Common Financial Mistakes We’re All Guilty Of

Posted on May 23, 2023 by VP of Marketing and Business Development Jessica

Some financial mistakes are all too common. So common in fact, that you might not even realize you’re making one. Keep reading to find out what some of the most common financial slip-ups are, and how you can avoid or get yourself on the right path to correcting them.

1. The Problem: Using credit cards for everything. This financial mistake is very common (quite arguably the most common), and can get you in a lot of trouble if you aren’t careful. We know it’s very easy to swipe/insert your chip card and go, or pay with a credit card that’s already saved in your digital wallet or P2P payment app. However, living on credit cards comes with the potential to rack up a huge amount of high-interest debt if you aren’t paying your bill in full each month. Over time, this interest and debt will continue to increase if you keep using your credit card. This only leads to a vicious cycle of accruing debt.

The solution: Set a budget for yourself, pay only with cash or a debit card, and when that money is gone until your next paycheck – it’s gone. Try not to live above your means, or keep purchasing and adding on debt and interest with out of control credit card spending.

2. The Problem: Not checking your credit report. ID theft is all too common these days – most people have been a victim of some type of financial scam or a fraudulent purchase. If you don’t check your credit report from time or time (or at the very least once a year), you could be a victim of identity theft and not even know it.

The solution: All consumers are able to get at least one free credit report per year through annualcreditreport.com. Be sure to check yours at least once a year, and make sure any open financial accounts or loans are actually yours. If you find any mistakes or fraud on your credit report, you will need to file a dispute with one of the credit bureaus. Should there be fraud on your credit report, it’s also a good idea to add a security alert to your credit report.

3. The Problem: Looking to buy a home you can’t afford. Sure, owning a home is probably one of the biggest financial milestones in life – however, buying one you can’t afford is sure to become a nightmare. Financing a home you can’t afford will create enormous financial stress, and not leave you much room to pay for other necessities. In turn, you may end up reverting to problem #1 above – and finance other things you can’t afford on credit cards. This could all snowball into massive amounts of debt you might never be able to financially recover from, and lead to bankruptcy and/or foreclosure.

The solution: Set a realistic homebuying budget for yourself. Check out our handy homebuying guide and checklist to ensure you find the perfect home for you, without putting too much strain on your finances. Also keep in mind future expenses that come with homeownership – furniture, maintenance, and utility bills. Be sure you can afford the monthly mortgage payment along with these additional expenses comfortably before you put an offer in.

4. The Problem: Not planning ahead for your financial future. This common financial mistake is multifaceted. The first mistake consists of not having an emergency savings account. Throughout life, financial emergencies and unexpected expenses are going to pop up. Not having an emergency savings account to fall back on should your car break down or if your home gets a leaky roof, may lead you to again revert to problem #1 at the beginning of this post – charging on high-interest credit cards.

Another financial problem that stems from not planning ahead is having minimal or no retirement savings. Many of us put off the thought of retirement – thinking that it’s way off in the distant future, but the reality is that it takes years of working and saving to secure the funds you’ll most likely need once you’re retired.

The solution: Start putting money into an emergency savings account as soon as possible. This can be extra money not spent leftover from each paycheck, or you can even set up a direct deposit from your paycheck that goes into a special savings account automatically. Setting up an automated direct deposit will most likely allow you to save more and faster, because it takes the thinking out of it and your savings will continue to grow. It’s like that phrase, “set it and forget it.” This way, when you truly need the money in an emergency – it’s there.

As far as retirement is concerned, the sooner you start investing – the more money you’ll have in your retirement years. Many employers even offer matching retirement contributions, which you should definitely look into if this is something offered by the company you work for. If you don’t know where to begin with retirement planning, it’s best to talk to a local financial advisor to help set you on the right path.

At First Financial, we’re here to help our members achieve financial success and meet their goals. You can get in touch with our representatives at 732.312.1500 or by stopping into any of our local branches.

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A First Financial membership is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a Base Savings Account is required to establish membership prior to opening any other account/loan.

What to Do After Money Mistakes

Posted on April 24, 2023 by VP of Marketing and Business Development Jessica

Have you made a financial mistake that you’re struggling to recover from? Maybe you’ve overspent on credit cards, taken out too many loans, or invested in a risky venture that didn’t pay off. Whatever the case may be, it’s important to remember that you’re not alone. Many people have faced similar challenges and have come out the other side stronger and more financially savvy.

If you’re ready to move on from your money mistakes and start fresh, here are some tips to help you get started.

Accept responsibility, but forgive yourself

The first step in moving on from a financial mistake is to accept responsibility for it. Acknowledge that you made a mistake and take ownership of it. This will help you to move forward with a clear mind and a determination to make things right. But don’t be too hard on yourself—financial mistakes happen, and are part of the learning process.

