10 Huge Mistakes to Avoid When Trying to Save Money

downloadAddressing the issue of saving money is the most fundamental, yet neglected, aspect of personal finance in the U.S. today. According to a 2012 survey by Credit Donkey, almost 50 percent of Americans don’t have more than $500 in their emergency savings accounts, which not only puts a kink in savers’ finances in the event of an unforeseen expense, but also creates undue stress for failing to prepare a safety net adequately.

Here are the top 10 money mistakes Americans make when it comes to saving money.

1. Not budgeting.
There are a number of philosophies on the best approach to take when budgeting your money, but at times the thought of sitting down with statements, bills, and an expense sheet is just too stressful. This mind-set is an easy trap to fall victim to, but is one of the worst money mistakes to make if you want to grow your savings fund.

2. Saving too little.
It’s commendable that about half of Credit Donkey’s survey participants had saved up some cash; but often, individuals don’t save enough money to carry themselves through a challenging and sudden financial crisis. A common recommendation when it comes to the appropriate amount to save in a nest egg is about three months’ salary, or six months worth of expenses (i.e. mortgage, auto loan, utility bills, gas, etc.).

For instance, the average American in 2013 made $42,693 before taxes. Take away about 25 percent of that income for taxes, and the average person walks away with $32,020 annually. Three months of net income (the ideal emergency fund amount) is about $8,000 to help keep you comfortably afloat in an emergency.

3. Not setting specific goals.
Determining what exactly you’re saving for, and when you need to save by, is a helpful motivational guide to follow. It acts as a constant reminder of what you’re working toward, and lets you know when your efforts have been successful.

Examples of this include saving money for a down payment on a car in the next six months, or getting more specific like committing to saving $200 per month for the next six months, to achieve this goal.

4. Failing to track spending.
Creating a budget is the start of the savings process and setting a goal is the end of it, but there has to be a quantitative way to follow your progression in the time between. Tools such as Mint.com  or even a simple spreadsheet are great ways to avoid this money mistake.

5. Living paycheck to paycheck.
When budgeting your spending allowance, don’t stretch your money to the last dollar. Not allowing yourself about a $100 per month buffer sets you up for disaster, as small, seemingly harmless purchases quickly add up.

6. Overdrawing an account.
Overdrawing a checking account is usually the result of making one of these other money mistakes, but expensive overdraft fees are a cost you have complete control over. A $35 overdraft fee might not sting now, but as more pile up on your account statement, the damage can become apparent in a short period of time.

Simply put, overdrawing is a money waster and an entirely avoidable circumstance if you stay diligent with your savings plan.

7. Claiming the wrong tax withholding.
Claiming the lowest withholding allowance when it comes to your federal taxes is a mistake that Americans commonly make. When you do so, the government takes away more income taxes throughout the year, and you’re left with a fat tax return check.

Don’t let this windfall fool you — what you’re doing is essentially giving Uncle Sam an interest-free loan and getting nothing back in return. Instead, you can claim the withholding allowance you rightfully qualify for, and use the extra cash in each paycheck to grow your savings fund in a high-interest savings account.

8. Signing up for low deductibles.
One way to increase the amount of cash you can save each month is to lower your premium and raise your deductible for auto and health insurance. This means you assume more risk up front by paying a lower monthly premium, with the expectation to pay more out of pocket in the event you have to file a claim (which should be no problem if you’ve saved that emergency fund).

According to the Insurance Information Institute, increasing your deductible from $200 to $1,000 can lower collision and comprehensive coverage premiums by at least 40 percent.

9. Buying name brands.
More customers are employing frugal tactics like passing on branded products in lieu of a generic version. Similarly, retailers have caught onto the fact that shoppers are looking for a frugal alternative in today’s challenging economic times.

That’s not to say you should never splurge on a brand that’s worth it, but most generics are the same product as their pricier counterparts. Look for generic products on the lower shelves of grocers’ aisles.

10. Waiting.
One of the worst money mistakes you can make is procrastinating on getting started with your savings plan, since achieving a savings goal can take longer than you might expect. Paying $500 per month toward an emergency fund at the income outlined in mistake No. 2, for example, would take the average American 16 months to save up three months’ income.

Utilize First Financial’s free, anonymous debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

Here at First Financial, we also encourage our members to come in at least once a year for an annual financial check-up – to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 866.750.0100 or stop in to see us today!

