Keeping More of Your Money

Making a Spending Plan

You might think making a spending plan is tedious. However, there are plenty of reasons why you should sit down and tackle it soon. A spending plan:

Step One: Identify Income

Step Two: List Expenses

Step Three: Compare Income and Expenses

Step Four: Set What’s Important To You

Ready to create your own spending plan? Click Here

What is Debt-To-Income Ratio

keeping-money-2Debt-to-Income Ratio is basically calculated by dividing how much you owe per month by how much money you make per month.

Lenders look at this number when they are deciding whether or not to lend you money or extend you credit. If you have a low debt-to-income ratio, it shows the lender you have a good balance between debt and income. Lenders like the numbers to be low, generally below 36%. The lower the ratio, the greater chance you have of getting a loan or credit.

If you already filled out a spending plan, there you can find your debt-to-income ratio. If not, click here. This is what you need to do to calculate your debt-to-income ratio:

  1. First you will need to add all of your monthly debt obligations (mortgage, car loans, student loans, minimum monthly payments on credit cards, and any other loans you might have).
  2. Once you have that total, divide them by your gross monthly This is the amount of money you earn before taxes and deductions.

Here’s an example: If you pay $1500 per month for your mortgage, $100 a month for an auto loan and $400 a month for credit card debt, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)

How to Begin Saving

Saving money is one of those New Year’s Resolutions that fall through the cracks by the second week of the year. Why is that? It might be because the hardest thing about saving money is getting started. Or, we usually feel that we don’t have enough money to save in the first place.

It’s important to check your spending plan to determine how much you can save. In just a few easy steps you can begin your savings plan:

  • Set savings goals. Make a commitment to a plan (emergency fund, home purchase, car purchase, vacation, or retirement).
  • Set-up an online savings account. You can set up automatic transfers from your checking every time you get paid. Start by trying $25 a paycheck. Your money will still be accessible to you but it will not be as easy to spend.
  • Set-up a direct deposit. By visiting your payroll office, you can ask that a certain amount of your paycheck be directly sent to your savings account.
  • Start small, and slowly increase your savings amount. By starting with a small amount your overall spending plan will not suffer. You can take these amounts from your entertainment or eating out budget. The national averages reflect that we should be saving 5-15% of our income.

Whatever you do, just make sure you KEEP SAVING! You’ll thank yourself in the long run.

Retirement Savings

Are you depending on Social Security to provide for you and your significant other’s living, medical and emergency expenses during your golden years?   Did you know that retirement can last for 30 years or more? That’s why, it’s very important to start saving at an early age. Before we give you tips on how to start saving for retirement, here are a few important terms you’ll need to know.

401 (k) – is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account. A big advantage of most 401(k)’s is the employer usually matches a certain portion of your contribution. Check your company’s plan document for the specifics.

IRA – is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis.  

There are three types:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA

You might ask, what if I switch jobs?

You can keep the account with your old employer (assuming they let you), you can roll your funds to your new employer (assuming it has a qualified plan that accepts rollovers) or you can roll your funds into an IRA. 

Or, what if I get married and/or have kids? New people and responsibilities do not lessen the need to make retirement a financial priority. So don’t get distracted!!

We recommend you automate everything you can, and check in once in a while.

  1. Put your retirement savings on autopilot.
    • If you’re saving in a workplace plan, your contributions will automatically be taken out of your paycheck.
    • You can also set up automatic bank transfers to an IRA on a monthly or weekly basis. This way, you won’t even get a chance to spend it!
    • Forgetting to contribute to your IRA a few times a year can greatly impact your retirement balance. Be sure to always deposit!
  2. Resist the urge to make changes to your account.
    • Stick to your plan. From time to time, some type of investments will do better than others.
    • Pay attention to the markets, but don’t make drastic changes just because the markets are trending downward. Force yourself to invest the same amount and diversify your investments to help you insulate your portfolio against the ebbs and flows on Wall Street.

Balancing a Checkbook

The point of balancing or reconciling your checking account is to make sure you and the bank agree on how much money is in your account. Bank mistakes and fraudulent transactions do occur and you are required to notify the bank of these type of transactions within 30 days of the closing of the bank statement cycle.


  1. Write every transaction in your checking account register. Make sure you include ATM and credit card withdrawals.
  1. Open and read your account statement

Start by comparing transactions on your statement with your register. Make a checkmark in your register for every transaction included on your statement.

Be sure all entries on the statement are written in your register, including any bank fees or service charges.

Now compare your balance in your check register against the balance on your statement. You may have reconciling amounts or adjustments that need to be made to either your check register or the bank statement balance in order for the two balances to “tie”. The point is you have successfully reconciled the two balances when they equal each other. Click here for a tutorial on how to balance your checkbook.

How to balance an electronic account?

If you are using bill-pay and/or running all transactions through your debit card, then it is a good idea to review your debit transactions and fees on a daily basis to make sure all transactions are valid and you are aware of your current bank balance.