Category Archives: Financial Advice

How to Financially Prepare for a New Baby

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A baby on the way is a very exciting time for any family. Whether you’re new parents or adding to your growing family, preparing for your new arrival can feel overwhelming. One of your biggest concerns is probably your finances. According to Parenting.com, the average middle class family will spend $12,000 on child-related expenses in the baby’s first year of life. That’s not a small chunk of change. So how do you prepare financially while trying to juggle all the new responsibilities that come with a new baby at the same time?

The earlier you start preparing, the better you’ll be able to set up for your baby’s future. Before your baby’s arrival, take a look at this checklist on easy things you can do to financially prepare now:

Redo Your Budget

With the arrival of your new bundle of joy, life as you know it will probably never be the same again. The same goes for your budget. It’s time to review and redo your budget, as baby expenses will now take up a large portion of your spending. Do your research and understand how much baby items really cost. From food to diapers, it’s probably more expensive than you think. You should also make a shopping list of everything you need once the baby arrives. Once you have an estimate, figure out how you can scale back your budget. Obvious areas to cut back on are entertainment and dining out (as new parents, you probably won’t have time for that anyway!).

Understand Your Health Insurance

One of the biggest costs to a new baby are medical costs. Not only does your baby need healthcare, which is especially crucial in his/her first year, but labor and delivery costs can be significant also. Well before your expected due date, take some time to understand your health insurance. Be sure to understand what is covered and what you will be paying for out-of-pocket. Also, once your child is born, make sure to add him/her to your own policy. Most health plans require you to do this within 30-60 days. Also consider choosing a pediatrician that is within your network to limit costs.

Shop Wisely for Baby Items

There are so many cute baby items on the market that you’ll probably want to spend a small fortune on. Try to prevent that from happening though. Yes, you’ll want to spoil your baby and that’s totally fine, but keep in mind that babies grow into toddlers very quickly. That also means they’ll grow out of those expensive clothes and toys you bought quickly, as well. There are a few items worth the cost, but learn to shop wisely for baby items and spend where it makes the most sense, like gear and food.

Plan for Childcare

Most companies in the United States offer new mothers 3 months of maternity leave and much less for dads. Eventually, you’ll have to go back to work and think about childcare. Having the help of grandparents or other friends and family will save you a ton, but if not – make sure to plan for childcare expenses financially and well ahead of time. You will also want to interview nannies or visit daycare centers to make sure you find the right fit for your family.

Start Thinking About College

Lastly, it’s never too early to start thinking about college. It may be 18 years away, but it’s also a huge expense so you want to start preparing for it now. You should start putting away money for your child’s education as soon as possible. Consider putting your money into a 529 college savings plan, where earnings will grow tax-free and won’t be taxed when taken out to pay for college.

Need help with a college savings plan? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com, or stop in to see us!*

Your finances will change drastically with a baby on the way, but you’ll be able to worry less and spend more quality time with your little one – with the right planning and preparing.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Article Source: Connie Mei for moneyning.com

4 Simple Categories to Create Your Budget

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It’s the new year – do you have a budget plan in place? If not, here are some great places to start!

1. Housing

Having a place for all of your stuff and somewhere to lay your head should probably be your biggest priority, so as you can imagine this category will be a large portion of your budget. Along with the mortgage, insurance and property taxes, make sure you include repairs and necessary utilities like gas and electric.

2. Transportation

Remember that when it comes to transportation, it’s more than just your car payment. Gas, insurance, repairs, and preventative maintenance like oil changes should all be included. Planning ahead will help keep your car on the road, which will keep money in your pocket.

3. Life

This category is huge. Several categories could be made out of this one, but if you want to keep it all together, it should include the following:

  • Cell phone
  • Food (at home or at a restaurant)
  • Health insurance
  • Medicine
  • Clothing
  • Entertainment
  • Tuition
  • Childcare

All of these things will add up to a large percentage of your budget, so if separating them into their own categories will help you, definitely do that.

