Learning the basics of how money works will help you with your finances
Money. It’s been said the love of it is the root of all evil, but without it, getting by in the world is nearly impossible.
Knowing how to spend in a way that covers all your necessities and leaves some for a rainy day, plus taking the leap into lines of credit can be intimidating to most, but there are a wide array of tools and assistance available.
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Amanda Reyes, director of financial capabilities for Nusenda Credit Union said financial capability is a person’s ability to take the knowledge they have and tools they have access to to create a financial plan.
“Do you have the tools and resources to make responsible financial decisions?,” Reyes said. “One of the most important things people need to understand is this is all based on their personal financial situation. Everyone is unique.
“Talking about finances isn’t something we necessarily do, especially when things are tough. It’s important for us to be a trusted financial resource, with the technology and tools and access.”
Nusenda Credit Union is the paid sponsor for the News-Bulletin’s ongoing series, “Lessons for Living: Literacy for Daily Life,” which is reporting on various types of literacy, from reading and writing to financial to health.
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Two digital tools Nusenda offers are the Banzai financial wellness tools and BALANCE Financial Fitness, both of which are available on its website free to anyone.
BALANCE focuses on credit and debt counseling, Reyes said, while Bonzai has tools for creating budgets, calculating mortgages and more. Banzai offers financial education articles, videos and podcasts for all ages, she said.
“We are just providing resources; we’re not selling any information to an outside party,” she aid of the online calculators offered by Banzai and BALANCE.
Whether you are using an online calculator or putting pencil to paper, how to start building a budget might seem complicated, but Reyes advised using the 50/30/20 method — 50 percent of your funds goes to needs, 30 percent to wants and 20 to savings.
“If you are starting and don’t know what to set aside, this is a good way to begin,” she said. “There’s a great article on Banzai about identifying needs and wants. Some people ask if their phone is a need or a want. That really depends on your situation. I need a phone to stay in touch with my family and kids, so for me it’s a safety issue.”
Reyes also noted it’s important to revisit your budget as things change, that it’s not written in stone.
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Nusenda Credit Union Valencia branch manager Judy Sandoval said a lot of people don’t know where to start, and in addition to the online tools, she and her team are available to visit with community members about questions or concerns they may have.
“Open communication is critical when it comes to having any kind of financial plan, establishing credit, improving or repairing credit,” Sandoval said. “Many people ask us about retirement plans as well… We continue to be available in person or virtually to assist anyone with their financial requests or concerns.”
While savings should be part of your budget, as Reyes said the 20 percent is just a suggestion and she encouraged everyone to start saving with what they have.
“You only need $5 to open a savings account with us and if you can put in $1 a month put in $1 a month. If you can do $1 a day, do that. Put in what you can,” she said. “The idea is you should be working towards an emergency savings that has three to six months of your most important bills — housing, food, utilities, car payment, gas for your car. Do what you can and build that up.”
Credit is often equated with credit cards and revolving debt, but that’s just one type of credit and only one factor in a person’s overall credit score, which is something that is important when accessing credit like car loans and mortgages and getting the best terms, Reyes said.
“With a better score, it’s often easier to get a loan and a better interest rate,” she said. “The higher your score, the lower the rate, which saves you money.”
A good credit score is higher than 620, she said, and getting your score to 700-plus and keeping it there is ideal. To keep you score in good shape, Reyes advises to always pay credit card bills on time and if you can’t pay the full balance each month, make sure you are using 30 percent or less of your available credit.
Source: https://t-tees.com
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