5 Basic Principles You Should Follow to Achieve the American Dream

bigstock-Family-Moving-Home-With-Boxes-6143817Coined by author James Truslow Adams in his 1931 book The Epic of America, the “American dream” is described as,

“‘[T]hat dream of a land in which should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement… It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Everyone’s path to reach the American dream is different. Yet there’s always some common ground — namely, that through hard work we hope to retire comfortably and on our own terms.

Five basic principles to help you achieve the American dream.

Unfortunately, as we’ve seen from a number of recent polls, Americans’ finances aren’t necessarily on solid footing. U.S. personal savings rates are pretty poor, debt levels among middle-class families are high, and distrust of the stock market still exists following the credit bubble and mortgage crisis that precipitated the Great Recession. Now more than ever the American dream appears to be on the brink of disappearing.

But it doesn’t have to.

If you follow five basic principles, you too can achieve the American dream of a comfortable retirement for you and your family.

1. Get a degree.

It’s perhaps one of the oldest debates: “Should I go to college?” Not going to college means saving potentially five- or six-digits in student loan costs, but not getting a degree could constrain your ability to move up the socioeconomic ladder. However, as Pew Research showed in a study two years ago, not going to college could have dire consequences on your ability to comfortably retire.

Based on Pew’s analysis, which looked at the median salaries of millennials ages 25 to 32 who were working full-time, those with high school degrees were earning $28,000 annually. By comparison, millennials who obtained bachelor’s degrees or higher were netting $45,500 per year. Both of these figures are in 2012 dollars. This $17,500 difference could be huge over the course of four decades: Not only can this income difference be invested and compound many times over, but presumably the college graduate will have greater opportunities to move up the economic rungs to collect an even higher wage.

If you want to get your retirement savings off on the right foot, you need to seriously consider getting a college degree.

2. Save as much as you can.

Secondly, Americans need to kick their loose spending habits and learn to live on a budget. A Gallup poll conducted in 2013 showed that only around a third (32%) of U.S. households kept detailed monthly budgets. Not keeping a budget makes it very difficult for you to understand your cash flow, and if you don’t understand how money is entering and exiting your checking account, you’ll have a tough time optimally saving for retirement and funding your emergency account.

Thankfully, the solution is easier than ever these days: budgeting software. There are countless choices when it comes to budgeting software, and all programs handle the grunt work of doing math. Many can even help you formulate a strategy to save money. But budgeting also takes resolve on your end. This is where some keen budgeting tips can come in handy. Make sure you’re doing what you can to get everyone in your household involved so you all remain accountable for your spending habits, and consider having what you save automatically deposited into a savings or retirement account on a weekly, biweekly, or monthly basis to reduce the urge to spend.

The earlier you start saving, the quicker your nest egg can grow.

3. Invest for the long-term.

The next step would be to take the money you’ve saved and look to invest it for the long-term.

Although your investments could take on many forms, it is strongly suggested that you consider putting at least some of your money to work in the stock market. I know what you might be thinking, and yes, the stock market does have its pullbacks from time to time. Since 2000, we’ve witnessed two separate 50%+ drops in the broad-based S&P 500. However, we’ve also witnessed all 35 stock market corrections of 10% or greater in the S&P 500 completely erased by bull market rallies since 1950. Over the long term, stock market valuation tends to rise at a rate of 7% annually, including dividend reinvestment. This means you could double your money almost once every decade, assuming this average holds true.

 

Additionally, you’ll want to focus on buying solid businesses, because trying to time your buying and selling activity is almost assuredly not going to turn out well. A study by J.P. Morgan Asset Management, using S&P 500 data from Lipper, between Dec. 31, 1993 and Dec. 31, 2013, shows that investors who held throughout the entirety of both huge 50%+ drops still gained more than 480% over the 20-year period. By comparison, if you missed the 10 best trading days, your return dipped to just 191%. If you missed a little more than 30 of the best trading days over this approximate 5,000 trading-day period, your return would fall into the negative. That’s the power of long-term investing and compounding in action.

