children on a bicycle

How much money should I have in my emergency fund?

Though no one likes to think about it, anything can happen. You lose your job. A car needs major repairs. A medical expense comes up that insurance won’t cover.

Most people actually have less than they would need should an emergency arise. We encourage our members to set aside a minimum of three to six months’ worth of income that they can easily tap into when they have unforeseen expenses. Of course the more the better, especially if you are self-employed and support a family. But as with any change, the important part is starting.

Even if you start small, put a percentage of your income directly into a separate savings account every month. It is important to keep it separate from other savings so you only use it for emergency purposes. You may also consider keeping a portion of your funds in a variety of short-term investments which you can sell if you are ever in need of emergency cash.

adult hand holding childs hand

Mama knows best

When we were kids our moms told us all kinds of things that we didn’t like or didn’t get. Now that we are older, we understand what she was trying to say …

“Money Doesn’t Grow on Trees”

We’ve all heard this one. At the time, you are thinking, “well yeah!” Mom was really trying to instill budgeting and smart money management habits. We have a natural urge to buy things, that’s just a fact, but mom was reminding us to think before we buy.

“You eat what’s on your plate. Just think of all the starving kids out there!”

That last piece broccoli always seemed to spark this line. Mom was really teaching us appreciation for what we have and to never waste those things. Now that we are older, we can relate this to anything. Do I really need new gym shoes or is there still life in my current ones?

“Oh wait… I have a coupon.”

We had to wait for mom to look in her purse for the yellow Longs ad to find her coupon. At the time, we were thinking, “Mom… that is so embarrassing,” but now that we’re older, we realize that those small discounts here and there can really add up. Mom was teaching us to look for sales and be mindful when we shop.

“Give mom your birthday money.”

And that is why we all wanted gifts we could unwrap instead of cards! Mom would take our birthday money and we’d never see it again. Now we understand that she was putting it in a savings account for us - teaching us to sacrifice now to save and invest for the future.

female standing on a bridge at sunset

Your credit score

Your credit score can have a major impact on your life. Not only do creditors typically check your score when deciding whether or not to approve your application and what interest rate to charge you if you are approved, but landlords, insurance companies, and even employers often check it as well. Having a good score can help you achieve your goals quickly and at the lowest possible cost.

What is a credit score?

Your credit score is a mathematical assessment of the likelihood you will repay what you borrow. It is based on the information in your credit report, which tracks your credit-related activity.

FICO score

The most commonly used scoring model is issued by the Fair Isaac Corporation (FICO). Scores range from 300 to 850, with a higher score being indicative of less risk.

Factors used to calculate your FICO score:

  • Payment history (35%): Making your payments on time boosts your score.
  • Amounts owed (30%): Carrying large balances on personal loans and revolving debt, like credit cards, particularly if those balances are close to the credit limits, will lower your score.
  • Length of credit history (15%): The longer you have had your accounts, the better.
  • New credit (10%): This factor looks at the number and proportion of recently opened accounts and the number of inquiries.
  • Types of credit used (10%): Having a variety of accounts, such as credit cards, retail accounts, and loans, boosts your score.

There are three major credit bureaus that compile and maintain credit reports: Equifax, Experian, and TransUnion. Theoretically, all three of your reports should be the same, but it is not uncommon for creditors to report to only one or two of the bureaus.