A Client's Perception

Creating a budget, understanding credit and saving

Money. It’s been said the love of it is the root of all evil, but without it, getting by in the world is nearly impossible.

Knowing how to spend in a way that covers all your necessities and leaves some for a rainy day, plus taking the leap into lines of credit can be intimidating to most, but there are a wide array of tools and assistance available.

“Talking about finances isn’t something we necessarily do, especially when things are tough. It’s important for us to be a trusted financial resource, with the technology and tools and access.”

Whether you are using an online calculator or putting pencil to paper, how to start building a budget might seem complicated, we are advised to use the 50/30/20 method — 50 percent of your funds goes to needs, 30 percent to wants and 20 to savings.

“If you are just starting out and don’t know what to set aside, this is a good way to begin” Some people ask if their phone is a need or a want. That really depends on your situation. I need a phone to stay in touch with my family and kids, so for me it’s a safety issue.”

Open communication is critical when it comes to having any kind of financial plan, establishing credit, improving or repairing credit. While savings should be part of your budget, the 20 percent is just a suggestion, and it is encouraged everyone to start saving with what they have.

You only need $5 to open a savings account with our credit union. The idea is you should be working towards an emergency savings that has three to six months of your most important bills — housing, food, utilities, car payment, gas for your car. Do what you can and build that up.”

Credit is often equated with credit cards and revolving debt, but that’s just one type of credit and only one factor in a person’s overall credit score, which is something that is important when accessing credit like car loans and mortgages and getting the best terms.

“With a better score, it’s often easier to get a loan and a better interest rate. “The higher your score, the lower the rate, which saves you money.”

A good credit score is higher than 620, she said, and getting your score to 700-plus and keeping it there is ideal. To keep you score in good shape, Reyes advises to always pay credit card bills on time and if you can’t pay the full balance each month, make sure you are using 30 percent or less of your available credit.

All of this aside, working with partnership companies to help those with financial wellness, the two most important questions that I am asked is:

1. What is the difference between a bank and a credit union?

What makes banks and credit unions different from each other is their profit status. Banks are for-profit, meaning they are either privately owned or publicly traded, while credit unions are nonprofit institutions. This for-profit vs. not-for-profit divide is the reason for the difference between the products and services each type of institution offers.

A?credit union?is owned by its members, since the institution is actually set up as a cooperative. Credit unions typically open membership to individuals who share a common bond, such as the industry they are employed in, the community they live in, their faith or their membership in another organization.

In addition, as a nonprofit, credit unions are also generally exempt from federal taxes, and some credit unions even receive subsidies from the organizations that they are affiliated with. This means credit unions do not have to worry about making profits for shareholders.

It is the credit union’s mission to provide its members with the best terms it can afford for their financial products. This means members generally get lower rates on loans, pay fewer (and lower) fees and earn higher APYs on savings products than bank customers do.

Banks are focused on making a profit, rather than specifically centering on the needs of the account holders. This is one of the reasons you’ll often find that banks charge more fees, and at a higher rate, than credit unions do. Interest rates on lending also tend to be higher at banks, while their APYs on savings products tend to be lower.

2. A brick-and-mortar location is not close by. How would I process my transactions from your credit union?

We offer shared branching. Shared branching means that if a credit union is a member of a shared branch network, that credit union’s members can go to branches of other credit unions in the network and make transactions like they would at their own. With over 50,000 surcharge free ATM's in our network, we will type in your zip code to your location on our website to use that ATM without being charged processing fees. Generally, at a shared branch, members can get all the services and help they’d get at their own credit union branches. At a shared branch of a credit union, you can:

• Make account inquiries and deposits.
• Withdraw funds.
• Transfer money between accounts.
• Make loan payments.
• Purchase cashier’s checks.
• Get a statement printout.

To complete a transaction at a shared branch, you’ll need to provide a few key items:

• A valid, government-issued photo ID.
• Your credit union’s name.
• Your account number.

Before you commit to a credit union or a bank, delve into both and read all the fine print associated with each product you're interested in. If a high level of personal service, better interest rates, and lower fees are more important to you than sophisticated tech, more convenience, and an extensive menu of banking products, then a credit union may be the choice for you, or you could opt to open accounts at a bank and a credit union to take full advantage of the benefits afforded by both.

#motivation #creativity #finances #budgeting