Banking Best Practices
Once you start receiving your first paychecks after graduation, knowing how to spend or save your money wisely can be tough. While you may be able to do your banking with just a few taps on your phone, managing money well is much more complicated. Here are a few tips to help you get started.
1. BUDGET USING APPS
Tracking how much you spend weekly and monthly shows you where your money goes and how you can save more. You can use a budgeting app that tracks your cash automatically or one where you enter information manually. Choose an app that lets you spend as little or as much time on budgeting as you want. From there, you can identify your total fixed expenses, such as rent and car payments, and more-flexible costs such as shopping and dining out.
2. SET UP AUTOMATIC TRANSFERS TO SAVINGS
When you have a rough idea of how much you can save regularly, create a recurring transfer from your checking account to a savings account. By making savings automatic, you can get used to spending “below your means” and never have to worry about remembering to transfer.
3. AVOID OVERDRAWING YOUR CHECKING ACCOUNT
Before you pay rent or spend any other big chunk of money, take a look at your checking account’s available balance. This can prevent you from spending more than you have in your account. If you overdraw, you may be charged a fee.
4. ESTABLISH CREDIT
Student loans and credit cards can help you build good credit — as long as you stay current on monthly payments and don’t overuse your cards. Your credit score, which shows how responsible you are with credit, is an important factor that lenders check before approving car loans and mortgages. The better your score, the lower the interest rate you may be eligible for.
5. REPAY DEBTS STRATEGICALLY
If you have debts from multiple credit cards and student loans, pay the minimum on each and then contribute more to your higher-interest debts. By making those a priority, you can reduce how much interest you’re paying faster than by treating all debts the same.
6. START AN EMERGENCY FUND
Being financially prepared in case of health emergencies or unexpected unemployment can save you from going into debt. Have a separate savings account just for this purpose; don’t mix it up with your regular savings. A good rule of thumb is to save enough to pay three to six months’ worth of living expenses.
7. SET LONG-TERM SAVINGS GOALS
Consider saving for retirement in an employer-sponsored 401(k) plan or individual retirement account. When you start saving early, you take advantage of compounded returns to make more money off your contributions overall.
From smart budgeting to setting goals, make good money choices now. Since time is on your side, you can benefit from building credit and saving early to be ready for big financial decisions in the future.
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Planning for Retirement
Planning for retirement can seem overwhelming. Here are Section 705’s suggestions for a successful future! In investing, time in the market is crucial. If past growth rates continue, the time you leave your savings alone actually matters more than the amount you save.
The problem with that, though, is that past growth rates probably won’t continue. Over the last 30 years, the stock market has averaged 7.8% growth, a rate that is the foundation of many retirement plans. If you’ve invested your whole 401(k) in total market index funds hoping for that growth, you may be unpleasantly surprised.
The 7.8% growth is a historical anomaly driven by demographic factors. Because of slowing industrial growth, decreasing population growth, and competitive overseas markets, that rate is projected to slow to 2% in the next year, and possibly past that.
This drop has significant ramifications. For 25-year-olds saving for retirement, a two-point drop over the next decade could necessitate saving twice as much before they retire.
Dealing with macroeconomic trends can be overwhelming. These steps can prepare your portfolio for struggling gains.
1.) Max out employer match
About 31% of American workers with access to a 401(k) don’t use it. Beyond the missed savings, employees are losing out on matching funds programs.
Matching funds programs are essentially interest payments. Your company will pay 100% interest on your 401(k) deposits. Increasing your 401(k) contributions to the maximum match level will minimize the impact of slow growth within your portfolio.
2.) Watch the fees
Ask your HR representative for a breakdown of your company’s investment management fees.
Review your fees and gauge if they’re reasonable. Most large companies have fees of 0.5%, with the numbers increasing for smaller companies to about 1.4% If you’re paying more, consider switching the funds you’re using.
3.) Revisit the Roth question
With the assumption that taxes usually increase over time, a Roth 401(k) generally makes sense for young people. However, with returns expected to drop and savings amounts likely to be a larger determinant of total wealth accumulation, it’s time to rethink this conventional wisdom.
If a tax deduction now in the form of a traditional 401(k) contribution would enable you to save more, it might be worthwhile. Growing your nest egg is essential; you can find ways to manage taxes once you’ve got enough saved for retirement.
4.) Look for predictable returns
As interest rates rise, growth slows as a result of decreased credit availability. That same force makes savings through other instruments more valuable.
An Individual Retirement Account (IRA) can hold savings certificate funds, like those available at 705 Federal Credit Union. These offer a predictable rate of return that isn’t dependent on macroeconomic forces, thus minimizing risk.
