A new featured article from George Chamberlin's national newsletter, Investing For Rookies, will be posted each month.

Featured Article for January 2012: 10 Tips for 2012
By: George Chamberlin

Tough economic times have taken a toll on many Americans over the last couple of years. But making sound financial decisions and saving for the future can help you weather financial storms. The start of a new year is a great time to take stock of your finances, so the FINRA Investor Education Foundation has put together these 10 practical tips that can help keep your finances on course in 2012.

1. Start a Rainy Day Fund. Set aside at least one month of your current salary (and work your way up to three months) in a federally insured savings account. This will give you a cushion to handle medical bills, a short job loss, a surprise car repair or other financial emergency—and help keep your finances under control.
   
2. Handle Credit Cards With Care. Keep your credit card spending in check and try to pay your credit cards in full. If you have accumulated holiday debt, pay it off as quickly as possible. If you cannot pay your whole monthly bill, at least pay more than the minimum due. Every dollar you pay above the minimum payment can reduce the amount of interest you will pay. Getting a handle on monthly bills and expenses can help keep you from overusing credit cards. 
   
3. Check Your Credit Report and Score. Good credit and financial fitness go hand in hand. Start the new year by requesting a copy of your free credit report. Call (877) 322-8228 or visit AnnualCreditReport.com. Check to be sure your credit history is accurate and correct any discrepancies immediately. You can also request your score from the site. There will likely be a fee to obtain your score—but it’s an important number to know, since it’s what lenders use to help them decide not only whether you get a mortgage, a credit card or some other line of credit but also the interest rate you are charged for this credit.
   
4. Don’t Leave Money on the Table: Contribute to Your 401(k). Too many workers leave free money on the table by not contributing enough to their 401(k) to receive their full employer match. According to a recent study, nearly 3 in 10 workers (29.4 percent)—and 43 percent of workers age 20 – 29—fail to contribute to the full extent of their employer's match. Here’s another way of looking at it—taking full advantage of the match literally doubles your savings, even assuming no increase in the value of your investments.
   
5. Avoid Payday Loans and Other Money Drains. During difficult economic conditions, some Americans might be more tempted to use alternative forms of borrowing, including auto title or payday loans, advances on tax refunds, pawn shops or rent-to-own plans. Steer clear, since these borrowing methods are likely to levy higher interest rates than those charged by banks, credit unions or credit card companies and can drain away your money.
   
6. Don’t Overdraw Your Checking Account or Debit Card. Making ends meet during an economic downturn can put a strain on family budgets. While overdraft protection may seem like a helpful feature on a checking account or debit card, overdraft fees can add up. To avoid that expense, balance your checkbook regularly and check your overdraft protection options.
   
7. Do a Background Check on Your Financial Professional. Far too few investors have reported checking the background of their investment professional with a state or federal regulator. Investing a few minutes of your time to take this free and easy step could save you time, money and other trouble down the road. FINRA BrokerCheck®, finra.org, is a free tool that allows investors to check the professional background of brokerage firms and individual brokers.
8. Keep Your Insurance Coverage Current. The start of a new year is a good time to assess whether your insurance coverage aligns with your needs. You want to make sure that recent life changes have not left you under- or over-insured. If your children have left the home and you have paid off your house, you might need less life insurance than someone who is financially responsible for others, or has a mortgage.
   
9. Diversify Your Investments. Volatile markets can make investing a challenge, but spreading your investments both among different asset classes—meaning stocks, bonds and cash—and within each asset class can reduce your risk.
   
10. Save for College Using Tax-Advantaged Accounts. If you have children, save for college using tax-advantaged savings accounts such as a 529 plan or Coverdell Education Savings Account. The FINRA Foundation’s state-by-state survey found that less than one-third (only 31 percent) of respondents with financially dependent children have money set aside for college. Of those who are saving for college, less than one-third reported having used a tax-advantaged savings account. The earlier you start—the more financially prepared you will be to cover the rising costs of higher education.

Quick Tip
SDCCU® offers investments and education accounts through LPL Financial located at San Diego County Credit Union¹.

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¹Securities and Insurance products offered through LPL Financial and its affiliates, member FINRA/SIPC. San Diego County Credit Union is not a registered broker/dealer, nor are they affiliated with LPL Financial.

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