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    Building Your Financial Foundation

    In order to build any great structure, you must start with a strong foundation. The same goes for your financial future. An expert from Delta Community gives her suggestions for those ready to take the next step toward becoming financially secure. 

    Grow Your Net Worth
    1. You should know your take home pay. Find a recent paystub and copy down your total income, less deductions, and see what your take home pay is each pay period. 
    2. The key to saving is spending less than you earn. If you’re not sure where your money goes, take the time to list out your known expenses. You can also use Delta Community’s complimentary personal financial management tool, Money Management™, which will categorize your spending for you. Don’t forget food and gas. Write in a miscellaneous category to account for expenses that don’t come every month.
    3. Manage your debt responsibly. 
      • Protect your credit by making all of your payments on time, every time. 
      • Pay extra on your consumer debt, i.e. credit cards, which is typically the most expensive debt. 
      • Check your credit card statement or call your credit card company to find out what interest rate you’re paying. If you are paying over 10% in interest charges annually, consider consolidation. Plug in the numbers in an accelerated debt payoff calculator to see if consolidation might make sense. 
    4. Save some money for long-term goals. There may be one hundred things you could spend each dollar on, but everyone needs to have some money set aside for long-term needs. The easiest place to do this is your employer sponsored 401(k). Make sure you are contributing enough to take full advantage of any employer matching. Check out a compounding calculator to see how that could add up over time. 

    Protect Your Net Worth
    1. Don’t let unexpected surprises derail your plans. Make sure that if you become ill or disabled, you have insurance to help out. That means having some health insurance  as well as long-term (and possibly short-term) disability insurance coverage . For many people, having some basic life insurance coverage is necessary to protect their loved ones, too.
    2. Who will speak for you when you cannot speak for yourself? Ensure that the people you trust most, whether it is a spouse, sibling, parent, child or friend, has the documents they need to speak on your behalf. The basic documents needed are:
      • Will - This document indicates who should get your assets and who you prefer to settle your final affairs. It also provides your guidance on who should care for your minor children if you cannot.
      • Power of Attorney - This document empowers someone you trust to manage your financial affairs. This could allow them to write checks to ensure your bills continue to get paid or make claims on your behalf for insurance benefits. 
      • Healthcare Directive - This document tells healthcare providers who knows your wishes best in the event you cannot communicate them yourself. This may ensure you get critical treatment in a timely matter.
    3. You should know your credit score and monitor your report regularly. Everyone is entitled to one free credit report annually at www.annualcreditreport.com. If you find errors or need help improving your credit, take steps to start rebuilding it.
    4. Establish an emergency fund. Life happens. The car needs a major repair, a last minute flight for a funeral in a distant place, your department is downsized. Having some cash on hand gives you choices at the time you need them most. A good rule of thumb is to set aside six months’ worth of expenses in cash for a single income household, three months’ worth for a dual income household. One of the best places for your emergency fund is a Money Market Account.
    Posted: July 26, 2018 by Delta Community