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Five ways to celebrate National Financial Awareness Day
August 14th is National Financial Awareness day—a day dedicated to preparing for your financial future and building financial stability. It’s crucial to take the time to review your finances—sound monetary decisions can make a significant impact in the long run. Today, try to complete one of the items below so you can take control of your finances.
Check your savings
Take a look at your savings account—in the event of an emergency, do you have enough funds to get you through? If not, use today to set goals to ensure you’re saving for the future. Calculate your monthly expenses and develop a plan of action to ensure you have the recommended three to six months’ worth of savings.
Reevaluate your budget
Have you found yourself not sticking to your budget lately? Take the time to reevaluate your spending and make changes where you see fit. Periodically reviewing your budget is a crucial step that is overlooked. Make it a habit to frequently assess your budget and see what should be adjusted.
Brush up on your financial literacy
Financial literacy is key to being confident in the monetary decisions you make, and it can be easy to forget the basics. Take the time today to brush up on your financial literacy. There are dozens of free tools to help, like ACHIEVE, a free financial literacy program from Georgia’s Own. ACHIEVE offers various topics and videos on essentials like owning a home, financial caregiving, planning for retirement, and more.
Take steps to improve your credit
Your credit score is a critical representation of your financial past, present, and future. You need good credit for just about anything, like owning a home, applying for an auto loan, or applying for a credit card—your credit score can even determine the price of your auto insurance. Look at your credit score and see where you can improve. If you don’t know your score, visit the federally authorized site annualcreditreport.com to receive a free copy of your credit report.
Get a head start on taxes
It’s never too early to get a head start on taxes. Begin gathering necessary documents, like receipts, expense records, and donations, then put them in an organized folder, so you have them prepared for when you’re ready to file. Preparing paperwork beforehand will save you time—and sanity—when tax season begins. If you want to take it a step further, you can even organize your tax records from the past few years, so you have those prepared if the IRS ever needs to conduct an audit.
We hope these tips help you take control over your financial future. And, as always, Georgia’s Own is available to help—click here to find more resources to help you make smart monetary decisions.
How to start an emergency fund
As the coronavirus pandemic continues, people have recognized the value of having an emergency fund. People have lost their jobs, faced unexpected hospital visits, and more, leaving some struggling to pay bills. Regardless, it’s still crucial to have funds saved in the event of unforeseen circumstances—26% of Americans have no emergency savings, and only 23% have enough to cover six months’ worth of expenses. Follow these tips to help you get started on your emergency fund, so you’re better prepared for the future.
Track your expenses and spending
Before planning how much you should have in your emergency savings, it’s essential to know your monthly expenses. Calculate how much you spend on your rent or mortgage, utilities, and other necessary items. Tracking your spending is tedious, but there are dozens of budgeting apps, like EveryDollar and Wally, to help you estimate your regular spending.
Set your emergency savings goal
After you’ve gauged how much you spend per month, set your goal of how much you want to save. According to CNBC, less than 30% of households have less than $1,000 saved. That isn’t nearly enough to cover costs in the event of a setback, like a trip to the hospital or unemployment. It’s recommended to have at least three to six months’ worth of expenses saved.
Develop a plan
Once you set your savings goal, it’s time to form a plan of action. Decide what you’re going to do to reach your goal—that could be anything from setting aside a certain amount of money each week to cutting back on unnecessary spending. You can set goals all day, but it’s crucial to know exactly how you’ll reach them—otherwise, it’s easy to fall off track.
Put funds in an accessible place
How you save is extremely important, but where you save is just as critical—if not more. To make the most of your money, put your funds into a high-yield savings account that allows you to easily make transfers between accounts. High-yield savings accounts have higher interest rates than traditional savings accounts—sometimes 20 to 25 times more. While you earn more money in the long run, it’s important to consider factors such as initial deposit or minimum balance requirements and interest rates.