4. Savings/Debt

This final category is one of the most important. Saving money for your future is something you want to make sure you’re doing every month. The earlier you start, the better. You’ll be surprised at how a little bit each month can really add up. Also make sure you’re steadily paying down your debt, whether it’s credit cards or student loans. Focus on paying them off and enjoy the freedom you’ll feel when that’s all accomplished.

Learn to create your own budget with our handy budgeting worksheet!

Article Source: John Pettit for CUinsight.com

 

Budget Busting Rationalizations to Stop Doing Immediately

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Did you spend money you didn’t intend to this past holiday season? If you are regularly falling victim to money rationalization (talking yourself into a purchase you don’t really need or can’t afford), you are doing yourself and your budget no favors.

Have you told yourself any of the following lies recently? If so, make it your new year’s resolution to stop right now.

  1. It’s on sale! There’s a very good reason why retailers put things on sale, offer two for one deals and give discounts. By offering something on sale, it gives the consumer a sense of urgency about purchasing the item. You know that the sale or discount will not last forever, so you want to snatch up the item before you lose out on the great deal. The thing is, it doesn’t matter how good a bargain the price is if you don’t need that item, because it’s still too expensive. If you are tempted by an item that’s on sale, put it down and walk away. If you still want it the next day (or even the next week), go ahead and buy it. The sale will still be in effect, and you will know that this is a good purchase, and not just an exercise in retail psychology.
  2. Buy now and save later. Later is a great time to do things you don’t want to do, whether that’s budgeting or dieting. It’s very easy to promise yourself that you’ll pay for your splurge by saving money in the future. If you are trying to rationalize a purchase by thinking about what you can give up next week or next month to pay for it, then you simply can’t afford the purchase. If you haven’t learned how to budget (or diet, etc), you’re not going to magically wake up knowing how to do this in the future. Telling yourself no now will be the first step in being the savvy budgeter you hope to be tomorrow.
  3. I need a reward. After a stressful period at work or at the end of a major project, it can be easy to want to reward yourself with something nice. But looking at a new pair of shoes or an expensive car and thinking “I deserve this!” is not the right way to go about being financially secure. Giving in to impulse buys because of stress will not help you achieve your financial goals.
  4. I want to fit in. Sometimes the worst purchasing mistakes come from peer pressure. It’s much easier to spend money when everyone around you is doing the same. Even if your friends would never dream of putting pressure on you, just seeing them spend money can influence your decisions. If this is a problem for you, then shopping should no longer be an activity you do with friends. Find other ways to socialize with the people in your life. Your bank account will thank you.

The best weapon you have against spending rationalization is to know yourself. If you are aware of the things that deceive you into purchases, then it will be much easier to avoid them.

And if you haven’t created a budget for yourself – that might be part of the problem. Learn everything you need to know about budgeting with our quick budgeting guide.

Article Source: Emily Guy Birken for Moneyning.com

How to Recover from a Blown Budget

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Went a little crazy on holiday shopping and now your budget is completely off track? Get back on the path to financial freedom and kick off the new year with the following tips:

  1. Stop dwelling. Going over your budget isn’t fun, but it’s not the end of the world. Life happens and you can’t be perfect all the time. Acknowledge that you messed up, then move on. Obsessing about it isn’t going to bring your money back.
  2. Get back into your old routine. Play a little bit of catch up: pay your bills, balance your checkbook, and schedule transfers to pay off some debt if possible. Sometimes when you fall off track, it makes you want to stay off track. It takes more effort to jump back on the bandwagon than it does to remain on the same path. That’s why it’s important to get back into your old routine as soon as you have the chance. Get everything caught up, map out a plan for the remainder of the month, and immediately return to your former routine.
  3. Temporarily cut expenses. If you need to cut back, consider the following tactics:
  • Eat at home until you’ve cleaned your shelves/refrigerator/freezer out.
  • Have “no-spend” days, when you don’t spend a single penny.
  • Skip paid entertainment and opt for board game nights or movies at home.

If you’re still facing a budget discrepancy, you may have to look for extra ways to earn money for the month. Consider selling clothes, furniture, and appliances that are in good condition but that you no longer use. Or can you pick up extra hours at work, or get a part-time job?

