by Emily Hechler 
Building financial security and stability starts with understanding your money and taking control of your financial habits. Whether it’s tracking everyday spending, creating a realistic budget, or preparing for unexpected expenses, the steps you take today can protect you tomorrow. Developing strong financial habits and building an emergency fund are not just about surviving the unexpected. These ideas create a foundation of healthy knowledge and practices that allow you to make confident, informed decisions with your money. With the right tools and mindset, you can turn everyday financial management into long-term stability and peace of mind.
How to Manage Your Money Well
Preparing and recovering from situations that create financial strain starts with staying informed and practicing healthy financial habits. Learning financial literacy skills and practicing them with your own money can take time. Every day that you practice is more experience. Here are some financial fitness tips to help you start.
Keep Track of Your Spending
Recording every purchase will help you see exactly where your money goes. This can help you spot quick and simple steps you can take to cut your spending on things that really don’t matter. You can do this with a budgeting app, your phone’s notes app, or even a mini notebook if you need to tangibly make a note to remember.
For example, I spend about $12 on coffee runs during the week to get through my workday and still want to grab another with friends on the weekend. If I reduce my spending on coffee during the week, I can still go out on the weekend.
Create a Budget and Stick to It
A budget only works if it’s realistic and tailored to your lifestyle. Alltru has several resources for creating a budget, like this one with four common budgeting methods. Just because you have the income to make a purchase, that doesn’t mean you should make the purchase. Start by identifying areas where you tend to overspend and cut back.
Tip: If you tend to make lots of small transactions, consider opening a RollUp Savings account. Each time you use your debit card, your purchase is rounded up to the next dollar and the spare change is automatically transferred to your savings account. It’s an easy way to build a little extra cushion of savings without thinking about it.
Check Your Accounts for Hidden Fees
Review your bank accounts and credit cards for unnecessary fees. If you are paying a monthly fee for an account that you don’t use or features that you don’t need, switch to a cheaper or free alternative. Even small fees can add up over time, so regularly reviewing your statements can free up money to put toward savings.
Increase Your Financial Literacy
Tracking spending, following a budget, and choosing the right accounts are important steps, but understanding why these actions matter is just as crucial. Improving your financial literacy helps you make smarter decisions that will pay off for years to come. Tools like Zogo make learning easy by turning financial education into quick game-style lessons. The more you learn, the more you can earn points which can be redeemed for gift cards. Every short module teaches you something new, and those lessons add up fast. Use access code ALLTRUCU to use Zogo for free.
How to Prepare for Emergencies
Life is full of surprises, and unexpected expenses can quickly take a toll on your finances. We’re here to help you navigate these challenges so you can stay on your feet. By taking proactive steps to prepare for emergencies, your finances can help you manage the situation instead of complicating the emergency.
Build Emergency Fund
According to Bankrate, 24% of Americans have zero money set aside for emergencies. Building an emergency fund while you’re in a comfortable situation can help you avoid financial strain in an uncomfortable situation. Creating a starter emergency fund and fully funding the account are two separate goals. Make your first emergency fund goal $1,000. After you hit that goal, you can work on a longer-term emergency fund, which is 3-6 months of expenses.
Develop a Cost-Cutting Plan
Identify expenses you can cut quickly if needed. Prioritize your list now so you’re prepared to pause or cancel non-essential services. If you need some extra funds to get through a rough financial patch, you can cancel your music subscriptions or resort to the free versions for a while. Monthly gym memberships can be replaced with outdoor exercise during the warmer months. Free online newspapers can substitute paid versions. Meal plan services can be replaced with a little extra time and a trip to the grocery store. While these services add convenience to your life, your financial security should come first.
Check Your Available Credit
Having access to credit can help bridge gaps during unexpected financial shortfalls. A good rule of thumb is to use no more than 30% of your available credit. If you need additional flexibility, consider opening a new line of credit, like a Home Equity Line of Credit, to maintain your credit score and provide an outlet for an emergency. Remember, the goal is to ultimately stay out of debt. If you decide to expand your credit availability and later borrow against it, create a plan to pay it back.
Refinance Your Loans
Refinancing mortgages, auto loans, or personal loans can lower your monthly payments and save money. This is done through lower interest rates and reduced minimum payments. Remember, refinancing or consolidating your loans will result in a hard credit pull, which will decrease your credit score by a few points. Before you apply, make sure your credit score is in a healthy range to avoid long-term credit score damage.
Communicate with Your Credit Union
Open, proactive communication is key to protecting your finances. If you anticipate difficulty making a payment or experience a change in income or expenses, reach out immediately. We have certified financial counselors, plus the option to skip certain loan payments.
If You’re in a Financial Emergency
We’ve talked about how you can prepare for a financial emergency. Unfortunately, those emergencies happen. Here’s how you should act in these situations to avoid making your situation more difficult.
Think Before You React
Before making an unplanned purchase, pause and ask yourself whether it’s truly a need or something that can wait until you get paid again. Consider your options for covering the expense without disrupting your budget. Sometimes, simply taking a step back can reveal a smarter, less stressful solution. For example, could a minor home repair, like replacing a faucet or a small leak, safely wait a few weeks? Or could you delay a routine appointment for a couple weeks without compromising your health? Slowing down and evaluating your choices helps you make decisions that protect both your emergency finances, credit, and your peace of mind.
Use Your Emergency Fund
Your emergency fund should be ready when you need it. To determine if you need to pull money from your emergency fund, you should ask yourself these questions. First, is the expense unexpected? Second, is it necessary? Finally, is it urgent? If you answered “yes” to all these questions, then you can use your emergency fund for the expense. While it may be difficult to drain your emergency fund, it’s there so you can avoid unnecessary debt and stay on your feet.
Examine Your Goals
During a financial hardship, it’s important to step back and reassess your goals so you can focus on what matters most. Savings plans for things like a future car, a home down payment, or a vacation may need to pause while you address the immediate emergency. Once the situation is handled, you can fold those goals back into your budget. Just remember, you may need to adjust how much you save in each category, especially if you’re rebuilding your emergency fund.
Use Your Available Credit
If you follow the steps mentioned above, you should have some available credit from a Home Equity Line of Credit or Credit Card. Either of these tools can help you afford to pay for the emergency. Just like any other type of loan, these funds will need to be repaid with interest. If you already have a lot of debt or a high debt to income ratio (DTI), then try to avoid using your available credit until you absolutely need it.
Prepare Yourself and Your Finances
You can create financial security by making consistent, informed decisions and proactive planning. By tracking your spending, sticking to a budget, preparing for an emergency fund, and maintaining access to credit, you create a safety net that protects you from financial strain. Life is unpredictable. But with these strategies in place, you can face unexpected expenses with less stress. You can pivot financially without compromising your future goals and financial stability. Remember, every small step you take today strengthens your financial tomorrow.