*Click here to view the original source by Nasdaq.

8 Things You Should Do With Your Money Before 2015

Checkbox 3DThe last thing we want to do right now while preparing for the upcoming holidays, is probably think about money. That’s what New Year’s resolutions are for, right? While it’s tempting to put off your finances until the New Year, you might miss some critical financial deadlines or lose the opportunity to save extra money. An end-of-year financial checklist gives you the opportunity to make changes and save before the clock strikes midnight on December 31st.

Here is a year-end financial planning checklist. Use these last few weeks to get your finances organized and under control — a great way to close out 2014.

1. Look over your spending.

Ideally, you’ve been tracking your spending all year. What were your spending patterns? Did you go over or under in a certain category? Take a look at what you actually spent vs. what you had budgeted for. Do you need to change your expectations? Review your financial goals from last year and consider whether they will work for you in the coming year and make the necessary adjustments. If you paid off a loan, see if you can redirect that money into a paying off another debt or adding to a savings or retirement account. Don’t let the money get eaten up by miscellaneous expenses. If you don’t have a budget, start one now. Mint.com, Level and Check are all good free budgeting tools with features to help you create a budget from scratch, track your spending, and set financial goals.

2. Order your free credit report.

You’re entitled to one free yearly credit report from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion. Get a report now so you know where you stand before heading into the new year. Look over your report and check for errors or negative information. If your credit history could use some improvement, make 2015 the year you get back on track.

3. Get your credit cards in check.

That means checking your balances, rates, and cash back or other rewards. Make a large payment if you are carrying debt and have extra money to do so. If you can’t pay down a chunk of the debt you accumulated this year, create a debt repayment plan that will get it down next year.

If you have a great deal of debt, First Financial has a free, anonymous online debt management tool called Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

4. Make an extra mortgage payment.

Making just one extra mortgage payment each year can cut your loan down by years, saving you possibly thousands in interest. Also, making an extra mortgage payment means you may be able to claim an extra month of mortgage interest deductions in 2014. If you can’t afford an extra payment, try to make January’s payment before the first of the month. If the payment gets credited before January 1, 2015, it may still be tax-break-eligible for 2014.

5. Review your insurance plans.

Look over your health, life, homeowner’s/renter’s, and car insurance plans. Do you need to adjust your coverage, premiums, or add any dependents? Do you need to purchase new coverage, like life insurance or disability? Did you get married, have a baby, or buy a house? Do you have any changes coming in 2015 that you need to plan for? Those life events all trigger insurance changes.

PS: If you answered yes to any of those questions, you might need to make changes to your W-2, too.

6. Automate everything.

It’s time to finally automate your bills and savings. The more you can automate, the easier your finances will be in 2015. Automating helps you pay your bills on time and maintain a regular savings plan. This is also a good time to cancel any automatic subscriptions you aren’t using: video and music streaming, magazines, premium subscriptions, etc.

7. Make a tax-deductible charitable contribution.

If you are going to itemize deductions on your 2014 tax return, consider making a charitable contribution to a cause you believe in. The donation must be made to a qualifying organization and the tax benefit only saves you a fraction of what you donate, but you’ll be supporting a good cause to end the year.

8. Use your Flexible Savings Account.

If you have a Flexible Spending Account for healthcare or other qualifying expenses, now is the time to submit any outstanding claims. This is also the perfect time to make any year-end doctor appointments.

If you get your finances in order at the end of the year, it can only help you get more organized for the coming one!

Don’t forget to stop in to have your annual financial checkup before the year ends, or to kick off the beginning of the new year! Here at First Financial, we encourage our members to come in at least once a year to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 866.750.0100 or stop in to see us today!

Article Source:

Morgan Quinn of Gobankingrates.com, http://www.gobankingrates.com/personal-finance/10-smart-money-moves-make-before-2015/

6 Apps That Can Save Your Financial Life

Save-Money-with-AppsWelcome to the bulging world of smartphone applications that will do the logging, tracking and thinking for you as you get your financial life in order, help you follow a budget, and nudge you to pull in the reins on your spending. New smartphone apps are going to market at speedy rates as consumers, both young and old, demand on-time access to all their accounts at a moment’s notice and thanks to Mint, Bona was able to do just that.

