When it comes to planning your future, education is key. TransPecos Banks is with you every step of the way with our Financial Wellness Program. Read on to get started with budgeting, savings and credit and debt management.
Having a budget is knowing where your money is going instead of wondering where it went. This sense of control can reduce your stress, and help you reach both short- and long-term financial goals.
• The small things add up, whether it is excess ATM fees or eating out every day.
• Understand your needs and wants. Your home, safety and food are things you need.
• Calculate your spending categories. Use the 50/30/20 rule. The recommendation is that 50% of your income should be for needs, 30% for wants, and 20% for savings or debts.
• Understand where your money is going by creating a written or online budget.
• Beware of “lifestyle creep.” As you earn more income, don’t spend it all.
• With every increase in income, budget half of the money to your savings and add the other half to your discretionary income.
• Total income minus total expenses should be a positive number. If not, adjust how much you spend on “wants”.
At TransPecos Banks, we understand the challenges and opportunities that come with managing your savings effectively. Below, we delve into the essentials of building a robust savings account, from starting your emergency fund to understanding the different types of savings accounts available to you.
No one wants to think about car breakdowns or job loss. But as much as we’d like to avoid thinking about them, emergencies do happen. Building an emergency savings account that is dedicated to handling the unexpected is important.
Savings is money that you put aside for safekeeping. You may be saving for a specific purpose, or you could be building up an emergency fund. Understanding the various types of accounts available to you and the way these accounts earn interest is one great way to increase savings even further. Let’s explore how you can make savings work for you.
If you can’t save a lot, it can be hard to find the motivation to save at all. But saving anything you can (even small amounts) is helpful.
• A typical savings account allows you to deposit and withdraw money, but there are limits on how many monthly withdrawals you can make.
• Depending on the savings account you choose, your financial institution may also require you to maintain a minimum balance.
Track your income, track your expenses, then set a realistic goal. Aim to have 3-6 months of expenses in your emergency savings fund, but start smaller if you need to.
• Savings accounts are useful for putting money aside for wants, emergencies, or a rainy day because they generally have higher interest rates than checking accounts.
• Make sure you set short- and long-term goals for yourself so that you know what you are saving toward.
It may take months or years to build an emergency savings fund, so don’t worry if progress seems slow. Keep at it!
• With a savings account, you take on the role of the lender and the financial institution becomes the borrower.
• The higher the interest rate and the longer the time period you leave your money in an account, the more compound interest you earn.
Understanding the principles of credit, the impact of debt on your financial well-being and the strategies to manage and reduce debt are essential steps towards achieving financial stability and peace of mind. In this section, we’ll explore practical advice and effective techniques to help you take control of your credit and debt, paving the way for a more secure financial future.
Have you ever run out of money before the end of the month? Determine your monthly income and expenses to create a budget so you know where your money is going instead of wondering where it went.
One survey shows that approximately 80% of Americans are currently in debt. Whether it be from a credit card, student loan, or mortgage, understanding how debt works, knowing where to go for help and making a plan are the keys to help you better manage your debt. To get a clear understanding of your overall debt profile and then consider options that can point you in a healthy financial direction:
A higher credit score may save you money. If you’re shopping around for a loan, a higher credit score may give you more loan options at more favorable terms. Even a slightly lower interest rate may mean you pay thousands less in interest over the life of a loan.
Be aware of the different types and amounts of debt you have, as well as the interest rates for each debt. Plan to make at least the minimum payment on each debt every month.
Your credit report influences your credit score. You can obtain a free copy from each of the three main credit reporting agencies every 12 months at annualcreditreport.com. If you catch any errors, you should dispute them with the credit reporting agency.
Choose a payoff option that works for you. Consider using either the Snowball or Avalanche Method to help you make payments beyond just making the minimum.
Certain actions may improve your score. Paying bills on time, paying down debts, and having a long credit history are all actions that may help improve your credit score over time.
Try your best not to neglect your emergency savings account. Having savings will help you pay for unanticipated expenses, which will help you avoid getting into more debt.
Be honest with yourself and recognize the signs that you may need help from a credit counselor.
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