A lack of financial understanding could be dangerous for your wallet. So here are some actions you can take that will boost your saving power.
Start an Emergency Savings Account
Car repairs, medical emergencies, last-minute necessities—we all get hit with surprise costs occasionally. The best way to ensure that you stay prepared is to start an emergency savings account to provide a cushion in your finances to cover unexpected expenses. If possible, keep this separate from your regular savings account, so you don’t have to drain funds for those future costs you can predict. It is typically recommended that you have enough in your emergency savings account to cover three to six months’ worth of living expenses.
Keep Track of Interest Rates
Do you know the current interest rates on your credit cards? They may have changed since you last checked. If you’re like many people, it’s also possible that you just forgot. Whatever the reason, it’s time to check. A high-interest card makes the balance you owe considerably more expensive in the long run.
Shop for the best deal
The total amount you will pay for your car depends on its price, the annual percentage rate (APR), and the length of the loan. One of the best sources for attractive car financing deals is your credit union. If you are not currently a member, consider joining one now. Our rates for car loans are frequently better than what you would get at a dealership, and you won’t have to worry about being “scammed.”
If you choose to go with dealer financing (where the dealership shops for loans for you), be sure to ask about manufacturer’s incentives, reduced finance rates, and cash back on specific car models. Financing offers can be tricky. If the length of the loan is long and the interest rate high, you will be paying more than you may have to.
Review Your Student Loan Repayment Options
When was the last time you checked your monthly student loan payment? Is it so high that you can’t pay the rest of your bills? If it’s too low, you may pay more in interest over the life of the loan than you need to. You can negotiate your monthly sum with your servicer if you need to adjust your payment.
Open A Retirement Account
Saving for retirement is critical, unless you plan on working full-time forever. If your employer offers a 401(k), take advantage of it. Even putting small sums away every month can make a big difference once you lose full-time income. Likewise, if you don’t have access to an employer-sponsored retirement plan, open an IRA with a financial servicer.
Stick to A Budget
Create a budget that you can maintain every month. New to budgeting? A good rule of thumb is that 50 percent of your income goes to essentials, 20 percent is for building savings and paying off debts, and 30 percent covers extras or unexpected expenses. Calculate how much of your income should be allotted for each section and stick to it.
Set Financial Goals
Setting financial goals will ensure you get what you want in life and help you save money in the long run. Goals should fall into three categories – short, medium, and long-term. For example, a new computer may be a short-term goal. Meanwhile, a new home that would take months or even years of consistent savings, would be a long-term goal. Once you set your goals, create a realistic timeline for achieving them.
If you need help setting goals or want to get your finances back on track, consider speaking with one of our financial counselors for further assistance.
Appreciate What You’ve Got
Learning to appreciate what you have will keep you from overspending on things you don’t need. Take stock of at least one thing you own for which you are grateful. Doing this every day will help you maintain a healthier financial mindset.
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