Why You Need to Be Financially Fit

Individual Americans spend hundreds of dollars a year and at least as many hours on keeping themselves physically fit but too many people neglect their financial health. Just like physical health, being financially fit is crucial to your well-being, your future and your quality of life. 

Here’s why being financially fit is so important and how you can overcome common barriers to achieving financial wellness. 

Financial wellness: a ripple effect 

Being financially fit is about more than just having enough money in your account to cover your expenses and put away something for tomorrow. Managing money responsibly will affect many aspects of your life:

  • Marriage. According to a recent study by AARP, financial problems are the second leading cause for divorce in the country. Money brings resentment and arguments into a marriage. In a study reviewing over 740 instances of marital conflict between 100 couples, money was found to be the most common topic couples argued about.  
  • Mental health. Money stress can severely affect your mental health, causing depression, restlessness, anxiety and more.  
  • Physical health. Stressing over finances can also directly impact your physical health, leading to recurring symptoms like headaches, fatigue, upset stomach, insomnia, high blood pressure and an increased risk of heart disease and stroke.
  • Work life. Being bogged down by money worries can make it difficult to focus while at work, which can bring down productivity levels and hamper career growth. In addition, prospective employers tend to review the financial wellness of new hires as part of their background checks; high rates of debt and a poor credit score can cost an employee a new job. 
  • Parenting. Managing money irresponsibly can mean not having sufficient funds to pay for a child’s education, private lessons, medical needs and more. 

What are the leading causes of money stress? 

According to a survey by Credit Wise®, 73% of Americans rank money issues as the number one stressor in their lives. Here are the top causes for financial stress: 

  • High-interest debt
  • Insufficient savings
  • Medical bills
  • Living paycheck to paycheck
  • Lack of retirement planning

Stressing over money is never fun. Stressing over money, when any of the above applies to you, takes on its own form of angst by adding a level of long-term anxiety. It takes time, sometimes years, to undo the damage of any of these stressors but it can be done!

Barriers to financial wellness and how to overcome them

We’re convinced: being financially fit is super-important. But what happens now? Why are 80% of Americans in debt?  Why do only 39% of Americans have enough saved up to get them through a $1,000 emergency? 

Unfortunately, while many people may understand that financial fitness is crucial to their wellbeing, there are several barriers that make it difficult to follow through on their convictions. 

First, many lack the basic financial knowledge necessary to responsibly manage their money. Second, many people mistakenly believe that budgeting, saving and being more mindful of how they manage their money are too time-consuming and tedious. Finally, some people may have fallen so deeply into debt, they’ve begun believing they will never be capable of ever pulling themselves out. 

Here are some simple steps you can take today to help you achieve and maintain financial wellness:

  • Get educated. There is no shortage of financial literacy available to the interested consumer, from financial literacy blogs to personal finance books, podcasts, online classes and so much more. Learning how money works, the power of a long-term investment and how much you’re really paying each time you swipe that high-interest credit card can help you make better choices. 
  • Have the money talk with your partner. Whether you’ve only been sharing expenses for half a year or you’ve been married more than a decade, it’s important to be on the same financial page as your partner. Talk openly and honestly, being careful not to be judgmental in any way, and discuss your individual and shared long-term and short-term money goals. Then come up with a plan for how you intend to reach them together. 
  • Pay all bills on time. If you can’t take aggressive steps toward paying down debt just yet, be sure to make the minimum payment on each credit card bill each month. 
  • Create a budget. Giving every dollar a destination makes it easier to spend mindfully and cut down on extraneous expenses. 
  • Start saving. There’s no such thing as a sum of money that’s too small to put into savings. Every dollar counts, and once you get the ball rolling, you’ll be motivated to pack on the savings until they really grow. 

You give your abs a great workout each day now it’s time to get those money muscles into shape! Follow the tips outlined above to stay financially fit at all times

Your Turn: What are your best tips for maintaining financial wellness? Tell us about it in the comments. 

Post-Pandemic Money Moves

Re-acclimating to normal life as pandemic restrictions are lifted and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap. You’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or, maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.

As you prepare to leap back into normal life, proceed with caution. Be sure to consider your full financial picture as well as long-term and short-term goals.

Here are some forward-thinking money moves to make as you adjust to post-pandemic life.

Review and adjust your budget

Pandemic times required their own budget, as people cut down on costs like dining out and updating work wardrobes, but spent more on things like at-home entertainment. Others may have had to adjust their spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted something in some people’s mental list of needs and wants, as they found they can live with a lot less than they’d believed.