The principles of smart retirement planning don’t change. Spend less than you earn. Avoid debt. Invest as much as you can, as often, and as cheaply as possible. With a bit of planning, you’ll enjoy a prosperous retirement.
Buyer’s Remorse after Christmas?
bill in January.
1.) Budgeting advice
2.) Refinancing major purchases
3.) Debt counseling
4.) Personal loans
New Year, New You!
The New Year is a great time of renewal. That makes it a good time to make bold, decisive changes in your life. Leave behind the baggage that was 2016 and start fresh with a blank slate in 2017. If you’re looking for some resolutions to improve your personal finances, we’re pleased to offer seven ways to make 2017 the year of the dollar!
1.) Track your spending
2.) Make a budget
3.) Get out of debt
4.) Start an emergency fund
5.) Start a retirement account
6.) Automate your savings
7.) Get educated
Happy New Year from all of us at 705 Federal Credit Union. We hope you have a safe, happy, and prosperous 2017!
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Holiday Budget Tips
There’s a better way, and it’s simple: create a budget, and make informed decisions about your spending before you hit the shops.
Tipping your budget just a bit every once in a while isn’t a disaster. But the spending hangover many parents face after holiday shopping is too large to be easily forgotten.
Over half the parents surveyed will pay for their holiday gifts with credit cards. Just 61% of them plan to pay off their spending within three months, and 16% say they will pay it off over the course of six months or more. That’s half a year spent catching up on holiday spending!
Think carefully this shopping season before you drop another item into your cart. Is this gift really worth trimming your budget for the next three – or six – months?
11% of parents use money from their retirement accounts, 14% have taken funds out of their emergency savings and 11% have taken out a payday loan.
While their kids may be delighted with their loot, parents can be paying for it for longer than they think.
Taking $500 out of a 401(k) at age 35 translates into giving up $6,000 that was earmarked for retirement. Parents are forking out additional taxes and penalties to gain access to the money, and are also losing the opportunity for that money to grow.
There’s nothing quite as exciting as unwrapping a present. Kids wait all year for the holidays and as their parents, you want to make them happy. This is why 60% of the parents surveyed claimed they try to check off every single item on their child’s wish list.
Aside from the financial drain, purchasing every gift your kids have their hearts set on teaches them a host of lessons they’re better off without. Do you really want your kids thinking they can always have everything they want? Do you want them to feel that everything they own must always be the best and most expensive?
This holiday season, teach your kids that true happiness can’t be bought.
Try saving up for the holiday season throughout the year. While it may be too late for this year, it’s never too early to start thinking about next season. Sign up for our holiday club accounts, and put money aside each month!
Be an informed shopper this holiday season and your decisions will pay off in more ways than one.
Your Turn: How will you fund your holiday spending? Do you plan to buy your kids everything on their lists? Why or why not?
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2017 Resolutions for Business Growth
The New Year is the perfect time to reinvent your business. Decide what you want 2017 to look like, then put on your entrepreneurial shoes and get to work! Here are five resolutions you can aspire to in 2017 for a happy and successful business year.
1.) Set an Exciting Goal
As Tim Ferriss puts it in his must-read book “The Four Hour Workweek,” a goal that makes your heart beat faster is easier to achieve than a ho-hum goal. That’s because there’s less competition when you’re doing the impossible and also because an exciting goal comes with a super adrenaline rush that makes you surpass what you thought were your limitations. Can you triple your income this year? Identify the 20% of activities that generate 80% of your results and focus only on that? Don’t limit it — give yourself permission to call your biggest dreams “goals.”
2.) Write a Marketing Plan
The most frustrating part of being a business owner is the constant need to put out fires. Everything demands your attention, and there are never enough hours in the day. One of the best things you can do is get away from it all and spend a solid, uninterrupted block of time crafting a marketing plan for your business.
Your plan doesn’t need to be perfect. It’s a living document, so expect to make changes throughout the year as you respond to new opportunities and developments in your industry .
3.) Get in Front of Compliance Deadlines
January 1 is when many new regulations take effect. If you aren’t staying up-to-date on your regulatory environment, you’re playing with fire.
Take a look at the new regulations that may affect your business. Consult with your compliance personnel or attorney to figure out the steps you need to take to keep your company updated.
4.) Trim the Fat
Is there a person in your organization who isn’t working out? Technology that takes more time than it’s worth? If it’s not an asset to your business, it’s holding you back.
