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

Financial Advice for Millennials

The Great Recession created a perfect storm for millennials. It was the worst financial crisis the United States had seen since the Great Depression, and it left millennials playing catch up with their finances in the hopes of someday being able to retire. But even as they fight to break even, millennials continue to accrue debt.

The Federal Reserve recently released a study showing millennials have accumulated more than $1 trillion in debt including mortgages, auto loans, credit cards, and student loans. Additionally, Schwab’s 2019 Modern Wealth report revealed that 62 percent of millennials are living paycheck to paycheck while only 38 percent feel financially stable. Despite that statistic, millennials also say they spend nearly $500 a month in nonessential purchases.

While the numbers above look grim, there is still hope for millennials pursuing the “American Dream.” It is important to remember that paying off cars and credit cards, buying a home and working toward retirement are not impossible feats. Like everything else in life, finances are about balance and finding an approach that works best for you.

Create a budget. Budgets are not “one size fits all,” and no two people will have the same financial goals. First, find a strategy that balances rewarding life experiences and saving for the future. Be realistic when crafting your savings and spending goals. For example, you can’t expect to go immediately from saving nothing each month to saving $500 a month. Start with a number that is easily attainable and increase the amount when it’s feasible.

Automate your finances. It’s easy for us to spend more than we save. The trick to overcoming that urge is to put our finances on autopilot. If your paycheck is set up with direct deposit, have a portion of it automatically deposited into a savings account that you don’t touch. Also, set up recurring transfers from your checking account into your savings account. Automatic bill pay is another great way to get ahead. Using online bill pay ensures that your bills are paid on time and you don’t have to remember to pay them (or buy stamps to mail them out)!

Track your spending. How much money do you spend at Starbucks each month? How many Amazon boxes arrive at your door each week? Chances are, like most of us, you don’t keep track of a $5 purchase here or a $10 purchase there. But those small amounts begin to add up and they can add up quickly. There are a number of apps like Mint, Quicken, and Twine – that aggregate your financial transactions and organize them by category so you can create and monitor a budget. Get some budget set up tips here.

Avoid impulse purchases. Overspending is a common interference to achieving financial goals. The more we give in to unplanned or excessive purchases, the harder it is to save money or stick to a budget. Rather than caving to those impulse buys, implement new habits to help avoid traps. Give yourself a waiting period for large purchases. During that waiting period, talk to someone such as a friend, partner, or spouse who is financially sound – and get their opinion about the purchase before you pull the trigger.

Consider a side hustle. Part-time work is a great way to make a little extra money that helps trim down debt or pad a savings account. There are multiple rideshare apps and food delivery apps that allow you to work when you want and as much as you want. If you have a particular skill set like writing or computer work, you can always look for ways to contract out those skills to make a little extra money doing freelance.

Trim your monthly expenses. Do you have a gym membership you never use? Are you paying for cable you barely watch? Does GrubHub make regular deliveries to your place? The average millennial spends more than $500 a month in nonessential purchases. Look at your budget and see where you can trim items. Replace cable with a streaming service. Make dinner at home. Get rid of that gym membership you never use and go for a run outdoors. You’ll be surprised how quickly you can build back your savings by eliminating unnecessary bills.

At First Financial, we offer our members a variety of services including financial planning and credit management counseling. We want to help you find a way to save for your future in a way that also meets your immediate needs. Contact us to schedule an appointment to review your financial situation and find a path that gets you where you want to be.

How to Manage Financial Stress

Are you financially stressed? Here are a few tips to help you maintain your cool and get back on track to achieving your financial goals.

Focus on the positive.

If you’re in debt, it’s a lot easier to focus on the negative. However, staying positive can help you remain calm and clear your head. List out the positive aspects of your money management skills, so that you can clearly recognize your financial strengths. You may be able to expand on those strengths to provide yourself with a solution.

Look back at your budget.

Go over your bills and expenditures with a fine tooth comb. There are always things that you can cut back on, so try to reduce any expenses and put that money to better use. Setting up an emergency fund, paying off debt, and putting money toward retirement are all good options.

Stop comparing yourself to others.

Its human nature to feel jealousy when you feel like you’re missing out. Avoid the fear of losing out by not comparing yourself to those around you. You don’t know their financial status – they may have material wealth, but could still be in worse shape.

Meet with a professional.

In most cases, stress comes from the unknown. If you don’t understand your finances – it can be stressful, but it will only get worse if you don’t ask for help. Before things get worse, seek someone who deals with similar situations every day.  If you are a First Financial member, we offer complimentary annual financial reviews. Stop into your nearest branch or contact us today to schedule an appointment.

Embrace the concern.

You shouldn’t be worrying about money all the time, but a little bit of worry can help you stay aware, keep your spending in line, and your savings on track.

Article source: Tyler Atwell for CUInsight.com