As you adjust to post-pandemic life, take some time out to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as a readjustment to pre-pandemic spending or changed priorities. You may need to review and adjust your budget, and maybe even your spending behaviors, every few months until you find a working balance.

Rebuild your savings

If you are one of the many Americans who were forced to dip into savings, or even to empty them completely, during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income, or use a windfall, such as a work bonus or tax refund, to get the bulk of your emergency fund in place.

Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it’s always best to be prepared, because you never know what can happen.

Rethink your long-term and short-term financial goals

The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you’d originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car.

Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly.

As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can.

Spend with caution

It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but it’s best to spend with caution.

First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently, and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting it out a bit until prices cool off.

Also, you may be eager to make up for lost time, but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned.

The restaurants and movie theaters are open for business again, and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here.

Your Turn: What post-pandemic money moves will you be making now? Tell us about it in the comments.

What to Do with Your Money When Crisis Hits: A Survival Guide

Title: What to Do with Your Money When Crisis Hits: A Survival Guide

Author: Michelle Singletary

Hardcover: 224 pages

Publisher: Houghton Mifflin Harcourt

Publishing date: May 18, 2021

Who is this book for? 

  • Anyone who is struggling to stay on top of their finances.
  • Anyone who’s ever wondered how to handle their money during a financial crisis, such as a pandemic, recession, bear market or energy crisis.

What’s inside this book?

  • Singletary’s expert advice for weathering financial storms.
  • Answers to questions about handling money during a financial crisis.
  • A practical guide for managing common money concerns.

3 lessons you’ll learn from this book: 

  1. The most important steps to take when facing a financial crisis.
  2. How to keep a financial crisis from becoming a catastrophe.
  3. How to manage debt, credit card issues and cash-flow problems.

5 questions this book will answer for you: 

  1. What bills must be paid first when in a financial crisis?
  2. When is it OK to dip into savings?
  3. How can I cut back on spending?
  4. How do I keep from panicking when the stock market is down?
  5. How do I tell a scam from a legitimate opportunity?

What people are saying about this book: 

  • “If you’re one of the tens of millions of Americans who are struggling financially, or if you’re faced with helping others who are struggling, you need to read this. Michelle Singletary has written an outstanding book, filled with no-nonsense, let’s-get-to-it advice that’s immensely practical, easy to read and emotionally reassuring. Stop lamenting your situation and let Michelle show you the way out of your crisis.”  – Ric Edelman
  • “Michelle Singletary, a voice of financial reason and calm throughout the pandemic, helps us move forward with what we need most—answers.  From when to raid your retirement accounts, go back to school, and so much more, her clear, precise guidance will put you on the right track to rebuild your future.”   – Jean Chatzky
  • “This is a compassionate encyclopedia of financial first aid when you stumble, and good financial health practices when you are back on your feet. Michelle Singletary has been the down to earth, practical advisor to the stars — and us ordinary folks — for decades.” – Vicki Robin
  • “Michelle Singletary’s latest book is full of clear, wise advice that anyone can follow—and everyone should—especially when they are thrown a curve in the game of life.” ­- Knight A. Kiplinger

 Your Turn: What did you think of “What to Do with Your Money When Crisis Hits: A Survival Guide?” Share your opinion in the comments.

Preparing Financially for a New Baby

Congratulations! You’ve just gotten the positive pregnancy test results and you’re breathless with excitement — and nerves. Or maybe you’re a few months along, and the mild panic is growing right along with the baby bump. Regardless, a baby means big changes, and some of those changes bring many new expenses. How will you pay for it all?

Whether you’re only thinking about having a baby, or your due date is fast approaching, there’s no need to stress about finances. By taking the necessary measures today, you can learn to cover these new expenses without falling into debt.

Here are some steps you can take to prepare financially for a new baby:

Pay down debt

There’s more than just a nursery to set up before your baby’s arrival. It’s best to get your finances in order to make it easier to manage all new expenses and prepare for your child’s future. If this involves getting rid of a mountain of debt, you can choose between these two debt-kicking plans:

The snowball method involves maximizing your payments toward your smallest debt balance first. Once it’s paid off, move on to the next-smallest debt, “snowballing” the payment from your previous debt into this one until it’s paid off, and repeating until you’re completely debt-free.
The avalanche method involves maximizing payments toward the debt with the highest interest rate and then moving on to the one with the second-highest interest rate until all debts are paid off.

