Category Archives: Financial Advice

Don’t Eat the Marshmallow! 4 Tips for Financial Self-Control

Posted on by
Reply

The “Marshmallow Theory,” based on a landmark Stanford University experiment, has been used countless times to demonstrate the power of self-control in your financial and personal life.

The experiment followed children who were left alone with a marshmallow and told that if they didn’t eat it they would get a second one 15 minutes later. Some of the kids waited the full 15 minutes, some ate the marshmallow immediately, and others waited for a short period of time before eating it.

Years later, researchers tracked down the children and found that those with the willpower to wait to eat the marshmallow — 1 in 3 of the test subjects — grew up to become more successful adults than those who ate the marshmallow immediately.

Temptation Never Goes Away

Joachim de Posada, an author, motivational speaker, and adjunct professor at the University of Miami, has gotten a lot of mileage out of the marshmallow experiment. He’s written three books based on the theory.

His latest — “Keep Your Eye on the Marshmallow” — teaches readers how to take responsibility for their own financial, career and personal success by keeping their attention focused on long-term goals rather than instant rewards.

“One of the lessons we can learn from the marshmallow experiment is that among the 1 out of 3 kids that didn’t eat the marshmallow, some already had willpower and some understood they needed to use different techniques to avoid eating it,” says de Posada. “Leadership, like willpower, can be inherited, but it can also be learned through emotional intelligence.”

While the children in the Stanford experiment resisted eating the marshmallow by turning their backs on it or distracting themselves by drawing on the walls, de Posada suggests that adults can use similar techniques (defacing property notwithstanding) to avoid the allure of instant gratification.

4 Ways to Artificially Boost Your Willpower

If you lack financial willpower (e.g., the wherewithal to save your paycheck instead of spending it right away), de Posada recommends the following workarounds to help you delay gratification:

1. Choose an accomplice. Let’s say you have a goal of saving 10 percent of your paycheck until you have enough to cover six months of living expenses to stash into an emergency fund. If you can’t do this on your own, de Posada suggests you identify someone whose willpower is stronger than yours either to keep your money for you or be the person to whom you are accountable.

“If you trust them, send them the money and tell them they can’t give it back until you’ve reached a certain goal,” says de Posada. “Or have your mother or your brother or a close friend call you every 15 days and ask you how much you saved or what you spent your money on during the previous two weeks.”

2. Have your boss hide away part of your paycheck. If you work for a larger company, de Posada says you should have at least 10 percent of your income transferred into a 401(k) or other financial instrument before you ever see it. Just like the kids who looked away from the marshmallow, your money will be out of sight and out of reach.

The Investment & Retirement Center located at First Financial can assist members with saving, investing, and planning for retirement. Set up an appointment with the Financial Advisor by calling 732.312.1500 or stop into any branch and ask a representative to schedule an appointment for you.*

3. Use a money planner. “You schedule your time with your iPad or your calendar, so schedule your money in the same way,” says de Posada. “Give yourself orders that you need to follow in your planner, such as saving a specific amount each week.”

Committing these money appointments to your calendar makes them more concrete, as opposed to vague, far-off goals.

De Posada suggests establishing your financial priorities as you would other activities, with the “A” level urgent actions that must be done today, such as paying a bill on the due date; “B” level tasks that are important but can be accomplished by a future deadline, such as reducing your debt by a particular amount; and “C” level long-term goals such as funding your retirement. He recommends checking your money planner weekly rather than daily.

4. Take action now for future rewards. Overcoming a bit of discomfort in the short term often accompanies actions that pay off in the long term. Investing in the stock market requires weathering the inevitable short-term gyrations and reminding yourself that over the long term the market has steadily risen.

“You need to understand who you are and your appetite for risk, but be aware that when you’re younger you can be more aggressive in your investments,” says de Posada.

De Posada says the most important part of the marshmallow theory is to understand how you would react to the experiment.

