Are you setting aside enough money from each paycheck for long-term savings? What about cosigning on student loans? Is it a good or bad idea? What’s the smartest way to use credit cards? Is there a way to pay less for air travel? Those are just some of the financial questions working people ask financial counselors every day. Consider the following do’s and don’ts that relate directly to your personal money situation.
Set Aside 5% of Total Income Toward Savings
Everyone’s situation is unique, but if you work a full-time job, aim to put 5% or more of all income into a retirement plan or long-term savings account. Of course, the assumption is that long-term accounts get funded after you have paid off high-interest debt and created an emergency fund that holds about three months of income. When you do begin saving, arrange to make the process automatic with a payroll savings plan. When the money comes out before you see it, saving is a painless task.
Learn About Cosigning on Student Loans Before Committing
Investing, trading, saving, and otherwise managing money can be a complex, challenging chore for even the savviest individuals. For those who are thinking about cosigning on someone else’s college loan, it’s essential to gather all the facts before signing on the dotted line. The first step is to review a comprehensive, informative guide that discusses cosigning a student loan pros and cons in an objective way.
While cosigning can immeasurably help the applicant gain approval for the loan, there are some downsides for those who append their signatures to the documents. On the one hand, when you cosign, the debt is reported to credit bureaus as if it is your own. That’s why you should know the financial situation of the borrower before agreeing to help.
Don’t Use Credit Cards for Everyday Expenses
The myth about credit cards is that they are a universal evil. Even with credit card delinquency soaring currently, they’re actually neutral financial tools that can serve a worthwhile purpose as long as users don’t abuse them. The secret to getting the full power of plastic cards is to only use them for emergencies and then pay the balances back to zero as quickly as possible.
Consumers get into trouble with unsecured debt when they use cards to pay for routine expenses and bills, and then don’t pay off the balances fast enough. Interest piles up, usage goes too close to the borrowing limit, and users end up with a ding to their credit scores. View plastic as emergency use only, and you’ll minimize your chance of running up debt.
Don’t Pay Full Price for Airline Tickets
In the internet age, it makes no sense to pay retail for airline fares. There are dozens of legit clubs, platforms, price hunter sites, and other avenues for travelers who want to save as much as 50% on the cost of flights. In most cases, the secret is booking far ahead of your expected travel date. Savings are particularly substantial for overseas excursions, like trips to Europe, Asia, and South America. Avoid sites that charge membership fees. The legit ones are no-cost affairs.
Disclaimer: This content does not necessarily represent the views of IWB.