SafeAmerica Credit Union

Better Financial Stability

• By Kevin Alvarez

Tips For New Credit Card Holders

For those starting their college career or their professional career, keep your eye out on offers for credit cards. These life milestones are often signals to lenders that the time might be right for you to get on board as a credit card holder.

Figuring out how to manage credit cards is critical for new borrowers. We suggest to start by asking yourself the following:

  • Is using a credit card the right way to pay for the purchase? Would cash or a debit card work just as well?
  • Is it clear how interest is charged?
  • Will any credit card fees be assessed?
  • Once the charge is made on the card, is it easy to track the minimum payments and due dates?

It can be helpful for borrowers to run through these questions for each card.  Knowing due dates, minimum payments and other terms is very helpful towards using credit cards wisely.

Advice To Follow

After you ask those questions about the basics, it also pays to think ahead.

Many people who have run into challenges with credit cards have told us that the most important advice to follow is to make payments on time, keep credit card debt manageable, pay off balances and maintain low balances to avoid interest and late charges.

If people only make minimum payments and keep making purchases, their debt will quickly grow, increasing financial stress and derailing their financial future. If a person gets into the habit of making late payments or taking on more debt than they can handle, then the credit score will suffer and they will have to take additional steps to repair the damage that been done.

New borrowers are wise to understand their current financial picture, their spending habits, and the pros and cons of how access to credit will impact their specific financial situation.

Where To Start?

As those credit card offers fill up your mailbox, it can be confusing to know where to start. Credit cards are available with many options. Compare different cards based on your needs and the card terms.

For students and new borrowers interested in using credit cards wisely, it is helpful to look at the following:

  • The annual percentage rate (APR): This is how much interest you will pay if you do not pay off your balance each month. Also, for many credit cards, rates may increase after a short period of time.
  • Fees: Many cards have yearly fees. Most charge for late payments, balance transfers, cash advances, or spending over your credit limit.
  • Credit limits: Your credit limit is right for you when it is in line with what you can afford to pay back. Many people we work with find that high credit limits offer challenges when it comes to managing the balance owed.
  • Figure out how many credit cards Is the “right” amount.
  • Managing just a few credit cards can be easier than having many cards.
  • When you reach the spending limit on one card, it’s best to manage those payments before shifting your purchases to another card.
  • Planning monthly expenses and setting a budget is the best way to easily adjust your spending habits.
  • Keeping your receipts helps with keeping track of monthly activity.
  • Having a plan will help you reduce the chance of impulse buying. When you have a plan, there’s less chance you will overspend on items you don’t truly need.
  • Review the different payment options: Is it easier to pay through an app or at a website or over the phone? Usually people can set up automatic payment drafts to pay the full balance or just the minimum payment by the credit card due date.
  • Many new borrowers find that it is necessary to use credit cards to cover important expenses such as food, gasoline, and utilities. If that becomes a regular pattern, it is helpful to review your budget.

New Credit Card Users — Next Steps

Remember: Every time you use a credit card, you take on debt, and debt is borrowing money you haven’t earned yet. It is wise to always keep the focus on this fundamental truth.  Beware of high interest credit cards that can become difficult to pay back if financial circumstances change unexpectedly.

It’s all about the basics: looking at monthly expenses, looking at income and setting spending priorities as well as building up emergency savings. As a new credit card holder, these principles will be the building blocks of achieving financial success!

brought to you by GreenPath Financial Wellness

Youth Month

Save small. Dream big.

We're celebrating Youth Month all April long! Be sure to check out our blog each week or follow is on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

Visa Platinum Reward Credit Card

• By Kevin Alvarez

Teaching Children How To Budget

Teaching children how to budget at a young age will be helpful for them later in life. When your child gets money as an allowance or as a gift, you can help get them started with simple budgeting concepts.

Start With Goals, Wants And Needs

Talk with your child about money and how to use it wisely. Talk about their goals for their money.  What do they want? What do they need? There may be short-term goals they can be purchased right away. They may have long-term goals that will require them to save over time. It is helpful for children to have a reminder of why they are saving and why they should not spend all of their money now.

