Financial Checklist You Don’t Want to Neglect
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We are always curious about how people learn about financial concepts. In high school they sometimes explain how to write a check or what a mortgage is, but many become adults without getting a real grasp on the different financial opportunities available to them or the challenges they may face. We asked our Facebook followers about it and here is what they said:
Without a good foundation, it can quickly leave you living paycheck to paycheck as you struggle to learn how to budget and save for what’s most important.
So, how do you get away from that month to month struggle? First, know your priorities and possibilities. Especially if you have, or are planning to have a family, some of the things on this list become even more important. If you’re stuck in this cycle, we also recommend that you read this article about taking back control of your money.
As your local credit union, we love being a trusted resource for our members. Our goal is to help you live a healthy financial life. Start exploring the things on this checklist to see what’s feasible now and what you can work toward. And, if you have any questions just stop by or give us a call: (800)795-2555
Here’s our checklist of financial items you don’t want to neglect:
Don’t Leave Money on the Table:
Too many decide to postpone starting their retirement fund until they have more expendable income. But, if your employer is willing to match a portion of your contribution, make sure you’re not neglecting this part of your income.
According to this study, 1 in 4 Americans left money on the table and didn’t save enough in their retirement to match their employer’s contribution. That means on average, $1,336 per employee was never received each year. “Over 1 million employees in our study sample left more employer matching contributions unclaimed ($1.4 billion) than claimed ($1 billion).”
Start looking at that match as a part of your annual income. Even if you’re only able to put in a small portion, a start is better than nothing. And, if your employer doesn’t have a retirement plan, but you’re wanting to start one, talk with us about our IRA options. This can serve as a secondary retirement investment as well.
Emergencies Will Happen, Be Prepared
We wish we could tell you that emergency expenses will never come up. That sickness, an unexpected move, a surprise car breakdown or job loss will never impact your family.
But, we can’t. Emergencies will happen and we want to help you prepare.
If you don’t have an emergency savings account, this should be the first thing you plan for in the new year. Challenge yourself to squirrel away as much as you can for an entire month. It’s recommended to at least have $1,000 set aside strictly for emergency situations. And, something that’s also important is to set up parameters as to what this money can be used for. Does the dishwasher going out fit under your emergency parameters? Or, do you need to save up for a new dishwasher so you can keep your emergency fund for when the car breaks down? Or, will you decide the emergency fund is only to be used if you or your spouse is out of work?
Decide on this now as you’re building your emergency fund. This helps you protect your savings so you know it’s only being used for what your family constitutes an emergency.
Protect Your Family’s Future, Even If You’re Not There
Life Insurance gives you peace of mind that your family will be taken care of if something were to happen to you. It can help cover medical expenses, debt, funeral costs and even just regular bills to allow your spouse time to grieve before worrying about their long term finances.
You might think that as long as you have enough in the bank to cover your spouse’s funeral costs, then if they unexpectedly pass away you will be fine financially. But, there is so much more to think through than that one large expense. Many families dealing with loss are also burdened with becoming the sole provider. Less income coming in, but with the same bills to pay, as well as potential medical costs to handle now too.
Life insurance comes in two forms, term and whole life. Term only lasts for a certain number of years, but many young, on-a-budget families find this to be the best option for them financially. Whole Life Insurance stays with you for your entire life. It’s generally a higher cost but once it is paid off, its benefits never decrease or expire.
Pay Down Debt Before It Keeps You From the Life You Want
While you’re building your emergency savings account, you’ll also want to continue paying down any debt that you have. This may mean you need to consolidate loans or credit cards. Explore your options to see where you can get the best interest rate and build a plan for when each will be paid off and how.
Though there are many different ways to pay down your debt, the most popular is Dave Ramsey’s debt snowball. This is where you pay down your smallest debt first, then you use that payment and add it to your next smallest debt’s payment. It can be so easy to feel defeated under the weight of debt. This plan helps you keep momentum as you pay down your loans and credit cards.
We love seeing our members pay down debt and regain full control of all their income. It’s a great feeling and we believe you can do it!
Max Out Your HSA Plan
If your insurance plan offers an HSA account, then you don’t want to neglect putting money into it. This is pre-taxed money that you can put away to be used on prescriptions, medical emergencies, procedures or checkups.
If you’re able, we recommend always maxing out your HSA account since there is a limit on contributions. In 2020, individuals can put in $3,550 and families can put it $7,100 a year.
Plus, if your HSA plan is solely yours, then it continues to accumulate. If you don’t use it all, one day you could even roll it into an IRA as a part of your retirement investments. Ask your insurance provider and employer if you’re allowed to choose your HSA account location. Signet offers HSA accounts and debit cards specifically for this type of account.
Don’t Let Christmas Set You Back Year after Year
Every year the travel, food and presents quickly add up over the holiday season. So, think about this scenario. Would you rather be in debt for 3-6 months at the start of every year, paying interest on money already spent? Or, would you rather save for 3-6 months, making interest that can then become your Christmas savings?
Hopefully you like the sound of the second option.
In 2018, 44% of holiday shoppers acquired more than $1,000 in holiday debt! So, instead of paying interest and worrying over paying for this debt in the new year, start saving now. If you save $100 a month for 10 months, you’ll have a very nice Christmas budget saved with no need for acquiring more debt.
The easiest way to do this is to actually set up a Christmas Savings Account with Signet. Money will automatically withdraw and be put into a special account that can’t be touched until mid-October, just in time for holiday shopping season. Learn more about how to sign up here.
Seek Financial Guidance Before It’s a Last Resort
It’s not uncommon for you to handle your finances like your parents did. You watched them for years and now probably still seek their advice occasionally when you face larger financial decisions. If your parents are financially savvy, then this can be a good thing. But, if those you’re seeking advice from don’t have a good financial record, you may need to look for advice elsewhere.
Don’t wait until you’re struggling to ask for guidance. Set up a meeting with a financial advisor, or even ask your local credit union for guidance as you work to understand your finances. It’s important to be proactive with your money. So, ask your questions early.
Want to buy a house in 2 years? Start asking for advice on what you need to do to prepare.
Want to expand your family? Start asking questions now so you can prepare for the costs that come with a new addition like hospital stays, formula/diapers/supplies and time off work.
Do you want to retire at 65? Then it’s important to ask how you realistically reach that goal.
Find a reliable source to ask these kinds of questions and start building the financial lifestyle you want.
No matter your financial question, start by asking your local Signet branch. We may not be able to answer all of your questions, but we’re trained to help you get on the right path for financial success. So, whether you’re just starting out or have questions as you near retirement, know that your credit union is here to serve you. Give us a call or stop by!