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.

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@cunamutual.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.

*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: Richard Barrington for Moneyrates.com

 

How Much Does it Take to Be Rich?

The results of a recent YouGov survey show that most Americans think you need to make $100,000 per year to be considered “rich.” Assuming you weren’t one of the people interviewed for that survey, does $100,000 a year sound like wealth to you? What if someone makes less than six figures per year? Can they still be considered wealthy? How can someone with a goal of getting rich know when they’ve finally arrived?

What does “rich” even mean? Here’s the challenging thing about defining what it means to be rich or wealthy—it’s all relative. In a recent article for CNBC, reporter Kathleen Elkins shared that, according to a recent Global Wealth Report, “If you have just $4,210 to your name, you’re better off than half of the people around the globe.” That report went on to show that anyone with a net worth of $93,170 or more ranks in the world’s wealthiest 10 percent. How about that? It turns out wealth has little to do with your income after all.

Yes, earning a lot of money can help you build wealth, but there’s more to it than that. We’ve all heard stories of individuals who made massive amounts of money yet wound up broke and bankrupt. At the same time, there are many examples of ordinary people who earned average salaries and somehow managed to retire with extraordinary wealth and financial stability. When you analyze their stories, you find that those who were successful focused less on their income and more on their net worth. If you want to “get rich,” you’ll need to make your money work for you instead of the other way around.

Net worth is the key to lasting wealth. Maybe net worth is a new concept for you, maybe it’s not. Either way, let’s define the term for the sake of clarity. Credit Suisse, the research institute that compiled the Global Wealth Report mentioned above, defines net worth as “the value of financial assets plus real assets (principally housing) owned by households, minus their debt.” Simply put, your net worth is the difference between what you own and what you owe. By this definition, it’s easy to see why income is only part of the wealth equation. You might earn $250,000 per year, but if your debt and payments outweigh your income and assets, you’re just broke at a higher level.

Do you want to get rich? Start with these simple steps.

Follow a budget. Whether you make minimum wage or a CEO’s salary, it’s essential to have a plan for how you’ll spend your money. Some experts recommend zero-based budgeting, which means you’ll designate where every single dollar will go during the month, starting with your basic needs (housing, food, utilities) and financial obligations (credit card payments, loan installments) and placing any remaining funds into savings. Others recommend a broader 50/20/30 guideline, which dedicates 50% of your income to needs, 20% to savings, and 30% to wants. These are only two out of many budgeting approaches. There are pros and cons to each, so take your time and find the right fit for your financial situation. Remember, the best budget for you is the budget you actually follow.

Minimize your debt. To create a substantial net worth, it just makes sense to limit your debt. If you’re starting out on your own and haven’t racked up mountains of debt, do your best to keep it that way. If you’ve made some poor financial decisions that left you saddled with considerable debt—especially high-interest consumer loans and credit card balances, create a plan for paying off that debt as quickly as possible. If you need help formulating a plan, you can find a variety of resources online – including this First Scoop blog. You can also contact your local credit union to see if they offer debt counseling services. If you live, work, worship, volunteer or attend school in Monmouth or Ocean Counties in NJ – you can make an appointment at your nearest branch to go over your financial situation and come up with a debt management plan that works for you. Once your money is no longer going to pay off debt, you’ll be able to take significant strides toward building wealth.

Invest in assets. Speaking of strides toward building wealth, investing in appreciable assets can help build your net worth. The most common assets are real estate, stocks, and bonds. While real estate varies by location and depends on fluctuating market conditions, it is historically a safe investment that typically increases over time. Buying individual stocks is another way to grow your money, but this kind of investing can often be a high risk, high reward proposition. If you’re looking for stable growth over time, investment products like 401(k) accounts and mutual funds offer stability through diversification. Since there are so many investment options available, it’s always a good idea to consult a qualified financial advisor before committing your hard-earned money. Be sure to contact First Financial’s Investment and Retirement Center to learn more and get started today.*

So, how much does it take to be rich? That answer is going to be different for everyone. Your situation is unique, which means your road to riches will be as well. Fortunately, you don’t have to plan your route alone as a First Financial member. Our dedicated staff is ready to help you find your starting point, establish your monetary goals, and select the best products and services to accomplish your financial dreams.

*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.

 

4 Financial Tips for Those in Their 40s

No matter your age, you’ll likely encounter a variety of financial challenges throughout your life. But, the obstacles you faced in your 20s and 30s are far different from those you’ll deal with while in your 40s. Instead of paying off student loan debt, buying your first home, or starting a family, your 40s will likely include a far different set of issues and experiences that will test your financial stability. Below are four money tips for 40-somethings and ways to secure your financial future ahead of retirement.

