As the US government faces its first day of furloughs, many government workers are facing their first day off without pay. GreenPath Financial Wellness reminds furloughed employees that they need to have a plan in place, when it comes to their personal finances.
Here are some steps:
1. Set Up a Budget – Many people think if they have money in their account at the end of the month, they are doing okay. “While this may work in some cases, individuals who may see a drastic cut in their income will need to prepare ahead to make sure their expenses are covered,” said David Flores, GreenPath counselor.
A simple way to build a budget is list all income. Then, list all your major expenses (mortgage, car payment, insurance premiums and utilities, etc.) and subtract from your net income. From there, track other expenses, like groceries, gasoline and credit cards.
2. Maintain Your Budget – “Years ago, we taught our clients to place cash each month in an envelope system, for a certain expense,” said Flores.
“Nowadays, we teach the envelope system as a budgeting concept with the idea that you only spend what has been allotted, and once it’s gone, you stop spending.”
Try to maintain each monthly allotment without borrowing from other “envelopes.”
3. Track your Expenses – Tracking expenses is a key aspect of maintaining the budget that you have created. If you do not track your expenses, there is no way of knowing whether you are staying within the budget you have established. “The most basic tracking method involves writing down all of your expenses in a notebook every day,” said Flores. “Another tracking technique involves saving receipts for purchases and documenting that information in a notebook or on your computer.”
4. Have the Talk – Communication is key when it comes to personal finance. Flores said that individuals should sit down today with their spouse and family and have an honest discussion about money. “People have misconceptions about how they should use money in a household,” he said. “Some view money as something they should spend freely each month, while someone else looks at money as something that needs to be saved.”
Furloughed employees need to talk about what steps they will take today, in case the government shut-down goes on for an extended amount of time.
5. Ask for Help – GreenPath Financial Wellness offers free debt counseling and coaching sessions, in-person, over the phone or Internet, with no obligation. “We work with thousands of people each year in helping them build a budget and a work plan to prepare for the future,” said Flores. “We provide impartial advice from an experienced, degreed professional credit counselor.”
A GreenPath counselor will thoroughly assess household income and expenses, find places to save, and develop a customized budget and action plan for achieving personal finance goals. “We encourage any furloughed employee, who has questions around budgeting and expenses, to reach out to us today for free help,” he said.
For more information, or to schedule a free counseling session, call (800) 747-2898 or log on to http://www.greenpath.org.