My Money Five

Making the most of your money starts with five building blocks for managing and growing your money -- The MyMoney Five. Keep these five principles in mind as you make day-to-day decisions and plan your financial goals.

The Five Principles

EARN – Make the most of what you earn by understanding your pay and benefits. The Earn principle is about more than the amount you are paid through work.  This principle is about knowing the fine print and details about your paycheck, including deductions and withholdings.  To put it another way:  In order to make the most of what you earn, it helps to understand your pay and benefits. 

Actions You Can Take

• Learn about the details of your paycheck, including any deductions
• Review the taxes that are withheld, including Social Security and Medicare taxes
• Explore and sign up for workplace benefits
• Invest in your future – with education and training.

Hints and Tips

• Remember, your employer has to subtract certain taxes and other items from your wages every pay period. Your take-home pay (net income) is what you receive after any taxes and deductions are subtracted.
• Usually, your deductions and withholdings include federal, state and city income taxes, Social Security and Medicare taxes, your contributions for retirement savings, and payments for health insurance provided as part of your job.
• Be sure you take advantage of all the credits and deductions that help lower your taxes.
• It’s a good idea to sign up if your employer offers a retirement savings program. If so, you can arrange to have retirement savings automatically moved from your paycheck to a retirement account. Many employers will match part of every dollar you save this way, and you will benefit from it when you retire.

SAVE & INVEST – Saving is a key principle. People who make a habit of saving regularly, even saving small amounts, are well on their way to success.  It’s important to open a bank or credit union account so it will be simple and easy for you to save regularly.   Then, use your savings to plan for life events and to be ready for unplanned or emergency needs.     

Actions You Can Take

• Start saving, form a savings habit, and pay yourself first!
• Open and keep an account at a bank or credit union that meets your needs.
• Track your savings and investments, and monitor what you own
• Plan for short-term and long-term goals
• Build up emergency savings for unexpected events
• Consult with a qualified professional on investments and other key financial matters
• Save for retirement, children’s education and other major items

Hints and Tips

• An easy way to save is to pay yourself first.  That means each pay period, before you are tempted to spend money, commit to putting some in a savings account. See if you can arrange with your bank to automatically transfer a certain amount from your paycheck or your checking account to savings every month.
• People who keep track of their savings often end up saving more, because they have it on their minds. New phone apps are available to help people pass up purchases they don’t really need – you might want to try one!
• If you are making investments, it’s good to consult with a qualified professional about your plans. Before you purchase investments, be sure to build an emergency savings fund to cover your needs for at least three months. Keep the savings in an insured bank or credit union account that you can access if you need it.
• Many professionals call themselves “financial planners.”  Before you hire one, ask for a description of the services offered.  A good place to check the credentials of an investment advisor is your State’s consumer protection office, the State’s Attorney General’s office, or the issuing agency for any professional licenses or certifications. 

PROTECT – The Protect principle means taking precautions about your financial situation. It stresses the importance of accumulating savings in case of an emergency, and buying insurance. Be vigilant about identity theft, and keep aware of your credit record and the credit score.

Actions You Can Take

• Keep your financial records in order.
• Watch out for fraud and scams, and protect your identity.
• Choose insurance to meet your needs, including health care insurance.

Hints and Tips

• A good system for keeping personal money records will include copies of important documents like your will, property ownership documents, information about savings and insurance, and other document. It should include overview of what happens to property after a major life event occurs.
• Assume that any offer that “sounds too good to be true” – especially one from a stranger or an unfamiliar company --- is probably a fraud.
• Look at your bank statements and bills as soon as they arrive and report any discrepancy or anything suspicious, such as an unauthorized withdrawal or charge.
• Be wary of request to “update” or “confirm” personal information, especially your Social Security number, bank account numbers, credit card numbers, personal identification numbers, your date of birth or your mother’s maiden name in response to an unsolicited call, letter or email.

SPEND – The fundamental concept of Spend is: make a budget or a plan for using your money wisely. It’s helpful to set short and long-term financial goals and manage your money to meet them. 

Actions You Can Take

• Live within your means.
• Be a smart shopper, and compare prices and quality.
• Track your spending habits and develop a budget or spending plan.
• Plan for short-term and long-term financial goals.

Hints and Tips

• A good way to take control of your spending is to set the maximum amounts you plan to spend each week or each month. Once you’ve set the maximum, stick with your plan.
• It’s helpful to track your spending over a few weeks or months to get a handle on how you are using your dollars and cents. Look into using on-line systems or phone apps for keeping track of your spending – you will be amazed at what you’ll learn about your habits!
• Be careful not to let a sale or discount coupon persuade you to purchase something you don’t really need and that isn’t in your spending plan.
• When planning a big purchase, take time to comparison shop and check prices at a few different stores, by phone or online.

BORROW – Sometimes it’s necessary to borrow for major purchases like an education , a car, a house, or maybe even to meet unexpected expenses. Your ability to get a loan generally depends on your credit history, and that depends largely on your track record at repaying what you’ve borrowed in the past and paying your bills on time.  So, be careful to keep your credit history strong.

Actions You Can Take

• Track your borrowing habits.
• Pay your bills on time.
• When you need to borrow, be sure to plan, understand and shop around for a loan with a low Annual Percentage Rate (APR).
• Learn about credit and how to use it effectively.
• Pay attention to your credit history, as reflected by your credit score and on your credit report. 

Hints and Tips 

• Borrowing money is a way to purchase something now and pay for it over time. But, you usually pay “interest” when you borrow money. The longer you take to pay back the money you borrowed, the more you will pay in interest.
• It pays to shop around to get the best deal on a loan. Compare loan terms from several lenders, and it’s okay to negotiate the terms.
• When repaying a loan, it may be better to pay more than the minimum amount due each month, so you will have to pay less in interest over the life of the loan.
• One of your most important aids when shopping for a loan is the APR – the Annual Percentage Rate. This is the total cost, including interest charges and fees, described as a yearly rate.
• Paying your bills on time will help increase your credit score. Even if you fell into trouble with borrowing in the past, you can get on solid footing and rebuild your credit history by making regular payments as agreed.
• You are entitled to a free copy of your credit report every 12 months from each of the three nationwide credit bureaus. Go to www.AnnualCreditReport.com or call toll free 1-877-322-8228 to order the free reports. Beware of imposter sites.