“If you know intrinsically that you’re a marshmallow eater, then find a technique to overcome that character trait,” he says. “Recruit someone to help you or put systems in place that will force you to wait for that second marshmallow.”

Click here to view the article source.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

What’s Your Number? 5 Financial Figures You Need to Know

Posted on by
Reply

When we talk about personal finance, a lot of terms often get tossed around: APRs, credit scores, mortgage principles … you get the idea. It’s easy to get lost in all of these numbers, so we’re here to break it down for you. These five may be the most important – they’re the difference between a healthy bank account and debt collectors knocking at your door. Expenses.

1. Your credit score. This may be the most important number ever attached to your name. Your credit score decides your approval for a mortgage or auto loan; it also plays a role in what credit card offers you qualify for. It influences your rates on loans too, and much more. Moreover, many employers evaluate an applicant’s score during the hiring process.

To build a high score, you have to be a responsible borrower. That job is a little more complex than it might sound, so we’ll start at the beginning: Pay your credit card bills on time and in full.

Once you’ve got that down, another way to boost your credit score is to take out different types of loans to show you’re creditworthy.

That said, don’t take out all those loans at the same time, as each results in a hard inquiry, which takes a slight hit on your credit score. Your length of credit history has an impact on your score, and too many accounts opened at the same time may not look too good.

2. Your tax rate. When you file your taxes, you’ll find yourself in one of six brackets. Don’t assume, though, that if you fall into the 15 percent bracket, you pay a flat 15 percent to the federal government every year — you’ll pay less. That’s because the 15 percent bracket isn’t your effective rate (the final amount you end up paying); it’s your marginal tax rate, which says how much your last dollar is taxed.

Here’s why this is important: If your employer withholds significantly more than you owe to the federal government, you might ask them to withhold a little less. That way, rather than get the extra cash back as a federal tax return in springtime, you can deposit the money into a savings account or save it for retirement by depositing it into an Individual Retirement Account (IRA).

3. Your personal savings rate. In America, saving a large portion of your earnings may be a thing of the past. The personal saving rate — how much of your disposable income is socked away rather than spent — is at just about 4.6 percent.

While this is much improved, it still represents a major decline from decades past, when Americans overall saved more than 10 percent of their income. According to the Federal Reserve, just 52 percent of Americans spent less than they earned.

If you’re looking to save, check out your local credit union like First Financial! We offer a great variety of options in savings accounts and savings certificates.

4. Your student loan debt. Americans hold more debt in student loans than in credit cards, to the tune of $1 trillion. Although rates on most federal and private loans are less than those for credit cards, the sheer amount of debt — sometimes as much as $100,000 or more — can make it difficult to afford even the minimum payments. Be sure to know your future obligations when taking out student loans, and take advantage of any beneficial repayment programs offered by your lenders.

You need to get a handle on your student debt, as it will affect the loans you take out in the future. The way you treat your student debt, and really any debt, has a bearing on your credit score, which in turn has a bearing on your future rates — or if you’ll be approved for a loan at all.

business finance5. Your net worth. It sounds daunting to try to put a dollar value to your name, but knowing this value will help you set smarter goals and create a sound financial plan. To calculate your net worth, you need to make a list of everything you own, everything you owe, and then subtract to find out the difference.

First, add up your assets, then your liabilities (or your total debts). Your rough net assets equation should be as follows:

Net worth = (cash + properties + investments) – (credit card debt + loans + outstanding payments of any other kind).

If you’re in the positive, ask yourself: “Am I allocating my resources as best I can to my short, medium, and long-term goals?” If all of your money is sitting in a low-yield savings account, consider investing a portion of it to diversify your portfolio. The Investment & Retirement Center located at First Financial, can help you do just that.*

If you’re in the negative, don’t stress – but rather develop a plan. The most important step you can take is to begin paying off your debt as soon as possible, starting with the loans that have the highest rates. Once you know where you stand overall, you can budget better for future expenses, such as preparing to buy a car or saving for retirement.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Article Source: http://money.usnews.com/money/blogs/my-money/2013/03/18/whats-your-number-5-financial-figures-you-need-to-know

When Was the Last Time You Had a Financial Checkup?