1. Mint: Mint is the oldest and most popular free app that pools your personal-finance accounts and investments into one place. You can pull up Mint on your smartphone or laptop and set goals — like paying off credit cards or saving to buy a home — that you can follow closely through graphs and colorful pie charts. If you stray by spending too much on, say, clothing, Mint does the equivalent of yelling at you. The app will alert you when a bill is due, but you cannot actually make a payment directly. This function is actually a good thing, in that it doesn’t allow you, or anyone else, to deposit or withdraw money, move money around or pay bills. It is encouraged that you download your financial institution’s mobile app or sign-up for Online Banking to move, transfer, and/or pay bills.

Here are budgeting and bill-paying apps besides Mint that will make your financial life simpler:

2. LearnVest: This new app is an extension of the financial-planning site of the same name that’s been around since 2009, initially as a personal-finance education site for women. The free app is a lot like Mint. It helps you create budgets and prioritize your financial goals while nudging you to meet them. Like Mint, it also connects directly to all your accounts — savings, checking, credit cards, investments — and tracks every credit and debit. That gives you an instant picture with easy-to-decipher charts and graphs of your net worth as well as alerts that you’re spending too much in one category. There’s a lot of reading material to help you navigate your financial future and for an extra $19 a month, plus an initiation fee of as much as $399, you can get financial advice services.

3. HelloWallet: This app, which is owned by Morningstar, takes a behavioral science approach to business to help you plan your financial future, not just today’s bills and debt management. Its founder, Matt Fellowes, is a consumer-finance scholar at the Brookings Institution who melded technology with behavioral psychology to offer individualized personal-finance recommendations based on income, age and spending patterns. Using your GPS, for example, it can alert you that you already have spent too much money at a particular restaurant. It will also point out the gaps in your financial life, like a missing emergency-savings plan or inadequate levels of insurance. It’s primarily distributed through employee wellness plans but household memberships are available — with a three-year commitment — for $100 annually.

4. OnBudget: This new app and its fee-free prepaid-card component follow an unfussy approach to budgeting: You can’t spend more than you have. With a MasterCard prepaid debit card — what OnBudget calls a “monthly budgeting card” — you find yourself organizing spending much as your parents and grandparents may have, with different “envelopes” for each spending category. But in this case it’s virtual envelope organizational behavior that delivers real-time spending patterns, tips on saving money and constructive suggestions for better decision-making. There’s no setup involved because the software system learns your habits as you spend — and tells you about them. A plus: Unlike with most other personal-finance management tools, more than one person in a household can share a single budget. And there’s no hiding spending here because the system tracks who is spending what.

5. Better Haves: Another envelope-budgeting system, this is a relatively new one designed particularly for couples, though individuals can use it too. You can track expenses on the go and watch your color-coded envelopes deplete with each purchase. Once the envelope’s empty, everyone is advised to stop spending in that category. This one’s dashboard charts joint expenses, but there are separate tabs for joint and individual budgets. There’s even an early-warning system that a money fight could be in the offing. Plus it asks you how you felt about your spending that day.

6. Check: This is the rare app that helps you stay on top of your bills and actually pay them from your smartphone. It touts itself as a “free app that does the worrying and work for you.” Once you set it up, it sends reminders of due dates as it monitors your bank accounts and credit cards. It also alerts you in real-time of large purchases or unusual charges, but it won’t assist in budgeting.

Our Mobile App is now available for iPhone and Android users! Receive 24/7 instant access to your First Financial accounts – including bill payment, make transfers, check your balances, find branch and ATM locations, and receive account alerts. Click here to learn more and how you can download the app today!*

*You must have an account at First Financial Federal Credit Union (serving Monmouth and Ocean Counties in NJ), and be enrolled in online banking, to use this application. Standard data rates and charges may apply.

Original article source by Jennifer Waters of Personal Financial, Market Watch.

4 Personal Finance Myths: Busted!

A computer generated image of a chain with a broken link.Financial myths are a force behind one of the biggest threats to your financial future – yourself. Here are some personal finance myths that could be costing you money and endangering your future security.

Myth 1: Two incomes are better than one. Truth: Today’s families often have two incomes out of necessity. They make more money than a one-income family did a generation ago. But, by the time they pay for the basics – an average home, a second car to get the second spouse to work, child care, health insurance, taxes, and other essentials, that family actually has less money left over at the end of the month to show for it.

