Helpful tips for borrowers and savers to support a healthy financial outlook
It has been difficult to manage personal finances over the last 15 months. Inflation and rising interest rates have tightened budgets and loan opportunities for many. Fortunately, there are opportunities for consumers to take advantage of these otherwise challenging trends. In fact, it is a good time to review your complete financial profile.
Community Choice Credit Union outlines the process of building a path to financial health for members using four simple terms: save, borrow, simplify and protect. For this article, we’ll focus on the saving and borrowing tips that consumers should consider.
Save
Saving in today’s economic environment can include:
- Taking advantage of Certificate of Deposit (CD) rates at their highest level in 20 years
- Supporting the goal of home ownership
- Maxing out 401K and other employer-sponsored retirement plans
- Contributing to a Traditional or Roth IRA and reviewing options for converting from one to another
CD rates have not been this high for well over a decade so keeping money you don’t need now in a shorter-term CD is worth considering.
Home ownership is a goal for many so be sure to save and plan for your mortgage payment and any home improvements as needed.
Lower stock and mutual fund prices mean that employees contributing to their 401K plans are purchasing investments at lower prices than they did one year ago. Anyone eligible for a 401K should check the employer match to make sure they are taking maximum advantage of employer-contributed funds.
A Roth IRA is an individual retirement account where holders only pay taxes on money going into their account, so that all future withdrawals are tax free. Taxes in a Traditional IRA are taken out when the money is withdrawn and there are contribution limits.
Borrow
Some suggestions for borrowers include:
- Knowing the importance of your credit report and comparing your balances to your limits
- Checking the validity and accuracy of your credit report (a 2021 Consumer Reports study indicates that up to 30 percent of consumers have errors on their report)
- The potential to take advantage of 0% balance transfers before year-end.
A credit report documents an individual’s history of managing debt. Any lender will typically consult your report and credit score which can affect a person’s finances and ability to achieve long-term dreams such as owning a home, buying a car and more.
Getting the best rate possible, whether for a mortgage or car loan, can mean savings of hundreds of dollars per month. Plus, a home equity fixed loan can help pay for travel, emergencies, important home improvement projects and more.
By focusing on how to save and borrow in a way to protect your money and assets, you can feel confident in your personal finance plan to create a path to the life you desire.