News Talk 94.1/AM 1600 Where The Upper Cumberland Talks
It is resolution season, and many people try and start the new year with a smart spending plan.
Putnam County Family Consumer Science Agent Michelle Parrott said getting a persons spending broken down on paper is an essential step for budgeting. Parrott said one of the biggest mistakes people make is overlooking the coffee, sodas or snacks that are part of a daily routine.
“Some of those can add up to $300, $400, $800, $1,200 dollars at the end of the year, adding to that budget,” Parrott said. “That you maybe did not actually write that down. That’s some of the things that we try to work on, when we work with individuals.”
Parrott said that once someone projects their spending on paper, it is important to go back and see if the projections line up with what someone actually spends. She said if someone is spending less than they projected, paying more than the minimum on credit cards is a good plan.
“You’re looking at probably 15 to 18 percent interest right now on that credit card, depending on the amount of debt that you have on there,” Parrott said. “If you’re only paying that $100 or $200 a month minimum, you’re going to be paying for it for the next 20 years.”
Parrott said for people with high-debt, they should make a goal to save one to two months of their net income. She said people with low-debt should aim to save three to six months of net income.
“Can I save $10 a month, can I put $10 a month into this savings account?” Parrott said. “If I can do that, then maybe I can do $20 a week into that savings account. So that I build up to that savings goal.”
Parrott said another common mistake people make is losing track of payments that do not have to be made monthly. She said making budgeting a habit, takes practice and commitment to better spending.