Posted on by
Reply

One of the best things you can do for your finances is to periodically check your financial health. It’s always a good idea to evaluate your finances, and recognize where you are in terms of financial health — and figure out where you want to go from here.

Areas of Consideration for a Financial Checkup

As you prepare for your financial checkup, it’s a good idea to consider the following areas, and make adjustments as necessary:

  • Net Worth: It’s not a bad idea to start with your net worth. Your net worth offers a snapshot of where your finances are right at this moment. As a result, it can make a good starting point. Look at your current net worth, and compare it to your net worth from your last checkup. This can give you a general idea of what direction you are headed financially, and can give you a warning that you might need to make some changes.
  • Financial Plan: Next, review your financial plan, and your overall financial goals. Are you on track? Is your financial plan still helping you reach your goals? Or have things changed enough that you need to make tweaks to your financial plan? If you have moved off course from your financial plan, now is a good time to get back on track. Recognize what you need to do to bring your spending and saving back in line with your long-term financial goals.
  • Insurance Coverage: Review your insurance policies. Look at the coverages and the various plans that you have. It’s a good idea to consider what you need to protect your assets. Make sure you have adequate coverage. In some cases, it might make sense to drop some of your coverage, or take steps, like raising the deductible, to lower your premiums. First Financial members are eligible to save money on home and auto insurance through Liberty Mutual.*
  • Investments: Consider your investment accounts. Does your asset allocation still make sense? Has your allocation drifted away from what you want? Review the fees you are paying as well. If you have investments that are racking up the fees for you, consider switching things up. It might also make sense to consolidate your investment accounts in some cases. If you would like to set up a no-cost consultation with the Investment & Retirement Center** located at First Financial to discuss your brokerage, investments, and/or savings goals, contact them at 732.312.1500.
  • Spending and Saving Habits: Don’t forget to consider your spending and saving habits. Have you moved away from your savings goals? What about your spending? Have you stopped following your spending priorities? Re-establish your financial priorities, and make sure your spending is in line with what you prefer.

Now is also a good time to review your tax liability, and look for ways to reduce your taxes before the end of the year. Part of your financial checkup should also include a look at the deductions and credits you might be able to add in before the year ends, whether it’s buying business equipment or donating to charity.

An annual review of your financial situation is a good idea. You can catch problems — or even just see where you might have become lazy with your finances. A financial checkup can help you identify areas for improvement, and you can make a plan to boost your situation.

Here at First Financial, we encourage our members to come in at least once a year to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call or stop in to see us today!

Article Source: http://moneyning.com/money-management/when-was-the-last-time-you-had-a-financial-checkup/

*Liberty Mutual is an insurance service available to members and is not a product of this credit union.

**Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

How Much is Your Habit Costing You?

Posted on by
Reply

bad-habits-resized-600We all have little habits that tend to drain our finances. Perhaps it’s soda, online games, cigarettes, magazine subscriptions, gambling, wine, or movies. No matter what your poison, if it costs you time or money, it should be examined closely.

Health and moral concerns aside, the wise consumer will examine his or her habits to determine if the benefits outweigh the costs, or if cutbacks are necessary to restore a healthy balance in one’s budget. One of the first steps in this process is to determine what you get (the benefits) out of your habits, and try to place a monetary value on those benefits.