Learn from your mistakes

Once you’ve accepted responsibility, it’s important to learn from your mistakes. Take a close look at what went wrong and identify the factors that contributed to your financial misstep. This will help you to avoid making the same mistake again in the future. Sometimes it can be easy to ignore financial mistakes, but the more you ignore them – the more they will become a recurring or bigger issue.

Make a plan

Now that you know what went wrong, it’s time to make a plan to get back on track. Start by setting realistic financial goals and creating a budget that will help you to achieve them. Make sure to include a plan for paying off any debt that you may have accumulated, and for improving your credit score if the financial mistake might have caused it to decrease.

Stay focused

It’s important to stay focused on your goals and to resist the temptation to fall back into old habits. Remember that financial success is a journey – not a destination, and that it takes time and effort to achieve.

Seek a professional

If you’re struggling to create a plan on your own, don’t be afraid to seek advice from an expert. A financial professional can help you to create a plan that will meet your specific needs and goals.

By following these tips, you can move on from your money mistakes and start fresh. Remember to be patient with yourself, stay focused on your goals, and seek help when you need it. At First Financial, we’re dedicated to helping our members achieve financial success and meet their goals. You can get in touch with our representatives at 732.312.1500 or by stopping into any of our local branches.

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10 Huge Mistakes to Avoid When Trying to Save Money

Posted on January 15, 2015 by Marketing Coordinator Nicole

download Addressing the issue of saving money is the most fundamental, yet neglected, aspect of personal finance in the U.S. today. According to a survey by Credit Donkey, almost 50 percent of Americans don’t have more than $500 in their emergency savings accounts, which not only puts a kink in savers’ finances in the event of an unforeseen expense, but also creates undue stress for failing to prepare a safety net adequately.

Here are the top 10 money mistakes Americans make when it comes to saving money.

1. Not budgeting.
There are a number of philosophies on the best approach to take when budgeting your money, but at times the thought of sitting down with statements, bills, and an expense sheet is just too stressful. This mind-set is an easy trap to fall victim to, but is one of the worst money mistakes to make if you want to grow your savings fund.

2. Saving too little.
It’s commendable that about half of Credit Donkey’s survey participants had saved up some cash; but often, individuals don’t save enough money to carry themselves through a challenging and sudden financial crisis. A common recommendation when it comes to the appropriate amount to save in a nest egg is about three months’ salary, or six months worth of expenses (i.e. mortgage, auto loan, utility bills, gas, etc.).

For instance, the average American makes $42,693 before taxes. Take away about 25 percent of that income for taxes, and the average person walks away with $32,020 annually. Three months of net income (the ideal emergency fund amount) is about $8,000 to help keep you comfortably afloat in an emergency.

3. Not setting specific goals.
Determining what exactly you’re saving for, and when you need to save by, is a helpful motivational guide to follow. It acts as a constant reminder of what you’re working toward, and lets you know when your efforts have been successful.

Examples of this include saving money for a down payment on a car in the next six months, or getting more specific like committing to saving $200 per month for the next six months, to achieve this goal.

4. Failing to track spending.
Creating a budget is the start of the savings process and setting a goal is the end of it, but there has to be a quantitative way to follow your progression in the time between. Tools such as Mint.com or even a simple spreadsheet are great ways to avoid this money mistake.

5. Living paycheck to paycheck.
When budgeting your spending allowance, don’t stretch your money to the last dollar. Not allowing yourself about a $100 per month buffer sets you up for disaster, as small, seemingly harmless purchases quickly add up.

6. Overdrawing an account.
Overdrawing a checking account is usually the result of making one of these other money mistakes, but expensive overdraft fees are a cost you have complete control over. A $35 overdraft fee might not sting now, but as more pile up on your account statement, the damage can become apparent in a short period of time.

Simply put, overdrawing is a money waster and an entirely avoidable circumstance if you stay diligent with your savings plan.

7. Claiming the wrong tax withholding.
Claiming the lowest withholding allowance when it comes to your federal taxes is a mistake that Americans commonly make. When you do so, the government takes away more income taxes throughout the year, and you’re left with a fat tax return check.

Don’t let this windfall fool you — what you’re doing is essentially giving Uncle Sam an interest-free loan and getting nothing back in return. Instead, you can claim the withholding allowance you rightfully qualify for, and use the extra cash in each paycheck to grow your savings fund in a high-interest savings account.

8. Signing up for low deductibles.
One way to increase the amount of cash you can save each month is to lower your premium and raise your deductible for auto and health insurance. This means you assume more risk up front by paying a lower monthly premium, with the expectation to pay more out of pocket in the event you have to file a claim (which should be no problem if you’ve saved that emergency fund).

According to the Insurance Information Institute, increasing your deductible from $200 to $1,000 can lower collision and comprehensive coverage premiums by at least 40 percent.