Adjust your monthly budget

Babies don’t come cheap. When your little one arrives, you’ll need to spring for baby gear and furniture, a new wardrobe, diapers and possibly child care as well. According to the USDA’s most recent report on the cost of raising a child, the average middle-income family will spend approximately $12,350-$13,900 on child-related expenses before their baby’s first birthday.

Most of these expenses will be ongoing, and it’s best to make room in your budget for these new items before the baby is born. Spend some time reviewing your monthly budget to look for ways to cut back on spending and give you that wiggle room to cover baby-related expenses.

Set up a baby account

All those baby expenses can be overwhelming, but if you break them down into bite-sized pieces, they’ll be easier to manage. You can do this by putting away some money for baby costs as soon as you plan on having a baby or find out you’re expecting. Consider setting up a new savings account at Advantage One Credit Union for all baby expenses to keep this money separate from other savings. You may also want to automate these savings by setting up a monthly transfer from your payroll or checking account to your “baby account.”

Estimate prenatal care and delivery costs

While exact amounts vary by state and by insurance provider, prenatal care and delivery can cost thousands of dollars. This includes out-of-pocket expenses, co-pays and insurance deductibles. Be sure to prepare for these expenses by saving up for them or by allocating a large windfall, such as a tax refund or generous work bonus, to be used for paying for prenatal care and delivery.

Start saving for college

Hard as it may be to believe, your little one will one day be all grown up and ready to go to college. With college tuition now averaging $41,411 at private colleges, $11,171 for state residents at public colleges and $26,809 for out-of-state students at state schools, according to data reported by U.S. News and World Report, this can mean paying a small fortune to give your child an education. In addition to spreading the costs over nearly two decades, starting to save for your child’s college education now will give those savings the best chance at growth.

Consider opening a 529 plan before your child is born where your college savings can grow tax-free.

Write a will

No one wants to think about their own death when preparing for a birth, but writing a will — and purchasing life insurance if you haven’t already done so — can be the best gift for your child in case the unthinkable happens.

Welcoming a new baby is a life-altering experience, and can mean big changes for your finances. Follow our tips to ensure you’re financially prepared for your new baby’s arrival.

Your Turn: What steps are you taking to prepare financially for a new baby? Tell us about it in the comments.

Learn More:
nerdwallet.com
mint.intuit.com
thepennyhoarder.com

All You Need to Know About Share Certificates

No one wants to play around with their savings. Whether you’ve just received a lump sum through a work bonus, inheritance or other unexpected windfall, or you’ve been saving for a while until you’ve built a sizeable nest egg, you likely want to park your savings in a place that offers your money its biggest chance at growth without risking a loss.

Lucky for you, as a member of Advantage One Credit Union, you have access to an abundance of secure options for your savings, including savings accounts, [and] money market accounts, [health savings accounts, holiday clubs and vacation clubs].

Another excellent option we offer our members to help their savings grow is our share certificates. Sometimes known as savings certificates, and referred to by banks as CDs, these unique accounts blend higher growth potential of a stock investment with the security of a typical savings account.

Let’s take a closer look at this savings product and why it might be the perfect choice for you.

What is a share certificate?

A share certificate is a [federally] insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and there is generally no monthly fee to keep the certificate open.

Aside from the higher dividend rate, share certificates differ from savings accounts in the more limited accessibility of the funds within the account. A typical certificate will not allow you to add any money to the certificate after you’ve made your initial deposit. You also won’t be able to withdraw your funds before the maturity date without paying a penalty. [However, at Advantage One Credit Union, we do offer more flexible options than the typical share certificate].

Terms and conditions of certificates

You’ll need to meet some basic requirements before you can open a certificate including a minimum opening balance and a commitment to keep your money in the account for a set amount of time.

The minimum amount of funds you’ll need to deposit to open a certificate will vary in each financial institution. It also depends upon the term you choose. Some institutions will accept an initial deposit as low as $50 for a certificate. Others, such as a “jumbo” certificate, will require an opening balance of $100,000 or more. In general, the more money you invest in a certificate, the higher rate of interest it will earn. At Advantage One Credit Union, you can open a certificate with as little as [$X] at an Annual Percentage Yield (APY) of [X%].

