By MARTY LEVINE
“We rarely stop to take care of our finances” in any systematic way, Susan Gallant told attendees at the new “Financial Wellness” workshop offered by the Faculty and Staff Development Program on Dec. 3. Her aim was “to focus on what we can do” — especially understanding “what drives your financial decisions.”
If we have spending habits rather than calculated practices, “we do them without stopping to think whether we can afford them,” said Gallant, of the WorkPartners program of UPMC’s LifeSolutions. “When we talk about spending habits, there’s no right or wrong. The question is, are they right for you at this current time?”
Our current spending (and saving) habits come from a combination of lessons from family and friends, the influence of our cautious or risk-taking personalities, and our personal experiences of living through a recession or worse, she noted.
“Every day we are bombarded by promotions, advertisements.” Are you a “save your money for a rainy day” person or believe “you can’t take it with you.” Are you certain “you should only carry one credit card” or convinced that “if you want the best you have to spend top dollar.”
“When are you most likely to make an impulse purchase?” she asked. “We can’t change what we don’t know or don’t understand.” Therefore, the best solution is to understand the flow of money in and out of your accounts by creating a budget to track “when you spend or why you spend. A budget would help you see what’s working and what’s not working. It can help you at any stage of life.
“Track expenses to get a detailed account of where your money is going — all your money” across one month to start, Gallant counseled. List every purchase or payment, including purchases on credit cards. Include regular monthly expenses as well as unplanned costs, such as car repairs.
“Don’t forget the smaller purchases — they can creep up on you,” she said. “They don’t seem like much, but they do add up over time.” And what about trying to add something to your savings?
At the end of the month, divide your budget into fixed payments (such as utilities and rent or mortgage) and variable expenses (such as groceries and entertainment). You have more control of this latter category, she said: “You want to reduce your expenses, that is where you will start.”
The goal is obviously to have a balanced budget, so spending patterns — once revealed more clearly by the budget — can be adjusted to meet your needs and your goals. Create a plan that works for you, she said: “Tracking expenses alone doesn’t change your budget situation. You can decide where you want to make adjustments. We have pleasures we want to hold on to. We just need to modify them. It’s not all or nothing.”
One big source of unnecessary spending may be those items for which an automatic renewal or automatic payment is set, which happens out of sight and out of mind. These can include streaming services, publications and gym memberships.
On the other hand, a regularly set transfer from your paycheck to a savings account would be ideal. “Starting small is better than not starting at all,” Gallant said. “The thing is, start doing it. Track your progress — and decide what you will do with the money you will save.”
“Beware of sales,” she added: “If it isn’t something that you need or that you planned in your budget, then it is an added expense, no matter how much you saved.” And plan ahead on shopping trips. If you can, operate under the motto: “If it’s not on the list, I must resist.”
While shopping online, put items in your cart and wait 24 hours to re-examine your choices before pushing that final purchase button. “Is this in my budget? Should I make it a goal? Do I need this? Do I need this now?” One workshop attendee volunteered that she buys groceries online and gets them dropped off or picks them up, just to avoid impulse purchases.
“Don’t think of your credit cards as extra money,” Gallant also warned. “Think through your actions of what the long-term consequences are.”
There are two ways of paying off credit card debt that show the best results, she said. The avalanche method targets the highest interest credit card first, then moves to lower-interest cards next. The snowball method pays off the smallest debt first, then moves to larger debts, which is helpful for those who are more encouraged by early victories.
Gallant explained that paying your bills on time counts for 35 percent of your credit score, while maintaining low credit-card balances counts for another 30 percent of your score.
Her office’s Employee Assistance Program (EAP) can help, she said, offering professional financial assistance with everything from debt management and credit counseling to student loans and retirement planning, as well as legal consultations for real estate transactions, bankruptcy, estate planning and other matters. The EAP also has financial webinars on “Household Individual Budgeting,” “Funding College,” “How to Talk to Your Partner about Money” and other topics.
“Small steps can lead to big changes,” she concluded.
Marty Levine is a staff writer for the University Times. Reach him at martyl@pitt.edu or 412-758-4859.
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