Save, Share and Spend Method

“Save, Share and Spend” is a method for children where they set aside money toward each of these three things.

Save

When your child earns money, they should first set aside a portion for savings. The recommendation is to save at least 10% of earnings. This percentage can be increased for children because they have fewer expenses. Savings can be accumulated in many ways. Some use a jar, piggybank or even a joint bank account to gain interest. The savings account should be kept for emergencies (new bike tire) as well as longer-term goals (first car).

Share

Teaching children about charity at a young age is also useful. Allow them to research and contribute to a charity of their choice. Sharing is typically around 10%. Discuss options with your child to determine which cause they may enjoy helping. Also consider having them volunteer with that organization to see what they are actually helping. For example, it can be very rewarding for children to use money to purchase toys for a local outreach center. Then they can help pass out those items out to needy families at Christmas.

Spend

The remainder of their earnings can go toward spending. The spending category is available so your child can make purchases they choose, but remind them that additional savings will help them reach their long-term goals faster.

Start Small, And Set An Example

It is helpful for your children to see how you budget, but start small. For example, allow them to help you plan the weekly grocery shopping. Start by planning a list from sale flyers and coupons, and then stick to that list at the store. This can turn into a saving game for them.  Remember, children will learn from your example.  So telling them about budgeting is important, but it’s much more impactful if they see you following a budget yourself.

This information is brought to you by GreenPath Financial Wellness

Youth Month

Save small. Dream big.

We're celebrating Youth Month all April long! Be sure to check out our blog each week or follow is on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

youth program

• By Kevin Alvarez

Financial Literacy For Kids

Did you know April serves as both Financial Literacy and National Credit Union Youth Month?

It’s never too early to begin teaching our youth about money. Financial literacy taught at young age becomes foundational value in adulthood. In fact, this is one of the most important areas where you can truly change the course of your child’s life. Financial literacy for kids can be fun. Educating your children about financial wellness will help them build healthy spending habits for the future and SafeAmerica Credit Union is here to help!

We're kicking off April with a series of financial education blogs to make it easier for parents to get the ball rolling for their children’s understanding of financial skills. All month long we will be sharing different concepts, financial terms and talking points for you to go over with your youth.

Here are some fun ways to teach your kids about money.

1. Play Games That Involve Money

One of the best ways to teach a lesson is by doing so without your child even realizing they are learning. Play games that include a financial component like Monopoly or Life and help your child strategize during the game. This will help your child learn the importance of budgeting and planning for the future, all under the guise of play.

2. Make A Wish List With Your Child

An important part of financial literacy is creating a set of priorities. We can’t have everything we want all at once, but if we plan ahead, we can hit our goals over time. This is a lesson that children can learn. Sit down with your child and have them list 10 things they want. Then have them rank them from most important to least important. Once the list is created, strategize with your child about how they can achieve their wishes.

3. Teach While You Shop

Take your child shopping and actively explain your decision-making process. When you arrive at the store, tell your child how much money you have to spend and what your priorities are. Show your child why you are picking one item over another and explain things like discounts and coupons. Additionally, give your child small amounts of money to spend themselves. You’ll be surprised at how happy your child will be to spend $2 on anything they want! They’ll also learn the importance of spending with a limited budget.

4. Link Allowance To Chores

To teach your child that money is earned through work, make sure the connection between allowance and chores is clear. You can do this by only giving your child an allowance after his or her chores are completed. When your child does an exceptional job, you can even pay them a bonus as a reward for good performance. This will instill the lesson that you have to earn money—it isn’t owed to you.

5. Split Money Into Categories

Get a piggy bank that splits money into spending, saving, and giving. Teach your child about what each section represents and how they are permitted to use the money in each section. Every time you give them their allowance, talk them through how they plan to allocate their funds. Place the piggy bank next to your child’s wish list, so that their spending and saving goals are clear to them. Also, talk through the causes your child thinks are important, and when they hit a giving goal, donate the money to that cause in your child’s name.

