April is National Financial Literacy Month.
It’s a good thing, because America (as a group) needs help in the area of finances.
Disturbing statistics have come out recently which indicate that we are headed in the wrong direction from a personal finance standpoint.
The Numbers Should Frighten You
Not to sound like a doomsayer, but the financial news in America is NOT good.
Here are a few recent statistics which may stun you:
- US credit card debt hit $870 million in December – the highest ever
- Only 46% of American’s think they’ll hit their retirement goals
- 7 million Americans are 3 months late on their car payments
- 40% of people in America have less than $400 saved for emergencies
- 55% of people aged 55-64 have less than $25,000 in retirement savings
Then, these findings were released as part of National Literacy Month:
5 Tips to Help You Avoid Financial Disaster
We want to make sure you’re holding up the other, happier side of these statistics.
Here are 5 tips our team put together which should help:
#1 Automate everything
There’s really no reason to write checks, lick envelopes & rely on the US postal service anymore.
Almost everyone’s bank offers some type of online banking which will allow you to automate your bill payment at no additional charge.
Despite this, our team sees people every day trying to explain late payments because of paying bills the old fashioned way.
In addition to paying your bills online, have your employer or accountant help you setup a portion of your paycheck to be automatically directed into a savings account of some type.
Most people won’t even miss the money that never hits their checking account, and you’re guaranteed NOT to spend it!
#2 Figure out a budget
As mortgage lenders, it never ceases to amaze us that people come in to apply for a loan but have only a vague idea of how much they really make and spend each month.
Most people can tell you a ballpark amount of their paycheck and get close on their major bills like rent/mortgage and cars, but outside of that, it’s anybody’s guess.
From our experience, the majority of people could benefit from creating some type of family budget and checking it every few months.
There are all kinds of free or low cost budgeting apps for your phone. Or, you could do it the old fashion way with pen & paper.
#3 Find your kitchen
Apparently, the struggle is real to cook these days.
It feels like people eat out more than ever, and recent statistics back that up.
The average US household spends 10% of their household income on food. And out of that, 40% goes towards eating out.
So we’re eating out a lot!
We live in New Orleans, so yes we’re going to eat out.
But consider the costs of eating out all the time and see how much money you could save by eating in a few more times a week.
#4 Shop insurance policies
Some of us are lucky. We have insurance agents that proactively review our policies with us regularly to make sure we’re taking advantage of all the available bundles & discounts available so we get the best possible rate.
Sadly, we see new clients all the time who are not so lucky. These clients haven’t heard from their insurance agent in years and are seriously overpaying for insurance.
If you haven’t checked in with your agent in awhile, it may be time to revisit insurance policies.
If you need a referral to a great insurance agent, let us know! We’ve got plenty!
#5 Reevaluate your savings plan
Many clients treat their savings plan like their insurance plan. If it ain’t broke, they don’t look at it.
We often hear “yeah, I need to get with my financial advisor and re-examine a few things” when people come in to apply for a loan and aren’t especially proud of their savings balances.
We’d like to suggest that you do this sooner rather than later.
There are more tools available than ever for you to get better educated on how to manage your finances. And your financial advisor would probably welcome the chance to present a more aggressive savings plan for you to help grow your nest egg.
Going to see your favorite mortgage lender is like going to the doctor. If there’s stuff you’re not proud of, it’s OK. We’ve seen it all before.
Even if you don’t need a mortgage at the moment, feel free to call us for a review of your financial situation and credit situation.
We often advise clients on strategies to leverage their home and mortgages to help with their overall finances & savings plans.
We’re here when you need us most.