The Rising Cost of Healthcare

It’s open enrollment season, and most of us are thinking about the best healthcare option for us going into the new year. Only one thing is certain when it comes to healthcare: the cost for us to stay healthy is constantly increasing. When it comes time to choose a plan, there are multiple factors to consider so you can budget wisely.

Choose your plans based on more than the premium. 

People often select their healthcare plan based on the monthly fee they will pay for coverage. However, when you choose a plan based solely on this component, you could end up paying more in the long run. There are several other factors to consider when choosing a healthcare plan that will fit your health as well as your financial needs. Factors include:

  • Co-payment (the flat dollar amount you pay when you need care)
  • Deductible (the amount you must pay before the insurance begins to pay)
  • Co-insurance (the percentage of permitted charges for covered services that you’re required to pay)
  • Maximum out-of-pocket costs (the maximum amount you will pay for healthcare services).

Take your previous health history into account. 

You can’t predict the exact amount of insurance you or your family will need. However, you can take your past medical history and family medical history into account when you’re selecting a plan.
By taking these factors into account, you should be able to get a ballpark idea of the amount of coverage you’ll need, barring no serious medical emergencies.

Choose wisely. 

When you’ve signed on for healthcare coverage and the open enrollment period passes, you aren’t able to change your plan during the year unless you experience a big life event. Healthcare.gov describes a big life event as marriage, having a baby, or losing your other healthcare coverage. If you experience one of those situations, you can typically amend your plan outside of open enrollment. Because of this, it’s important to choose a plan that works best for your health as well as your budget.

Plan ahead.

While healthcare coverage can be good to have when it comes to covering medical expenses, it never hurts to have extra funds. Before an unexpected medical expense arises, plan ahead and set aside some money every month in a savings account. Anything you can stow away for a rainy day will be helpful when the time comes to use those extra funds.

First Financial is here to help. Talk to one of our Member Service Representatives today about setting up a special savings account and be prepared for the unexpected.**
Like most things in life, there’s no one-size-fits-all health insurance plan. You have to choose the best one for you and your budget.

*This blog was written for financial purposes only, and not written by a healthcare professional. This article should not be taken as medical advice.

**A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. 

3 Steps to Reduce Your Impulse Spending

It can be tough to resist spending money. When you see something you want, especially when it’s at a price you like – it can be difficult to keep from making the purchase. With the way the internet and our smartphone apps have made it so easy to shop, the solution isn’t as simple as just avoiding the stores. If you’ve got an itch for shopping, here are three steps you can take to help you get back in control of your finances.

Take your time: During an impulse buy, for the most part – the whole process from finding the item to paying for it only takes a few minutes. Next time you’re about to hit the “buy now” button, slow down. Put the item in your online shopping cart, but wait before completing the transaction. Try not to buy anything the day you add it to your online cart. Let it sit and think – do you really need this item?

Think it over: If you’re still thinking about that item after sleeping on it, go back into your online shopping cart. In your cart you’ll be able to see the total price (including taxes and shipping), and decide for yourself if the item is really worth that total cost. At this point, look around some more online and try to find a better deal, but still – don’t buy the item (yet). After you’ve done all your research, put the item on your wish list or save it for later.

Be ready: You’ve thought about your purchase for days now, and you know you’re going to buy the item. You’ve done the research and you’ve found the lowest price. Do you have the money to make the purchase in your checking account? If the answer is yes, then go ahead and complete the transaction. If you don’t have the money now, save and start the process over when you’ve saved up enough to buy it without going into debt.

These same steps work for in store impulse purchases too. If you see something you’d like to buy when physically in the store – think about it for a day. The next day do some comparison shopping to make sure you are getting the best price. Still want the item on the 3rd day and you have shopped around and have the money to buy it? Head back to the store and make your purchase.

It pays (literally), to be a savvy shopper and reduce your impulse purchases!

Article Source: John Pettit for CUInsight.com

How to Create an Easy to Follow Budget

Are you the type of person that when you see something you like, you just buy it? It really is important to plan for the future and really take hold of your finances. If you or someone you know doesn’t budget well, here are a few easy ways to get started.

Housing: This category will most likely be the largest portion of your budget. If you’re a homeowner, along with the mortgage, insurance, and property taxes – make sure you include necessary utilities (gas, sewer, electric, etc.), and some extra cash for any emergency repairs. If you’re renting, you’ll still have to budget for your monthly rent and any utilities.

Transportation: When it comes to transportation, there’s a lot more than just your monthly car payment. Gas, insurance, and preventative maintenance such as oil changes – should also be included within your budget. This is another area where it’s a good idea to save some extra cash for any repairs you may not see coming. Planning ahead will help keep your car on the road, which will also keep money in your pocket.

