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7 Quick Financial Fundamentals That Everyone Can Use

In a perfect world, you’d have enough money to pay all your bills and save for retirement and emergencies and a new house or a college fund…but in the real world, most of us have to prioritize where our money goes. Below are seven easy-to-follow saving fundamentals that can help you achieve a more secure financial future for yourself and your family.

1.Create a monthly budget!
The first step is to take control of your finances by creating a monthly budget – it’s as simple as starting with your monthly income, and then subtracting your fixed and variable monthly expenses. This will help identify your nonessential expenses. 

2. STICK to your monthly budget!
Identifying nonessential expenses is key to finding the extra money you need to start saving. It’s not easy, but it helps if you can be honest with yourself!
    …how many times a week do you buy lunch instead of bringing it from home?
    …do you really need that cup of gourmet coffee?
    …do you really need a flat-screen TV in every bedroom?

Once you’ve started eliminating nonessentials from your monthly budget, use every penny you save to accomplish the next five fundamentals!

3. Pay off credit card debt!¹
High-interest credit card debt can make it hard to reach your savings goals. Increasing payments beyond your monthly minimum payment makes a big difference, as the chart below illustrates:

    $6,000 balance @13% interest

Monthly payment:Card paid off in:

 Interest you’ll pay:

$1206 years

$2,689

$3002 years

$800

You save: $1,889

This represents the amount you could save by increasing your payment on a credit card with a $6,000 balance at 13% interest. This assumes that you do not incur any more charges.  Clearly, making larger payments every time can save you a lot of money!

4. Create a 3-month emergency fund! ²
Creating an emergency fund can help ensure your short-term financial well-being when faced with unexpected expenses or a change in job status. Plus, it can help you avoid expensive alternatives:

    Credit cards – pay high interest
    Postponing monthly payments – pay late fees and/or damage credit rating
    Selling stock or mutual funds – lose opportunity for investment growth
    Premature withdrawal from retirement funds – pay early withdrawal penalties

Your emergency fund should cover at least three (3) months of essential living expenses, like rent/mortgage, utilities, food and transportation. Also, keep it in an account that’s easy to access, like a BankAtlantic Totally Free Checking, Savings or Money Market account.

5. Save for your retirement!
It’s a simple fact: the more money you set aside today, the more financially secure your retirement will be tomorrow. If your company offers a 401(k) plan and offers to match a portion of your contribution, do it! You can also start your own BankAtlantic Individual Retirement Account (IRA) and start contributing as much as you can, up to the maximum allowed per year. Money in these accounts can safely grow tax-deferred until retirement, and your contributions may also be tax-deductible! (consult your tax advisor)

6. Save for a child’s education!³
If you have kids, saving for their education is also a priority – here’s why:
    …in 15 years, the projected cost of a 4-year college degree will be $181,751!
Start saving NOW and pay less later – take advantage of your state’s 529 plan, a tax-free college savings plan where your investment earnings can make up a sizeable share of the cost of your child’s college education.

Get the kids involved in saving, too!

BankAtlantic’s Kid Power® Savings account – for kids ages 13 and under – is designed to teach kids how to start saving at an early age – it’s never too early to learn good saving habits!

7. Save for a down payment on a first home! 4
For first-time home buyers, there may be a “silver lining” in the current economic climate – prices and mortgage rates continue to drop. There is an attractive tax benefit as well, as property taxes and mortgage interest are typically deductible. (consult your tax advisor)

Ideally, you’ll want to save at least 20% of the purchase price of the home – making a larger down payment can lower your monthly mortgage payments. Another factor to consider is closing costs, which can range anywhere from 2% to 7% of the home price.

Check out our savings options – Certificates of Deposit (CDs) with flexible terms, Money Market, High Interest Checking or High Yield Savings accounts – to help you save and reach your down payment goals in less time.

This information is provided as a courtesy and is not intended to be a substitute for specific, individual financial planning advice. You should consult a professional for professional financial advice.

 

 

 

 

1. Chart obtained from “Digging Yourself Out of the Hole” by Carrie Schwab Pomerantz, Chief Strategist, Consumer Education, Charles Schwab & Co., Inc. and President, Schwab Foundation, September 21, 2006.

2. Information obtained from Schwabmoneyandmore.com/lifeevents/downpayment.php?nav=1.

3. Information obtained from “Where Should My Money Go First?” Charles Schwab, November 2008. College projection is based on four years of college at the current one-year cost of $17,366 with 6% annual inflation.

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