Refrain from lending to loved ones.

Chances are now that you’re in your 40s you have built a solid financial foundation. If a family member or friend comes to you and asks for a loan, although your heart will tell you to dole out the dough, listen instead to your head. The net worth you’ve worked so hard to accumulate, could quickly be at risk the minute you begin loaning out money to those in your life. Remember, although retirement is still years away, the time is now to save and plan. If you really want to help others out, only loan them an amount you know you’re comfortable with, so you don’t get behind on your expenses.

Travel now, rest later.

Because you have more money (hopefully) now than you did when you were straight out of college, it’s time to treat yourself and take trips with family. You always said once you were in financial order you’d spend money on travel, so stop procrastinating and book your next vacation. The longer you wait, the older you’ll be and the less likely you’ll want to get out of town. Now is the perfect time to use your hard-earned cash on family travel experiences that you’ll remember for a lifetime.

Teach your children to be financially responsible.

Now that you’re in your 40s and your children are a little older, they probably have a better understanding of the value of money than they did when they were younger. This is the perfect time to instill in them the importance of financial literacy and responsibility. Teaching them to make smart money choices even from a young age, will help them to become more confident and independent. This is also a great time to encourage them to get a part-time job so they can learn to budget and save their own money for that brand new iPhone.

Set up an estate plan.

Estate planning is a critical part of planning for your financial future and it includes a variety of aspects, such as wills and trusts. It is always smart to make these arrangements while you are in good health and of sound mind. The first and very critical component of setting up an estate plan, is drafting a will. This detailed document ensures your finances are distributed how you see fit, and aims to curb any potential family disputes. For assistance with this process, find a trusted financial advisor to guide you toward safeguarding the income you’ve acquired over your lifetime.

To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings plan goals, email mary.laferriere@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.

Article Source: Wendy Moody for CUInsight.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!*

 *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: U.S. News Staff for money.usnews.com

 

Congrats Graduate! 4 Things to Do with Your Gift Money

Cash tops the list of popular graduation gifts year in and year out. If it’s your turn to don a cap and gown this year, congratulations – you probably pocketed a significant amount of change along with your achievement. So, what are you going to do with it?

Since we tend to view graduation gifts as a form of “extra” money (a psychological money trap known as mental accounting), it can be tempting to quickly reach for that wish list. Before you do though, consider these four ways you can use it to both celebrate your achievement and give yourself a better financial foundation for the future.

1. Celebrate the present.

You’ve achieved something important, so go ahead — spend some of that money on yourself, any way you’d like. Instead of blowing the whole sum, financial advisors recommend setting aside about 10% for yourself. If your cash gifts totaled the $1000, that still gives you $100 to spend on clothes, electronics, entertainment – whatever.

2. Invest in your future.

With the other 90%, one good choice is to invest in tools that will help you succeed in your next life steps. If you are jumping into a high tech job, maybe you’d like a new laptop or specialized software you could use to make work life more efficient.

There are also other practical needs like expensive furniture and household goods if you are moving out. Although the return can be harder to quantify, putting some of your graduation gift money toward these expenses is an investment in yourself.

3. Save for the future.

Graduation cash doesn’t have to burn a hole in your pocket – it’s okay if you don’t have a plan for it right away. In fact, saving it is a very good plan. If you’re already on a budget or would like to start, treat your graduation money like income and apply the 50/20/30 rule. Savings is the 20%, so calculate this much and set it aside.

Although you can certainly save for the future in terms of life after high school or college, you may need to first focus on shorter-term needs like living expenses. One of the best places to save your cash is in a separate savings account (or an account you won’t be using for daily purchases). Since you won’t see or use this money all the time, you’ll feel less tempted to spend the funds on impulse purchases.

4. Invest for your future.

Investing in your future is important, but so is investing for your future. For young investors, many financial advisors recommend mutual funds with low-cost index funds. The key is to choose an option that doesn’t require extensive management, knowledge, or risk, especially when you’re just getting started.

The amount you invest isn’t so important; after all, your money and your salary will grow for decades to come. They key is to start learning the ins and outs of investing. Not only will this give you another, potentially more profitable savings channel, you’ll learn solid investment management skills that will set you up for the future when you need to properly allocate the wealth you will accumulate for the rest of your life.

Questions about 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 or stop in to see us!*

Regardless of how little or much your graduation cash amounts to, determine to enjoy a little, save a little, invest in yourself, and plan for the future. The way you choose to use this money can set a trend of how you’ll manage your money for years to come, so let it be a good one!

*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: Jessica Sommerfield for moneyning.com