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San Diego County Credit Union's

Not a Big Bank Blog

Because we're not a big bank, we're here to help YOU, not stockholders! Follow our new blog for financial tips ranging from balancing your checkbook to buying a home. Our goal as your financial partner is to help you make educated financial decisions for yourself and your family.

Financial Literacy Uniquely Designed for You

SDCCU | 3/31/2016 02:14 p.m.
Financial literacy means understanding and being able to analyze financial matters and opportunities—such as how to earn, manage, spend, invest and donate money.

What is financial literacy?

Financial literacy means understanding and being able to analyze financial matters and opportunities—such as how to earn, manage, spend, invest and donate money. Since being a financially successful person does not depend on your income—but rather the choices and priorities you make—financial literacy is absolutely critical to being financially successful.

Achieving financial goals

Individual financial goals range from paying off debt, creating an emergency fund, buying a new vehicle or purchasing your first home—to name a few. Your individual financial goals should continue to motivate you, so it’s vital that you take adequate time to decide your own goals. While financial goals are unique to what is important in your life, the first step for anyone in achieving their respective goal is to track where your money is going—and build a spending and savings plan. 

Create a monthly spending and savings plan

The first step to creating your monthly spending and savings plan is to classify your expenses as either essential or discretionary. Essential expenditures are the things we can’t live without, such as housing, food and transportation. Discretionary expenses however, are not necessity and include such things as entertainment, gifts, and pricey gadgets or electronics.

Once you have tracked your monthly expenses for at least 30 days, compare your spending habits to recommended budget guidelines and determine necessary changes that can be applied to your own spending and savings plan.  Recommended budget guidelines are:
  • Housing: Spend no more than 35 percent of net income on housing expenses (including mortgage/rent, utilities, insurance, taxes and home maintenance).
  • Savings: Save at least 10 percent of your net income throughout your working life.
  • Transportation: Spend no more than 15 percent of your net income on transportation costs, such as public transportation tickets, car payments, insurance and registration fees, maintenance, gasoline and parking.
  • Debt: Allocate as much of your net income as possible towards paying off expensive consumer debt like credit card balances, personal loans, tax and medical debt and student loans. Take advantage of balance transfer promos to help pay down a balance while saving on interest.
  • Other: Spend no more than 25 percent of net income on all other expenses, such as food, clothing, gifts, entertainment and vacations.

Making changes

If after creating your monthly spending and savings plan, you realize more money is being spent than earned—don’t panic! First, itemize your plan line by line and ask yourself: “Is this a want or a need?” Scrutinize each expense; consider dropping that $40 per-month gym membership and instead exercise by hiking outdoors (for free). Cut the cord and swap cable television for a streaming service and save up to $100. Purchase store brands instead of big-name brands and save $10 the next time you visit the grocery store.  Budgetary changes are easy to make after creating a monthly spending and savings plan—especially once you have distinguished the difference between your essential and discretionary expenses. Expense tracking software is a great tool to get your spending and savings plan organized quickly and easily!

How long would it take you to achieve your individual financial goal with the additional $150 saved each month in the above section?

Multiple savings accounts

Establish a 3-tiered savings plan to better organize your individual financial goals. Open multiple free savings accounts and label them short, medium and long-term goal accounts. Short term goals are what you’d like to reach in 0-12 months. A great example of a short term goal is establishing an emergency fund if you have not already done so. Medium goal accounts are for any financial goals you’d like to achieve in one to five years—such as a new car. Long term goals—such as college savings plans are achieved in 5+ years. An ideal long term goal everyone needs to be saving for is retirement!

We tend to want to spend what we make, so here are a few savings tips to help reach your financial goals:
  • Automate savings transfer(s) to your goal accounts.
  • Don’t wait until you pay bills to put money into your savings.
  • Remember that you are an essential expense!
Always remember—financial literacy is meant to be applied to all income levels. Whether you make an hourly wage or earn a six figure income, everyone should have goals that can help to prioritize finances better. Just remember to set goals that are important to you in your life, devise a spending and savings plan which allows you to achieve those individual financial goals and start living a more fulfilled life!

Ready to start budgeting? Use SDCCU’s free expense tracking software to create your spending and savings plan!


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What You Can Do
San Diego County Credit Union® was founded on the principle that people come first and profits second. This forward-thinking approach in the banking industry has propelled SDCCU® to become San Diego’s BEST Credit Union and largest locally-owned financial institution. SDCCU provides breakthrough banking products that meet the demands of today’s lifestyle and delivers banking services that save customers money. SDCCU serves customers nationwide with 30,000 surcharge-FREE CO-OP ATMs and 43 branch locations in San Diego, Riverside and Orange counties. Open an account today.

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