Resources to Get Started on the Path of Financial Awareness
If you’re not confident in your ability to manage your finances, you’re not alone. According to a report by the Financial Health Network’s Financial Health Pulse Report release in November, 2019, 54% of Americans are struggling with some aspect of their financial lives. And this was before the COVID19 pandemic. The journey to achieving control of personal finances is a lifelong pursuit. If you’re just beginning, here are some helpful steps:
- Check your account balances
- You may not know how much money you have in your checking and savings accounts. Also, look at your balances for any loans, credit cards or retirement accounts you may have. This will help you gain a full picture of your financial health.
- Are you a SDCCU member? Log in to check your account balances
- Set up a budget
- Automate saving
- It’s hard to save. It’s hard to delay gratification. That’s why whenever possible, take yourself out of the equation. You can set up your accounts to automatically move a certain amount of money from your checking account into a savings account. Also, if available, you can set up automatic contributions to your retirement account from each paycheck.
- Know your credit score
- Your credit score is an important number. It can affect your ability to rent an apartment, get a loan or even get a job. According to Investopedia, your credit score is based on your credit history. That includes the number of accounts open, amount of debt and repayment history.
- SDCCU members with an open loan can view their FICO Score® in Internet Branch online banking.
Optimizing your Finances
Once you have a basic understanding of your financial situation and where you stand, it is time to make the next step. Optimizing your finances helps you improve your current situation and puts you on the path to financial stability.
- Debt Repayment
- Debt is something that can make or break you. This is the time to work on minimizing your debt and working towards being debt free. Gather all your debts and look at the interest rate and terms. Is it possible to refinance to a lower rate or pay off more than your monthly payments? Both options could save you a lot of money over time. Learn more about debt with our 5 helpful tips for getting out of debt blog post.
- Retirement Savings
- This may be something that does not seem like a necessity, but it is the biggest savings you will need. If you don’t start right now, you may not have enough to retire. Compounding interest is your friend and the only way it can truly work is with time. This means that if you don’t save enough, the end of 9-5 is never going to be near and you may be working well into your late 60s and beyond. Work your way up to saving 10% of your pre-tax salary for retirement (including any company match). It isn’t easy so start small and push yourself to make this goal.
- Credit Card rewards
- There are many benefits to using a credit card and understanding which offer the best benefits for your specific situation. Learn 4 Benefits of Using a Credit Card vs. Debit Card.
- Auto Loans
- Understanding auto loans is a sure way to minimize your loss. Be sure to save for a down payment, up your credit score before buying and know exactly what you can afford. Once you are ready to buy figure out the best time with our When Should I Buy a Car? 6 Timing Factors to Consider blog post.
- Home Loans
- Home loans and auto loans are two very different loans. A home can help you build equity and more often come out with more money than you put in. Steps to Homeownership: 5 Things to do Before Buying a House.
Congratulations on taking your financial wellbeing to the next level. Now that you understand where you are financially and how to optimize your finances, you can start advancing on your financial position.
- Once you have a budget, emergency fund and started saving for retirement, try investing your money. This can be in the stock market or through real estate. Create passive income and let money work for you. Investing money can be scary if you don’t know where to begin so start small and test the waters. Once you get the hang of it, you may wonder why you never did it before. Get help from one of our Financial Advisors.
- Creating multiple sources of income
- Many successful people mention that they can live the way they do because they have created multiple sources of income. The best source is one that can make you passive income which is money earned on something that requires little effort.
Find out about emergency resources San Diego has to offer at 211 San Diego.
Learn more about Protecting your Finances during Uncertain Times and Buying a Home in San Diego during the COVID-19 Pandemic in our other blog posts.
Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.