For example, if you like to get a weekly massage, you can list several potential benefits from this activity, like so:

  • Health benefits: Many medical professionals recommend massage to reduce stress, increase circulation, and improve lymph drainage. If your health is compromised, or if you experience a lot of stress in your personal or work life, the monetary health benefits can be extraordinary. Let’s say four massages a week replaces a prescription muscle relaxer. In this case, we could say your monthly massages are worth $80 a month in health benefits.
  • Productivity benefits: In our example, we could imagine weekly massages increase your work performance by reducing stress, allowing you to complete two extra projects a month. The productivity benefits could total $400 a month.
  • Happiness benefits: If your massages bring you immense joy, you are less likely to spend money on other pursuits of happiness, and you can also place a monetary value on how your habit makes you feel. What’s your habit worth to you? How much would you pay to continue it? For our massage example, we could say our happiness value for this habit is about as pleasant as mowing the lawn is unpleasant. If we pay a lawn service $30 an hour, our massages would be worth $30 an hour in happiness, or $120 a month.

That’s a total estimated monetary benefit of $600 a month.

The next step is to calculate what your habit costs you. Not only will you have to determine your out-of-pocket expense (in this case, the cost we pay for the massages), but also such things as the cost of managing negative health impacts, transportation and maintenance costs, and the effect your habit has on your relationships.

  • Out-of-Pocket Expenses: For our massage example, let’s say the cost of a weekly massage is $65 plus tip, equaling $308 a month.
  • Transportation: If we travel 20 miles round-trip to the spa, we’ll estimate it costs you $0.74 per mile to maintain and operate your vehicle, equaling $59.20 per month in travel costs to our support our massage habit.
  • Time: The time you invest in your habit is also considered a deduction. Our massage habit takes up four hours a week, plus two hours of travel time each month. If your time is worth $40 an hour, you’re losing $240 worth of time every month.

For our massage habit example, our total cost is $607.20.

Our conclusion is a weekly massage habit costs us $7.20 a month. Is it worth it? That’s where you need to decide if cutbacks are necessary. If you don’t want to drop your habit, try finding ways to reduce the impact of the overall cost to make your habit a wise choice.

Do you have questions about any of your financial habits or would you like to make an appointment with a financial representative to discuss your financial plans?

Contact a Financial Representative

Article Source: http://moneyning.com/life-style/how-much-is-your-habit-costing-you/

* First Financial is not responsible for the content listed on any external websites.

5 Splurges You Can & Should Allow Yourself

Posted on by
Reply

iStock_000017972218XSmallYou work really hard to save money and get out of debt. Every year, when making your New Year’s Resolutions, you vow that this will be the year you finally succeed and never look back.

You set your budget before December, you’ve planned how much you will put on each card, and you plan to say “no” to everything.

  • No more lattes from the Starbucks drive-thru.
  • No more eating out with friends.
  • No more weekly manicures.

At first, you’re so proud of yourself for doing well, but by January 27th, you’re starting to regret and resent your plans.

Your coworkers are going out to dinner tonight and you really, really want to go. You wrestle with your conscience and your goals and off you go to eat with the gang.

You’re not thinking about the goals you established only a few weeks back; you’re thinking about how your debts aren’t going anywhere, no matter what you do. If you can’t change your future, then why not enjoy your present?

Your plans fly out the window before you’ve even given them a fair chance to work.

The unrelenting pressure of your iron-fisted budget is coming down on you hard, and you can’t stand the thought of never spending another dime on yourself. Your inner rebel is screaming to get out. So you surrender, and let the rebel win. This year can be different. No, really, it can be.

Let Go

Allowing yourself a few guilty pleasures that won’t break your budget or wreck your route to success will give you a budget that’s livable and easier to swallow. No one wants to live life feeling deprived.

1. A gym membership

Yes, there goes your excuse to not join the gym. Sorry! The fact is, the gym is a great place to be inspired to stay fit. With the low cost of many fitness centers, it’s easy to justify $19 a month to better your health. Though the biggest win is the excellent health habits you’ll develop, the relaxation that comes after a great workout is a massive bonus. This is one expenditure you should allow yourself — and feel good about!

2. A healthy diet

Buying whole fruits, veggies, and meats eliminates many middle men from the food preparation process. This means you’re getting nutrient-rich foods that will fill and fuel your body better than frozen, prepackaged, or processed foods. They may cost a little more, but YOU are well worth the investment.

