April 29, 2021
NACA Director of Finance & Operations
It is hard to believe a year has come and gone since last April when the Financial Literacy blog I wrote was published. But here we are closing out Financial Literacy Month again. As the director of finance for NACA, I realize the topic of finance is not the most exciting and engaging. Back in the day, I fell asleep many times studying for accounting tests and exams. But even if your profession is not tied to the field, the subject of finances is important to everyone.
To quote Del Lewis, former NPR executive, “If your outgo exceeds your income, then your upkeep is your downfall.” To avoid this “downfall,” all of us must do our own personal accounting as part of our daily lives. In some form or fashion, we manage a balance between what we earn and what we spend. What many of us struggle with most is reducing debt and saving.
A recent newsletter article from First Sun EAP, “How to Make a Budget and Stick to It” provided some very practical advice for keeping spending under control. While it may take some initial time, thought and effort, the outcome can be well worth it. The article detailed a step-by-step process for making intelligent decisions about what to buy with your hard-earned cash. Below is a quick recap of the information:
First, record your expenses. Track your spending over at least two months. List all transactions whether paid by cash, check, or credit card. Then factor in all seasonal, annual, semi-annual, and quarterly expenses that did not fall into the period for which you have been tracking, like property taxes, insurance payments, and holiday expenses, to name a few.
Next tally up your income. Depending on your individual circumstances, this may include your wages (after deductions), alimony or child support payments, public assistance or bonus pay.
Once you have tracked income and expenses for several months, you have a basis for creating your budget with a goal of controlling impulse spending and to starting to save. Tally up the amounts you spend in each category of expenses each month and subtract it from the amount of income each month. If your expenses exceed income, there are but two choices: Increasing income or decreasing expenses. Finding ways to increase income is usually more challenging than finding expenses that can be eliminated or reduced.
Knowing how much you need to cut and prioritizing your spending will help you stay on track. Do not give up what you need and, to the practical extent possible, retain things you most enjoy. You may need to trade off the morning specialty coffee you like for a dinner out once every week or so. The key is to be realistic. While you need to be willing to sacrifice, taking away all but the essentials makes it harder to stick to your budget. Consider what is most important to you and make needed adjustments according to your priorities.
Budgeting may not sound like an enjoyable or exciting activity, but in the end, you may be excited to see the fruits of your effort in your savings account.
Brenda Baker is the director of finance and operations at the National Association for Campus Activities. Baker has dedicated her 40-year career to managing associations' financial resources and services.