Have you ever heard the phrase, “Pay yourself first”? Put simply, it means to set aside a portion of your paycheck each week, before you pay your bills and purchase necessities like groceries or gas for your car. The purpose? To create a savings strategy that could help you weather the storm if a financial emergency arises.
Develop Good Financial Habits
Regular, consistent contributions to a savings account can go a long way toward building a nest egg over time, providing you with financial freedom in the long term.
The easiest way to accomplish that goal is to do so automatically by splitting your direct deposit so that a portion goes directly into your savings account – without you having to think about it.
First, determine how much of your salary you would like to set aside to meet your financial goals. If you know you can only afford to pay yourself a small amount now, look for opportunities to change your spending habits, such as bringing lunch to work instead of ordering out each day. This little bit adds up over time and would allow you to increase payments to yourself.
Once you’ve identified how much you would like to save, set up a direct deposit into your LUSO Federal Credit Union savings account. To do so, you’ll need to fill out a form to submit to your company’s human resources department. This form includes LUSO’s routing number (211883922), your account number, and the amount you wish to deposit.
Out of Sight, Out of Mind
Once you have set up a direct deposit into your LUSO savings account, remember that it’s important to treat it as if it’s off-limits. If you can avoid the temptation to withdraw from that account – except in the case of a true financial emergency – you’ll be amazed at how quickly it grows.
If you’re ready to start saving with direct deposit, and you don’t currently have a savings account, or you’re looking for one at a credit union outside of your primary financial institution, consider opening a Basic Statement Share Account with LUSO. With a $5.00 minimum deposit at account opening, you’ll receive Online Banking and Bill Payer Access, eStatement processing, and ATM Card or Debit Card through SUM Program with REWARDS Scorecard, plus access to all the products and services LUSO offers.
A Local Source for Direct Deposit Savings
LUSO Federal Credit Union is a member-owned, not-for-profit financial cooperative dedicated to providing its members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of those who live, work, worship, do business, or attend school throughout Western Massachusetts, regardless of economic status.
For more information, or to open a savings account, contact our Ludlow or Wilbraham branch toll free at 1-844-LUSO-FCU.
Want to prepare your child(ren) for a lifetime of financial wellness? Now is the time to help them develop a healthy relationship with money. The most fundamental lessons about money are related to how we use it. In addition to earning money, we tend to save, spend, or share it. Teaching kids how their financial choices affect them (and others) will help them make smart financial choices as they grow.
While younger children won’t be able to fully understand the value of money, they can grasp basic money concepts by age 3. Research shows that by age 7, children can recognize the value of planning/budgeting and delayed gratification and understand that some of the decisions they make in spending money are permanent. Oftentimes, the money habits that kids develop by this age are carried into adulthood.
Teaching your kids how to save and budget their money at an early age helps them reinforce the good money habits that will set them up for long-term financial health and wellness. If you’re unsure where to start, LUSO recommends the Save, Spend, Share plan, which helps kids understand the fundamentals:
The Save, Spend, Share plan is a simplified budgeting strategy that includes three buckets (or piggy banks): one for saving, one for spending, and one for gifts/sharing with others. You can decide what percentage of each dollar earned goes into each bucket, but we recommend a plan that looks like this:
For every $1 kids receive, save $0.30 (or 30 percent) of their funds.
Saving money teaches kids about delayed gratification, planning for future use, and the importance of goal setting. When kids set goals and track their progress with each deposit into their savings piggy bank, they will learn a valuable lesson that some things are worth waiting and saving for.
For every $1 kids receive, we recommend spending $0.50 (or 50 percent) of their funds.
Does your child enjoy purchasing toys with their own money? Do they have their eye on a new book or video game? Giving kids 50 percent of their money to spend gives them the satisfaction of purchasing what they want, and deciding for themselves if that’s really worth their money.
For every $1 kids receive, share $0.20 (or 20 percent) of their funds.
Most kids are taught the importance of sharing from an early age, so this is a natural extension of those lessons. Setting aside some money to give to others (whether as a gift or as a form of charity) empowers kids to make a difference, which they’ll carry into adulthood.
It’s simple. That’s what makes this plan so effective. Many parents will notice that this kid-friendly approach to money closely mirrors the 50/30/20 rule that divides monthly income into three buckets: 50% for needs (housing/food, etc), 30% for wants (recreation), and 20% for savings and debt repayment.
The best part about these spending/savings plans for kids and adults is that they’re flexible. The Save/Spend/Share recommendations provided here can be tailored to suit your specific child while still instilling the same basic financial concepts/goals.
LUSO offers children’s savings accounts as well as an in-school banking program that gives them the opportunity to conduct their banking in person, right from school! It’s easy and fun and we’d love to include them! Visit our Student page to see if your school participates or download a banking agreement. If you have any questions, contact our member service department at (413) 589-9966.
November is the time when many people begin their holiday shopping. As you search for the best gifts for friends and family, it’s easy to end up going over budget and getting tangled up in monetary difficulty without realizing it. This is why it’s important to find ways to stick to sound financial planning amidst a season that shouts “buy!” from all directions. Whether you’re waiting for a Black Friday door-buster sale or plan to get your gift-buying done tomorrow, here are some money-saving tips to help you stay on track this season.
