Smart Spending vs. Smarter Financial Planning
Smart spending and smarter financial planning offer similar techniques and overlapping strategies for reframing your relationship with money, reconfiguring your finances, and refining your financial literacy.
For example, both strategies begin with the idea that assessing the particulars of your financial present can help you take control of your financial future.
Yet despite their similarities, they offer slightly diverging paths to obtaining financial solvency. If you’re looking for ways to improve how you handle your cash, understanding the differences between smart spending and smarter financial planning can help you choose the method that’s best for you.
To that end, here is your guide to smart spending vs. smarter financial planning.
What is Smart Spending?
Smart spending is the practice of developing and exercising wise, responsible money habits that enable you to achieve and maintain good financial health.[1] People who exercise smart spending understand that even the smallest spending decisions have an impact on their current and future financial situation, so they make daily choices that contribute positively to their fiscal wellness.
As a result, people who engage in smart spending habits have no trouble paying their bills, managing their debt, and keeping enough money in their savings accounts to stay above water when financial emergencies arise.
Fortunately, you don’t need a degree in money management to become a smart spender. Everyone’s financial situation is different, but regardless of factors like your income or debit history, the path to smart spending remains the same. And it begins with taking the following steps:
- Make a Budget (And Stick To It) – Adhering to a budget that’s in line with your earnings is among the most important aspects of spending smartly. So, if you don’t have one, now is the time to write one up. Doing so is as simple as subtracting your total known and expected monthly expenses from your monthly income.[2] Our Spend Forecast tool can give you a broader perspective on your expenses and devise a fail-safe budget.
- Know Where Your Money Goes – Tracking your expenses so you know how all of your money is being spent can help you identify where you need to cut back.
- Give Your Credit Cards a Break – A major component of good financial health is reducing your debt. Paying off your debt is one way of doing that, but an even better way is avoiding new debt to begin with. You may also want to consider gaining some immediate relief via debt personal loans. NJ residents can turn to North Jersey Federal Credit Union for help finding one.
- Save, Save, Save – Sometimes, the smartest way to spend your money is saving it to invest in your future—that is, simply not spending it. Once you’ve analyzed your spending habits, look for areas where you could stand to scale back. Then, use our Savings Goal tool to set specific goals, like saving for a new car or home.
- Open a Second Checking Account – Having an alternate checking account exclusively for paying bills can help you avoid wasting money on needless expenses like overdraft fees. Then, set up automatic withdrawals where you can so that you’re never late with a payment.
What is Smarter Financial Planning?
Essentially, financial planning is a two-pronged approach to money management that addresses your current financial situation as well as your short-term and long-term financial goals.[3]
First, take a big-picture perspective on all of your money matters. You should consider the most important factors of your financial situation, like your income, savings, and debt levels, plus any investments and insurance. Then, you can use that information to devise methods that help you meet your financial obligations and bring you closer to your personal objectives.
A good place to start is with our Financial Health Checkup tool, which can help you better understand the current state of your finances and craft a plan that works for you. Depending on your situation, your plan may include things like tackling debt, making investments, buying a new house or car, and taking steps to improve your credit score.
Tips for hashing out a winning financial plan include the following:[4]
- Work with a knowledgeable financial planner
- Don’t just plan for emergencies, expect them
- Monitor your expenses, spending, and credit report
Master Your Finances With New Jersey Federal Credit Union
At New Jersey Federal Credit Union, we know that being good with money isn’t always as easy as it sounds. But we also believe that successful money management is attainable for everyone.
That’s why we’re committed to helping our members liberate themselves from money troubles and find solutions for obtaining heightened financial health.
And because we’re committed to being the best credit union New Jersey has to offer, we take pride in connecting our members with incredible services and products that put you on the path to financial freedom, from essential online banking features to tools that help you track your everyday spending and gauge your financial wellness.
If you aren’t yet a member, what are you waiting for? Join us today!