Certificate term lengths also vary among financial institutions, with most offering a choice of certificates that run from three months to five years. Typically, certificates with longer maturity terms will earn a higher rate. Here at Advantage One Credit Union, we offer our members certificates that can be opened for just [X] months or as long as [X] years. Our dividend rates start at [X%APY*] for short-term certificates, and going up to [X%APY*] for our long-term options.

Is a share certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you move forward with opening a certificate, be sure you won’t need to access the funds before the certificate’s maturity date. It’s best to have a separate emergency fund set aside to help you through an unexpected expense.

Why keep your money in a certificate?

Here are some of the reasons people choose to open a certificate:

  • Low risk. With each Advantage One Credit Union certificate insured by [the National Credit Union Administration] up to $250,000 [and independently insured up to $XXXX by XXXX], you can rest easy, knowing your money is completely secure.
  • Higher dividend rates. Certificates offer all the security of savings accounts with higher yields.
  • Locked-in rates. There’s no stressing over fluctuating national interest rates with a certificate. The APY is set when you open the account and is locked in until its maturity date. This means you can calculate exactly how much interest your money will earn over the life of the certificate the day you open it.

If a certificate sounds like the perfect choice for you, stop by Advantage One Credit Union today to learn more. We’re committed to giving your money its best chance at growth.

* APY=Annual Percentage rate and rates are current as of [XX/XX/XXXX].

Your Turn: Have you chosen to keep your savings in a share certificate? Tell us why you chose this option in the comments.

Learn More:
investopedia.com
thebalance.com
businessinsider.com

Products for Managing and Tracking Business Expenses

Running a flourishing business means overseeing a constant flow of money. There’s revenue, payroll, suppliers, lease payments, taxes and so much more. It’s a lot to keep track of!  Luckily, though, there are lots of products on the market that can help you cover, manage and track your business expenses effectively and smoothly. Let’s take a look at some of these products and share some tips for choosing those that are the best fit for your business.

Business checking accounts

A designated business checking account makes a company look credible and professional while enabling it to manage and track expenses, taxes and revenue. Separate accounts also protect business owners from losing their personal assets if legal action is taken against the company. Business owners can use their checking accounts to deposit checks made out to their company and to cover business expenses, such as payroll or payments to suppliers.

Here’s what to look for in a business checking account:

  • Generous cash-deposit limit per transaction
  • Generous monthly transaction limit
  • Low or no maintenance fee and other costs
  • Online and mobile banking
  • Possible dividend rate

[If you’re looking to open a business checking account, a Advantage One Credit Union Business Checking Account can be a great choice. Our business checking account has [a low maintenance fee of $xx/month/ no maintenance fees] and convenient features like [XXX]. Call, click, or stop by Advantage One Credit Union to learn more.]

Business savings account

A business savings account is an account designated for funds to be used in cases of emergency or for future business expenses. The money in this account will grow at a greater rate, but access to these funds will be more limited.

Business owners can use a savings account to build a cash cushion for slower seasons, prepare for unexpected expenses or to save up for new equipment, tax payments or an expansion.  Many financial institutions also offer rewards and incentives for businesses opening a business savings account, such as cash-back programs, increased dividend rates for larger deposits and reduced fees.

Here’s what to look for in a business savings account: 

  • High dividend rates
  • Low fees and a transparent fee structure
  • Rewards and perks
  • Online and mobile banking

[Opening a Advantage One Credit Union Business Savings Account will provide you with a favorable rate of [x.x%], generous terms, and convenient features like [XXX]. If you’re ready to open a business savings account, call, click, or stop by Advantage One Credit Union today.]

Business credit card

A business credit card provides small business owners with easy and unsecured access to a revolving line of credit. Business owners can use the credit to withdraw cash as necessary, cover large expenses, make purchases, fund an expansion or meet their monthly bill payments.

In comparison to a business loan, a business credit card is easier to qualify for, but it will nearly always come with a higher interest rate. If business owners are careful only to use the credit card when it is absolutely necessary and pays the bill before it’s due, interest will not accrue. A generous line of credit can be a convenient way to increase a business owner’s purchasing power without risking any assets. Credit debt that is managed well will also build the company’s credit score and may provide the business with rewards and incentives.

Here’s what to look for in a business credit card: 

  • A low interest rate
  • Generous perks and rewards
  • A low or no annual fee
  • Interest-free introductory period
  • Purchase protection and insurance

[If you’re looking to open a business credit card, look no further than Advantage One Credit Union. Our Business Credit Cards feature a generous credit limit, easy qualifying terms, and great perks. Call, click, or stop by Advantage One Credit Union today to learn more.]

