How Money Can Work for You

By Gordon Chavez

Gordon Chavez, Financial Advisor

Money is essential for meeting your family’s needs. Knowing its value impacts budgeting, saving, and investing. Your upbringing shapes your relationship with money, which affects your financial decisions. Awareness of this connection helps identify when your emotions may be influencing your choices.

For effective budgeting, monitor monthly expenses against income.

When I first moved out of the house back in the mid-1990s, I was getting paid about $350 every two weeks. My dad told me to add up all my expenses (rent, utilities, food) and then divide them by two. It gave me how much I needed to save per paycheck to cover my bills. The rest would be spending money. I didn’t have a habit of saving, so I was living paycheck to paycheck.

Consider using the 50/20/30 Rule: 50% for essentials (food, rent), 20% for savings, and 30% for leisure (movies, dining out).

Banking is integral to budgeting, safeguarding your money with insurance against theft. Storing cash at home (like under your mattress) risks loss. A bank account helps you with essential financial tasks such as obtaining credit cards, purchasing homes, or borrowing for business—key steps in building credit and financial history.

Money’s value, subject to inflation, diminishes over time. Over the past 30 years, averaging 2.5%, it steadily erodes purchasing power. For example, going to the grocery store used to be $100 per visit; now, it’s more like $300 for the same food.

With inflation eroding your money by 2.5% annually, finding an account yielding 2.5% will help you break even. High-yield savings accounts offer 4–5% returns, combating inflation. Your hard-earned money should work for you; a savings account cushions against unexpected expenses. Aim to have 3–6 months’ expenses in savings for financial security.

As you grow accustomed to these concepts, consider investing for your future. Consider contributing to financial vehicles such as 401(k)s, IRAs, or non-retirement stock market investments. Evaluate risks, costs, and tax implications before proceeding with investment decisions for long-term financial security.

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