What College Grads Need to Know About Money

College graduation is a big milestone to feel good about. And as you head out into the world, you’ll be learning new things, facing new challenges, and making big financial decisions. One of the most helpful skills to have as you get older, is being able to manage your money. And luckily, you don’t need a class to learn financial management – you can get familiar with these skills through educational resources like ours! Keep reading for our top money management tips for recent college grads.

Learn how to budget

Budgeting is one of the most important financial skills you can learn. Maintaining a budget can help you be smart about your spending and plan for your financial future. We recommend using the 50/30/20 strategy as a rough guide for how you should spend your money. This means you should aim to spend 50% of your budget on essentials, 20% on savings and investments, and 30% on other remaining expenses.

Calculate your expenses (rent, student loans, utilities, food, transportation, etc.) and variable costs (dining out, vacations, shopping), and make sure your expenses do not exceed your income.

Start saving money

No matter what your financial goals are, opening a savings account is always a good idea. You can start by dedicating a certain amount of your paycheck toward your savings. While it’s recommended to keep 20% of your income for savings and debt repayment, you’ll need to evaluate what works within your budget and when you’ll need the funds. Even if you’re starting small, you’ll be surprised how quickly the account can grow!

Want to open a savings account?* We’re here for you! Contact us or stop by your local branch to speak with a representative today.

Plan for retirement

It may seem too early to start planning for your retirement, but it will make a big difference to start saving right out of college. For example, a 22-year-old who starts investing is going to have nearly twice the amount of money saved by 67 than someone who starts at 32. Most employers offer a retirement plan match program like a 401(k) or 403 (b) that is typically deducted straight from your paycheck. If your employer offers matching contributions like this, make sure to take advantage – since it’s essentially free future savings.

Pay off student loans

According to Forbes, there’s currently $1.75 trillion in total student loan debt with an average of $28,950 owed per borrower. And while graduating and starting your career may be exciting, paying back student loans can be daunting – to say the least. When it comes to paying off your student loans, you should take the time to look at your budget and determine how much you can afford to pay toward your debt payments. It’s recommended to start paying off the debt with the highest interest rates first, and then focusing on the debt with lesser amounts or lower rates like federal student loans. There are sure to be plenty of repayment options to choose from based on your current income and budget.

Don’t forget about your credit score

Having a decent credit score is going to be very important throughout your life. A credit score essentially is a rating that financial institutions use to determine how likely you are to pay off your debt. Whether you’re renting an apartment, opening a new credit card, or buying a car – your credit score will play a factor in what you’ll be able to obtain.

A credit score is determined by:

  • Your payment history
  • Your amounts owed
  • The length of your credit history
  • New credit
  • The variety of credit products you have

As a new college graduate, understanding financial management can feel overwhelming – but you’re not alone. Our financial experts can give you advice based on your situation. Contact us to get started, or stop into your local branch to speak with a representative today!

*A $5 deposit in a base savings account is required for credit union membership before opening any other account/loan. 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. Some restrictions apply, contact the Credit Union for more information.

 

 

 

Here’s How Much You Should Have Saved for Retirement by Your 30’s

Start saving for retirement while you’re young. It’s easier said than done when you are just starting out, especially if you have student loan payments taking a huge percentage of your paycheck.

First, let’s determine how much you should have saved for retirement by the time you reach the end of your 30’s. Retirement plan provider Fidelity recommends having the equivalent of your salary saved by the time you’re in your 30’s. In other words, if your annual salary is $50,000, your goal should be to have the same amount in retirement savings by the end of that decade of your life.

How do your savings stack up against others your age? The average 401(k) balance for individuals between the ages of 30 and 39 is $50,800, according to data from Fidelity for the fourth quarter of 2020. However, the average employee contribution rate for Americans in this age group is only 8.3%.

One easy way to kick start your retirement savings is by taking advantage of any retirement matching program your employer offers. Those matching funds from your employer can add up fast and help you get closer to your savings goals. Not sure if your employer offers a program like this? If you don’t ask, you could be missing out on a huge benefit to you. Find out the details from your Human Resources Department if you are unsure.

