A recent report by the Corporation for Enterprise Development found 43% of US households are one crisis away from living in poverty. A growing number of families have no savings to help them through a job loss or medical emergency, which can be detrimental to a families’ financial situation. Only 30% of Americans save their money, and even more live paycheck to paycheck. It’s time to get serious about saving.
The Kansas Credit Union Association has gathered five four-letter words to know to help you save and build a financial cushion for your household.
NEED Do you NEED it? Or do you want it? Do you need a 65” flat screen TV? Or will a smaller television do just fine? Do you even need a new TV, or did your neighbor just get one and now you feel you must "keep up with the Joneses?” Know the difference between need and want.
SAVE The rule of thumb is to have enough money in savings that you could live for three months. Six months is better. But don’t let that looming goal scare you. Even saving just a little is better than not saving at all. SAVE that pocket change in a jar, and at the end of six months see how much you have. Can you save $50 per month? Set up an automatic withdrawal with your financial institution and you won’t even miss it. At the end of the year you’ll have an extra $600.
FEES Cell phone fees. Cable fees. Late fees. Bank fees. Hidden fees. Get a handle on the FEES you are charged each month. Review your bills. See a "fee” that you don’t know what it’s for? Call the provider and ask for an explanation. It might be a mistake, or you might be able to get it removed from future billings. Is your financial institution charging fees you don’t agree with? Consider switching to a credit union or online bank with fewer or no fees. Remember, even small fees add up over time.
KNOW How much do you spend on food? How much is your mortgage or rent? How much do you spend on utilities each month? What is your monthly take home pay? KNOW how much your bills are, how much you bring in each month and how much your necessities cost. Make a budget and adjust your spending to accommodate it. What should you do with any money you have left over? Save it.
HELP It’s hard to save. But it’s easy to ask for HELP. If you need additional guidance on how much to save, tips on saving or someone to help you navigate it all, get help! Some financial institutions like credit unions offer financial literacy courses or consider contacting an organization like Consumer Credit Counseling Service.