Money Management

Freshen up your financial knowledge

DATE | 05/06/19
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Spring has sprung and with it our mood for starting things anew. If you haven’t given your finances the once over yet, we can help you clean up with a basic guide to budgeting, saving, and investing.

Build a budget

A budget sets the groundwork for sprucing up your finances. Think of it as a road map for managing your money or a tool that helps you make smarter decisions as you track your monthly expenses.

Not only does it help ensure you’ll have money for the things you need and that are important to you, but having a spending plan can also help keep you out of debt (or work your way out of it).

In simple terms, a budget compares what’s coming in with what’s going out. And it’s not just for those who need to closely monitor their money—even people with large paychecks and lots of money in the bank can benefit too.

Why have a budget?

  1. It helps maximize your savings and investments, allowing you to make sure your hard-earned money is being used to its best purpose.
  2. You’ll be better prepared in case of an emergency such as a job loss, major health crisis, or extensive home repair.
  3. You can build in a plan to pay off debt.
  4. It gives you some room to splurge. That may sound counterintuitive, but having a budget can “give you permission” to buy those concert tickets or celebrate at that nice restaurant by tracking your expenses and building in an amount you choose for the fun spending.
  5. It can help you clarify your short- and long-term savings goals. Long-term financial goals are often too easy to put off for later. For example, depending on your age, saving for retirement may seem a long way off. However, a budget can help you discover a way to fit it in, even if it’s just a small amount at first. Starting earlier than later gives you a huge advantage by utilizing the power of compound earnings (see next page).
  6. You’ll be less likely to spend money you don’t have. Before credit cards, people knew easily whether or not they were living within their means. But in 2017, the average American had a credit card balance of $6,375, up 3% from the year before (Experian). Those who don’t pay attention and overuse their credit cards may not realize they’re overspending until they’re weighed down with debt.

Budgets are not just about saving and spending. One important aspect of your financial health is protecting yourself from loss with appropriate insurance coverage. We can help you assess what you need.

Budgeting options

You don’t need to be a math whiz to create and maintain a budget. Spreadsheets and online software can take care of the calculations for you. Do a search for software online, create your own spreadsheet, or go old school with a ledger—whatever works for you.

Stick with it

The point of a budget is to give you more financial freedom, not less. If you find yourself having a hard time following a budget, follow these tips:

  • Keep your future top of mind and remember how your budget will help you get where you want to be.
  • Make it more difficult to impulse buy. Take yourself off of retailer e-mail lists and remove your stored payment information online so you can’t just click to order.
  • Find a like-minded friend or online budgeting forum to help keep you accountable.
  • Use cash more often—swiping a card is less “real.”
  • Reward yourself once in a while with something you enjoy.
  • Educate yourself by exploring the financial resources on our website or attending one of our free financial seminars.

Creating a budget is not a “one and done” project. Once you’ve built your budget, review it regularly and make adjustments because life changes…just like the seasons.

Save for your future

Saving for retirement should be at the top of your list of long-term budget goals.

While Wisconsin public school employees are fortunate to have the Wisconsin Retirement System (WRS), WRS is not enough. And don’t count on Social Security to fill in the gap. On average, Social Security payments make up only about 14%–28% of retirement income for those who receive WRS. To build a secure retirement, you need three things: WRS, Social Security, and your personal savings.

Personal savings options

You can save with a 403(b) through your district, and if eligible, you can also open an Individual Retirement Account (IRA). With an IRA, and sometimes with the 403(b), you can choose between a pretax or Roth account (see below).

If your employer (or your spouse’s employer) offers a match in your 403(b) plan, take it. It’s free money. Added bonus: The match effectively increases your income without increasing your tax bill, since you pay no taxes on matching contributions until you withdraw them in retirement.

Most Wisconsin public school employees can expect their retirement income to come from:

  • Wisconsin Retirement System

  • Social Security

  • Personal savings

Start sooner than later

The earlier you start, the more you can benefit from compound earnings. Compounding is when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested, and so on. This means that contributing a small amount now could benefit you more in the long run than any larger amount you contribute later on. Even modest monthly contributions can grow to several hundred thousand dollars over three or four decades.

Make it automatic

If you have an IRA, making contributions directly from your savings or checking account will make it much easier to save. With Member Benefits, you can set up SmartPlan, or you can use payroll deduction if your district offers it.

If you haven’t started saving for retirement yet, give us a call. We can help you open an account or simply answer any questions you may have.

Brush up on investing terms

Now that you’ve decided to start saving for retirement, what do you need to know? Here are a few investing terms to familiarize yourself with.

Pretax vs. Roth (after-tax)

Traditional (pretax) accounts allow you to defer the taxes on your contributions and at the same time reduce your taxable income. The earnings grow tax-deferred but both the earnings and initial investment will be taxed when withdrawn.

Roth accounts allow for after-tax contributions. You pay taxes now in exchange for tax-free treatment of earnings on qualified withdrawals.


Having a variety of investments in your portfolio helps manage risk. Historically, it also yields higher returns as the positive performance of some investments offset the negative performance of others.


Before you consider any investment, you need to understand risk and determine your personal risk tolerance. Lower risk investments have averaged modest long-term historical returns. Higher-risk investments, such as large company, small company, and foreign stocks, have averaged higher returns historically, but with more volatility or fluctuation in value. Learn your risk tolerance by using our “What kind of investor are you?” calculator.

Asset allocation

This is how you divide your money among stocks, bonds, and short-term reserves. The aim is to control risk by diversifying your portfolio. Your allocation should be based on your tolerance for risk.


The impact of fees over time on your IRA or 403(b) account can significantly reduce your nest egg. Pay attention to all of the costs, including plan fees and mutual fund expense ratios. Not all providers or funds charge the same fees. Visit to learn more.

Member Benefits’ investment options include plug-and-play options for those with less time or inclination to monitor their portfolio allocation, as well as do-it-yourself investing for a more hands on approach. Visit our investment choices page for more information.

Investors should understand the fees and risks involved in making investments, including interest rate risk, credit risk and market risk. The value of market investments can vary; investors can lose some or all of their principal