Did you know First Financial has an Investment and Retirement Center which offers complimentary retirement consultations to our members?*

Stop in or call to make an appointment with one of our Financial Advisors today!

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and The Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using The Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or The Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government AgencyNot Credit Union GuaranteedNot Credit Union Deposits or ObligationsMay Lose Value

Smart Money Moves to Make in January

It’s January, and if you looking at the upcoming year – you are (hopefully) thinking about your finances and trying to plan ahead. Here are three items to definitely include in your annual financial outlook, and this is a great time to review them.

Review Your Credit

With mobile phones, laptops, tablets and apps, it’s easy to stay connected to our finances these days. Your credit score is something that you should especially be paying close attention to. If you are thinking about buying a house, car, or acquiring any type of loan, knowing your credit score is very important. It’s also significant to review your credit report to see if everything is accurate, especially if you were subject to recent fraud or a data breach. Everyone is entitled to a free credit report from each credit reporting agency every year, and the start of a new year is a good time to review yours as you plan for the year ahead. Not sure where to start? Check out annualcreditreport.com – it’s free, easy, and monitors your credit from all 3 major credit bureaus!

Focus on Saving Money

Even if you did a great job of saving money last year, you probably don’t have as much saved as you might like as of now. Fortunately, it’s the beginning of the year and there are many ways to reach your savings goals by December. An easy way is to automate your savings. More than likely your paychecks are directly deposited to your bank account. It’s extremely easy to add another account to your direct deposit, all you need to do it choose an amount you’d like to save for this year and redirect those funds to a separate savings account that you’ll vow to not touch during the year. Another way to save is add more to your retirement savings. If your employer matches or contributes in any way to your retirement – be sure to look at this and participate. This will mean a great deal later in your life. Not sure where to get started with retirement planning? Make an appointment with the Investment & Retirement Center located at First Financial.* Our financial advisors are here to talk you through the planning process and ensure you feel comfortable in your financial future!

The last way to save money is to go on a “financial fast.” We can almost guarantee that most of your spending doesn’t fall within the “need” category, right? Take a good look at how you’re spending your money and cut out your “wants.” This year, try not to waste your money either. Are you actually using the gym membership you are paying for, or watching Netflix or Hulu? If you aren’t – think about canceling these types of services and only pay for ones you are using on a regular basis.

Are You Prepared for the Unexpected?

If your emergency fund isn’t in good shape, or if you don’t have an emergency fund at all – make it your immediate new year’s resolution. If you have credit card debt that has been lingering for years, don’t let it stay around another year. Review your monthly budget as well, and make sure it fits your lifestyle and expenses. Maybe you keep track of your monthly bills, but what about the annual ones you might sometimes forget about? Be sure to think about any annual fees coming for the year ahead and try not to let them sneak up on you (i.e. property taxes each quarter, annual gym membership fee, and so on). A good strategy to follow this year is to write down or make a note in your smartphone for any once a year or quarterly bills that come up – this way you won’t forget about them moving forward.

Don’t forget that as a First Financial member, you are eligible to make an appointment or stop into any branch for an annual financial review. If you’d like to get your new year off on the right foot, contact us today!

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and The Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using The Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or The Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Article Source: John Pettit for CUInsight.com

Saving Money Now to Help Plan Your Future Retirement

Retirement. It seems like a lifetime away, right? It’s probably something you plan to worry about when you’re a little closer to your retirement date as well. However, financial experts suggest that the best time to start planning is in your 20s when you typically start earning a steady paycheck.

Regardless of your retirement date, it’s never too early to start planning for your retirement. You may be asking, “Where is the best place to start?” and “How should I invest my money to maximize the returns I see at retirement?” Both of these are great questions that we will delve into on this post.

Set your goals.

This applies to 20-somethings, 30-somethings, and 40-somethings. How do you know what steps to take if you don’t know where you’re going?

Sit down and figure out your goals. Do you want to buy a house one day? How long do you need to rent and save money? What “bad debt” do you need to pay off now to help you in the long run? These answers may change as life circumstances change, but it’s helpful to know what your goals are and create a plan to achieve them before you set out on your savings adventure.