It’s never fun to be the bad guy, but as a business owner, it’s your responsibility to see to it that your team is doing what needs to be done and productivity and morale are high.
5.) Keep Learning and Growing
With so much on your plate, it’s easy to get caught up in the day-to-day responsibilities of working both in and on your business. Make 2017 the year you invest in your own knowledge by resolving to read one new business book a month. Make a list of websites, blogs and publications you’d like to read regularly. Revisit classic business books, or ask others for recommendations.
Close the books and learn from the experiences. 2017 is up next and it’s up to you to make it the best year ever. Bring on the challenges and rewards of another New Year! What New Year’s resolutions will help your business thrive?
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Bring Back The Brown Bag: Saving Money On Lunch The Old-Fashioned Way
Move over, breakfast! Lunch is the new king: Recent studies show that employees who take a lunch break are more likely to be productive in the afternoon and avoid long-term burnout.
1.) Save while you shop
2.) Think DIY
3.) Plan ahead
- Pack ahead. Prepare the pieces for all your lunches at the beginning of the week and store them in the refrigerator for easy grabbing at a moment’s notice.
- Be prepared to turn down co-workers who invite you to eat out with them by thinking of a response in advance.
- Brown-bagging your lunch doesn’t mean being chained to your desk. Weather permitting, you can eat in a nearby park, or sit in your car. Still getting a “break” with your lunch will make the transition easier.
Boating on a Budget: Staying Afloat Without Drowning In Debt!
Boating on a budget? Is there such a thing? Louisiana is truly “Sportsman’s Paradise!” With so many bodies of water, many would LOVE to spend your spare time unwinding on a boat that you own. Some boat-owners like to joke that “boat” is an acronym for “bring on another thousand.” This can be an expensive hobby, but also a rewarding one. Let’s look at a few ways to save money while keeping your dream boat from becoming a nightmare.
1.) Avoid stuff labeled ‘marine’
2.) Find a ‘boat buddy’
3.) Get gas beforehand
4.) Do your cooking on the water
5.) Cut down on the alcohol
How Students Can Get Discounts And Savings Just By Being a Student
There’s no doubting it; college is expensive. For most students, the cost is worthwhile because of the earnings potential that exists on the other side, but what about the here and now? Did you know being a college student could get you all kinds of discounts? Here are three excellent places to save with your college ID.
1.) Save big on Amazon Prime
Amazon offers a specialized Amazon Prime discount that’s just for college students. For those unfamiliar, Amazon Prime is a membership program that offers free shipping on most products sold on Amazon. Just by providing them with a .edu email address, you get 50% off a yearly Prime subscription. Since you can share Prime with up to four other people, you could split the cost with roommates or family to get the cost even lower.
Amazon Prime also includes its own music streaming service (so you can stop paying for Spotify), its own online video service (goodbye Netflix), and even some free before-market e-books! With that range of services, plus free shipping, Amazon Prime for students might be your budget’s best friend.
2.) Trim the travel costs
Visiting home, going on spring break trips and traveling to potential employers can really eat through your budget. Fortunately, there are several programs designed just for college students that can help you out. The Student Advantage, ISIC and ISE cards can all help keep the costs down at least a little bit.
The Student Advantage is the highlight for domestic travelers. These cards costs $22.50 and require verification of enrollment. In return, you get a 10% discount on Amtrak, a 20% discount on Greyhound and discounts on some hotel bookings. These are far from luxurious ways to travel, but the prices can’t be beat!
The International Student ID Card (ISIC) offers lots of benefits for student tourism. Educational excursions, like guided tours of historic European sites, are deeply discounted, as are domestic and international train travel. The ISIC card also includes discounts on Amtrak and Greyhound, along with some online and local retailer discounts. These cards cost $25 and require proof of enrollment. A photocopy of your ID will do.
The ISE card is another option for the international traveler. It costs $1.99 for a mobile card, but requires both proof of full-time student enrollment (a transcript) and proof of identification (the information page of your passport). This card includes many more deeply discounted tourist destinations as well as savings on airfare, rail travel and other modes of transportation.
3.) Save on software
Colleges tend to be all about sharing (or software piracy, depending on your perspective). Major publishers, recognizing this trend, have gone on the offensive by offering discounted versions of their signature products to college students at phenomenal discounts.
You can find Microsoft’s Office Suite or new versions of Windows for a fraction of retail prices. Adobe’s Creative Cloud software (which includes Photoshop) can be had for nearly 70% off the retail price. Norton offers a seriously reduced fee for antivirus software and computer security, too. These are programs you’ll need anyway, and with a student email address, you can get them at a price you can afford.
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