Budgeting & Accounts Pt 2

Scott: [00:00:00] Dollars and Cents with Hapo Community Credit Union helps empower our listeners to achieve financial success while living for today and planning for tomorrow. This podcast focuses on financial education, community support, fraud prevention, real life stories of financial transformation, and much more.

Hapo Community Credit Union serves Washington and Oregon with over 18 locations. Bank on more when you bank with us. Welcome back to another episode of Dollars and Cents, Hapo Community Credit Union's financial literacy podcast. This is part two of our budgeting and account structures podcast. Now, I know that, uh, for my wife and I, we have all shared accounts.

Um, but I also know a couple of other people who utilize their structures of accounts differently. Um, both are, are, uh, with jobs. So they both have an income coming in and they both have their own [00:01:00] individual accounts, but they also have a joint shared account. Both of them deposit money into this account to make sure that their bills are covered.

So this is part of their budgeting, but they keep the rest of their money separate. Um, what other types of, uh, account structures have we seen out there that different people can utilize for their different personalities? 

Stephanie: Personally, I, I think 

I've seen, you know, like you said, uh, there's, everybody has their own ways of budgeting and having their accounts.

There's certain marriages or, you know, couples who. Prefer we have one joint account and that's where all the payments come out. But aside from that the extra money is mine and If I want to surprise my husband, I don't want him to see it. I don't want him to see it on our On our joint account, you know, another example would be, you know, somebody who just had a baby.

Whenever I notice a mother or a father or, um, parents come in and they [00:02:00] have a baby, I let them know, hey, we have, you know, we have free savings accounts. Like, as long as we have their social, which I think it takes about two weeks to get here, we have free savings accounts that's gonna set you up. Set your baby up for the future, 

Scott: um, place that you can deposit some money here and there.

Maybe at the time of birth and uncles like, Hey, for birthday presents, what we don't need are plastic toys, throw 20 into this account and that'll, that'll build up and help set them up for the 

Stephanie: future. Definitely. And I think once they get a little older, um, I see kids all the time and they come in and they have their piggy bank and they're super excited to get a receipt that shows their name and see how much money they have and things like that.

And once they get a little older, you know, maybe middle school, high school, then we revisit again and possibly get them their own personal savings and checking so that they can really See how that works and see what a transfer protection is and see what is a savings. Like, why do we use a savings versus a checking account?

Scott: Get [00:03:00] that base financial education and literacy when they're young. Help build those good, uh, those good habits of checking in and maybe starting their own first budget. I mentioned my friends that have their own separate accounts and then they pay into a, a joint account. What about people that have everything going into a joint account and then just pull some out for, is that what, what yours is, is set up that you were talking 

Stephanie: about?

I think I was just kind of using examples that I've seen, you know, um, couples that I've seen where again, you know, they have their joint account payments come out of that account, but they also have their individual account and maybe that's where they have their own, you know, this is where I really want to put money away for.

My car or something like that. So 

Scott: utilizing like say their direct deposit to, uh, pull a certain percentage or a certain dollar amount out into a, into a separate account for themselves or for their planned budget savings, which is an interesting tool that we actually haven't touched on until just now, [00:04:00] which is, uh, that direct deposit ability and making your distribution of your funds, not just second nature, but something that you never see.

How is that a type of tool that people can use to help with that? Almost that willpower aspect of 

Sebrina: things. Oh, yeah. I love that you're looking at me because that's the only way that I get to do fun things. Um, if I see it, I, I consider it part of my budget. So it budgets out and funds my savings before I ever even see it.

So all I see is what I actually get into my account after my savings has been funded. So in both of those accounts, so ones that, as I said, one's an emergency fund, one's my, like my dream fund, basically, if you want to call it that. Um, but then my working monthly budget that all of my expenses, my fuel, my groceries, all of that sort of stuff comes out of my checking account.

So those savings accounts really don't come into play until I reach those goals. So 

Scott: this is also, uh, fairly similar to say a [00:05:00] 401k. Uh, withdrawal from your paycheck before it even hits your accounts. Like you only see the amount that's getting deposited for you. The other pieces are being pulled out before you get that money.

So you don't really notice what's going on there. All 

Sebrina: right. So when we talk to people about budgeting, we usually start in with the psychology behind it. Why do we budget? And, and some of the things that we look at are know your strengths and weaknesses. Um, just because you're weak in something doesn't mean you need to be ashamed of it, but you do need to be aware of it so that you can guard against it.

