As part of our Consumers ConnectU financial education series, Tim Kosak, our Consumer Lending Manager, will be hosting monthly “Ask Tim Anything” chats on our Facebook page. In February, he took your savings questions. In case you missed it, here’s the play by play.
Not coincidentally, this is America Saves Week! Many additional savings resources are available on their website.
Q: Can the credit union help me save for retirement?
A: Absolutely! Your retirement savings needs depend on many factors unique to you. Our retirement experts offer complimentary consultations to all members to uncover the best option for you.
Q: If you need to make a large purchase and have the funds now, should you purchase it (depleting your savings) or look to finance it at the lowest possible rate and keep your nest egg?
A: Cash is king. Depending on your situation, you may look at a balance between the two, but having cash in the bank is hard to beat. Today with interest rates being so low, the decision is a bit easier, because you don’t have as much interest rate risk when borrowing.
Q: Are there any tools to help me budget for my weekly/monthly expenses?
A: Yes, there are! A great resource free to all members is Accel Financial Services. They will walk you through your budget to help you plan your expenses around your goals. They can meet with you locally in Kalamazoo or over the phone. There are also good budget worksheets at MyMoney.gov that can help you, too. Click on the “Tools” tab on the website. You can also lean on our Member Service Representatives. They’ve learned many good tips in their time working with members!
Q: I keep hearing about an “envelope method.” What’s that?
A: The envelope method is an old school way to budget by dividing cash among envelopes for your spending categories. Many of our members use their accounts to do an electronic version of the envelope method. The envelope method worked well with couponing to help you save, since you could tuck the coupons in the envelope with the cash you had to spend.
Q: Is it true that you should “pay yourself first”?
A: This is one of our favorite tips. Paying yourself first is the notion of building your savings into your budget right along with your normal bills. Many of our members automatically set aside a portion of their paycheck for savings, just like they would their car payment. You can set up automatic transfers right in Online Banking! Check out this YouTube video for more information.
Q: With education costs skyrocketing, how do you save for kids’ college?
A: A regular savings account (or the envelope method) is a great way to save for incidentals. Our financial planning experts can help you explore options that provide possible tax savings opportunities, similar to retirement accounts. Regardless of what you save or how you save, planning ahead is key! The more you have, the easier it is to save.
Don’t forget to seek out scholarships and other educational assistance. Sometimes the best way to save is to cut down your expenses. Education is a good example where sometimes spending money can save you money in the long term. We’re currently taking applications for our Dollars for Scholars scholarship! Graduating high school seniors can apply online.
Q: So if I give up my coffee addiction for Lent, I should bank the savings?
A: It’s amazing what one fewer coffee every week will add to your savings account!
Most importantly? It’s okay to start slow! It’s hard to go from 3 cups of coffee a day down to one a week overnight. Start slow and build steam to ensure you don’t get overwhelmed when you start. If your goal is to save $50 per paycheck and you have a hard time saving, start out with $5 per paycheck and build into the higher balance gradually. New habits take work. Likewise, if you want to add a couple new savings accounts (Emergency, Car Repair, Christmas, etc.), start with one. Prioritize, work into the new habit, and add more savings as you get comfortable. Be proud of even the slowest start—it’s a start! You can build up steam over time.
Be sure to join us next month for our Ask Tim Anything ConnectU Facebook Chat on lending questions! Watch our Facebook page for more information.