Now that you’ve set your financial goals, how you’ll achieve them, and where you’re going to put your funds, it’s time to start saving. One way to help increase your savings is by setting up automatic transfers—you can set an amount to transfer to your savings each week, every two weeks, or each month. Even if it’s only $50, you’ll be surprised at how quickly your savings will grow. Another great way to increase your savings is by setting aside your tax refund. You can set aside all of it or even just a portion—either way, any amount will help get you that much closer to your goal.
Consider what constitutes an emergency
Now that you’ve started to set funds aside, it’s imperative to decide what constitutes an emergency, so you’re only using your emergency fund for its intended use. This could be unexpected hospital visits, car repairs, job loss, or other unanticipated situations. Defining what you consider an emergency is important so you know your emergency fund is used properly, rather than being spent on frivolous things. Remember, it’s not fun money—it’s money you’re setting aside so you know you and your family will be okay should something happen in the future.
Visit our website to get started on your emergency fund today.
15 ways to save at the grocery store
It’s natural to waltz down grocery store aisles and add everything you see to your shopping cart. Strategically placed products catch your eye and make you think you need them immediately. Overspending at the grocery store is a habit that’s difficult to break—but, it can be done. Here are 15 ways you can save during your next trip to the supermarket:
Check your pantry
Before you head to the store, check to see what you already have. There are websites and apps, like Supercook or Cookpad, that allow you to find recipes based on ingredients. Depending on what’s in your pantry or fridge, you could make meals with what you have and avoid going to the grocery store altogether.
Make a grocery list
Compile a list to be sure you’re purchasing the essentials, and stick with it. Don’t stray from your list—you’ll spend more money than you intended.
While you’re determining your list, create a grocery store comparison chart. Pick your essential items, choose your stores, obtain the prices, and compare. It’s an invaluable tool that will ultimately save you money.
This seems obvious, but using coupons can help tremendously. There are dozens of websites, like coupons.com, that have free, printable coupons. Also, be sure to read your local store’s circular—it promotes items that are on sale. In addition to circulars, look for digital coupons that are store-specific.
Don’t shop hungry
The golden rule of grocery shopping: don’t shop hungry. According to Psychology Today, when you’re hungry, you overload your shopping cart with items you don’t need. Your brain focuses on finding its next food source, so you grab everything appealing within sight. To combat this, be sure you’ve eaten before you go. You’ll avoid the temptation of grabbing unnecessary items, and your wallet will thank you.
Leave the big spenders at home
Whether it’s your kids or your spouse, there’s always someone adding more than you need to your cart. It’s not always easy to say no, so avoid the situation entirely by leaving your big spenders at home, if you can.
Keep a running tally of your cart’s cost
Steer clear of the dreaded, “I spent how much?!” when you make it through the check-out line. As you add items to your cart, keep track of the running cost. It doesn’t need to be exact—just a rough estimate.
Avoid eye-level items
It may be easier to grab the first option you see, but scanning the shelves is critical. Stores use the motto “eye level is buy level” for a reason. We look at items that are eye level, so that’s where grocery stores place the most expensive items. Look for cheaper items on higher and lower shelves.
Don’t purchase pre-cut food
It’s often simpler to purchase ready-to-eat salad and fruit, but that’ll cost you more in the long run. You won’t receive as much, either, and pre-cut food doesn’t stay fresh for long. Trust me—just buy the head of lettuce and make your salad. It’ll take less than ten minutes, and you’ll save money.
Ask for a rain check
Did someone get too greedy during the BOGO sale? You can ask your store for a rain check on items that sold out during a promotion. If your grocer allows it, you can snag the item once the store restocks.
Don’t always buy in bulk
It appears cheaper, but buying in bulk isn’t always the best choice. Sometimes, depending on the unit price, it can wind up being more expensive. If you’re debating whether you should purchase items in bulk, it’s crucial to check the unit prices and compare them to see if you’re saving or spending more.
Try generic brands
Don’t be afraid to try the store brand. It’s often just as good as the national brand but a fraction of the cost. If you don’t like it, most grocery stores will allow you to return it and get your money back or swap for the national brand.