The assumption in the myth is that with two incomes you’re doubly secure. But if you’re counting on both of those incomes, then you’re in serious trouble if either income goes away. And, if you have two people in the workforce, you have double the chance that someone will get laid off, or that someone could get too sick to work.

Housing prices are rising twice as fast for families with kids, and a big reason is dwindling confidence in public schools. People are bidding up the prices on homes situated in school districts with good reputations. The only way for a typical family to afford one of those homes is for both spouses to work. Average mortgage expenses have risen 70 times faster than the average family’s primary income, so, families are required to keep two incomes.

When two incomes are a necessity, the question of whether two may be better than one is moot. Busting this particular myth means understanding the true financial stakes involved in deciding to have children and raising a family, based on your personal situation.

Myth 2: Owning is always better than renting. Truth: The money you pay for rent is a necessity like your other living expenses. Do you consider the money you spend on food to be wasted? What about the money you spend on gas? Both of these expenses are for items you purchase regularly that get used up and appear to have no lasting value, but are necessary to carry out daily activities.

If you own a home, unless you paid cash for it, you pay a mortgage (and it’s likely as much as you’d be spending on rent), plus other expenses like property taxes, insurance, maintenance, etc.

The choice between owning and renting is often a financial toss up. Busting this myth means understanding the most important reason to buy a home. Decide how badly you want to settle down for the long-term and invest in a permanent residence.

First Financial offers a number of great mortgage options, including refinancing – click here to learn about our 10, 15, and 30 year mortgage features and see what a good fit for your home is!*

To receive updates on our low mortgage rates straight to your mobile phone, text FIRSTRATE to 69302 and each time our mortgage rates change, we’ll send you a text message with the new rates.**

Myth 3: A near-perfect credit score will get you the best loan rate. Truth: Every expert, credit bureau, and loan officer has a different opinion as to where the threshold for excellent credit lies. In addition, “near-perfect” can be a relative term. Do we mean “near-perfect” as in “excellent,” or as in “perfect,” which doesn’t exist? Different loans and lenders have different standards.

Generally, any credit score in the mid-700 range and up is considered excellent credit, and will get you credit approvals and the best interest rates. But at this high end of credit scoring, extra points don’t always improve your loan terms much. Sure, the higher your score, the better. But even an extra 50 points in this range doesn’t always help you get a better rate on your next loan.

Those extra points can serve as a buffer if a negative item shows up on your credit report, however. For example, if you max out a credit card, you can get dinged 30-50 points. An extra 50 points would absorb the hit and minimize the possible damage.

So, there really is no “magic number” when it comes to credit scores. Busting this myth means understanding that more than just your score is taken into consideration. To get the loan you want, you may need a high credit score, no negatives in your credit file, and adequate income to afford it.

Myth 4: You need to earn more to save more. Truth: Your ability to save is defined by your discipline to sacrifice and set aside a percentage of your spending. Your income level is not really a factor. And no matter the amount, the younger you start saving, the more years you’ll have for your money and any interest earned to work its magic. You may decide you want to invest some of your savings too – talk to a financial planner and decide if investing in stocks and mutual funds might be a good option for your savings goals.

So, savings is not some arbitrary amount – but a discipline. Busting this myth means understanding that you need to sacrifice some of your spending now for financial security later. You simply have to decide how important that security is to you.

Consider how these personal finance myths and others like them could be contributing to money problems you’re experiencing now, and pose more serious trouble for your future.

“Busting” these myths offers the answers you need to take action and change your behavior with money – and assure your financial security.

Article Source: http://www.nasdaq.com/article/why-these-4-personal-finance-myths-perpetuate-money-problems-cm396086

*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. Subject to credit approval. Credit worthiness determines your APR.

 **Standard text messaging and data rates may apply.

Our Fall 2014 Newsletter is Here!

Our Fall Bi-Annual Newsletter has arrived! In a continued effort to “go green,” we’re publishing our newsletter electronically – it can also be found on our website and social media sites. Paper copies will be available in our branches in the coming weeks – stay tuned. This Fall “First Edition” newsletter covers some great new topics and talks about some of the exciting events and promotions going on at First Financial for the rest of 2014.

