by Kathryn Hackney
For more than 30 years, Kathryn has been helping people work toward their financial goals. She takes pride in providing Members with an objective review of their current situation and helping them create long term goals. Kathryn likes to remind Members that retirement planning doesn’t end at retirement. “Members often think that once they retire things will take care of themselves,” she says. “There are a lot of opportunities that retirement presents for managing your retirement savings. Working with Members to make sure they are getting the most out of their plans is something I really enjoy.”
Kathryn is a fully registered financial advisor and licensed insurance agent. When she’s not working with Members, Kathryn loves to get outside, bike riding and spending time with her family and friends.
A new year typically brings new challenges. Maybe you have some financial resolutions you’re already working on. But what are the best ways to help you stick with them so your circumstances change for the better — permanently?
Here are some money moves that can help you stay on track this year.
If you’re like most people, you probably see a raise, bonus or tax refund as a welcome boon for your household finances. But taking a little time to plan what you’re going to do with that extra money is important to achieving lasting security.
Splurge … a Little When You Get a Bump
Part of creating a plan for your finances includes rewarding yourself when good things come your way. So when you use a percentage of a raise or bonus for short-term goals like taking a vacation or buying a new computer, this helps to boost your morale and celebrate your successes. It also keeps you motivated to keep progressing in life and your career.
… But Also Put Your Raise to Work
The average annual raise is usually around 3%. It doesn’t sound like much, but it can really make a difference when saving for your future. As an example, if you make an annual salary of $45,000, you’ll get an increase of pre-tax dollars in the amount of about $112 a month. Of course, it’s natural to just increase your spending to that income. But what if you took $80 of that monthly raise and invested it for 30 years earning an average annual rate of 4%? You’d have $55,523.95 extra added to your nest egg.
Keep in mind that this 4% example is a conservative estimate of what you could potentially earn on your investment. According to FINRA, a not-for-profit organization that protects America’s investors, investing over long periods has historically provided average annual returns of more than 10% for stocks, 6% for corporate bonds, 5.5% for Treasury bonds and 3.5% for cash or cash equivalents such as short-term Treasury Bonds.1
You can also earmark a raise or bonus toward paying down debt or building up an emergency fund so you don’t have to rely on credit cards when the unexpected occurs.
Use That Tax Refund Wisely
The average annual tax refund hovers around $3,000. According to research, most Americans use the majority of their funds to pay off debt, save more or help manage their everyday expenses. Keep in mind that while a refund is a nice windfall, you actually overpaid the government over the past year. In fact, it’s money you loaned them – without interest. Some people don’t mind this, because it allows them to save without thinking about it. But another option would be to adjust your tax withholding to a lower amount so you get more money back each pay period and save or invest that extra amount so it benefits you, not the government.
The IRS offers a tax withholding estimator tool that can help to ensure that you’re not having too much – or too little – taken out of your paychecks.2
Auto-Boost Your Savings
The easiest way to save and invest more is to pay yourself first – automatically. For instance, if you earmark 10% of your paycheck toward your future by setting up automatic transfers to a designated retirement account, and then increase that amount over time, it’s money you probably won’t miss much now, but it has the potential to build wealth over time.
Protect Your Loved Ones and Finances
Although nobody likes to think about worst-case scenarios in life, planning for your family’s future if something happens to you shouldn’t be placed on the back burner. If you haven’t established a will or trust, or updated your beneficiaries for all your financial accounts, now may be the perfect time to do so. An estate plan can help protect your loved ones if you pass away, or become incapacitated, because it provides instructions on how to manage your finances and property, and if you have minor children, who will act as their guardian. You should also review your life insurance needs and current coverage.
Get an Action Plan
If you’re already on your way to improving your finances this year, or are looking for ways to get started, we can help. Our team of financial advisors3 can help you develop spending and saving strategies for all your short- and long-term goals including building an investment portfolio, saving for college, managing your life insurance needs and planning your estate.
Visit schoolsfirstfcu.org/advisors to learn more.
- The Reality of Investment Risk Source: FINRA
- SFFCU does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
- Financial Advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with SchoolsFirst FCU to make securities available to Members. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America.
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or GreenPath Financial Wellness counselor who can help tailor a solution for you.
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