If you’ve blown your budget, the important thing is to pick up where you left off and get back to your budget as soon as possible.

Need help creating an organized household budget? Check out our budgeting guide and budgeting fillable PDF worksheet.

Article Source: Alexa Mason for Moneyning.com

A Few Things You Can Cut From Your New Year’s Budget

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When it comes to finances, what would you like to do differently in the new year? When looking at your money and the way you spent it last year, what needs to change?

Here are a few things you should remove from your budget in the new year:

Unnecessary daily expenses: We all like coffee every day. But do you really need Starbucks every morning? It’s gets very expensive if you spend at least $5 a day buying coffee. That’s $25 each work week and $100 or more a month!  This will eventually add up to well over $1,000 at the end of the year. Instead, stock up coffee to brew at home and use the price difference to beef up your emergency fund.

Phone apps: The vast majority of phone apps are free, but for a lot of people – spending 99 cents on one here and there doesn’t seem like a big deal. If you’re one of those people who spends a lot of time on your smartphone throughout the day, then it might be time to think about which apps are costing you money (whether it’s up front or from in-app purchases).

Spending with coupons: You’re probably thinking, “this sounds like saving money!” While coupons can be helpful tools, they’re only helpful if the coupon is something you were already planning on buying. Don’t be swayed by a deal or discount if it’s not something you need. Buying things you want (and don’t need), is an easy way to throw money away. Make smart or necessary purchases, and use coupons to make those buys even better.

Kick the new year off right – think savings instead of spending!

 

5 Ways to Curb Impulse Buying

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It’s so hard to fight the urge to spend money. You’ve earned it, so why can’t you spend it – right? It’s certainly fine to give in once in a while, but impulse buying can really throw your budget, especially if you’re buying higher priced items.

Impulse shopping is far from uncommon in America. According to a survey from CreditCards.com, about 54% of Americans have spent $100 or more on an impulse purchase. The survey also points out that 84% of Americans have made impulse purchases, and 20% have even made purchases of at least $1,000 on impulse – wow!

If you’re looking for ways to finally kick this type of habit, here are five tips to help overcome impulse buying:

Make a Shopping List

The easiest way to fight impulsive shopping is by making a list. When you go shopping, know exactly what you’re there for and stick to the original mission. If an item is not on the list, you don’t buy it – it’s as simple as that. Sticking to the shopping list will take some self-discipline but with a little practice, it will become second nature.

Create a 30-Day Rule

Impulsive purchases happen essentially because you don’t give yourself the time to rationally think about the purchase. The next time you feel the urge to buy something, tell yourself to wait 30 days. After the 30 days, do you still want it? Are you still thinking about it? If so, go ahead and buy it – but you’ll find that most of the time, you’ve long forgotten about it already.

Budget in Impulsive Purchases

Some people just can’t help it. They’re going to buy random items regardless of how much planning they do. If you’re one of those people, that’s okay. Just put it into your budget. Create a category for “miscellaneous spending” or in other words, impulse purchases. Once you’ve reached the max for the category during a given month, you’ll have to wait until the next month to buy anything else. This way, you can satisfy your urge to shop while controlling it at the same time.

Bring Cash Only

Another way to stop yourself from impulsive buying is to leave all your credit cards at home. Just bring cash. Doing so will put a limit on how much you can buy. Of course, you’ll want to be prepared and know how much cash you’ll need to bring for at least essentials, but this could be a very effective method if you’re good with keeping track.

Think About Those Long-Term Goals

Thinking about the future is actually very difficult, as shopping can be fun and the thrill of making a purchase even more so. But think about your long-term goals and all the things you want to save up for. You’ll realize that there are probably more important things than what you’re about to buy. Is that pair of designer jeans really worth delaying your vacation? And what about another new tablet or other electronic device? Is that more important than saving for retirement?

The answer could very well be yes, but most of the time – opt to save up and spend it on something that truly matters.

Article Source: Miranda Marquit for Moneyning.com