Three Keys to Managing Your Money—Do You Use Them?
What are your financial goals? Longer-term goals may include buying a home, saving for your children's college education, or planning and investing for a retirement free of money worries. In the shorter-term maybe you'd like to buy a new car or plan toward a dream vacation. Managing your money wisely can help you reach your goals. Three powerful strategies form the foundation for success:
- Building a budget
- Controlling your credit
- Setting up savings plans
Your credit union has tools to help you do all three. This report outlines how.
Build a Budget
Do you know exactly how much income you and your family have on a monthly and annual basis? Do you know how much you and your family spend every month and each year? What do you spend it on?
Looking at what you spend enables you to look for places where money may be slipping unnoticed out of your account, spent in areas or on items where you can save. It may identify expenses where you can cut down slightly such as on clothing or entertainment and free up money to save for goals.
Tip: Tired of bank fees, check out the many services provided free with your credit union's checking accounts.
Control Your Credit
Your credit rating and credit score have a big impact on your finances. Your creditworthiness determines how much interest you'll pay on a credit card, an auto loan, a home mortgage and other loans. A lower rating means higher rates. A poor rating even affects your ability to get credit or a loan on any terms. Your creditworthiness may also influence what you pay for insurance or your ability to rent an apartment.
Set Up Savings Plans to Grow Your Money
What longer-range financial goals are you saving for? Most financial experts recommend first establishing an "emergency" or "rainy day" savings fund of 3 to 6 months of basic expenses. An emergency fund can protect against unexpected events or expenses derailing your longer-term plans. Many families then put a priority on 1) saving for children's higher education and 2) saving for retirement. You may have different or additional goals.
What's important is to set up savings and investment strategies to meet your goals, if you have not done so. If you already have savings plans in place, it may be time to review your investment management strategies.
You may also wish to check out two previous Nick's Reports:
- Are You Saving for Your Kids' College? Tips for Success
- Are Your Retirement Savings on Track? Tips for Meeting Your Goal.
Sound Money Management Today Can Lead to a Bright Tomorrow
If you start today building on the three foundation blocks of managing your money—or renew your commitment to building on them—you help ensure that you and your family will have the financial resources to accomplish your goals for the future. At each step your credit union has the tools and the people to help.