Shop in season
If you’re purchasing produce, be sure to buy items that are in season. Not only is it fresher and tastier, but it also costs less. It’s all about supply and demand. When produce is in season, there is an abundance—therefore, it costs less per pound. Compare that with something out of season—there is less of the product in-store, so it’s more expensive.
Pay with cash
When budgeting, cash is king. Paying for items with cash allows you to set a budget and stick with it—once your cash for an item runs out, that’s it. Finance expert Dave Ramsey swears by this method. Bring enough money to cover your groceries for one trip. If your total runs over, take items in your cart out. It’s hard but better than ruining your monthly budget.
Changing how you grocery shop can have a notable impact on your financial well-being. By shopping sensibly, you can stick to your monthly budget, as well as reach other money-related goals you may have. Try one, or some, of these tactics next time you’re at the grocery store—you’ll be amazed at how much you save!
Does a balance transfer affect your credit score?
Balance transfers are an excellent way to consolidate your debt and pay it off as quickly as possible. But, it does have positive and negative impacts on your credit score. Despite some minor negative impacts, balance transfers can immensely transform your credit score. Here’s how:
How does a balance transfer negatively affect your credit score?
A balance transfer can cause a dip in your credit score in the short run. When you apply for a balance transfer, lenders conduct a hard inquiry to determine if you’re a capable borrower. Hard inquiries remain on your credit report for about two years. Several hard inquiries show you’re seeking credit from too many sources, which could indicate you may not be a reliable borrower. This differs from a soft inquiry, which is when you check your credit or a lender is trying to pre-approve you. Soft inquiries do not affect your credit score.
Balance transfers can also lower your credit score by reducing the average age of your accounts. If you have three cards with an average account age of 48 months, and you decide to open a balance transfer card as your fourth, the average age of your accounts would lower, which could drop your score.
This has a minimal impact on your credit score, but it’s still critical to be aware of. It’s imperative to keep old, unused accounts open to maximize the average age of your accounts. But, if an old account has a high annual fee that you can’t afford, then it might be in your best interest to close it—weigh the pros and cons before closing the account.
How does a balance transfer positively affect your credit score?
Despite some hindrances, a balance transfer can considerably raise your credit score. Balance transfers reduce your credit utilization rate, which is the percentage of available credit that you’re using.
Low rates show that you’re not accumulating debt. Ideally, you want your credit utilization rate to be below 30%. For example, if you have multiple credit accounts and move the balances to a single account, your credit utilization rate shows as 0% on the old accounts. It’s crucial to take advantage of the 0% APR period so you can pay off your debt as soon as possible. This will then decrease your credit utilization rate over time.
Your credit utilization rate accounts for 30% of your FICO® Score, which is the score most used by lenders.
What should I do after I apply for a balance transfer?
After you’ve applied for a balance transfer, avoid applying for more credit. Limit the number of hard inquiries on your credit report as much as you can, and only apply for loans unless they’re necessary.
Don’t make purchases with your balance transfer card. The sole purpose of your card is to pay off debt, not accumulate more. When you add to that debt, it makes paying your balance during the 0% APR period more challenging. Create a budget to cut out unnecessary expenses and avoid accruing more debt.
Lastly, set up auto payments to ensure you’re paying your credit card bill on time each month. This boosts your credit even more—payment history accounts for a large portion of your FICO® Score. Choose a specific amount to transfer from your checking account to pay your bill. It should be enough to pay off your card within your 0% APR period.
Balance transfers can do wonders for your credit score, despite some drawbacks. When you use a balance transfer card responsibly, your credit score can grow in the long run. Check your spending habits, stick with your budget, and you’ll be debt-free in no time with a credit score on the rise.
If you’re ready get your finances in order, try a balance transfer.
6 tips to save for your future home
So, you’ve decided you want to buy your first home. It’s an exciting time, but there are various things to consider—the most significant being a down payment. Standard down payments are approximately 20% of a home’s cost. If you’re purchasing a $200,000 home, your down payment could cost upwards of $40,000—that’s a considerable amount of money! It seems daunting to think about saving that much money, but it can be accomplished—here are some tips to help you start saving towards your first home purchase.
