02 Sep Basic Financial Fitness
The way you handle your finances is a personal choice. The decisions you make about them change over time and may differ from your friends’ or your parents’. Still, there are some broad guidelines that may help you get better control on your financial plans.
Start by comparing your income to your current expenses. Create a spreadsheet so you can clearly see how much money you bring in and how much you spend. If money is tight, use this spreadsheet to see which non-essential expenses you can cut back on.
Watch how you use credit cards. Get the lowest rate card possible to avoid high interest payments if you carry a balance. Western Sun offers three different credit cards with rates starting at 8.75%APR (annual percentage rate) and no annual fee. While not always possible, it is best to pay off your card balance each month. For your debt picture, try to live at or below your budget while watching your spending and reducing your debt.
Save for Emergencies
How much should you be saving in an emergency fund? Financial experts suggest putting three to six months’ take-home pay in a savings account. That can take time to build up, and you may need to raid your account even while you’re adding to it. Still, if you consistently put aside at least 5% of your take-home pay, using payroll deduction, you’ll reach your goal.
Create a Nest Egg
If your employer offers a 401(k), put a percentage into your 401(k) that equals what your employer will match. Ideally, contribute the maximum your employer allows into your 401(k).
If your employer doesn’t offer a 401(k) or you are self-employed, look at other options, like a traditional IRA, a Roth, or a Simplified Employee Pension IRA.
Get adequate insurance
Buying good insurance for your health, car, and home (or renters’ insurance), is a good investment. It will protect your finances from high medical costs, damages due to car accidents, and against losses to your personal property.
Western Sun Federal Credit Union wants to help you become financially fit. We know that financial fitness (budgeting, planning) is not a one-size-fits-all solution. Contact us to learn about the services available to help you meet your specific financial goals.