Life: This budget category will cover a lot (think food, health insurance, medical, clothing, entertainment, wireless, tuition, childcare, etc.). All of these items will add up to a sizable portion of your budget. You may need to separate some into their own category and monitor them.

Debt and Savings: This final category is one of the most important. Saving money for your future (401k, Roth IRA) is something you want to make sure you’re doing every month. The earlier you start, the better. You’ll be surprised at how a little each month can add up over time when you make use of compound interest. Also, make sure you’re steadily paying down any debt you have – so you can enjoy your financial freedom.

Need help setting up a budget? Check out our budgeting guide.

Article Source: John Pettit for CUInsight.com

How to Make Your Money Work for You

Every day you hustle. You’re working hard for your money, but have you ever stopped to think about how your money can work for you?

Making your money work for you goes beyond an emergency fund or simply being debt free – although, both concepts are a necessity in this instance. It’s about taking the money you’re already making and making it generate returns for you.

But, how? There’s no simple answer or even a single way to do it, but these tips can help you get started.

Get out of debt.

First things first, if you have debt – get rid of it. After all, you can’t invest in your future if you’re giving your money to other people or lenders. The first step to a debt-free life is figuring out exactly how much you owe. Most people don’t even know how much debt they’re in, according to a study from The Federal Reserve. Once you know how much debt you have, decide how you’re going to pay your debt off.

Budget.

The most important way to change the way you handle your money is to budget. By creating a budget, you are telling your money what you want it to do. When you assign each dollar into a category, you’re controlling where your money goes and what it does. It’s a great first step in reaching your financial goals. Think about it this way: your budget is like a fitness tracker in that it helps you monitor your money. When you monitor your money and know where it is and what it’s doing, it’s easier to make it do what you want it to do.

 Utilize retirement accounts.

Don’t sleep on opportunities to invest in a 401(k) or Roth IRA. A 401(k) allows you to contribute pre-tax money into your account, and you may even be able to get free money from your employer in the process too. Think about it like this: You earn $100,000 a year and your company offers a 3% match on your 401(k). If you invest $3,000 (3% percent of $100,000), and your company matches that – $6,000 will go into your 401(k). A Roth IRA works just a little differently. Unlike the 401(k), a Roth IRA leverages after-tax income. However, when you begin to withdraw the money at retirement, you won’t pay taxes on your withdrawals.

Start a side hustle.

Uber, GrubHub, Instagram – all of these companies began with an idea that blossomed into billion dollar companies. What’s your passion and can you turn that into a billion dollar idea? Consider starting a side hustle and find ways to make some extra money. It could be a traditional second job, a work-from-home job, or turning your ideas into ways that add to your savings. If you can structure your budget and expenses around your primary source of income, any money you make from your side hustle ideally would go straight into your savings.

 Create passive income streams.

Passive income is money you earn with little to no effort involved. Once it’s set up, passive income will earn you money while you sleep. For example, a rental property is a source of passive income. Creative passive income does require some type of investment upfront, whether that’s time, money or both – but it’s an investment that can lead to a bigger payoff later.

Building your future is important, and it takes a lot of hard work. At First Financial, we’re just as interested in your future as you are. We want to help you take the necessary steps to make your financial dreams come true. Maybe you need to consolidate your debt or look at options to pay off some debt. Maybe you’re looking to refinance your car in order to lower your payments and save a little money each month. Whatever it is, we’re here to help you. Stop by and see us or give us a call to get started!

Don’t Fall into the Unexpected Expenses Trap

Let’s face it – adulting is hard. How many times have you and your friends sat around talking about the time when you had little to no responsibility? Long before the days of mortgages, kids and car payments. The carefree days when thinking about life insurance, retirement and 401(k)s seemed light years away.

Planning for the future and life’s unexpected events can be overwhelming, but it can also be  extremely beneficial. There’s a sense of financial security that comes with knowing you have a plan in place to handle the curve balls life likes to throw at you.

Create a budget

Having a budget isn’t a bad thing. Consider your budget a reflection of your priorities and values, rather than depriving yourself of the things you enjoy. Creating and keeping a monthly budget is the key to long lasting financial planning. It allows your money to work for you as you’re giving each dollar a purpose. It puts you back in control of your money.

No matter how much your income is, there’s always the potential to spend more than you make. There are several ways to set up a budget, but it ultimately comes down to what works best for you. Check out our budgeting 101 guidebook here.

Build up your emergency fund

There’s a quote that says, “The best laid plans of mice and men often go awry.”