Determine a goal
If you haven’t already, determine how much you need to save. Set a definite goal and time frame, that way you have a tangible end within your reach. Then, set a monthly budget so you aren’t overspending and can accumulate as much money as possible. An essential thing to consider is ensuring you are debt-free—focus on paying off your debts before you acquire more. It’ll save you more stress in the long run if you pay off that student loan or credit card before making a big purchase like this.
If you already have a savings account, then great. However, there are more options than a traditional savings account that will help immensely when saving for a down payment. Look into a high-yield savings account or money market account. You’ll earn more interest than you would with a traditional savings account—the longer your money sits in the account, the more interest you earn, which ultimately puts you closer to attaining your goal of owning a home.
You can also consider a Certificate of Deposit, otherwise known as a CD. CDs enable you to set money aside for a predetermined time, so you earn a set amount of interest. There is less flexibility and liquidity, but this is ideal if you have a particular time frame where you want to meet your goal. However, it’s crucial to note that you could be subject to a fee if you prematurely withdraw funds.
Cut out unnecessary expenses
When you’re preparing your budget, look at where you spend the most amount of money. If it’s unnecessary, cut it out. Things like going out to dinner or buying coffee start to add up—if you spend $5 per day on coffee, that totals up to $25 per week. It doesn’t sound horrible, but if you proceed to do that weekly, it costs $1,300 per year. Shocking, right? Imagine how much closer you’d be to your down payment if you simply brewed that coffee at home.
Pause saving for retirement
Odds are, you’ve probably begun saving for retirement. It may seem strange not setting money towards your 401(k) at first, but just remember, it puts you that much closer towards your goal of owning a home. If that idea scares you, just remember—it’s only temporary. You can start putting money towards your retirement again once you’ve purchased your home. However, despite what some websites may say, absolutely do not withdraw from your retirement account. You could be slapped with penalties and taxes for withdrawing early.
Set aside your bonus
Got a bonus or tax refund? Be responsible: put it into your savings—you’ll be thankful you did when you’re relaxing in your cozy breakfast nook, sipping on a hot cup of home-brewed coffee. As tempting as it is to solely use your refund on a new wardrobe or a fancy dinner, every dollar counts when you’re saving for a home.
I can assure you, things are lying throughout your apartment and collecting dust. Scour and gather everything you’re not using, and sell them. Or, ditch the summer vacation. According to Business Insider, people fork over nearly $2,000 annually on summer vacations. I know—vacations are sometimes necessary, but foregoing your family trip this year will catapult you towards attaining your goal. Do you like animals? Start offering to pet sit or walk your neighbors’ dogs. Or, you could begin driving for a rideshare service or food delivery. Take that extra cash you earn and immediately put in your savings. You won’t miss it—I promise.
If you’ve done all of these but still need some backing, many credit unions offer down payment assistance programs for first-time home buyers. These programs help with home financing, loans for first-time buyers, and more. There are also various federal and state programs that offer similar support. However, it’s critical to keep in mind that you’ll pay more interest with a lower down payment.
Saving up for a home seems intimidating, and with such a large amount of money, it’s hard to imagine ever being able to save that much. These pointers will aid you in reaching your goal, so you can finally fulfill your aspiration of owning a home.
Have questions about buying your first home? We’re here to help!
5 Checking Account Mistakes You Don’t Want to Make
For most people, their checking account is the heart of their personal finances. It’s where they deposit their paycheck, how they pay their monthly bills, and where they go to withdraw cash for the weekend. And, since their monthly statement details every financial move, it’s an efficient and easy way to keep track of spending and saving.
Although most checking account activity is processed electronically, it’s critical not to employ the out of sight, out of mind mentality. Check out these common checking account mistakes and how to avoid them:
1. You’re loyal to a fault
According to a survey conducted by Bankrate and MONEY, the average adult has had the same primary checking account for about 16 years. Why so long? People stay for convenience and quality customer service, which are important. But what about making sure they’re getting a good deal?