In short, teaching children about finances can be easier than it might seem. It just takes a bit of forethought, a little patience, and some creativity. Once your child learns the basics of finances, you can increase their financial responsibilities by upping their allowance or bringing them into the conversation about family financial matters.

And remember, a financially literate child grows into a financially responsible adult!

This Information is brought to you by GreenPath Financial Wellness

Save small. Dream big. We're celebrating Youth Month all April long!  Be sure to check out our blog each week or follow us on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

Youth Program

• By Kevin Alvarez

Budgeting 101

Many people find that the journey to financial wellness is smoother when they take the time to create a budget. It might sound complicated but there is a way to break down the process. To get started, see this overview on the steps to take to set a budget and take control of financial health.

Needs vs. Wants

Everyone has a certain amount of money to spend each month. So you need to separate your needs from your wants.  Your needs include things like food, medicine, child care, and housing. These are things you can’t live without. Once your needs are taken care of, any remaining money can go to wants. These items are nice to have, but not needed to live.  These might be things like cable TV or dinners out.

Being clear on the difference between the things you need, and the things you want is one of the keys to budgeting, especially if money is tight. Resist the temptation to spend money on credit cards to buy things that you don’t need. Living within your means is an important milestone on the journey to financial health.

Define Your Monthly Income

The first step in creating a budget is to define your monthly income. Most people think income is what they earn from their job. But it is vital to include all sources of income in your budget. This includes things like side-jobs and child support.

Next, document the net amount you get from each source. Net income is the amount of money you get after taxes. This is the amount of money that you have available to spend.

Figure Out Your Major Expenses

Your next step is to write down all of your major expenses. Subtract them from your net income. Examples of major expenses include housing costs, auto payments, and insurance. These are fixed costs. You need to pay them each month. Some major expenses can be paid from quarterly. For these, it is wise to divide the expense over several months.  For example, a quarterly payment is divided over 3 months. Set aside money each month for these expenses. Pay them when they become due.

Setting Realistic Goals

The money leftover is for items such as food, gas, and credit cards. It may be hard to define how much you spend on food or gas each month. Try your best to guess for the first month. As the month goes on, track your spending. After you have a clearer idea of your expenses, you can update your budget.

Cover High Priorities First, and Set Goals

It’s important to use your available funds to cover your high-priority bills first. You might be surprised at how much money is spent on wants. You can decrease spending by limiting your budget for the “wants” (often called discretionary spending). For example, if you spend $100 per month on dining out, only put $50 in your budget, and stick to it. It takes restraint, but it’s well worth it. The money that you save can go toward paying down the principal of your debts faster (and saving you money on interest). Or you can build your savings or investments.

Stick With It

It will be difficult at first. Most changes aren’t easy. You’re changing your mindset toward your money. That takes time. But the longer you do it, the easier it becomes. It won’t be too long before your budget has become your habit.

Tracking Expenses

Tracking expenses is a key part of the budget. This is how you know if you are staying within the budget you created. For example, you may have allotted $150 for groceries this month, but if you do not track your expenses carefully, you may never notice if you spent $225. Spending more than the budgeted amount in one area requires you to decrease spending in another area. The only other option would be to borrow money on credit, which gets costly if used too much. Tracking expenses will also help you to see where your money is going. You will learn a lot after you spend a month tracking your expenses.

There are several ways to track expenses. The most basic method is to write down all of your expenses in a notebook each day. If you choose to track your expenses in a notebook, make sure to carry it everywhere you go. Otherwise, you may forget to record an expense. When you’re documenting everything, it may be easier to label your spending.

Another technique is to save receipts and document them in a computer. Keep in mind that you may spend money on items for which there is no receipt, like a donation to a co-worker’s birthday gift.

If you use a debit card, you can track your debit card statements. Most banks have websites that allow you to view all of your checking account.

