In our Fall 2024 issue, we highlighted Wisconsin educator Kerri Herrild and her work in helping pass a law requiring high school students in our state to take a financial literacy course.
We applaud the decision and know it will make a positive difference in many young people’s lives. But we also want to acknowledge something just as important—that financial literacy isn’t just for the young.
At Member Benefits, we hear members talk about how they wish they knew more when they were younger. But the good news is that there’s always something new to learn. It’s never too late to become more financially knowledgeable, no matter what your age.
With that in mind, we’ve put together some helpful financial tips and resources. We hope it will make it easier to get you started on your financial journey…or to continue on your path of learning.
So now that your students are set to become more financially literate in the coming years—how about you?
Budgeting
Building a budget calls for an investment of time up front and requires you to face the good and the bad of your financial situation. But the pay off and benefits are long lasting.
Writing a budget helps you set up and achieve goals by:
- Establishing priorities.
- Giving you permission to spend.
- Helping you save money for long- and short-term needs.
- Preparing you for financial emergencies.
Use our budget worksheet and financial calculators as a guide, and/or schedule a financial planning consultation to help you get started.
Managing debt
Spending more than you earn on a consistent basis can build debt quickly. Having a budget can help you prevent the problems that come with that.
Being in debt has a BIG impact on financial wellness by affecting your credit score, paying higher interest rates, making it harder to get a loan, etc., as well as taking a toll on your mental and physical health.
If you’re carrying too much debt, devise a plan to pay off the highest interest debt first. Paying off your outstanding bills has many benefits—it improves your credit score, reduces stress, and increases your financial security. If you need some help, contact one of our financial advisors. And use our online debt calculators as a resource.
Saving
The phrase “pay yourself first” can be a powerful savings strategy. It means you pay into your own savings and investments before anything else.
There are three types of savings goals you may want to achieve, which will change depending on your age. For example:
- Short-term (0-5 years): Emergency fund, vacations, start a family.
- Intermediate term (5-10 years): New car, new home/condo, college fund.
- Long-term (10 years or more): Retirement savings (IRA, 403(b), etc.).
An emergency fund is critical—there will always be surprise financial situations that pop up in daily life. Start with a goal of saving at least three months worth of expenses in your emergency fund. Six months is even better if you can do it. Consider setting up a recurring transaction to place money in your emergency fund each month. If you need to, take it slow and just save $20 per paycheck, increasing as you are able.
Saving for retirement earlier than later gives you a huge advantage by utilizing the power of compound earnings over time. Setting up automatic contributions into your retirement account using payroll deduction or electronic funds transfer can make saving easier to do.
You’ll also want to save enough for a potentially long retirement—it’s easy to forget the fact that we are living longer, often into our 80s and 90s. Depending on when you retire, you could be looking at 30+ years outside of the workforce.
Investing
Though many people think of them as the same thing, saving and investing are different.
- Saving money has a shorter-term horizon and a low risk of losing value, but generally has lower returns over time. It commonly utilizes savings accounts, CDs, or money market accounts to save and preserve assets.
- Investing has a longer-term horizon and comes with risk, including loss of principal, but also has the potential for higher returns—though they are never guaranteed. It is a strategy used to save for long-term goals, such as retirement or saving for college, and utilizes stocks, bonds, mutual funds, and ETFs.
The idea of investing can be intimidating for some people. However, being a good saver is far more important than being a skilled or knowledgeable investor. Simply getting started is key. In fact, waiting to invest can make a significant negative impact on how much you’re able to save over time.
Investing can help grow your wealth by potentially:
- Providing you with retirement savings.
- Helping you get out of a financial predicament.
- Becoming an additional source of income.
Before you start investing:
- It’s important to balance the potential gains with the risk involved.
- You’ll want to be in a good financial position to invest, such as having manageable debt and an adequate emergency fund, so you can ride the ups and downs of the market without having to withdraw from your investments.
- The earlier you start to invest, the better due to compound interest. But it is never too late to start investing.
Protecting
Many people don’t think about insurance as a way to conserve money. But if you don’t have the right coverage, you put yourself at financial risk.
For example, umbrella (personal liability) insurance is an often misunderstood coverage because many people assume their basic insurance policy offers them adequate protection. However, you may be surprised at the situations in which you may need umbrella insurance—your dog bites a neighbor, someone slips on your sidewalk, or your teen throws a party while you’re gone and one of the guests gets an Operating While Intoxicated (OWI) on the way home. An umbrella policy provides extra protection for you as well as other members of your family.
In general, we suggest you consider three principles to help find the right insurance coverage for your needs:
- Buy the right amount of protection for your situation.
- Buy more liability protection rather than less.
- Choose the highest deductible amount that you can comfortably afford.
While many companies offer auto, home, and umbrella insurance, ours is the only one created exclusively for public school employees like you. Set up a consultation and we’ll review your coverage so you can compare.
And if you have any recreational vehicles or classic cars, make sure they’re covered, too. We can help with that.
Credit score
As we mentioned earlier, debt can negatively affect your credit score. FICO (Fair Isaac Corporation) credit scores are used by financial institutions and credit card companies to determine whether you can get a loan and at what interest rate. It uses information from a consumer’s credit report to indicate the ability to repay amounts borrowed.
Information in your credit report is used in various ways. For example, credit card companies may give you a more favorable interest rate and a larger line of credit with a higher score. Potential lenders, landlords, insurance companies, and even some employers use your credit score to help make decisions about you. Companies use different sets of factors related to your score to make their decisions, so it’s safe to say that the higher your score, the better.
Employee benefits
According to the Employee Benefit Research Institute, only about 55% of workers say they understand their workplace financial benefits well. Taking advantage of all the benefits offered to you at work can help you boost your wealth as well as your job satisfaction. For example, if your district offers a match in their 403(b), take it—it’s free money.
If you’re not clear on the workplace benefits available to you, contact your human resources department or district office. Make sure you know about any post-employment benefits that may be offered as well.
Tax benefits
Another way to safeguard your wealth is by taking all the tax credits and deductions you are qualified for each year. Common ones to watch for may be based on your income, on paying for higher education, or on putting money into a retirement or health savings account. As an educator, you may be eligible to deduct expenses for classroom materials. Be sure to consult your tax advisor to know what you qualify for.
Borrow smart
It can be tricky, but one key to building financial security is to borrow only what you need. You are likely to need a loan to purchase a house or car, or to pay for college education, for example. But ask yourself questions first: Just how expensive of a house do you need? Do you really need a premium packaged car? The less you borrow, the more you have to spend on other financial goals, material goods, and life experiences.
Get support
The foundation underlying Member Benefits’ offerings of products and services is one of financial education. It underscores everything we do. So please turn to us with your questions, learn from our resources, and consider our program options. We are here to help every member become financially secure.