Five Savings Tips for a Better Future
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Pay yourself first: Remember that savings and investments grow over time. Pay yourself small regular sums of money from your income. Visit www.americasaves.org for saving strategies.
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Don’t touch your savings: If you’re constantly dipping into funds and taking a few dollars for the movies or to pay your phone bill, it’s going to take you a lot longer to save up for you bigger goals. Checkout www.feedthepig.org for tips on finding and fixing those spending leaks.
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Take advantage of retirement plans: Many employers offer 401(k) plans which can help you kick off your savings. Learn more at https://www.dol.gov/agencies/ebsa/key-topics/retirement
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Open an Individual Retirement Account (IRA): Even if your employer does not have a retirement plan, you can start your own! An IRA is an account that you set up with either a bank or another financial institution. The earlier you start, the more your savings will add up over time. See how much you need to save at: https://www.bankrate.com/calculators/retirement/retirement-plan-calculator.aspx
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Learn about other investment opportunities: Whether you want to invest in stocks or an Index Fund, long-term investments can really payoff. Find out how to get started at https://www.in.gov/sos/indianamoneywise/4134.htm
Creating a Monthly Budget
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Determine your take home income by looking at your paycheck. Your net income is the amount of money that you make monthly minus the amount you pay in taxes. Don’t forget to include any income outside your paycheck, like scholarships or alimony.
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Determine your fixed expenses like rent, savings, or insurance payments.
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Determine your flexible expenses. These might include items such as food or entertainment. When you plan ahead to provide enough money to cover your needs and responsibilities, the leftover can be used for fun, guilt-free!
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Categorize your expenses by creating a list of fixed and flexible expenses each month. Categories can include things like utilities, phone bill, groceries, dining out, and savings contributions.
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Save: Don’t forget the most important step! Saving is the key to financial success. Set aside a certain amount of your paycheck or income source each month. A good rule of thumb is to start by saving 10% and slowly work up to saving more.
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Balance: The last step is to take your total net income and subtract your total expenses. If it’s a positive number, congratulations: your budget is on track! If it’s negative, look for ways to increase your income or cut from your flexible expenses.
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Remember to track your spending and compare it to your budget every month. Keep yourself on track and keep working on saving more and spending less.
What Makes Up Your Credit Score?
When you take out a loan, use a credit card, or make a large purchase (i.e. a home or car), your credit score changes. Creditors want to know if you are able to pay them back, and your credit score helps show how reliable you are. Over time, your credit score changes based on these 5 factors:
Factor: Explanation: Influence on credit score compared to other factors:
35% of your score: Payment History. Do you pay on time?
30% of your score: Amounts Owed. Do you have other debt that may keep you from paying?
15% of your score: Length of Credit History. How long has it taken you to pay back creditors?
10% of your score: New Credit. How many new debts have you taken on?
10% of your score: Types of Credit Used. What kinds of accounts do you have?
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