A budget acts as the scaffold that all other financial decisions can be built upon. A sound budget realistically allocates the amount of money coming in and going out. Assess your debts, savings and retirement obligations and incorporate them into your budget.
Going hand-in-hand with budgeting, saving money is critical. Generally, you should try to dedicate 20 percent of your income to savings and paying off debts. If you do not have enough money saved to cover all of your expenses for six months—commonly referred to as an emergency fund—consider making this your savings priority.
Considered to be revolving debt, credit cards are a great way to build your credit worthiness with lenders. When you use cards carefully and pay them off in full each month, they can be a great benefit. Also, they are convenient for travel and for emergencies. Remember, it’s important to shop around for the best interest rates and added benefits—like rewards programs.
For most Americans, a home mortgage is the largest financial investment they will make in their entire lives. Rather than spending money on rent each month, an individual can build up equity in a property to help protect their financial future. To ensure that lenders will find that you are a worthy borrower so you can secure the best mortgage loan interest rate available, properly use credit cards, save money and stick to your budget.
Again, if you maintain a strong credit score, you should qualify for an auto loan with a lower interest rate. That will translate into lower monthly payments and greater financing flexibility. It is important to shop for the best loan, just as with a mortgage loan. Credit unions usually offer auto loans with the best terms.
Saving for retirement is one of the most neglected aspects of financial plans. Nearly half of all Americans don’t have a retirement savings account. The earlier you begin saving, the less of your income you need to put away because your savings/investments will have a longer time to grow. Many companies match a percentage of their employees’ 401(k) contribution—this is free money—take advantage of it.
Mountain America is committed to helping individuals and families learn the basics of budgeting, saving and spending wisely so they are on track financially, are motivated to take action and live a balanced life.
For more in-depth information on a broad array of financial topics, go to the Financial Tools section of Mountain America’s website located at www.macu.com. We offer financial calculators and a broad array of financial education modules (e.g., budgeting, saving, credit, home ownership, money management, the basics of investing and more).
Loans subject to credit approval. Membership required—based on eligibility. Federally insured by NCUA.
This article is sponsored by Mountain America Credit Union.