If you’ve been loyal to the same bank since you were a tween or a teen, it’s time to do a little comparison shopping. Checking accounts come in all shapes and sizes, and they’re all not created equal.
They have different features, expenses, and rates of return. In today’s competitive market, many financial institutions are wooing consumers with lower fees, more conveniences, and quality services, all of which are important to consider. Sticking with the same bank out of loyalty sounds honorable, but it doesn’t do much for your account balance.
2. You disregard the minimum balance rule
Many banks or credit unions offer no-fee checking accounts–as long as you maintain a minimum balance. Others require you to use your debit card a specific number of times per month or receive direct deposits into your account. Heck, sometimes you might even earn a tiny bit of interest. But, if you don’t comply with the requirements, BOOM! Your no-fee just jumped to high-fee and you’re out more than a few hard-earned bucks.
These checking accounts can be a smart choice for some consumers, but it’s critical that you keep track of your activity and always meet the requirements. We’re all not detail people, so if that’s too much for you to manage, move to another option. There’s nothing worse than watching your money fly out the window every single month, especially when you can avoid it.
3. You maintain a higher than necessary balance
First it’s not enough money, now it’s too much? Yep, the art of managing your money is all about striking the optimum balance.
Not all checking accounts are interest-bearing, but if they are, they traditionally offer the lowest rates. As such, you should keep enough money in your account to pay your monthly bills and cover your spending, plus a little more that can serve as a buffer. Put the rest in a higher-yielding savings account so you maximize your interest earnings.
Be sure to monitor your balance, and if you’re running low, initiate a transfer. Because most banking is done online, it’s quick and easy to move funds from your savings account to your checking account when needed.
4. You use any nearby ATM
Regardless of which banking institution you use, there are ways to avoid the notorious ATM fees. Some have large networks so an ATM is always nearby. Use your bank’s app to locate other branches or free ATMs so you don’t incur the most dreaded of all account fees. If you’re using an online bank, they’ll likely have a smaller network of ATMs, but many will offer a monthly ATM fee refund.
Using an out of network ATM should be your last resort. You’ll be charged twice—once from each bank. And, with ATM fees at a record high, it could easily cost you between $5 and $10. That’s especially painful when you’re only withdrawing a few bucks at a time.
When you’re in a pinch, you might want to be a little more creative and avoid the ATMs altogether. You can pay for your purchase with your debit card and choose the cash back option, withdraw cash less frequently, but in higher amounts, or even arrange for a friend to pay and use a money-sending app like Venmo to repay them.
5. You don’t fully understand the checking account overdraft protection plan
In 2017, Americans paid more than $34 million in overdraft fees. Today’s average overdraft fee is more than $33 per transaction, and it’s on the rise.
While an overdraft protection plan can be a benefit, it can also be a detriment. Without it, any charge or check that would cause your account balance to fall below $0 would be declined or returned. If you’re enrolled in the plan, you’re home free, right? If you’ve mistakenly swiped your debit card for more than what’s in your account, you’ll be covered and you can breathe a sigh of relief. Until, of course, you see the overdraft fee—or maybe it’s fees.
Once the first transaction crosses the $0 threshold, every transaction that follows also incurs an overdraft fee. It’s especially unfortunate when a large charge hits your account before three smaller transactions, for example. In that case, you would incur four overdraft penalties at roughly $33 each. If the three smaller transactions hit first, you would only incur one fee.
Overdraft protection will help you avoid returned check fees and maybe a little embarrassment when your card is declined, but you can rack up some hefty fees pretty quickly. If you opt for this feature, be sure to read the fine print. Some banks will offer you a grace period that allows you time to make a deposit and avoid the fees, but others may not. Be sure you thoroughly understand the overdraft plan feature before you decide whether or not to opt-in. Otherwise, it could be a costly mistake.