Easy Ways to Save for the Holidays

Yes, the holiday season seems to come earlier every year, but unfortunately for too many Americans, saving for Christmas often arrives too late—if at all.

The average American spends $800 on holiday-related expenses every year, according to the National Foundation for Credit Counseling (NFCC), Washington, D.C. Despite the significant outlay, many consumers forget to plan for these annual costs and instead charge them to credit cards.

If you charge $1,000 and pay only the minimum 2% balance, at an 18% annual percentage rate it will take you 12 years to pay it off. And by the time you do you will have spent $2,353. Now imagine if you have to do this every year.

The NFCC offers a better alternative—plan for the holidays.

If you spent too much this holiday season, here are five easy ways to save for next year’s holiday season.

1. Tighten your everyday spending with the goal of saving about $1 a day between now and December 25th, 2015.

2. Adjust your W-4 to accurately reflect what you owe in taxes. The average tax return is $3,000, but that money doesn’t arrive until April. By taking less out of each paycheck, you can save that money for the holidays.

3. Cut back on monthly expenses that aren’t fixed. Aim to spend $10 less every month on categories like gas, food, and entertainment.

4. Sell unused items. Sell clothes at consignment shops, books, utilities, and CDs online at sites such as Amazon, resale shops, or have a garage sale.

5. Open a Century Club account with New Century Credit Union. Don’t use existing accounts because you could too easily spend that money on other items.

You can also always rethink the kind of gifts you give.

“It makes no financial sense to pile new debt on top of old. Kindness and experiences are meaningful substitutes for purchased gifts, and are remembered long after the wrapping paper and bows have been discarded,” says Gail Cunningham, spokesperson for the NFCC.

Don’t Fall For These Common Money Myths

Even the most battle-tested budget warrior might be making money decisions based on bad information, according to results of a recent survey.

Charles Schwab interviewed 998 people to discover their biggest financial misconceptions. A large number of them believed common money myths. In fact, those who described themselves as “savvy” actually were more likely to believe the myths.

Because it’s dangerous to not know what you don’t know, here are nine common money myths.

Myth No. 1: A will guarantees your property and money will be distributed the way you wish.
Unfortunately, 91% believed this. However, if you’ve named beneficiaries on financial accounts, such as your IRA (individual retirement account) or insurance policy, those designations override any will. You’ll need to update them to ensure you don’t leave assets to someone you didn’t intend, such as an ex-spouse.

Myth No. 2: You shouldn’t have any debt when you retire.
Differentiate between “bad” and “good” debt. No credit card debt is a good goal, but you shouldn’t pay off a low-interest mortgage or student debt at the expense of saving more for retirement.

Myth No. 3: You can always shore up your income in retirement by getting another job.
This is easier said than done for a number of reasons, including declining health and the erosion of marketable skills. Only 4% of retirees end up getting another job, despite 39% of those surveyed indicating they plan to work after they retire.

Myth No. 4: Everyone should have life insurance.
Life insurance is necessary only if you have disabled or young children or a spouse depending on your income, or if you own a small business.

Myth No. 5: You should take Social Security when you turn 62.
Not unless you really need it. If you wait and take Social Security at age 70, your benefits will be 76% higher.

Myth No. 6: You should buy long-term care insurance in your 40s when premiums are lower.
The premiums will be lower, sure, but you’ll be paying them for a longer time. If you’re healthy, Schwab says the ideal age for purchasing long-term insurance is between 50 and 65.

Myth No. 7: Retirees should keep their money out of the stock market.
If you anticipate a long retirement, keeping a portion of your savings in the stock market can help you keep pace with inflation.

Myth No. 8: You should borrow from your 401(k) if you need a loan.
Borrowing from a 401(K) should be a last resort; otherwise you’re putting your retirement savings at risk. New Century Credit Union offers other low-cost loan options that won’t derail retirement savings.

Myth No. 9: Your 50s are too late to make a difference in your financial future.
If you don’t retire until your late 60s, you could have almost two decades left to save. In 2014, anyone older than 50 can add an additional $5,500 in catch-up IRA and 401(k) contributions.

If you have questions about money management, the professionals at New Century Credit Union can help. Contact us today!

Teach Your Children Financial Independence

Are your kids on the right track to financial independence?

For many of today’s young adults, the weakest link lies in learning the basics. Only 35% of teens know how to balance a checking account or manage credit cards. During the past several years, a decline in overall financial knowledge is especially pronounced among 18-year-olds, and 13% fewer teens have bank accounts.

Achieving economic prosperity is difficult, and it’s especially hard for young people who’ve never learned how to manage money.

New Century Credit Union is ideally positioned to respond because we believe in the power of education. We’re here to help you launch the youth in your life toward financial independence, and here’s how:

Join. For starters, open a NCCU Kids Account for each child in your family. As soon as your children can write, have them fill out deposit and withdrawal slips. Guide teenagers through using a debit card and tracking transactions.

Share. Include your children in household money discussions. Show them how you budget income and expenses. As their skills improve, give them challenges—such as finding a better cell phone plan, calculating the total monthly cost of owning a car, or sticking to a budget for back-to-school or holiday spending.

Coach. Remind your children to ask for help when they need it. And turn to NCCU, Your Financial Family, when you want help. Our tradition of service and philosophy of self-help make us and ALL credit unions a natural partner in pursuing financial security.

We’re here to help. For more information, contact us!