So you can put things into place that will help that become a strength. So for me, as I said, if I see it, oh, that's part of my budget. But if I automatically put it into a savings account, I haven't seen it. So that's already taken care of. Um, so that's a weakness for me. So that's how I fix that weakness.

So know those weaknesses. But then learn the tools to kind of work around that so you can still be successful. So you can also 

Scott: be aware of what's happening as you're doing it. If you are [00:06:00] the type of person that really loves your iced coffee in the middle of the summer and you drive past a coffee stand, you're going to immediately think, Hey, iced coffee.

But if you know that you're spending too much on coffee and that you are an impulse purchase type of individual. Maybe that just being in your mind is going to be enough for you to be like, no, I actually, I, I, I don't want to do that today. Maybe, maybe next week when it's 10 degrees hotter. Yeah. But today we, we don't need that iced coffee right 

Sebrina: now.

And if you don't have the willpower to do that, that's cool. I get that. Then, um, get one of those iced coffee machines. Yeah, seriously. And then, and have it at work. And then when that time hits in the afternoon, you can go make your iced coffee on your break and then you've still got that thing, but it's costing you way, way less to get it.

Also, 

Scott: it can be on your list of your dreams for your budget. Yes. Now we bring this up. And my immediate thought is, okay, now we've added a new dream to our budget. We need to reevaluate our budget. Let's jump back in there [00:07:00] and adjust everything again so we can get this one thing. How often should people be reevaluating their budget and how it's working?

Sebrina: So it depends really on you. Personally, on who you are, on how you like to budget, for me, it is every paycheck, and I'm a line by line budgeter, and that's what I need. I need that structure. So, there are other types of budgets you can do, like a percentage, where, say, 50% of it's going to go to my needs, 30% goes to my wants, and 20% goes to savings.

And as long as you stay within those parameters, you can make adjustments within each of those. Um, and you can adjust those numbers, too. That's just kind of a general guideline. Um, but I check my budget. I rewrite my budget and check it every two weeks when I get paid and and I make adjustments there because stuff happens.

New stuff happens every month. There's something new. There's always something that you didn't plan for. That's life, right? So maybe there's a birthday I forgot about. And we have Father's Day, which shoot, we have Father's Day this week. Mother's Day was last [00:08:00] month. So those things that we we spend money on consistently, and maybe that means having a budget category for each other.

Like just for gifts that I'm constantly putting into. So when these things come up, um, maybe a spontaneous trip out of town that you didn't really plan for. So you want to add that to your budget. So, so I'm constantly adjusting my budget based on what is important to me right now, what needs to be taken care of, what I would like to do.

Um, but still keeping in mind those longterm goals that I have. So. 

Scott: Looking at those, not a regular spontaneous trip on a weekend, but having that in place. Not an emergency savings, but almost a fun savings. It's like, hey, I've got this set aside. I've got everything else budgeted for, and so I know that this spontaneous trip, I don't have to, have to just be, no, I'm not allowed to have fun and go do this fun thing.

I know that I am actually capable of going to do this thing. 

Sebrina: Yeah, and you absolutely should budget fund money, [00:09:00] um, whether that means going out with your friends or so many lunches a week or, um, like that weekend trip once a month or once every couple of months, and that doesn't even have to be into a savings account.

That can be a line item in your budget. Remember when I told you not to use the word restrict. That was rigid. The word was rigid. Okay, that's where this comes in is that you budgeting isn't about restricting you. It's about opening your eyes to what you want. To what you're actually doing with your money, aligning your priorities with your actions.

When those things line up, then you're going to find that money is there that you didn't realize was there. Because really, for me, a trip to Europe is way more important than lunch out with a friend. I mean, my friend can come to my desk and we can, we can bring our lunch and eat together. That's not what I'm saying, but, but that's a higher priority for me in my life than going out to lunch.

So now that I can see that on paper, it's a lot easier for me to cut that out and find different ways to enjoy my friends. [00:10:00] 

Scott: Yeah, there's nothing saying that you're not going to hang out with your friends. It's just we're not going to go out and order a 20 lunch this week just to hang out when we can, you know, make effectively the same meal for half that price at my house.

You can come hang out with me. And then that extra 20 or 10 or whatever is going to be spent on a fancy lunch on whatever European country you feel like visiting. Yes. Which 

Stephanie: one is it, by the way? 

