The 2×2 System is where you set aside two hours on the calendar two times a month to complete a predetermined financial task. This modest but consistent effort can help you sustain financial health and build wealth in bite-sized chunks. Read March’s blog for tips on creating a spending and savings plan. We hope you find this month’s information helpful.
April ideas to move you forward financially
Tax season is finally over for most people. With that hurdle out of the way, it’s time to turn your attention from money owed to growing your savings for short- and long-term goals. This month’s sessions offer ideas for making savings a habit and your retirement more financially secure. Keep reading to learn more.
April Session 1: Automate your savings
A recent study found that people who automate the process of putting money toward their goals achieved a 73% increase in savings over people who didn’t. The bottom line is that you’ll save more by automatically transferring part of your income to your goals each month. Automatically directing money into a savings account helps prevent you from being tempted to spend your money instead of depositing it.
Tip: Most financial institutions allow for multiple savings accounts, and many allow you to name each account after the particular goal you’re trying to achieve. Distribute the money for each goal to a different account and name it accordingly. It may seem like a small act, but anything that will help you stay motivated to stack up those funds is worthwhile. Here are a couple of ways we can help you automate your savings. Let’s start with Direct Deposit. It is a safe, reliable way of getting paid. No worrying about losing checks. Your money is deposited into your accounts even if you’re on PTO. And, if you’re a Farmers’ employee, you get paid up to two business days early.* Plus, if you open an Online Savings account with Direct Deposit, you get a 0.50% bump-up rate bonus.** If you prefer to make automatic transfers into a special account for long-term goals or emergencies, consider our My Account or Rainy Day Savings accounts. Both pay a nice yield and offer limited access; it’s the out-of-sight, out-of-mind approach to savings.
April Session 2: Review your retirement plans
Because taxes and retirement considerations are connected, it’s a solid idea to do an annual review of your account elections and your overall retirement plan once you’ve completed your filing with the IRS. Here are a few questions to ask yourself:
• Am I contributing as much as I could be to retirement?
• Am I maximizing matching employer contributions?
• Does the risk tolerance of my investments still match my target retirement date?
• Does my asset allocation need rebalancing?
• Are there retirement plans from past employers I could roll over into an individual retirement account (IRA) for easier management?
• Do I need to schedule an appointment with a professional to review my retirement strategy?
Tip: Remember, the deadline for making a contribution to an IRA for a given year is the tax filing deadline for the following year. So, while the April 15, 2024, deadline has passed, you can get a head start on next year’s taxes. We offer Traditional IRA, Roth IRA, and SEP IRA options.† Each offers tax features that can result in significantly more savings than ordinary savings accounts.
Final Thoughts
Whatever is on your financial wish list, from a new home to a dream vacation or six months of cash in an emergency fund, start by starting to save. Begin by automating your savings now. A little effort today can go a long way to helping you achieve your best financial life. If you need help setting up Direct Deposit or opening one of our many Savings accounts or an IRA, please connect with us online through Tulee or call 800.877.2345.
Thanks to our friends at Balance for these smart tips.
*Offer valid on Direct Deposit Payroll enrollment into a Credit Union share account. This offer may be withdrawn at any time. Only Farmers’ employees qualify for payroll deposit two days early. Subject to employer and/or payer terms and conditions. FIGFCU will generally post Farmers payroll direct deposits on the day they are received, which will be up to two days earlier than the scheduled posting date. Other exceptions may apply.
**APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month. Rate bonus for $1,000 monthly Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account. No branch or call center access with this account.
†Consult your tax advisor regarding tax consequences and your specific situation.