Take advantage of your employee benefits.

Does your company offer a retirement savings account? Many full-time employers will offer either a 401(k) or a SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account). It’s important to understand what these accounts are, how they work, and whether or not it’s a viable option for you.

What’s the difference between a 401(k) and a SIMPLE IRA?

A 401(k) is an investment account you make contributions to out of each paycheck. If your employer matches your contribution up to a certain percentage, that’s free money going into your 401(k) in addition to the contributions you’re making.

A SIMPLE IRA is a tax-deferred employer-provided retirement plan. Like a 401(k), you make pre-tax contributions from your paycheck, and your employer can also elect to match your contributions up to a certain percentage. Unlike a ROTH IRA, when you reach retirement age and begin drawing from the SIMPLE IRA, you will pay taxes on the money you’ve saved.

Good debt vs. bad debt.

Believe it or not, there is such a thing as good debt. Debt to buy a home or to start a business is considered good debt as it can be used as collateral. To our 20-somethings, listen up! Consumer debt: credit cards, car loans, and student loans often come with high-interest rates, which may only hurt you as you get older. Educate yourself on interest rates before taking out one of these types of loans (especially for credit card usage).

No matter what age you are, the best thing you can do is to avoid buying things you can’t afford. But, if you have debt or need to go into debt for a major purchase, have a plan to get out of that debt promptly. Look for areas within your monthly budget where you can reduce spending and cut unnecessary costs.

Check out debt consolidation and refinancing options.

Consolidating debt and refinancing loans are two great ways to save money on your monthly payments. Debt consolidation is typically used for unsecured debt and is especially effective for high-interest debt like credit cards, while refinancing a loan enables borrowers to “redo” an existing loan to get a lower monthly payment, different term length or a more convenient payment structure.

Both options are a great way of saving money each month. Ideally, you’d be able to measure the savings you’re seeing and put that toward your retirement planning. It might not sound like a lot of money, but even if you were able to save $50 a month, at the end of a year you’d have $600 to put toward your retirement.

Do you have debt that can be consolidated? Do you have loans that may need to be refinanced? You never know what your options are until you ask! Check with your local branch to see if we can save you some money each month to put toward your retirement.*

To take it a step further, did you know First Financial has an Investment and Retirement Center which offers complimentary retirement consultations to our members?**

Stop in or call to make an appointment with one of our Financial Advisors today!

The truth is, there are a dozen different ways you can prepare for retirement early and start saving money. You just have to find the ways that work for you, and we are here to answer any questions you might have and get you started!

*Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. Current loans financed with First Financial FCU are not eligible for review or refinance. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and The Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using The Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or The Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Financial Questions Everyone Should Be Asking

Here are some important questions that will help you get to know your finances a little better, and plan ahead for your financial future.

1. Are you regularly surprised by running out of money?

It’s one thing for money to be tight, but if you are repeatedly coming up short on being able to pay your bills or by overdrafting your checking account, it is a sign that you are not in control of your budget. Step one is formulating a budget that lets you live within your means, and step two is putting controls in place to make sure you follow that budget.

2. Do you save up for big purchases or rely mostly on credit?

Borrowing may be necessary for major purchases like a house or a car. But if you find yourself making routine purchases on a credit card, you are making those items way more expensive than they need to be by adding interest to the cost. The more you can wait and save up to buy things, the more you will be able to afford.

3. Have you formulated a retirement savings plan?

People tend to assume that buying a house is the biggest financial decision they will ever make, but chances are you will need even more money to retire on than it costs to buy a house. It takes years of effort to build up enough of a nest egg, and that effort starts with figuring out how you are going to save that money.

Need help with retirement planning or investments? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 732.312.1500, email mary.laferriere@lpl.com or stop in to see us!*

4. Is your retirement savings on track?

It may be hard to feel a sense of urgency about something that may be 20 or 30 years in the future, but if you wait until retirement saving becomes urgent, you will have left it too late. Start holding yourself accountable now, so you won’t have to try playing catch up in the last few years of your career.

