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Financial Wellness

Five Big Mistakes Americans Are Making With Money

Though no one wants to think about it, someday we will all have a major unexpected cost. Your car might break down, your water heater will go out, or you will have a major medical expense. Plus, you might want to save up for a fun expense, such as a vacation, a boat or a special gift for your spouse. For these reasons, it is important to take a good look at your finances and make sure that how you live now doesn’t limit how you live in retirement.

In addition, be aware that longer lifespans for men and women mean that your savings probably has to go farther in retirement, and the high investment return rates earlier generations enjoyed are not guaranteed in the current economy.

It is also crucial that you discuss your financial issues, habits, attitudes and goals with your spouse, especially if you share bank accounts, credit cards or expenses. Not only could either of you be on the hook for the other’s debts, being on the same page will lead to fewer misunderstandings about money.

Bronze financial tips
  • Write down every expense for a month to see where your money goes.  Or use a smartphone app such as Mint (http://www.mint.com ), which you connect with your credit cards and bank account and tracks your spending for you.
  • Track the amount of money spent on repeated non-essentials: a soda from the vending machine every day, drive-through breakfast, etc. and consider whether those things are worth it to you.
  • Put a fixed amount ($5, $10, etc.) into an envelope every day or every week and keep it out of sight. Keeping the habit is more important than the amount you accumulate!
  • Open a checking and savings account at a local bank or credit union and set up direct deposit of your paycheck into your checking account.
  • Instead of buying a new truck, consider a certified pre-owned vehicle. Even buying a vehicle that is 2 or 3 years old instead of brand-new can save thousands. Visit http://www.bankrate.com/ to use their calculators to estimate the long-term cost of major purchases.
Silver financial tips
  • Talk to a bank staff member about automatically transferring a percentage of each paycheck from checking to savings, so you aren’t tempted to spend your whole paycheck before the next one comes.
  • If you have credit card debt across multiple cards, consider two strategies for repayment:
    • Pay off one card at a time, starting with the card with the lowest balance, so you can pay it off completely the soonest. When it is paid off, move to the card with the next-lowest balance.
    • Pay off one card at a time, starting with the card with the highest interest rate, since it is costing you the most to carry a balance. When it’s paid off, move to the card with the next-highest interest rate.
  • Schedule automatic repayments towards your credit card bill for the day after your paycheck is deposited.
  • Visit http://www.feedthepig.org/ for more tips on saving money for life goals such as homeownership or retirement.
Gold financial tips
  • If you make payments regularly, talk to your lender (for your credit card, car payments and/or mortgage) about lowering your interest rate.
  • Automatically transfer a percentage of your paycheck into a Roth IRA (Individual Retirement Account.) A staff person at your bank can help set this up.
  • Meet with a certified financial planner to talk through your financial goals. You do not have to have a lot of money to begin with to have a financial
    planner! They can help you set up your saving/spending plan to build savings and think about investing someday.
  • Consider investing in long-term care insurance in case you and/or your spouse need to live in an assisted care facility as you age.
For members nearing retirement age:
  • Ask yourself how many more years of work you have left in you. Some people retire right at the earliest age they can, but some keep working until 65 or 70 to get the very highest Social Security check they can.
  • Contact your Pension Fund office to get an estimate of how much money will be on your pension check.
  • Contact your Health and Welfare Fund office to see what your health insurance options are if you retire before Medicare takes effect at age 63.
  • Meet with a financial planner to go over your debts, assets (such as savings and real estate) and predicted costs of living. If you rent, you will continue paying that for the rest of your life, but if you own, you might have paid off your house or will pay it off partway through retirement.