Making a budget is a valuable activity for any type of financial planning. Lay out what your expenses are, how much you think you need to spend, how much you can afford to set aside from each paycheck, and so on. Ideally, the budget should remain your constant frame of reference during your holiday shopping. Draw up a list of who you plan to give gifts to, and assign each person a fixed dollar amount for their present that you will not exceed. Don’t be afraid to take a cue from Santa and check your list twice to find extra opportunities for saving or redistributing funds, but you should also be able to take a step back at the end and finalize your plans.
It may be helpful to set up a separate holiday account that you draw on for gift purchases. LUSO’s Holiday Club accounts help you save a pre-determined amount of money each week, all year long. Or you can open a savings account with direct deposit week so that the account silently fills up with the funds you need. This is sometimes referred to as a “stealth approach” since it doesn’t make the loss from your main funds immediately obvious.
It is easier for people to overspend when using credit or debit cards. If you know you have this habit, take a cash-only approach to your holiday shopping. Once you establish your budget for gifts, withdraw the amount and use it (and only it) for your purchases. When the cash is gone, your holiday shopping ends—no exceptions.
Online shopping can sometimes be more affordable than making purchases in the store itself since online vendors don’t have the same types of infrastructure costs and can pass the savings on to you. When shopping online, pay attention to any delivery fees and conditions in order to make sure you are actually getting a good deal and, perhaps most importantly, that the gift will actually arrive before the big day occurs.
This may seem a bit random, but if you have a wedding coming up, then the November-December season is actually a good time to go bridal shopping. Wedding dresses are usually cheaper at this time of year since most people are too occupied with other festivities, and business will be slow. Additionally, holiday bargains can make buying someone a wedding gift easier on the wallet.
Keep careful track of how much you spend during the holidays. Not only does this help you stay on budget, but you can use the information to guide your financial planning activities for the following year. Make particular note of any areas where you ended up spending more or less than expected so you can factor it in the next time the holidays roll around.
It’s easy to get caught up in searching for the biggest, shiniest gift, but remember that there are plenty of other ways to give people meaningful presents. Homemade gifts, cooking special treats, babysitting so your friends can have a night to themselves, and other presents or gestures can be just as or more meaningful than something bought in the store.
LUSO Federal Credit Union is a not-for-profit, member-owned financial cooperative dedicated to providing members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of our members and helping them save for the special occasions in life.
Feel free to contact our Ludlow or Wilbraham branch toll free at 1-844-LUSO-FCU.
Emergency funds are extremely important whether you are an individual or own a business. Managing your savings, however, is not always easy, especially when you are trying to pay down debt or have high bills each month. Here are several strategies to starting an emergency fund and budgeting your income so you can make the most out of your money.
An emergency fund can be used to pay for essential expenses and propel you through a tough time. It should cover your take home pay for at least three months, but ideally six. It might be overwhelming to take out a huge chunk of your income to put into savings, so saving a smaller amount regularly will make the task less daunting. By contributing a small percentage from each pay, you can meet your savings goals more easily, especially when you use direct deposit to automate your savings!
Whether you set a budgeting app on your phone, use Microsoft Excel spreadsheets, or write by hand, it is important to keep track of your monthly expenses. Knowing how much money goes in and out of your account each month, and knowing recurring expenses such as mortgage and utility bills, can help you create a better estimate of how much you are actually able to save. It also keeps you on track if you have the bad habit of spending spontaneously. If you’re wondering how much you should set aside, our Emergency Fund Calculator can help.
Aside from finding out how much you can save, find out how much you need to. Depending on your goal, you may need to save more than you think. For example, if you plan to take a two-week vacation in Europe, you would need to consider the cost of the flight there and back, a hotel stay, food, and sightseeing. Once you have an estimate of the trip cost, you will know how much you need to save from each paycheck to meet the date of your vacation.
Emergency funds need to be available when you need them, so using a retirement account such as a 401K in which your funds are locked is not a good idea. There are many saving options available to keep your emergency funds accessible in case you need it quickly, yet not too convenient to reach. After all, you don’t want to be tempted to dip into these funds when it’s not an emergency. Whether you’re looking for a savings account, a money market account, or a term share certificate, LUSO’s Member Service staff can help you find the best account to suit your needs.
Tax refunds usually get people excited as they wonder how to use their tax refund money. Instead of immediately spending it on things you didn’t plan for, save it. Putting that money into your emergency savings can give you peace of mind that your money hasn’t been wasted, but it allows you the excitement of knowing it is there for your future expense, whether it be your vacation, wedding, home down payment, or new puppy.
If you’re in the process of paying off debt, you might think saving should be postponed until later. Although it makes sense to aggressively pay down balances on credit cards or loans, it is still recommended to have even a small amount to set aside for savings. Find out the best way to pay off debt and set savings aside each month.
LUSO Federal Credit Union is a not-for-profit, member-owned financial institution that strives to provide customers and members with the best financial services and products. Our team proudly meets the financial needs of our members by helping them understand their financial situation, manage their income, pay off their debts, increase their chances of getting loans, and helping them build good habits for saving money. Our services and rates are available in Wilbraham and Ludlow, Massachusetts. To learn more about emergency savings, contact our Ludlow or Wilbraham branch at (844) LUSO-FCU.