If you like to use a computer, you can track expenses using a software program. Some programs can even be linked to your bank accounts. This allows for immediate updates.

No matter what method you choose to use, it’s key to enter your expenses on a regular basis.

Budgeting As A Family

Budgeting should be a family project. Since everyone in the household is affected by the budget, everyone should be aware of what is available to spend — or not spend. Often, there is one designated person in the family that handles the money — balancing the checkbook, paying all the bills, providing allowances, etc. That job can be very stressful if that person does not have the full support and understanding of everybody in the family. A healthy and open approach to money management is good for the entire family.

Set SMART Goals

When developing a family budget, it is good to establish some goals that the family can strive for together. For example, if the whole family knows that their goal is to save for a new house, it will be easier to resist overspending on holidays and entertainment. When establishing goals, it is important to make them SMART: Specific, Measurable, Attainable, Realistic and Timely.

For example, if the goal is to save enough to make a down payment on a new car, a SMART goal might sound something like, “We will set aside $200 each month until we have saved $5,000 for the down payment on our new car.” This goal is very specific and measurable. The goal is also timely because you know exactly how long you will have to set the money aside (for as long as it takes to reach $5,000). However, if you do not have $200 to set aside, this goal would not be attainable or realistic. So it’s important to set the dollar amount at something that you can afford.

Keep Goals Top Of Mind And Support Each Other To Reach Them

After developing goals, write them down so you can post them for all to see and review them periodically. It brings a sense of accomplishment to see goals being achieved. Seeing the goals on paper will also inspire you to keep saving for your financial goals. You will recall from the earlier section that setting up a realistic budget involves a balancing act between what you earn and what you spend. You should be allocating money based on the financial goals and values established by your family.

Teachable Moment: Include Your Children In The Process

Parents often ask if they should include their children in the budgeting process. While the children may not need to know how much their parents earn, it is still important to teach children that money is a family asset that is needed to provide the essentials of food and shelter. Too often children are not taught that money is earned through hard work and needs to be spent wisely and carefully. If children know parents are serious about their financial goals, they will often help with them. Children may even help hold you accountable when you think of overspending. If you're interested in starting your children on their own financial journey, SafeAmerica Credit Union offers a Youth Program that can help! Visit https://www.safeamerica.com/youth-program for more information.

This information is brought to you by GreenPath Financial Wellness

• By Kevin Alvarez

Why Refinancing Your Auto Loan Makes Cents!

When saving money pivots to the top of your priorities, an auto refinance may be an opportunity to create instant savings on your monthly auto payment. Everyone’s financial situation is unique, so it may or may not be a financial fit for everyone.

Here's How:

When you refinance your auto loan, what is actually happening is your loan is being paid off and the balance is transferred to a new lender (who may have a better rate and/or term like SafeAmerica’s current auto refinance promotion).

When It Makes The Most Cents:

The whole point of refinancing is to purposely switch from your current interest rate and payment terms to a lower interest rate and better terms. Of course, shopping around for lower rates is the first step towards identifying if you can create monthly savings for yourself.

Maybe you obtained a higher earning position since you first took out your auto loan or even have seen an improvement to your credit score. Either way your chances of qualifying for a lower rate are dramatically higher than when you first got your auto loan interest rate.

While lenders use numerous factors which all contribute toward the determination of your rate, a good point of reference would be to focus on your debt-to-income ratio along with checking if your credit score has improved.

Here's Another Situation To Consider:

If you are unable to qualify for a better rate, you may be able to extend your repayment period. While you would be extending the amount of interest paid, you would be reducing the amount of money owed on your monthly payment. Just know, you will be paying more interest over the life of the loan even with your monthly payments being smaller.

Do your research and make sure to shop around for rates and terms you are comfortable with and more importantly, make the best decision for your specific financial situation. Be aware of any fees lenders may charge to refinance your auto loan. It's also important to be aware of your vehicle’s equity, age and total mileage. All are important vehicle trait’s lenders take into consideration and ultimately determine if your vehicle qualifies for refinance.

Credit unions more often than not, offer incentives and reduce fees to attract members and help them save. See what SafeAmerica Credit Union has to offer for Refinancing your Auto Loan!

Refinance with SAFEamerica credit union

• By Kevin Alvarez

America Saves Week – Save to Retire

Retirement is one of those endeavors that fall into the “someday” category. When living your day-to-day life as a person in their 20s, 30s, and even your 40s and those everyday expenses pop up, it’s more difficult to save for something that is seemingly so far away. But as we all know — life comes at you fast. A 2020 survey by Charles Schwab of currently employed 401(k) plan participants found that saving enough for retirement continues to be a leading source of significant financial stress for all generations.

While studies show that 71 percent of Americans are adequately prepared for retirement, much of that includes receiving Social Security benefits under the current law. With Social Security payouts only scheduled to be paid at the full benefit amount through 2035, Millennials and Gen Z have to approach retirement from a different perspective — one that is diverse and doesn’t rely on Social Security benefits, if you can help it. The good news is that starting early allows you to reach your retirement goals more easily.

In today’s economy, we can’t overlook the fact that there are some people who are not making a fair living wage, making it difficult to save. But for those of us with the ability to save it’s important to understand that it’s never too late to start saving for retirement. Your future self will thank you!

1. Get In The "Retirement Ready" Mindset

The first step is getting in the right mindset, meaning-making your new savings goal a priority. We encourage you to “Start Small, Think Big” and take advantage of retirement solutions available to you like your employer's 401K or 403 B plan or IRA options you can open on your own.

If you’re starting your retirement savings journey early, you have time on your side! However, if you’re closer to retirement age, then prepare to be a bit more aggressive in order to achieve your retirement goal. Research how to make catch-up contributions to your retirement savings, ultimately jump-starting a stalled plan.

The good news is this: it’s never too late! It is important to remember that saving anything is better than saving nothing. Even increasing your retirement savings by one percent can make a huge difference in the long run.

IRA OPtions with Safeamerica Credit Union

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2. Define What Retirement Will Look Like For You

Your retirement years will be as individual as you are! Have you visualized how you’d like your retirement to look and feel? Think about where you want to settle down. Will you stay put and have sweet tea and lemonade on the front porch most days or do you intend to travel far and wide? Most importantly, how much “annual income” will you need to achieve this envisioned lifestyle? Asking yourself these questions will help determine a rough estimate of how much to start saving now.

Someone who plans to travel and or have an active lifestyle when they retire may need to save more than someone who has a home that is paid off with no grand plans of world travel.

You will also need to consider exactly when you want to retire. This will help determine how much you should be saving annually. In the modern age, people pre-retire, half-retire or even never leave the workforce at all.

3. Calculate How Much You'll need To Save

Once you have an idea of what type of retirement you want to have, estimate the annual retirement income needed. You want to ensure you are saving for the future you want. Most Americans are not putting enough money into their retirement fund every year in order to afford the life they want for themselves in the future.

What each person needs will vary widely based on a number of factors, including your current age, the age at which you plan to retire, if your partner or spouse has an income, your spending habits, and different sources of retirement income. There are also circumstances beyond your control, like how long you can expect to live based on family history.

While there is no hard and fast rule to determine how much to save by a specific age, many personal finance experts recommend having saved an amount equal to your annual salary by age 30, three times by age 40, and five times by age 50. While this can be overwhelming if you haven’t hit those milestones in your retirement savings yet, one small step you can take is to increase your contribution rate with each pay raise. Remember, building a savings habit and taking control of your finances, like you’re doing now, is worth celebrating.

4. Take The America Saves Pledge

Now that you have a better idea of what exactly you’re saving for and how much, it’s time to consider how you’ll achieve your dream retirement. The America Saves Pledge is a tool that helps you make a simple plan to meet your savings goal while offering you long-term accountability and support along the way. Take the America Saves Pledge and visit AmericaSaves.org for tips, resources, and support on your journey towards retirement. Remember: savers who make a plan are twice as likely to save successfully!