3. A retirement fund

Allocate an amount that can be set aside each pay period for your retirement. Even if you already contribute to a 401K, you can increase the amount. The more you invest now, the closer you are to sitting on the front porch of life, rocking away and watching the sun set.

If you would like to set up a no-cost consultation with the Investment & Retirement Center* located at First Financial Federal Credit Union to discuss your savings and retirement goals, contact them at 732.312.1500.

4. A weekend away

(Only do this if you can pay for it outright — no credit cards for this one!) Once in a while, you deserve a break. And though it may cost a bit more, a weekend away can really recharge your batteries, giving you a reason to continue on your journey of savings. Make sure to fully relax in your environment, so that when you return, you’re ready to work hard and roar towards your financial goals.

5. A special reward

Maybe you’ve had your eye on a gorgeous new suit, but you have a hard time justifying the purchase with your looming debt. You longingly stare every time you pass it by. Tuck away a little each week, so that you can get those dapper duds without breaking your budget. After all, you’ve been good and stuck to your goals, right?

By giving yourself permission to enjoy your money (within reason), you’ll be far more likely to stick with your budget and reach your goals.

What splurges do you allow yourself? Tell us! We’d love to hear it – comment below…

Click here to view the article source.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

7 Steps to Creating Lasting Financial Resolutions

Posted on by
Reply

New-Years-Resolution-for-Finances-300x221We all have more than a few well-intentioned New Year’s Resolutions that never make it to February. We mean well, and we try hard to stick to our life-changing plans, but it seems inevitable that we’ll fail.

If you want to make lasting financial resolutions, you have to include a certain level of detail in your goals.

Try these 7 steps to help you create financial tips that will stick:

1. Make your goals specific.

In order to make realistic financial goals, you have to be very specific about what you want to attain. “I will save more money this year,” gives you lots of wiggle room to shirk your new goals. A more specific goal like, “I will save 7% of my income each month,” is very specific and helps keep you on target.

2. Make your goals measurable.

In order to determine if you’re meeting your goals or if you need to step up your efforts, you have to create a goal that includes measurable outcomes. If you set a goal to spend your grocery money more wisely this month, you have to include examples of what smart grocery shopping looks like. Are you buying items in bulk? Do you only buy groceries when they’re on sale? Are you shopping at discount food stores? Are you spending less on higher-priced processed and ready-to-eat foods?

3. Set a time limit.

Who says New Year’s resolutions have to be set in stone as of January 1st? Make a goal for the first thirty days and include a reminder to set another goal for the next month. Can’t make it through thirty days consistently? No problem. Set your goals for smaller periods of time.

4. Reward yourself.

One of the best ways to create a lasting habit is to make the experience pleasurable. Forget the guilt trip over not keeping your resolutions; just give yourself a break and start anew as soon as you realize you’re failing. Reward yourself often for meeting even the smallest aspects of your financial resolutions.

5. Be realistic.

While we’d all love to become millionaires overnight, setting a goal to become “rich” in a short period of time isn’t very realistic.Don’t set yourself up for failure by including unrealistic details in your financial goals. It’s completely acceptable (and encouraged!) to dream, but not to set goals that are impossible to achieve.

6. Get help.

When setting financial goals for the new year, don’t forget to include an accountability partner to help keep you on track. This person can be a trusted friend, family member, or professional that will check in periodically to see how you’re doing with your goals. When you have to answer to someone else, you’re more likely to curb your undesirable behavior.

If you would like to set up a no-cost consultation with the Investment & Retirement Center* located at First Financial Federal Credit Union to discuss your savings and retirement goals, contact them at 732.312.1500.

7. Change your attitude.

One way to reinforce your desire to make lasting changes is to change the way you perceive your finances. Set a goal to read one book a month about finances, take a financial management class, or spend time with people who have a solid grip on their finances. Talk to people who are where you want to be at the end of the year. Surround yourself with information and encouragement to help make this year’s financial resolutions a success.

Click here to view the article source.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are: