Financial “Rules” Most Individuals Don’t Know…But Should
The obvious financial advice most people hear about is that it is wise to create and follow a budget and try not to spend more than you make. Sounds simple! But here are some other tips that you may not have considered that can help save your hard-earned dollars.
AUTOMATE! AUTOMATE! AUTOMATE!
Do you trust yourself to transfer money into your savings account each paycheck? Or do you see what you have and spend it? The best choice is to make a conscious decision ahead of time to set up an automatic savings from your paycheck. Money sitting in your checking account is just tempting you to spend it. Automatic transfers into your savings is money that you don’t see and don’t have to remember to transfer. Transfers do not only need to go into a savings account; a 401(k) is another option especially if your employer has a full match. And if you don’t have a 401(k) plan through work, you can set up an individual retirement account (IRA) and still have money automatically transferred there.
AUTO- RENEW IS NOT YOUR FRIEND
Auto-renew may sound like a good plan but it may lead to spending on items you no longer want or need. Subscriptions set to auto-renew can be easy to forget. Additionally, prices may have gone up since you signed up. You may be charged at a higher rate than when you initially started the subscription. Periodically, you should take a minute to review all of your subscriptions and cancel the ones you are no longer using.
GO OVER YOUR CREDIT CARD STATEMENT WITH A FINE-TOOTHED COMB
Before you make your credit card payment, be sure to go over each item line by line. Hackers will often “test” a smaller purchase to see if it goes through. Therefore, it is wise to review your monthly credit card statement and report it to your credit card company immediately before it turns into a larger purchase that you did not authorize and a big headache to follow.
YOU GET WHAT YOU PAY FOR
Who doesn’t like a good deal? But that low-priced item may actually be a terrible deal if it is not up to standards. You may end up paying more in the long run to replace a cheaply made item that has broken. Sometimes you may have to spend a little more to save more focusing on quality and life of the product. Another good tip is to shop at the end of a season when you are likely to get top of the line products at a reduced cost.
BE REALISTIC WITH YOUR BUDGET
A budget is a great tool to save and to see where your money is going. But if you are too strict with your budget, you are setting yourself up to fail before you even start. It will be hard to stick to the plan and change your spending habits all at once. Instead, start out by making a few small changes in how you spend and save your money. If it’s important to meet up with friends for dinner, put that in your budget. You can find other places to cut back such as those subscriptions mentioned in this article. After a while, the changes you made will become routine and so will saving.
SET UP SPECIFIED SAVINGS ACCOUNTS
Having specified savings accounts for your long-term, mid-term and short-term goals is key. A long-term account could be a 401(k) and never touched. A mid-term goal account could be buying a home or paying for college. While a short-term goal, could be your “rainy day” fund or to pay for car maintenance and insurance on your car and home or any unforeseen event that may arise. Mapping out specified accounts and funding them will help avoid the question: “how I am going to pay for this?”
YOU DO YOU!
Everyone’s priorities are different. Identify what works best for you when dealing with your finances. Ask yourself the tough questions about money: what is my goal and how do I plan to achieve it? How much risk am I willing to take? How long do I plan to keep working? But the most important key in this exercise is to be completely honest with your answers. Once you have answers, then you can decide how to deal with what’s best for your financial situation.
If you would like help with any of this information, please reach out to us here at Evergreen Park Schools Federal Credit Union. Both Co-Managers are Certified Credit Union Financial Counselors who will be happy to answer your questions.