Tax software

Tracking business expenses and marking which of them can be deducted from a company’s tax liability can be super-challenging. Tax software designed for businesses makes this task easy. Business tax software, like H&R Block, TaxAct and TaxSlayer, can track all the expenses of a business and help owners file taxes efficiently and easily. The software allows businesses to upload all relevant tax documents, provides online support from tax specialists and helps the business calculate federal — and sometimes also state — tax liability. Businesses will need to pay a fee to download most tax software programs, but the cost is more than offset by the time and money the software can save a business.

Here’s what to look for in tax software for businesses:

  • Online tax filing
  • Low monthly cost
  • Assistance with filing federal and state taxes
  • Compatibility with your devices
  • Money-management apps

Managing expenses for a small business isn’t easy. There’s payroll, suppliers, monthly bills and so many other ongoing expenses that need to be covered. Fortunately, there’s an app for that! Money management apps like Mint, Truebill and ZohoBooks allow businesses to track and review all their expenses in one convenient location. Chart expenses on colorful graphs to visualize cash flow, see where the business money is going, categorize expenses for easier tax-filing and link accounts for automatic syncing of expenditures and income. Tracking business expenses on an app also makes for easy monitoring the business via mobile device.

Here’s what to look for in a money-management app: 

  • Manageable monthly cost
  • Easy-to-use interface
  • Synchronization across multiple devices

Your Turn: How do you manage your business expenses? Tell us about the products you use in the comments.

Learn More:
entrepreneur.com
investopedia.com
nerdwallet.com
patriotsoftware.com
brex.com

The Importance of Being Financially Fit

Are you ready to stretch those financial fitness muscles? We hope so, because it’s time to get financially fit!

Being financially fit means living a life of complete financial responsibility. The Center for Financial Services Innovation (CFSI), also known as the Financial Health Network, defines four basic components of financial health: Spend, Save, Borrow and Plan. These components reference everyday financial activities. As such, every choice you make in terms of these four activities either builds or detracts from your financial fitness. Like physical fitness, you can beef up those fitness muscles a little bit more each day.

Being financially fit is crucial for a well-balanced, stress-free life. Here’s why (and how):

Expand your financial knowledge

A financially fit person is constantly broadening their money knowledge. They read personal finance books and blogs, attend financial education seminars and are aware of the evolving state of the economy. This enables them to make monetary decisions from a position of knowledge and power, leaving much less up to chance or luck.

Stick to a budget

A financially fit person knows that tracking monthly expenses is key to financial health. They are careful to set aside money from their monthly income for all fixed and discretionary expenses and to stay within budget for each spending category.

Minimize debt

A financially fit person is committed to paying down debts and seeks to live debt-free. Constant budgeting, ongoing financial education and planning ahead enables them to make it through the month, and through unexpected expenses, without spiraling into debt.

Maximize savings 

A financially fit person prioritizes savings. In fact, savings is a fixed item on their monthly budget instead of something that only happens if there’s money left over. This allows them to think ahead and build a comfortable nest egg or emergency fund. In turn, having a robust safety net means sleeping better at night knowing there’s money available to cover unexpected expenses or a change in life circumstances.

Maintain complete awareness of the state of your finances

A financially fit person knows exactly how much money they owe, the accumulated value of their assets and the complete sum of their fixed and fluctuating expenses. This awareness takes the stress out of money management, allowing them to make better financial choices.

Maintain a healthy credit score

A financially fit person knows that an excellent credit history and score is a crucial component to long-term financial health. They are careful to pay all bills on time, hold onto their credit cards for a while and to keep their credit utilization low. This enables them to qualify for long-term loans with favorable interest rates, which saves them money for years to come.

Help your money go further

A financially fit person does not waste large sums of money on interest charges for purchases made using borrowed funds via credit cards or loans. They live within their means and only use these resources for purchases they can actually afford, or for large, long-term assets, like a car or a house. This means they have more funds at their disposal to help build their wealth through savings and investments.

Create concrete financial goals

A financially fit person has long-term and short-term financial goals. This enables them to keep their focus on the big picture when making everyday money choices, empowering them to actually realize their financial dreams.

