Message from Service Representative
Keep Debit in Check
70-20-10 RULE
In today’s times there are many more demands on the family
budget than ever before. Unanticipated medical expenses, an unexpected
car repair / towing, or the current rising of home heating fuel
cost can quickly create financial pressure. While it is very
tempting to utilized your credit cards to address these types
of expenses, if you begin to financially plan now you can reduce
your reliance on credit to handle these emergencies.
There is a good rule of thumb to follow and it is called the
70-20-10 Rule. While budgeting your monthly expenses, allot 70%
percent for living expenses, such as rent, mortgage, food, utilities,
clothing and gasoline. Then save or invest 20% percent of your
earned income for financial goals and emergency expenses. This
can also be called the “Rain Day fund”, which you
set aside now for sometime in the future. The 20% percent can
be divided into retirement savings “IRA” and or saving
for a specific goal, such as a vacation or to purchase a large-ticket
item. You could also set up an emergency saving fund. A good
long term goal for this would be to save three to six months
of living expenses in that account. Hey don't be disappointed
if an actual emergency arises that causes you to withdraw some
funds, because that is what it’s there for. However, don't
withdraw your cash funds for impulse buying. By getting into
a saving mode you will find that you rely less on credit and
loans to make your purchases. This will allow you to stay within
your means. The remaining 10% percent should be dedicated to
debit payments. This includes debt such as your credit card payments,
and auto / student loans. Yes, following the 70-20-10 rule requires
you to work hard to live within your means. If you must devote
more funds to living expenses, then you will have to reduce some
of the funds dedicated to savings or debt payment. However, by
applying good financial leverage you can work to avoid spending
more than your monthly income.
The NAPUSFCU is always available to help you with your financial
needs. Visit them at NAPUSFCU.ORG.
Deborah Boulware
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