Questions about retirement savings, estate 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 732.312.1564, email samantha.schertz@cunamutual.com or stop in to see us!*

4. Be tax-savvy.

The fourth thing you’ll want to do is aim to give back as little of your wages and capital gains as possible to the federal and state government. There’s no way of getting around completely paying taxes (so don’t try it!), but there are things we can do to reduce our tax liability.

One of the smartest moves you can make is contributing to a Roth IRA. Although there are numerous investment tools we can choose from, the Roth IRA is arguably the best, because investment gains within a Roth are completely tax-free as long as no unqualified withdrawals are made. In addition, there are no age contribution limits with a Roth IRA (unlike a Traditional IRA), meaning you can keep contributing well beyond age 70. There are also no minimum distribution requirements. This point is important if you want to allow your money to continue growing, or aim to have a hefty inheritance to pass along to your family.

Also, take into consideration where you’re living, as well as how you plan to withdraw your money during retirement. All 50 states seemingly have different tax laws, with some states being far more tax-friendly than others. If you choose to live and retire in a tax-friendly state, you could wind up saving a lot of money over the course of your lifetime and during your golden years.

Having a withdrawal plan in place prior to retirement means that you’ll have laid out exactly how much money you’ll need each year when you retire. Having a plan in place can potentially keep you from withdrawing too much money from say a 401(k) or investment account each year, and having that withdrawal bump you into a higher tax bracket. Making small adjustments can save you big bucks come tax time.

5. Understand how to use debt.

Finally, it’s important that you maintain discipline when it comes to utilizing debt, as high levels of debt can cripple your ability to save, and can crush seniors’ budgets during retirement.

What you’ll want to keep in mind is that there are different kinds of debt, and they’re not all bad. Student loan debt can be a good thing since it allows you to get a better paying job, but what you may want to consider is not aiming for Harvard. In-state colleges can often be cheaper than the most prestigious colleges, and may even offer a better return on your investment.

What you’d want to avoid is racking up debt on credit cards because you wanted the latest outfit or gadgets for you home. Since nearly all vehicles depreciate in value over time, auto loans are another notorious source of bad debt you should try to minimize.

Check out First Financial’s free, online 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.

Long story short, the better you manage your debt, the less likely it is to keep you from being able to sock away a good chunk of your income for an emergency or retirement.

The American dream has, and always will, require hard work, so be financially proactive and go claim your piece of the pie.

*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.

Original article courtesy of Sean Williams of The Motley Fool.

5 Essential Things You Need to Know About Saving for Retirement

bigstock-Mature-Retired-Couple-Enjoying-71278750Saving for retirement is essential. The concept of retiring on the checks you get from social security has vanished in the 21st century. You have to go out of your way to gather the funds necessary to sustain a long and enjoyable retirement.

Generation X is the most vulnerable group. In the financial crisis a study revealed that they lost nearly half of their total wealth. But it’s never too early to save for a long and happy retirement, and it’s certainly never too late.

This guide is going to show you the essentials you need to know about retirement saving.

1. Look Ahead.

Don’t be blind to your financial situation. Be proactive and take notice of what your various retirement funds are going to actually give you during your twilight years. Look into your employer-sponsored retirement program and see whether it’s sufficient enough to cover your needs.

There are so many people that have yet to even think about retirement. The later you start saving for it the less you can expect to get. This can have the consequences of forcing you to continue working throughout your retirement simply to survive.

You can never save too much for retirement, so get started now.

2. Ignoring the Problem.

It’s never nice to think about your final years, and it’s certainly never nice to think about your final years if you are unsure as to whether you can afford to survive. But this is a problem that will only become more urgent the older you get.

Don’t enter a cycle of denial where you prioritize current financial issues over your retirement. Starting today is always better than starting tomorrow.

3. Make Sacrifices.

If you are starting your retirement fund later in life, you may have to consider making sacrifices. In other words, you are going to have to sacrifice some of your current quality of life in order to get the income you need when you decide to leave work.