5. If you have investments, how well are they performing?

People tend to focus on the big winners and losers in their portfolios, but what matters more is how everything has performed in aggregate. Performance measurement should focus not just on how well you have done, but whether your investments have behaved appropriately for the prevailing market conditions.

6. What is your credit score?

Banks, insurance companies and even prospective employers are going to know this about you, so you should probably know your credit score yourself. Check your credit report for free annually by visiting annualcreditreport.com.

7. What could you do to improve your credit score?

If your credit score is less than perfect, it could cost you in the form of higher interest rates, or even limit your ability to get credit. Identify what you need to do to address any problems so your score will improve over time.

8. What would happen to your finances if you were out of work for 6 months?

It may seem tough to build up that big of a cushion, but the median duration of unemployment peaked at nearly 26 weeks in the aftermath of the Great Recession. Knowing how close to the edge a period of joblessness would put you, is a good test of your financial wellness.

Some of these are questions that people just neglect to ask. Others are questions they are afraid to ask, because they might not like the answers. However, it’s better to ask these questions when you have the time and opportunity to deal with them constructively and create a financial game plan for your future.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and The Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using The Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or The Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Article Source: Richard Barrington for Moneyrates.com

10 Life Events That Require Financial Planning

Sometimes even the best events in life – a birth, new job or dream relocation, need a financial plan. They might require more insurance coverage, a new budget, or guidance from a financial advisor. Here are 10 life events that should inspire you to do some financial planning:

1. The opportunity to buy a vacation home.

Summer rental homes can represent bliss, that great escape you have every year. Summer homes are often bought as emotions rise at the end of the season. But purchasing a vacation home can be a complicated long-term commitment. A financial planner, not a real estate agent, can tell you what to consider.

2. You got that big raise you’ve been counting on for years.

Pay raises are typically small and incremental, so getting a big raise is cause for celebration. They also mean it’s time to do some financial planning to determine how much you should be saving for the future, too. It might be time to bump up your retirement savings. Talk with your financial advisor ASAP!

3. Wedding bells are ringing, finally.

Couples might be marrying later these days than they used to. So when they finally do tie the knot, combining finances can be even more complicated. Prenups might be a buzzkill, but they can help protect each person’s savings and prevent any misunderstandings. They are especially important if either member of the couple is bringing children into the marriage.

4. You got your diploma.

Graduates might not think they have enough money to talk to a financial planner, but they face key money choices as they start repaying their share of the overall $1 trillion in college debt with “starter” jobs. They could certainly use help prioritizing payments for credit cards and student loans.

5. You’re relocating.

The 50 states can be as different as moving to another country. Tax rates differ and cost of living can shift dramatically. There are scores of moving-related expenses too. Make sure you do your homework and are prepared.

6. You just got an inheritance.

Baby boomers stand to inherit significant wealth in the coming years, and receiving lump sums also carries with it financial responsibility. It can raise questions about spending habits, charitable contributions, tax payments and a multitude of other concerns. You might want to get help from a professional as you figure out how to handle this money.

7. You’re expecting a new arrival in the family.

When a baby arrives, life inevitably gets way more complicated. It could be worth it to factor in some financial planning alongside baby naming or stroller shopping. You might want to open a 529 savings account (for future college), as well as take out additional life insurance policies.

8. You got your first real job.

Your college grad may act like they just want to have fun, but they often need guidance during this key life transition. Consider sending your child to a financial planner before they enter the workforce.

9. You get offered a generous severance package.

Emotions often run high when your employer offers a big severance package. It’s important to understand the complex financial issues associated with severance packages. You want to make sure you understand all the fine print before you sign on the dotted line.

10. You retire.

Retirement is considered the pivotal financial moment in a person’s life. If you haven’t already worked with a financial planner to figure out your plans and budget, then now is the time. In fact, financial advisors urge even clients in their 20s and 30s to start planning for this major life transition, to make sure they’re saving enough during their peak earning years. It’s also a good time to reflect upon what you’d like to do with your retirement.

To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals with a Financial Advisor, contact us at 732.312.1500 or stop in to see us!*

 *Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and The Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using The Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or The Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Article source: U.S. News Staff for money.usnews.com