Mount Pleasant Magazine March/April 2021

55 www. ReadMPM. com | www. VOICE forRea l Es tate. com | www.MountPl easantBu i l der s . com Wealth Management Company, have some easy tips for anyone looking to save money for the future. “I think the simplest way to get on track to saving money is to coach people into making small, continuous improvements in their finances. I often say that finances aren’t very complicated, but they’re certainly not easy,” said Ellisor. “Sometimes we focus a little too much on goals and not enough on habits. It’s really about trying to change your behavior a little bit at a time to ultimately position yourself toward where you want to go.” Start with a plan to banish debt. Both Ellisor and Phillips believe that to get started with a savings plan, you need to assess what your finances currently look like and where you would like to be. Look at how much you spend each month and how much you have left over, then adjust accordingly. Phillips said that she often advises her clients to stick to the 60/20/20 rule, where 60% of each paycheck goes toward basic living expenses, including car payments, gas payments and groceries; 20% goes toward discretionary expenses, like going out to eat or other nonessential activities; and 20% goes into savings, where they can start building toward a goal. “Solidifying a plan is the key first step,” said Phillips. “If somebody wanted to save $5,000 in the next 12 months, the number-one step is to write down the goal and then have it somewhere where they can see it. Then start reverse-mining the goal. How are you going to save $5,000 in 12 months? Divide it by 12 months, and then save up that much each month. Go through your budget and find where you can scrimp and save to hit that dollar amount.” One of the biggest barriers to creating a savings plan is paying off debt. According to CNBC, the average American in 2018 had around $38,000 in debt, not including mortgage expenses. That said, making a plan for paying off debt is just as important as creating a savings plan. “Ultimately, I believe the secret to success is managing your savings-to-spending ratio,” said Ellisor. “If the majority of your spending is basically paying back debt, then you really have to focus on that before you can save. You need to have a little bit in cash or some type of emergency savings account, but you need to try to eliminate as much debt as you can if you don’t have any capacity to meet your other savings goals.” Boost your emergency fund. Having some sort of emergency fund on hand at all times is crucial. Unexpected medical bills or repairs to a home or a car can appear at any time and can easily blow through a savings account or take money that could otherwise be used to pay off debt. In order to know how much you need in your emergency fund, you need to first understand your average monthly cost of living. “Everybody should always have between three to six months of emergency funds in a liquid savings account,” said Phillips. “And the way that you can calculate that is to pull up your bank statement to see how much you’re spending each month.” Save toward a goal. Once your emergency fund is established, you can then begin stashing extra money into savings to work toward your goal. Some of the more common savings goals are retirement or a child’s education, but you may also have some smaller goals, like travel or buying a new car. In fact, having some smaller, more fun savings goals may give you more motivation to put money away. “You want to find out how you can also incorporate financial goals that are new, exciting and make saving money something that you want to do,” explained Ellisor. “We try to incorporate the standard finances into all of our planning but finances