9. Buying name brands.
More customers are employing frugal tactics like passing on branded products in lieu of a generic version. Similarly, retailers have caught onto the fact that shoppers are looking for a frugal alternative in today’s challenging economic times.

That’s not to say you should never splurge on a brand that’s worth it, but most generics are the same product as their pricier counterparts. Look for generic products on the lower shelves of grocers’ aisles.

10. Waiting.
One of the worst money mistakes you can make is procrastinating on getting started with your savings plan, since achieving a savings goal can take longer than you might expect. Paying $500 per month toward an emergency fund at the income outlined in mistake No. 2, for example, would take the average American 16 months to save up three months’ income.

Here at First Financial, we also encourage our members to come in at least once a year for an annual financial check-up – to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 732.312.1500 or stop in to see us today!

5 Big Budgeting Mistakes Most People Make

Posted on November 1, 2013 by Marketing Coordinator Nicole

Some people take budgeting very seriously. They budget their money down to the very last cent. Others ignore the subject completely and don’t even bother to look at the big picture every now and then.

Regardless of the situation you’re in, there are five budgeting boo-boos that most people make — and they are big. Let’s review these pitfalls so you don’t fall into any of them.

1. Not Tracking Your Actual Expenses

Budgeting is great, but without tracking it against your actual expenses it’s a useless endeavor. The ultimate purpose of budgeting is to determine if your spending behavior is getting you closer to — or further away from — your life goals. A budget is a dream. Actuals are reality. The dream is nice, but it won’t change your life. Your actual spending, if you track it and make critical decisions around it, can propel you forward in ways you could never imagine. It’s important to track your actual spending every month.

2. Neglecting Emergency Planning

There are two kinds of emergencies. The first kind are involuntary, as in, “Oh my gosh, my car needs a new transmission!” The second kind are voluntary, as in, “Oh my gosh, I just have to go to Vegas this weekend!”

These are both examples of unplanned expenses that throw most people off track. But they don’t have to. Here’s why. If you look back over your records for prior years, you’ll probably notice that these kinds of emergencies (voluntary and involuntary) pop up about once or twice a year. If it’s not one thing, it will be another. You don’t know what it will be or what the price tag will be exactly, but people get smacked with “unexpected” expenses in a fairly predictable manner if they view it on an annual basis. That’s another reason why it really pays to keep good records.

Look at your past “emergencies” to get a sense of how much goes out more or less each year and divide that number by 12 and set that amount aside every month to cover these costs.

3. Forgetting to Allow for Non-Recurring Expenses

Of the people who do track what they spend each month, few put aside the bills that come in infrequently like property taxes and insurance. That’s why, when people are asked what they think they spend on average each month, they usually undershoot it by 30% or more. And that kind of miscalculation poses a huge danger.

If you retire thinking you spend “X” but actually spend 130% of “X” you’ll be back to work before you can say, “Flippy Burger.” Track everything that goes out. It doesn’t matter how you do it. It just matters that you know what it costs you to live on average each month including everything – even non-recurring expenses.

4. Not Expecting the Really Bad Stuff

Do you budget for the really terrible “what if” scenarios? Part of that includes a family continuation plan and that usually includes a discussion about life insurance. According to JD Power and Associates, 40% of the adult population in the United States has no life insurance at all. And according to that same study, 25% of all widows and widowers (35 to 50 years old) feel their deceased spouses didn’t have enough life insurance.

Make sure you know how much coverage you need, carve out a spot in your budget and then put the policy in place. Term life is very affordable. And don’t let health issues stand in your way. Each insurance company views your health history differently. Even if your doctor’s chart is really ugly, don’t despair. You may be eligible for a guaranteed issue policy. You have nothing to lose and your family to protect, so put the latte down and take care of this.

5. Not Budgeting Your Top Resource: Time

Regardless of how much money you have or don’t have – time is your most precious resource. Are you budgeting and tracking it? Don’t feel bad, most people don’t. Something you can try is to make a daily list of three things you need to get done. Only jot down three things because you want to set yourself up for success rather than failure. Keep that list by your side all day long and don’t unplug your computer until you cross each item off the list. Sticking to your list and plowing through it before doing anything else will yield powerful results. You’ll be more effective and feel less stress — it’s a win-win.

Take a look at the way you spend your time and money. Are you satisfied? If not, which of these budgeting tips offer the greatest potential for you? When are you going to start? Why or why not?

Click here to check out our free financial calculators that are conveniently located on our website. We also offer a number of services that can be helpful organizing your finances and getting yourself back on track. If you’d like to sit down and review your current finances with a First Financial expert, contact us to make your complimentary annual financial check-up today by calling 732.312.1500, email info@firstffcu.com, or stop into any branch and ask to speak with a representative.

The article source was written by Neal Frankl for FOXBusiness.