5 Tips for Making Your Money Work for You
What would it mean to achieve your financial goals? Get out of debt? Secure your family's future? With a few smart choices, there are several ways to put your money to work for you!
Start Saving Early
The sooner you put your money to work, the more time it has to grow. Have you ever heard of compounding interest? Compounding interest is interest you can earn on top of interest. If you save $100 and it earns 5.00% APY** every year, the next year you will have $105. If you leave that money and it earns 5.00% APY** again the next year, you will have $110.25 (earning $5.25 on top of the $5 earned last year). If you do this for 30 years and never add another dime to it, you will have $432.19, and that’s starting from just $100! See the difference below of earning no interest on $100 versus earning 5.00% APY** on the same $100. Use this compounding interest calculator to see what you can earn with your investment.
Pro Tip: Some saving and investment options that may be available to you include your employer's retirement plan, a certificate of deposit (CD), a Money Market account, or an individual retirement account (IRA). Remember: you're never too young -- or too old -- to start saving or investing.
Did you know that billionaire Warren Buffett still lives in the same modest house he bought in the 1950s? Many of the richest people in the world understand that having a comfortable nest egg is much more important than buying the biggest house, driving the flashiest car, or wearing the most bling. Here are some tips on frugal living.
Build Your Savings Into Your Budget
Budget an amount of money that can be placed into savings every month and try not to use it for everyday living expenses.
Pro tip: Set up a direct deposit to automatically divert a portion of your paycheck into a savings account. If you do not receive your paycheck via direct deposit, then set up an automatic transfer from your checking to your savings monthly. Decide how much or how little you can set aside and watch your savings grow!
Need help building a budget? Check out these free budget excel spreadsheets and other budget templates to get you started.
Shop Deals & Buy Off Season
You would be surprised how much money you could save just by timing out when you buy things. The rule-of-thumb for bargain shopping is to understand the demand for the goods you’re looking to purchase. When demand is high, prices are high and when demand is low, prices are low. If you can, wait to purchase that grill or patio set until fall/winter when the items are out-of-season, and the demand is lower. Here are some other ideas on how to make the most of your money while shopping.
Be Aware of Your Debt
Credit cards can be helpful when building credit, and many credit card companies offer rewards for using them. But credit card debt can become a burden, especially from unnecessary fees and interest charges. According to Forbes Advisor, in 2021, 48% of all credit card users carried a balance, which means they paid interest on the money they had charged onto their credit cards. The average credit card interest rate is currently 24.08%, so if you carry a $1000 balance on your credit card, you will pay $240.80 in interest in one year.
Pro Tip: A balance transfer to a low-interest credit card could help you save hundreds or thousands of dollars in interest.
Have questions about how BluCurrent Credit Union in Springfield, MO can help you achieve your financial goals? Contact us and a friendly BluCurrent representative would be happy to help!
**APY = Annual Percentage Yield.