No matter how good or solid our plans may seem, sometimes life happens and our plans are pushed to the side. What happens if your car breaks down, you have to move, or your water heater has to be replaced? Illness and employment are equally as unpredictable. If you are laid off, how long could you pay your bills without living off credit cards or borrowing money? You’re not alone. Did you know that 40 percent of Americans can’t cover a $400 expense out of pocket?

This is why an emergency fund is paramount. Completely separate from a savings account, your emergency fund is specifically designed to cover your necessary monthly expenses.  Ideally, you should keep three to six months’ worth of expenses in your emergency fund at all times. Why? It covers you in the event of a layoff or medical emergency that leaves you unable to work.

Eliminate your debt

Northwestern Mutual’s 2018 Planning & Progress Study showed that the average American has about $38,000 in personal debt, excluding home mortgages. Typically, that debt is a combination of credit cards, student loans, car loans, and personal loans. Credit card debt accounted for 25% of that debt. The study further showed that 2 in 10 Americans spend anywhere from 50% to 100% of their monthly income on debt repayment.

These are staggering facts. But there is hope in those dismal numbers. Getting out of debt takes discipline, and it’s not easy. Start by paying more than the minimum payment. If you’re only making the minimum payment, you’re only paying interest and not attacking the principle. Anything over the minimum payment is applied to the principle and knocks out that balance faster.

There are many helpful methods to reduce debt, and there are several free online and mobile debt repayment tools to help you track your progress as you pay down balances. Check out our credit management and debt reduction guidebook here.

Invest in your future

It’s never too early to invest in your future. If you don’t have a retirement plan such as a 401(k), IRA or stock investments – get one.

If you already have a retirement plan, that’s awesome! Think about increasing the percentage you’re contributing. It helps you save without making an effort, allows you to take advantage of the compound interest, and it reduces your taxable income.

Financial planning is just as personalized as each member we serve at First Financial. Let us help you get your future on track, by making an appointment with our Investment and Retirement Center.* Stop by your local branch or give us a call at 732.312.1500.

 *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.

6 Easy to Forget Expenses to Include in Your Budget

Creating a budget is never easy, it can take months or even years to perfect the process. Plus, life is always changing so a budget that worked a few months ago might not necessarily work now. One of the most common reasons people find budgeting so hard is because there are so many different expenses to keep track of. The big ones, like housing and food, are pretty obvious. However, often there are little things we forget about that can derail a budget from the start.

The next time you evaluate your budget, consider these six expenses that people often forget to plan ahead on:

1. Celebrations

It seems like every week, we’re always celebrating something. From birthdays to weddings to holidays, our schedules are jam packed with social events. However, we often forget that these celebrations come with hefty price tags. Gifts, travel costs, and party attire can add up quickly. Not accounting for these items can really throw your budget off. For example, if you know you have a few weddings coming up in the next year, be sure to set aside funds to cover any associated costs. Also be sure to increase your budget during the holiday season to account for gifts and travel.

2. Pet Care

We love our pets, but there’s no denying that caring for them can get expensive. We tend to only think of pet care expenses in terms of things they use everyday, like food – but any pet owner knows that there are many other major costs associated with our furry friends. Healthcare, including regular veterinary visits, is a big one. Grooming and pet sitting is another. These are expenses for your pet that may not happen every month, but they’re regular enough that you should include them in your annual budget.

3. Coffee

Any good budget will include a category for food and dining, but don’t forget to include coffee in there as well. We all know how much a cup of coffee can cost – anywhere from $2 for a regular cup to $6 for a latte. Whether you make your own or go to your local Starbucks, make sure you understand how much you’re really spending on your coffee addiction every month.

4. Home Maintenance

Many first time homeowners are unpleasantly surprised by the cost of home maintenance. Aside from utilities and minor repairs, there are several recurring expenses, such as lawn maintenance, landscaping and weather proofing that homeowners often forget. Expenses like these can drive up the cost of owning a home considerably.

5. Me Fund

When we’re trying to stick to a tight budget, we often forget about ourselves. If you’re trying to cut your budget, spending on things you enjoy is likely the first expense to go. Don’t underestimate the value of having a me fund, though. It can be anything, from a night out to a pedicure – but doing even something small from time to time can drastically improve your mood and increase your productivity.

6. Emergency Fund

The one thing people most often forget to account for is an emergency fund. This is also the most important.  In life, you never really know what can happen, and you need an emergency fund to protect you from whatever life throws your way. Your budget should include a portion set aside for emergencies. Many recommend that you have 3 months of expenses on hand at any given moment. You can decide the amount you’re comfortable with and then start to save up for it. Just remember to make this a priority.

Need help setting up a budget? Check out our easy Budgeting Guidebook and Worksheet.

Article Source: Connie Mei for Moneyning.com