Financial Tips from GICU Staff
April 28, 2020
April is Financial Literacy Month and some of our staff at Greater Iowa wanted to share their favorite financial tips they use to help them reach their personal financial goals!
- Avoid owing more on your vehicle than what it's worth. Don't get “upside-down” on your auto loan, which is also known as having negative equity. This can happen if you finance your vehicle for the longest term available and choose to only pay the minimum payment each month. Make sure you purchase a vehicle you can afford.
- Pay off loans the smart way. If you want to be debt-free, use any extra money to make payments on your loan with the highest interest rate. When that loan is paid off, use the money you would have used for that payment to make additional payments on your loan with the next highest interest rate. Continue to do this until all of your loans are paid off.
- Track your spending. You will be surprised how the little things you buy add up. Greater Iowa’s online banking will help you do this and also check out the Mint app.
- Always pay yourself first. Put any amount you can afford into a savings account, 401K, and IRA.
- Take advantage of free financial education resources. You're never too old to learn. There's so much information out there, whether its investing, insurance, taxes, retirement, starting a business, or kids activities. Banzai has some great articles for adults on a variety of topics and they are always posting new relevant information. Hit the Road is a fun game for 1st through 8th graders from the National Credit Union Association (NCUA) to help teach kids financial literacy. Jumpstart Clearinghouse is a website with free resources for financial education for all ages.
- Create an emergency fund. Always have at least $1,000.00 in an emergency fund. You never know when something might come up where you need some extra cash. It's not only a smart financial move, but peace of mind knowing you have a safety net.
- Create a simple and reasonable budget. Be sure to track spending first and then recalibrate your budget as needed. I revisit my budget every six months as life seems to change quickly in my household.
- Shop the sales racks and look for deals! The trick is to make sure the deals are for items you were already planning on purchasing. You'll always be able to find deals, but if you get hooked in by that online ad or coupon for something you don't need, then that defeats the purpose.
- Give back. Don’t forget to give a charity if your budget allows, even if it's only a little bit. It’s always nice to help others when you can.
- Don’t spend more than you make. This is easier said than done. Make sure you know exactly how much income you bring in monthly (or on average for non-fixed incomes) and about how much you spend monthly. Adjust spending from there and see if there are any easy purchasing habits you can break!
- Keep track of your credit score. If you regularly use credit cards, pay loans, or have trouble making payments, make sure you keep track of your credit score. Usually, you can check your credit score annually for free. GreenPath is also a great financial assistance program that's free for GICU members where you can learn more about how to manage your credit score and credit report.
- Live below your means. A good rule of thumb is to try to live on 75% of your income. It hit me one day that no matter how many things I buy I'm always wanting more or the next best thing. Try to think rationally about all of your purchases by asking some questions first; Will I use it? Do I actually need it? Is it worth the money? Being able to say no sometimes gives me financial freedom and helps me be content with what I have.
- Take time to think about major purchases. Do I really need that top of the line vehicle, furniture, camera, house/apartment, or computer? It's great to save money on the little things, but saving on the big things can make a huge impact on your day to day budget and financial well being.
- Try the 50/30/20 Rule. This helps you create a rough budget without tracking expenses and figuring out where every penny goes. To start all you need is your monthly income. Let's say you bring home $10,000 a month (wouldn't that be great). According to this rule, 50% of your monthly income should go towards needs, 30% towards wants, and 20% towards long-term savings. Learn more about the specifics of the 50/30/20 Rule here.