is, however, the best thing to do is to make a plan to save the money over the preceding months so it will be available to spend when the time comes. Spending money that is not in the budget or overusing credit are surefire ways to increase debt and cause strife later.
The holidays should be about family, friends, and the joy of giving. It should not be a competition to see who can have the biggest, brightest, most fabulous home, gifts, etc.
Retailers and the media work hard to send the message to consumers that the latest this or the greatest that are needed to get the full holiday experience. However, it is important to resist their messaging and stick to the determined budget.
Including children in any discussions about holiday spending is important. Let them know that there is only a certain amount of money available to spend on gifts and help them understand the importance of sticking to the budget. While parents may feel pressured to get everything on their child’s wish list, focusing on a few special items will help families stay on financial track.
Cash and debit cards are the best ways to pay. If the money is coming directly out of pocket, consumers are more likely to be more cautious before spending. Use credit cards wisely. Choosing to purchase with credit in order to receive airline miles or rewards points is fine, but keep close track of all purchases and only charge as much as can comfortably be paid off in its entirety when the bill comes due. Avoid the pitfall of still paying off this year’s holiday spending next Christmas.
Some of the most meaningful and treasured gifts are those that come from the heart. Custom, handmade gifts really show a person they are valued.
One large gift for an entire family that everyone can enjoy can also save money over buying something for each individual. Many people also appreciate a donation in their name to a charity or cause that is near and dear to their hearts.
The holidays do not need to be stressful or break the bank. By adopting a few smart spending practices, you can enjoy the holidays without the added worry.
For more information on holiday spending and strategies for creating a smart holiday spending plan, please call Samantha Kennedy at (850) 926-3931.
Extension classes are open to everyone regardless of race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations.