Make some conscious trade-offs to increase saving and reduce spending. One good move is to increase contributions to your work-based retirement fund. Each time you receive a raise, you should make it your priority to increase the amount of money you are saving.

A simple change in your state of mind can have a big impact going forward.

4. Face Financial Reality.

If you have already reached middle age, you are about to enter your peak earning years. Many people are scared to face the financial realities of retirement. They are terrified of discovering they don’t have enough to retire at the age they wanted. But it’s vital that you know you are following a clear path.

You should have an intimate knowledge of interest rates and inflation, for a start. It may be worth contacting a financial advisor to find out about what other retirement options are open to you. You may discover that there are better choices available.

5. Consistency is the Key.

Be consistent with your savings. Make sure that you are constantly contributing to your retirement fund. The key to building up a healthy amount of money is to be automatic. Make sure that you are constantly making payments and you will be amazed at how quickly it can all add up. Setup a regular payment agreement with your bank so you don’t even need to think about making contributions.

Saving for retirement is best done as early as absolutely possible. Failing to do this will leave you in the difficult position of not having enough money to meet your basic needs. Begin saving and commit to regular payments and don’t compromise on your retirement for anything or anyone.

How will you begin preparing for your retirement today? 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 866.750.0100, email samantha.schertz@cunamutual.com or stop in to see us!*

*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.

Original article source courtesy of AJ Agrawal of the Huffington Post.

13 Commandments For Smart Personal Finance

commandments1. Know your goals. This means trying to step back and say, “Where are we going? How are we going to get there?”  While it doesn’t necessarily mean having all the pieces in place, you should be able to identify the goals and a few actions that will bring you closer to achieving them.  Don’t be be afraid of dreaming a little, but also make sure the goals are specific, measurable, and realistic.

2. Don’t be paralyzed by past mistakes. Most people, even those who are highly successful, have made bad investments at some point in their lives.  The important thing is to learn from your mistakes and move forward. Stressing about the past is not a productive activity.

3. Develop a plan. A goal without a plan is nothing but a wish.  You also need to be flexible enough to re-calculate as goals and situations change. This is where a trained and certified financial planner can be an asset, monitoring your performance, how it measures up to the market, and whether or not you are on track to meet your stated goals.

4. Know your cash flow. This is the financial equivalent of taking your blood pressure. It’s not about putting you on a budget, it’s about knowing how much money is coming in and where it’s going. You might be surprised at how much you are spending on certain items. Having a handle on your cash flow combined with knowing your goals, will help identify possible changes that can be made to help you achieve your objectives.

5. Plan your major celebrations without stress. Planning for a child’s wedding?  Rather than incurring excessive debt, consider scaling down the event to reduce stress. In addition, if there is enough time and with proper planning, there may be ways to save well in advance.

6. Understand your liquidity. Liquidity is the ability to convert your investments into cash quickly.  Liquidity is valued because life is dynamic and your need to move quickly may be necessary – whether it’s due to an opportunity like a good investment, or an unforeseen expense, like a flood in your basement.

7. Know and manage your risk. Things go wrong and accidents happen. Whether it relates to a downturn in your health or your finances, you want to protect your family. Understanding your insurance options is an important part of every financial plan.

8. Plan for financial independence. Knowing when you can retire and having some confidence that you will have enough money, is what financial independence is all about. The financial planning process can help you project your retirement at a given age based on such things as assumed income, expenses, inflation, social security, and savings.

9. Establish an estate plan. This gives you control over your money and your children’s future when you’re gone.  Unfortunately, too many people relegate this to the bottom of their list.

10. Manage your taxes. Your accountant and financial advisor should be talking when it comes to your tax planning. You should have a strategy in place that will minimize your taxes, while helping you achieve long term value.

11. Manage your debt. Carrying debt creates anxiety and stress. Credit card debt in particular often results in interest rates exceeding 20%! It’s important to pay down debt as quickly as you can. This ultimately frees up funds that can be relegated elsewhere.

12. Understand your investment strategy. Your investment strategy should be tied to your goals, time horizon, and risk tolerance. Having a plan guides you so that you avoid the type of panic that can lead to making bad decisions.