5. Do Your Homework

Consider what type of accounts to deposit your retirement savings into. Your employer may offer a retirement plan such as a 401K, 403B, or SEP-IRA and match your contributions up to a certain percentage. The most important consideration here is to take advantage of any employer benefits such as matching your contributions up to a certain percentage. Find out if your employer offers a match and contribute at least enough to maximize that benefit.

Individual Retirement Arrangements (IRAs) are also an option, and you can open one anytime through financial institutions or financial services providers. There are several different IRAs including the most common: Roth and Traditional. Roth IRAs can be withdrawn at anytime without penalty and are tax-free. Traditional IRAs may be tax-deductible and your earnings grow tax-deferred until you start making withdrawals. You’ll need to determine which is best for you — or maybe a combination of both. The IRS has put together a great comparison tool to understand the differences between the two accounts and decide which may be better for you.

6. Prioritize Making Your Contributions Automatically

Now that you can visualize the type of retirement you want, have determined approximately how much you’re saving for, and have a plan and support in place, the best thing you can do is to set it and forget it! Set up automatic payments and contributions either through your employer or from a financial institution to stay on track.

The point of retirement savings is to keep it invested for the long term. This means avoiding dipping into your retirement fund for emergencies. Instead, create an emergency savings fund that you are also contributing to consistently.

Research by the Employee Benefit Research Institute shows that it typically takes 13 years or more of contributions to an account before you begin to reach a level of savings that is enough to fund a number of years of retirement as a supplement to Social Security. So don’t become discouraged if you feel you do not have enough savings in your retirement fund just yet.

Whatever path you choose to take toward retirement, the biggest step to take is being consistent. Retirement savings is a long-term commitment, but today’s work will pay off in the long run, literally. Take the America Saves Pledge and let us help you reach your goals, no matter what they are. Your future self will thank you!

 

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We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

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• By Kevin Alvarez

America Saves Week – Save for the Unexpected

The Coronavirus pandemic has made saving a priority for most Americans, especially those most vulnerable with low to moderate earnings. In fact, a recent study by Edelman Financial Engines, in conjunction with America Saves and the Bipartisan Policy Center, found that:

  • 40% of working Americans report they had difficulty paying for a personal expense in 2020.
  • 1 in 3 working Americans say they would run out of savings on hand in 1 month or less if their income suddenly stopped.
  • Nearly 1 in 2 working Americans (45%) would have difficulty paying for a $400 emergency expense, meaning they say they would not cover it with savings or put it on their credit card and pay it off at the next statement; 11% say they would be unable to come up with the money.

While saving provides us with a much-needed financial cushion, it also helps ease the emotional burden of worrying about what’s around the corner.

Save for Opportunities

Day Two of America Saves Week encourages us to save for the unexpected. While saving for emergencies is always a much discussed topic in personal finances, here’s something that’s not as widely discussed: saving for opportunities.

If you are in the position to save, you’re not only saving for an unexpected car repair, medical bill, or appliance breaking down — you’re also saving for the last minute dinner invite with friends and family, the concert for your favorite artist, or the ability to grab a birthday gift for your child’s classmate.

Today we want you to consider reframing saving for the “dreaded emergency,” and recognize that you’re also saving for fun and positive opportunities! Doesn’t it feel better to contribute to an OPPORTUNITY FUND vs. an EMERGENCY FUND?

If you haven’t, we encourage you to take the America Saves Pledge. After making your new savings plan, you’ll receive support, reminders, and tips from America Saves that will help keep you on track towards achieving your goal.

Make the Pledge

By accessing this link, you will be leaving SafeAmerica's website and entering a website hosted by another party.

Although SafeAmerica has approved this as a reliable partner site, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of the bank's website. The other party is solely responsible for the content of its website.

We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

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