Achieve financial independence

A financially fit person is independent. They don’t rely on loans from friends or family members to get by, and they don’t need to pay with plastic at the end of the month because they ran out of money. Their well-padded emergency fund means they don’t depend on their monthly income to put bread on the table, either. By sticking to a budget, prioritizing savings and maintaining an awareness of their finances, they are strong, secure and completely independent.

Being financially fit means living a life without battling anxiety about getting through the month or stressing about the future. You can achieve financial fitness by committing to making choices in each of the four components of financial health (spend, save, borrow, plan) that are forward-thinking and help to build your financial wellness.

Your Turn: Why is financial fitness so important? Share your reasons with us in the comments.

Learn More:
femcove.com
doughroller.net
moneybites.com
forbes.com
cbsnews.com

My Savings Has Been Wiped Clean; How Can I Replenish it?

Broken Piggy Bank with coins scattered on tableQ: The last few months have been really tough on my finances, and I’ve been forced to use my savings for getting by. My emergency fund and savings account are basically zero. Now that my financial situation is starting to improve, I’d like to start building these up again, but it’s all so overwhelming. Where do I begin?

A: Watching savings that took you years to build up disappear in just a few months can be disheartening, but it’s important to remember that you’ve made the right choice. Using emergency funds to survive prolonged unemployment, an unexpected large expense or a medical emergency is the best way to make it through a financial hardship. If your savings are depleted, though, you’ll want to start rebuilding as soon as possible to ensure you have the funds to cover a future financial challenge without falling deeply into debt.

Here’s how to start your rebuilding plan:

Set a goal
Before getting started on saving up money, it’s a good idea to establish a tangible goal. What’s your magic number? You can try to recover the value of the savings lost, or start smaller, with a more attainable goal. Bear in mind that experts recommend having funds to cover three to six months’ worth of living expenses set aside in an emergency fund or savings account.

Review your budget and trim your spending
A good place to start finding those extra dollars for savings is by carefully reviewing your spending for ways to cut back. Look for expenses that can make a difference in a monthly budget without dramatically affecting your quality of life. Think about subscriptions or services that are rarely used, a dining-out budget that can be scaled back and expensive recreational activities that can be swapped with freebies. There’s no need to live like you’re broke, but stripping your budget of some extras can give you the boost of cash you need each month to build up your savings again.

Find a side hustle
Another great way to land extra funds is through a side job. There are many ways to pad a wallet without a major investment of time. Some options include taking surveys on sites like Survey Junkie and Swagbucks and doing gig work for companies like Uber, DoorDash and Rover.

Sell your old treasures
If you’ve spent part of the COVID-19 lockdown giving your house a deep cleaning, you may have unearthed some forgotten treasures that can turn into easy moneymakers. You can sell old clothing on ThredUp, unwanted jewelry on Worthy.com, make good money off your unwanted furniture through Chairish, sell or trade unused sports equipment on Swap Me Sports and sell kids clothing and toys on Kid to Kid. Use the cash you earn from these sales to jumpstart your new nest egg.

Make a plan
Once you have a goal in place for building your savings, and you’ve maximized the possible monthly contributions toward savings each month, it’s time to create a plan. Map out a timeline of how long it’ll take to reach your goal when putting away as much as possible each month. Remember: the more aggressively you save now, the sooner you’ll reach your goal.

Start saving
It’s time to put the plan into action! The best way to ensure regular savings happens each month is to make it automatic. You can set up an automatic monthly transfer from your Advantage One Credit Union Checking Account to your Advantage One Credit Union Savings Account on a designated day of the month. You may want to have the transfer go through several days after you receive your monthly salary, or it might work out better to put a smaller amount of money into savings each week. Give us a call at 734-676-7000 to discuss your options.

Put unexpected windfalls into savings
To speed up the process of rebuilding depleted savings, you may want to resolve to put unexpected windfalls into an emergency fund or savings account. This can include tax refunds, a work bonus and gift money. If another round of Coronavirus stimulus checks is approved, consider using these funds for your savings as well. Earmarking future windfalls for savings can shorten the amount of time spent cutting corners in a budget and taking on extra jobs to build up a savings account.

Rebuilding an emergency fund and savings account from the bottom up isn’t easy. It takes commitment, hard work and the ability to keep a long-term goal in mind; however, the security that comes from knowing you have a safety cushion to fall back on in case of a financial setback will make this goal worth the effort many times over.

Your Turn:
Have you started working on rebuilding your savings? Tell us about it in the comments.