13. Putting it all together. Simply stated, this means looking at the big picture and feeling confident you have crossed your T’s and dotted your I’s. Be sure to prioritize your needs and talk with a professional who can offer independent advice.

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!*

*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.valuewalk.com/2015/06/personal-finance-commandments/

5 Ways You Could Be Sabotaging Your Future Net Worth

The 3d person under a bill's rain. crise hopelessnessYou may not realize it, but the actions you take now can greatly impact your sense of financial security down the road. Many Americans inadvertently minimize their future net worth by focusing only on the short-term. It can be great to live in the moment, but in some situations it’s a good idea to take a step back to evaluate the long-term impact of your financial decisions.

Here are five ways many Americans are shooting their future net worth in the foot:

1. Renting a Home Instead of Buying

Purchasing a home is probably the biggest investment you’ll ever make, but if you choose a property wisely, it’s definitely worth it. Sure, you’ll need to come up with an initial down payment and you’re responsible for all upkeep and repairs, but in most cases these costs pay themselves back.

When you own the property, you build equity in an investment that will likely increase in value over time. Rather than making monthly rent payments to someone else, your mortgage payments are essentially an investment in your future. Homeowners enjoy the stability of knowing their monthly housing expenses are for the long term, whereas renters never know when their monthly rent will increase. Additionally, interest and property tax paid by homeowners is tax deductible, often offering the chance for an annual break from Uncle Sam.

Need a mortgage or you’d like to re-finance your current mortgage? First Financial has great, low rate mortgage options!  Check them out today. We also have a mortgage rate text messaging service, and when you text firstrate to 69302 – you’ll receive a text message whenever our mortgage rates change.*

2. Not Paying Into a Retirement Plan Early in Your Career

When you’re young, saddled with student loans and barely making enough money to pay the rent, it’s easy to put off saving for retirement because it’s still 40 years away. However, waiting until you’re older to start saving can have a significantly negative impact your financial stability in your golden years.

The earlier you start saving, the more money you’ll earn in interest. For example, if you opened a 401(k) account in your mid-20s, saved a total of $30,000 and realized an 8 percent rate of return, you would have approximately $280,000 by age 65. However, if you save the same amount, realizing the same rate of return, but wait until your mid-40s to start the process, you’ll have only about $60,000 at age 65. Many companies also have a 401(k) match program, where they’ll match your contribution to a certain percentage or dollar amount, so you’re essentially turning away free money by not taking full advantage of this opportunity.

3. Waiting Until Withdrawal to Pay Taxes on Retirement Plan

Traditional 401(k) and IRA plans allow you to make tax-free contributions into your retirement account, with the deductions made in retirement when you withdraw funds. However, it might be smarter to open a Roth 401(k) or IRA, where taxes are deducted upfront, allowing you the benefit of making tax-free withdrawals in retirement. This could be a savvy move, as there’s a very good chance you’ll be in a higher income tax bracket when you retire than you were when you opened your retirement account.

4. Leasing Vehicles Instead of Financing

At first glance, leasing a vehicle can seem like an attractive option — less money down, lower monthly payments and the ability to drive a higher-priced car than you could afford to finance. However, leasing won’t add any gains to your future net worth. The monthly payments you make are essentially rent to the dealership, as you don’t get to keep the vehicle at the end of the lease. Rather than paying off the car and driving it for a few years payment-free, you’re forced to return it and immediately start making payments on another model — and continue the cycle every few years when your lease is up. Additionally, you’re limited to the number of miles you can put on a leased vehicle, you have to pay extra for excess wear-and-tear charges and you’ll pay sky-high early termination fees if you need to break the lease early.

In the market for a vehicle?  At First Financial, our auto loan rates are the same whether you buy new or used.** Apply online 24/7!

