BMI Federal Credit Union
7 Strategies for Financial Fitness this Year
Did you resolve to be better with your money? These seven strategies will help you with reaching your financial goals and will increase your financial confidence.
1. Make saving automatic. Do not rely on memory or willpower to save. You can automate your saving by participating in employer sponsored retirement plans funded by deposits from every paycheck, setting up a recurring transfer from your checking account to a savings account, and/or by splitting your direct deposit with funds assigned to specific saving goals such as a down payment for a home or vehicle.
2. Keep close track of loans and credit card balances. Stay on top of the details of your debt, including current balances, interest rates, and minimum payment requirements. Be strategic about borrowing and debt repayment and avoid high interest rates and excessive fees. Carefully direct when and where extra payments are applied that will help you move toward paying off debt in the most effective way for your situation.
3. Understand how income taxes work. Know your marginal tax rate and at what income amount it will change. Use financial products such as Health Savings Accounts, Flexible Spending Accounts, and 529s to lower your taxable income. Being knowledgeable about income taxes can also help with decisions involved with Roth vs. Traditional 401(k) and IRAs.
4. Calculate your net worth once a year. Add up the value of your assets (cash, real estate, vehicle, etc. and subtract your liabilities (loan balances, debt on credit cards, etc.) Be clear about what you own and what you owe. This can help guide financial decision making by encouraging long term thinking related to saving, spending, and borrowing
5. Grow your money with the power of compounding interest. Your money can earn money. Compound interest allows you to earn interest on both the money you have saved and the interest you have earned. The key is to leave that money alone in order to let it grow.
6. Monitor your credit report and score. Know what your score is and how to improve or keep it strong. Understand how it impacts your financial life, from interest rates offered on loans, to the impact it can have on insurance rates and some contracts.
7. Make the effort to learn about money and personal finance. Listen to podcasts, read articles, and/ or follow personal finance experts. Take advantage of workplace financial wellness programs and know where to get sound information. Make sure you have a safe place to save and a fair place to borrow money.
BMI Federal Credit Union can support improving your financial fitness and reaching your goals. Our products and services, from checking and saving accounts to auto, home and personal loans are designed to help you move forward financially.