Money is not everything, but how you manage it can be key to whether you make it or break it. Iowa State University Extension, in partnership with Iowa Central Community College’s English Second Language program, taught “Your Money, Your Future”, a course aimed at helping Storm Lake become more financially literate. The course provided some helpful tips that anyone can use to make their dollars stretch further.
The course covered how to understand spending, exposed financial management resources and built personal finance management skills for participants. “When you have sound information and strong skills, you can make your money work for you and for your future,” said Katelyn Brinkerhoff, a program assistant for ISU Extension. Participants prioritized their personal finance actions as a result, giving them the skills to calculate family income, fill out expense worksheets and maintain a family spending plan.
Recent estimates indicate that over half of U.S. adults do not have a budget, and 25 percent with a retirement contribution plan have used their retirement savings for non-retirement needs. About 39 percent carry credit card debt with high interest rates from month to month. All these statistics highlight America’s need for better financial management.
Simple tips gleaned from the course can help anyone be more savvy with their money.
When saving money, keep it in a safe place that is more inconvenient, so that it is harder to reach when tempted to use for things not part of your goals. After you have figured out your income and expenses, plan to save a regular amount of money each week or month from the amount left over, no matter how small. Small habits can build up to big savings over time, ensuring you have money when you need it for emergencies or unexpected expenses.
Building credit can be a catch-22 for those without credit. Lenders often will not give credit to those without it, and those without it need the opportunity to establish it. Taking out a small, secured loan from a bank or credit union can get you started. Secured means that you have the amount of the loan set aside in a separate account to guarantee that you will repay the loan. Another option is secured credit cards, which can be used to responsibly build credit with a deposit up front to secure a line of credit. Building credit this way—before you need it—can ensure that you have a good credit history established when you need to use it later.
It is easy to over-spend with credit. If you are having trouble making payments on credit cards, do not ignore the problem—it will not go away. Instead, contact creditors, be honest about why you fell behind, and make realistic payment plans that you can work with. Be sure to document encounters with creditors, such as the name of the person talked to, date and time. Put all changes in writing, and follow through with the agreement to reduce the likelihood of confusion or conflict in the future.
If you need more time to make a payment, do not be afraid to ask for it. You might be surprised at how flexible creditors can be. Remember that it is in their best interest to work with you to recover the money they lent you. Creditors that cannot recuperate the funds lent to borrowers may eventually sell the debt to debt collectors for pennies on the dollar.
The Extension course advised against “payday” loans, which can be predatory and charge astronomical interest, often trapping its customers in a cycle. Instead of using payday loans, take advantage of available credit options from banks or credit cards. With credit cards, anything paid back within the grace period (by the due date of your cycle) is not charged interest.
Rent-to-own is another costly option to watch out for. The cost of renting weekly, though it may seem small, adds up to significantly more than the item itself costs over time. Responsible use of credit cards for large purchases can over time be a better choice, provided that you have a defined plan to pay off the purchase and have enough flexibility in your budget for that payment. This way, you own the item at the point of purchase, rather than after a long payment plan.
Spending too much on groceries? Do most of your shopping once a week, when you are not hungry. You will save time, plan ahead and have less opportunities to waste money on “extras” that tempt you. Also keep in mind that non-food items, such as laundry detergent and soap, may be more expensive at supermarkets. Compare brands by price per unit, keeping in mind that larger packages are not always more economical.
Financial management impacts your quality of life, your family’s qualify of life, and the life of your community. Using these tips, you can be more prudent with your spending, adding up the dollars over time to meet goals or put aside savings for a rainy day.