5. Using Credit Cards to Overspend

Everyone wants things they can’t afford, but offers for zero or low-interest credit cards can make it very difficult to avoid temptation. It might seem harmless to book a vacation or purchase a new furniture set using a credit card with little-to-no introductory financing, but what if you can’t pay the balance off before the promotional period ends? It’s not uncommon for these promotional interest rates to rise from zero to 18 or 20 percent, which can seriously increase the initial price of your expenditures and leave you with a mountain of debt that can take years to pay off.

Do you have a large balance on a high interest credit card? Have no fear, First Financial’s Visa Platinum Card has a great low rate, no balance transfer fees, no annual fee, and rewards!*** Apply online today.

Making savvy financial choices now can help ensure you’re able to enjoy stability later in life. Sometimes it’s worth making initial sacrifices now to allow yourself to ultimately come out ahead. Always consider what the impact of the choices you make now will have on your long-term happiness before jumping head first into a decision you’ll grow to regret.

 *Subject to credit approval.  Credit worthiness determines your APR. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. 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.  See Credit Union for details. Standard text messaging and data rates may apply.

**A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties. Subject to credit approval.

***APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Article Source: Laura Woods of gobankingrates.com, http://www.reviewjournal.com/business/money/5-ways-you-re-sabotaging-your-future-net-worth

 

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.

Saving May be Tough but Here’s How to Get a Handle on It

saveGetting on top of your finances can be a tough task. On paper the idea sounds simple, but in real life, it’s easier said than done.

By the time you pay down your consumer debt, put a dent in student loans, pay off your mortgage, and put extra money away for your children’s college fund and not to mention your own retirement, the list of demands for your savings is long! Online tools and advice from financial advisors suggest we can make it work but we need to rethink our approach and strategy. Here are some ideas to help you manage your savings goals:

Get real. If retirement sounds far away and “a rainy day fund” sounds kind of depressing, it’s time to rename these goals. For short-term savings objectives, identify what you want to buy and decide whether it’s important for you to finally take that dream vacation you’ve always wanted, or send your kids to college. The same extends to retirement. What does retirement look like to you: a vacation house, writing a book, or doing volunteer work? Visualize it then put a picture on your fridge so you can actually see it. It’s recommended that you should identify how much money you want to have put away at various ages in your life. Sixty-five may be hard to visualize, but goals targeted to ages 30, 40, and 50 will shorten your timeframes, making them more measurable and do-able.

Get started. The decision to save is based on a cumulative series of well thought out choices. You tell yourself you’ll save tomorrow and tomorrow never comes. If you don’t save one month it’s not terrible, but a series of those choices over your lifetime has consequences. Starting early really pays off and online tools and calculators will make the concept more real and easy for you.

Make savings planning a family affair. Providing an inheritance to your children is also about passing down values. The money tips we teach our children can be beneficial or crippling, even when we say we want our children to be financially educated to manage their finances in the future. Don’t be afraid of having money conversations as a family and talk to your kids about savings goals, spending and savings trade-offs, and even higher-level concepts such as inflation and investing, keeps everyone budget conscious.

Put your savings on autopilot. Did you know that you’re losing out on a lot of money when you don’t contribute the maximum allowable amount to your retirement plan? By committing to increase your 401(k) contribution by a percentage equal to your yearly raise will help you grow your pre-tax dollars before the money even gets distributed. Putting a stop to your daily temptations is also important – avoid going to the mall, only carry a small amount of cash in your wallet or simply leave your credit cards at home to cut back on your spending habits.

Hold your feet to the fire. When you’re spending money, ask yourself if this is a need or a want? Making this a habit enables you to keep track of your purchases and helps analyze your spending. It’s a good idea to make your own consequences when you fail to abide by your commitments – so bet on yourself. For example, if eating out has put a huge dent in your wallet, say out loud that you’ll limit yourself to two dinners out a week for the next month and then stick to your plan!

Go social. Sharing money-saving ideas or picking up tips from free sites like Mint.com and Moneyning can help make the topic of finance more enjoyable. Maybe you may want to consider starting a friendly money-saving competition — it holds you responsible, will help you stick to your saving goals and helps take your mind off your struggles.

Here at First Financial, we 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 article source by Barbara Minnino of Fox Business.