Sebrina: All of them. No, this year it's Ireland, actually. 

Scott: Ireland is a place that I would love to visit as well. I will add that to my dream list, uh, and, and start looking at budgeting.

Most of mine end up underwater, though, and I don't know if the, if the water, cause my dream list is, uh, scuba diving based, generally speaking. Um, equipment itself isn't exactly cheap, so budgeting for that, as well as, uh, most places that I like to visit tend to be islands, which requires either a boat [00:11:00] or a plane to get to.

Also not exactly cheap. Uh, so planning ahead in, in those type of budgeting things. Um, interesting, different question. I think the answer is probably pretty self apparent. When you're budgeting for things, are you making sure that all of that money is there or that all of that money can be replaced eventually?

If we're looking at an annual budget, and I want to take a trip in February, but I know that the entire year I can cover the cost of this thing. Is that a bad strategy for budgeting to spend a bunch of money up front knowing that that fund will be replaced over time, or should I put that off until that money is actually in that account so that it doesn't put me scraping the bottom of the barrel, so to speak?

I 

Sebrina: would say if it's not disrupting your normal cash flow, if it's not disrupting you getting your bills paid on time and having that little bit of extra cushion for an [00:12:00] emergency, then you do you. Do what works for you. 

Scott: And that's kind of what we've been talking about this whole time is your budget should work for you.

It should work not so much for you, but also with you. Your personality type. Do you know that? Hey, I have this bigger expense that I pulled from a couple of different places. My emergency fund is still safe, but I can replenish those and be comfortable with that over time. Therefore, I can go ahead and plan differently than somebody who's just like, you know what?

I don't know if I can trust myself to put that money back into those places over time. 

Sebrina: Exactly. And where is your level of security? What's your risk tolerance? You know, that comes into play too, but ultimately your budget is yours. Your life is yours. You're going to design it how you want it, and if something is not working, figure it out.

Figure out why maybe I so for me I don't have that risk tolerance that you just said if I don't have a certain amount in savings for an emergency fund then I Know I'm not gonna take that trip. I'm not gonna buy [00:13:00] that thing Because that that's my I need that for me personally because too many times I've been without it and had to scrape and I just refuse to go back into that season of life again So for me, no, that wouldn't work for you if that works, that is amazing Yeah, 

Scott: it's again, we talk about the different personalities and how different people can utilize this information to make sure that they're living their best life, uh, and making sure that they're doing it financially sound, uh, so that they can continue to dream and go do these other things.

Do we have any other final thoughts, uh, about different account types, account structures, budgeting, how people can make that work for 

Stephanie: them? I guess my advice would just be Ask questions, educate yourself, know what's out there, you know, go to your local bank, credit union, and really just give your loan officer or, you know, account specialist, what is your goal, and I'm, I'm sure that they're going to be able to help you with, hey, like, if you want to [00:14:00] do this, I recommend this, and really just getting different opinions and seeing what works best for you, knowing to forecast, forecast for an emergency, but at the same time, like, Don't be so hard on yourself, you know.

If you've worked hard all week and you budgeted to go out to eat, buy a, buy a coffee, something like that, then, you know, forecast to be able to do that and really just. Feel good with yourself 

Scott: and use the resources that are available everybody in the financial industries inside of your local credit union Wants to help and assist and provide the information to you about what is available there We've had episodes where we talked about financial coaching And that free resource that Apple provides to anybody member or outside not a member yet To come in and talk about those things and to help out with those plannings 

Sebrina: So, for me, a final thought is give yourself permission to dream.

Give yourself permission to kind of take the limits off and those things that have been just kind of [00:15:00] stored in your heart that you've pushed down. Give yourself permission to think about those things and this is your life. Your budget really is just kind of a road map to help you get to the things that you want in your life.

It's not supposed to be restrictive and it's not going to match anybody else's. Give yourself permission to do those things. Give yourself permission to take a wrong turn, to, to take a detour. On that roadmap, but because it's yours and then go back and realign if you miss it, that's okay You know, I love gps because it says oh rerouting just reroute.

Yeah, just reroute and you know If your goals change, that's okay. Change your change your roadmap. 

Scott: All right Well ladies, thank you very much for being with me in the podcast studio today for everybody else out there Don't be too hard on yourself. Use your budget. Use the resources that are available to you.

And until next time, this has been dollars and cents, Hapo community credit unions, financial literacy podcast.[00:16:00]