Learn More:
policygenius.com
fool.com
moneymanagement.org

Best Ways to Save for Your Mortgage Down Payment

Four simple methods to get the ball rolling on your down payment savings
Buying a home is ajanuaryfeatured_saveforhome huge step in life and begins with a huge hurdle: the down payment. Fortunately, by starting early and thinking things through, you can get a solid jump on saving. Here are some easy ideas to get you started.

Automate Your Savings
At your usual financial institution, open a savings account specifically designated for your down payment/mortgage. Not only will this allow you to conveniently transfer funds from one account to the other, it will also allow you to automate transfers or directly deposit part of your paycheck into the specified account.

Make a Budget
Create a spreadsheet that lists all of your monthly expenses and monthly net income. Not only will this tell you how much you can put into savings, it can also help you discern what monthly mortgage payment you can afford. If the buffer between expenses and income is already too small, this is an early red flag that you will have to start doing some things differently to afford your mortgage.

“Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits (meaning spend less) and avidly look for new savings sources,” says Peter Miller, The Simple Dollar contributor.

Invest Your Funds
If you are looking to buy a house within the year, Kathryn Vassel of CNN Money recommends keeping your money liquid; but if your plans are more long-term, it is a good opportunity to invest in order to boost savings. If you are looking at a 10-year time frame, stocks could be a good option for you, Vassel writes. If you think you’ll buy a house in five to seven years, consider investing in bonds: 50 percent in longer-term bond funds or individual bonds and 40 percent in short-term bonds that mature in one to three years, plus 10 percent in cash. Finally, try higher-interest CDs if you are still two to four years from buying a home.

Research Home-Buying Programs
One of the first steps toward saving for a mortgage is setting a goal. A general rule of thumb for the down payment is 20 percent of the home’s selling price, but many available government programs also offer lower down payments, down payment loans or grants, or housing discounts. For lower down payments, look into GSE loans or loans through the FHA, VA or USDA.

Whether you choose one of these savings methods or all of them, they will help you come up with the down payment for the home you’ve always wanted.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The Power of Compound Interest

Why it really pays to invest early in a retirement account
Money in a savingsjanuaryfeatured_compoundinterest or retirement account grows over time as it earns interest. But the interest rate isn’t the only factor that determines how much it grows; compounding interest helps your funds grow faster because it lets you earn interest on the money you deposit plus previously earned interest.

Compounding interest gives young investors great power to save for retirement, even if they don’t currently have much to save.

People in their 20s and 30s who are working to build their careers are often tempted to put off investing in retirement for a time when they are more established financially. By doing so, however, they miss out on the big advantage they have over older, wealthier savers: time.

“If you invested $10,000 in a mutual fund and the fund earned a 7% return for the year, you’d gain $700,” according to NerdWallet. “Over the years, that money can really add up: If you kept that money in a retirement account over 30 years and earned that average 7% return, for example, your $10,000 would grow to more than $76,000.”

To test out the power of compound interest for yourself, try the Compound Interest Calculator from NerdWallet. It can show you exactly how far your money could go if you started saving today. Just plug in hypothetical savings amounts at https://www.nerdwallet.com/banking/calculator/compound-interest-calculator.

The earlier you start investing, the more time your money has to compound, and when you do the calculations, it becomes clear that saving a little bit of each paycheck today can add up to a much bigger sum at age 65 than if you wait a few decades to start saving, even if you can afford to save more each month when you’re older. The bottom line is that to truly take advantage of the power of compound interest, you need to start saving as early as possible, and the advantage you gain by doing so cannot be overstated.

Business Insider calculated how much you would need to save each month to reach $1 million by age 65 at a 6 percent return rate, and the results are astounding. If you start saving at age 20, you only need to invest $361.04 each month, while starting at age 30makes the required monthly savings nearly double to $698.41. If you wait until you are 50, you need to put away $3,421.46 each month to end up with the same amount at age 65.

You can see a chart that illustrates the calculated monthly savings required for each age group at http://www.businessinsider.com/compound-interest-monthly-investment-2014-3/#.U6xcEI1dWVh.

“When you start saving outweighs how much you save,” says Business Insider contributor Libby Kane. “Retirement accounts such as 401(k)s and Roth IRAs aren’t just savings accounts-they’re actively invested, and therefore have the potential to make the most of this benefit.”

If you’ve been inspired by the mathematical magic of compound interest, harness that motivation by talking to your financial institution about opening up a retirement account or by committing to making regular contributions to your existing savings and retirement accounts.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.