Life is so much easier if we adopt good financial practices.
What do you recommend for getting our financial processes in order?
- You need a plan to be financially sound.
- An Emergency Savings Fund of $500. min and goal of $1,000
- Make this a priority
What can I do after I get my emergency fund in place
- First and foremost, stop accumulating debt.
- Use the Debt Snowball approach
- Start paying down the debt you owe the least on first.
- Once you have paid off your first debt
- Move down the list to the next one with the lowest balance
- The palmettocitizens.org website has a debt calculator that is helpful in this process.
Fast forward to the elimination of all of my debt other than a mortgage and a vehicle loan. What is the next step?
- Focus on creating an emergency fund = 3 or 6 months of expenses
- Keep this money in a money market account
- Do not invest this money - it is to be used for an emergency only
- Review your insurance
- Remember to replenish any money you must use for an emergency
Everyone is looking forward to retirement. How much should I be saving for my retirement?
- Save 15% of your gross household income in a retirement plan.
- Begin with a 401(k) or 403(b) retirement plan
- Secure your employer match as this is literally "free money."
- After you reach the full employer match contribute to a ROTH IRA
- You can set up a direct deposit and you will not even miss that money
We cannot forget about the College Education Fund. Where does that occur in my money management process?
- After you have funded your retirement account you can contribute to your child's college education fund.
- You never want to invest or save for college using borrowed money.
- Check out the SC 529 plan as a vehicle for investing for college
- What will be the outcome of all of my financial efforts?
- You will be protected by an emergency fund
- You will have a retirement account
- Have your child's college education fund underway
- You will truly have greater peace and financial freedom.
MoneyWACH is a partnership between Palmetto Citizens Federal Credit Union and WACH FOX focused on financial education in the Midlands. Over the course of the year we'll cover financial and economic topics that matter to you. The segment airs the first Monday of every month on Good Day Columbia and will also be archived here for your convenience. Achieve your potential with Palmetto Citizens Federal Credit Union and WACH FOX.