The Fall Newsletter Magazine features the following articles:

  • Upcoming First Financial Seminars (October – November 2014)
  • New Mobile App Announcement
  • “How to Save Money by Simplifying Your Life” Article
  • Note from the CEO
  • New Instagram Announcement
  • “Living in Retirement” – IRC Article
  • Groundbreaking Event Photos & New Freehold/Howell Service Center Address
  • Tell a Friend Referral Program with Holiday Bonus Offer
  • “4 Ways to Save” Financial Tips
  • 2014 Erma Dorrer Literary Scholarship Recipients and Photo
  • Penny Smart’s Food Truck & Restaurant Birthday Bash Summary with Photos
  • Important information, holidays, phone numbers, and branch locations

To view a copy of the newsletter, click here.

Enjoy!

Personal Finance: 5 Areas You Shouldn’t Ignore

piggy bank savings - top viewPersonal finance is not just something to think about now and then, such as when you review your bank statement – it affects your life on a daily basis. Ask yourself how well prepared you are in each of the 5 personal finance items below, and how you might be able to do better.

1. Credit and Debt

If you have significant credit card debt, you should pay it down as quickly as you can. Fortunately, it can be done. One good strategy is tackling your highest-interest-rate debt first. Switching to paying for most things with cash instead of credit cards can also help by reining in spending.

Beyond that, you need to strive for a spotless credit report and strong credit score. Check your credit report regularly, have errors fixed, and build a high score. Healthy credit is a key aspect of personal finance.

If you have a great deal of debt, we also have a free, anonymous online debt management tool called Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

2. Insurance

Yes, you might have home insurance, car insurance, and health insurance, but how about life insurance if anyone relies on your income? How about renter’s insurance if you rent your home or apartment? This personal finance category also includes umbrella insurance that offers excess liability protection, which insures you against lawsuits. Disability insurance can protect your income stream in case you become unable to work. Long-term care insurance can support you if you need to be cared for at home or in an assisted-living facility for a while. It’s well worth exploring, as you’re more likely to need it than you might expect, and buying it while you’re relatively young can save you money in the long run.

3. Real Estate

This personal finance category includes buying a home, owning and maintaining one, and selling it at some point. To do well in this category, you need to maintain a strong credit rating and qualify for a low-interest-rate mortgage. You might opt for a 15-year mortgage to build equity faster. It’s important to take good care of your home but you should also think twice before embarking on expensive remodelings that might not let you recoup most of their cost.

It’s also smart to consider refinancing your mortgage at some point. Conventional wisdom suggests that it’s smart to do so when you can snag an interest rate about 1 percentage point lower than your current one. That’s not enough of a reason though, be sure that you plan to stay in the home long enough for the savings to outweigh the closing costs.

If you’re looking to purchase or refinance a home, First Financial has a variety of options available to you, including 10, 15, and 30 year mortgages. We offer great low rates, no pre-payment penalties, easy application process, financing on your primary residence, vacation home or investment property, plus so much more! For rates and more information, call us at 866.750.0100, Option 4 for the Lending Department.*

You can also sign up for our Mortgage Rate Text Messaging Service to receive updates on our low mortgage rates straight to your mobile phone. To be a part of the program, text FIRSTRATE to 69302 and each time our mortgage rates change, we’ll send you a text message with the new rates.** 

4. Taxes

Smart taxpayers make smart tax decisions all year long. Here’s a tip that not enough people take advantage of: Set up and use a flexible spending account throughout the year. It lets you put aside pre-tax dollars to pay for qualified health care expenses.

5. Estate Planning

This is another critical area of personal finance. Your estate plan might include a will, a durable power of attorney, a living will, advance medical directives, beneficiary designations on financial accounts, and possibly a trust. Don’t assume you have everything covered with just a will, as you might be able to save your loved ones a lot of headaches, heartache, and money with some more planning and preparation. A living, or revocable trust, for example, can let you avoid the sometimes long and costly (and public) process by directing how your property is to be handled before and after your death.

There’s a lot more to learn about each of these personal finance topics. Spend a little time on them, and you may find that they’re not so boring, and the prospect of saving a lot of money (and being able to spend it now or in retirement) is exciting. And if you need help, don’t be afraid to consult a financial professional.

Questions about retirement savings, estate planning, or investments?  If you would like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 866.750.0100 or stop in to see us!***

*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. Subject to credit approval. Credit worthiness determines your APR.

**Standard text messaging and data rates may apply.

***Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source:  http://www.fool.com/how-to-invest/personal-finance/2014/08/10/personal-finance-5-areas-you-cant-ignore.aspx by Selena Maranjian.