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The following post was written by Kaitlyn Mahoney, Delta Pi–San Francisco State University. It is part of an ongoing blog series about financial health for the modern woman.  

At some point, everyone feels lost or anxious about money. Rest assured—you’re not alone. These five tips will set you on a path to a healthier relationship with money: 

1. Budgeting 

Utilize a budgeting tool to identify and allocate every dollar you earn to a specific purpose. There are three key categories of spending to consider: fixed expenses, goal funding and discretionary spending. In a perfect world, 60 percent of your after-tax income should be allocated to fixed expenses (e.g. rent, car payment, etc.). While it may seem impossible, 20 percent of your after-tax income should ideally go toward goal funding (i.e. savings). The remaining 20 percent is your ‘fun money’ discretionary spending. Regardless of where you are financially, identifying a starting point allows for small, consistent wins.  

2. Savings 

Besides educating clients, I help them save in the right places. While 20 percent of your income should be allotted to savings, most Americans save around 3-6 percent, with Canadians slightly higher at 10 percent. Many of us are lucky if we are even able to part with that much! 

There are four main buckets that need to be funded through savings—short-term, midterm, long-term and retirement. Depending on where you are in life, you may need to focus on all or just a few buckets. Regardless, the earlier you can begin, the more your savings will grow. 

You may be thinking—wait, my savings can grow? A high yield savings account or taking advantage of employer-matched retirement funds can help you reach your financial goals faster. Talk with a financial advisor about what makes sense for your goals and lifestyle. Even if you can only part with $25 per paycheck—the sooner you start filling those buckets, the faster they will fill. 

Savings Challenge: Put One Back 

When you’re out shopping, I challenge you to take one item back out of your cart. Using your online banking app, immediately move the amount of that item into your savings account. Happy shopping—and saving! 

3.  Investing 

Thanks to apps like Robinhood and Acorns, we have seen an uptick in stock market activity during the pandemic. But—as history will tell—a high market will eventually result in a decline. Make sure to plan for down markets and keep emergency funds elsewhere. In other words, it may seem fun to put all your savings in the stock market, but make sure you have rainy day funds outside of your portfolio. Research, learn on your own, ask questions or talk to your financial advisor to find the most rewarding way to invest. 

4. Insurance 
One of the first questions I ask my clients is what their greatest asset is. Most people think it is their bank account or a materialistic item. However, your greatest asset is you.  

There may be a time when you—your greatest asset—are unable to earn a living. That’s why disability insurance is essential during your earning years. While many employers in the US and Canada provide it as part of their benefits package, you’ll need to pay your own if you are self-employed or work part-time. In addition to being prepared for extended illness or injury, disability insurance can be particularly important if you plan to become pregnant. US employers are not required to offer paid maternity leave and those that do typically grant 6–8 weeks. If you are put on bed rest or would like to extend your leave, disability income will provide 60 percent of your income fully taxed.  

Additionally, check with a financial advisor to discuss which life insurance option is best for you. In some cases, a small policy may be included with your employment benefits, so be on the lookout for it as you review prospective job offers. 

5. Contributing to the World’s Work 

Among the important lessons we’ve learned through Alpha Gam, a spirit of philanthropy is near the top. Find your passion and identify a charity aligned with that cause. The Alpha Gamma Delta FoundationFeeding America and Meals on Wheels are great choices!  Keep track of all donations and receipts—you could possibly benefit from a tax break when tax season rolls around. 

Budgeting, saving, investing, protecting and giving may seem simple enough, but a little planning and guidance can help elevate your financial goals. Make small but meaningful advances toward financial independence and turn your negative feelings surrounding finances into empowerment!

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