September 2020 Newsletter
The pandemic has created some times of uncertainty, which makes saving for the future more of an imperative than ever. Budgeting is a great way to create the consistency that results in savings success. Following a budget keeps you on top of your finances, helps you meet your savings goals and pay down debt, and can create a fallback plan in case of a future emergency.
To start developing your budget, you first have to understand how much money you bring in each month. Record your paychecks and any additional income you might have. Next determine where all of your money goes. Start by noting all of your fixed expenses, such as mortgage or rent and car payments. Then look at variable monthly expenses like groceries, utilities or gasoline, and entertainment. Be aware that some months might have different expenses than others due to birthdays, holidays, or anniversaries.
Next determine your financial goals. How much do you want to have saved by next year? What about in five, ten, or twenty years? To make those goals happen, you’ll need a plan—it might include becoming debt-free, having cash on hand, or investing toward retirement. Achieving those future goals needs to be part of your current monthly budget.
Consider a zero-based budget where each dollar you bring in has a place to go, whether that’s toward monthly bills, debt, or savings. If you find that your budget hits negative numbers, you’ll need to make some adjustments. Typically, that will be in discretionary spending, such as dining out, gym membership, or clothes shopping. If cutting out those expenses still leaves you with a shortfall, you might need to take a harder look at some of your other lifestyle choices.
As you go forward with your new budget, be sure to track your spending and adjust that month’s budget accordingly. Hitting a zero-based budget will take attention and regular action. For example, if gas prices surge and you’re suddenly spending more to get around, you’ll need to balance that by making a change somewhere else. Remember to save for emergencies or planned large expenses, such as car repairs. With these things in mind, you should see budgeting success as well as success toward your financial goals.
By CUSO Financial Services, L.P.
The coronavirus pandemic has affected the American worker in unparalleled ways. If you’ve experienced a layoff, you may be wondering what the best approach is when deciding what to do with your 401(k) account. Since your 401(k) may be a significant portion of your retirement savings plan, it’s important to carefully consider your options before making a decision.
There are three general options for dealing with 401(k) funds:
1.Leave the funds with your former employerʼs plan.
In most cases, leaving your job doesn't mean your 401(k) has to move. It sounds simple, but this may be a very costly choice. You may have fewer investment options than if you moved your money to an IRA and you may be stuck paying high plan fees without the benefit of an employer match to help offset the fees.
2.Roll the funds into an Individual Retirement Account (IRA).
An IRA may give you more control over your investment dollars and more investment options. While IRAs enjoy the same tax-deferred compounding as most qualified savings plans, such as a 401(k), they typically offer a wider range of investment choices, and these could potentially translate into a better retirement plan for you over the long term. You can ask your employer for a direct rollover into your IRA to avoid paying any penalties.
3.Withdraw the funds.
Normally, you pay a 10% penalty on early withdrawals from a 401(k), in addition to being taxed at your ordinary rate on withdrawn funds. But the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows you to take up to a $100,000 withdrawal without owing this penalty if you face financial hardship due to COVID-19.You can also spread out your tax payments on the withdrawal over three years.
But while you can take at least some money out of your account without penalty, the ordinary income taxes you'll owe could still be quite high. Plus, you lose the chance for the withdrawn funds to potentially continue growing.
If your work has been affected by the coronavirus and you have questions about your 401(k) account, we invite you to schedule a time to speak with a CFS* Financial Advisor. Call 303-728-3443, email email@example.com, or stop by any Bellco branch to schedule an appointment.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Bellco Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Before deciding whether to retain assets in an employer-sponsored plan or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions, and possession of employer stock.
CUSO Financial Services, L.P. (CFS), does not provide tax or legal advice. For such guidance, please consult your tax and/or legal advisor.
Con artists thrive during periods of uncertainty. Now, more than ever, you should stay wary of possible scams and fraud and protect your identity and your financial information as much as you can. Bellco Credit Union values your security, so we have some suggestions for how to additionally protect yourself.
1. Be aware of scams. Donate only to verified organizations, and never send money or gift cards to someone you don’t know. Red flags include strangers asking for your personal information, people claiming to be or represent hospitalized or stranded relatives, or someone posing as a government official. Verify the request before you give anything away.
2. Identify phishing. Many times, email communications can seem official—scammers will go as far as to add actual corporate logos to their communications and will use legitimate-sounding terminology—however, you could get tricked into giving away your personal information. Red flags include misspelled words, factual errors in email addresses or domain names, and inaccuracies or inconsistencies in the message.
3. Recognize traps. A Bellco representative will not ask for your personal information unless you contact us. If you’re contacted by someone claiming to be from Bellco, don’t give your personal data, credit card information, or login credentials. Hang up the phone and call our official number or log on to our website to verify any request. Also, be wary of links in text messages or emails; if you’re not positive the link is legitimate, don’t click it.
It’s always a good idea to review your credit information annually. Contact the three credit-reporting agencies to request a copy of your credit report, and verify that you created all accounts listed. If you find any errors related to your Bellco accounts, please contact Bellco directly. For more information on keeping your information secure, contact a Bellco representative, and if you think you’ve been the victim of a scam, contact the Federal Trade Commission at ftc.gov.
As a not-for-profit, Colorado-based financial cooperative, Bellco is committed to providing tools and resources to help our members and the community feel financially empowered. One way we've done this is by collaborating with Denver 7 to provide communities across Colorado with helpful financial tips.
In a recent Denver 7 newscast, reporter Eric Lupher provided helpful tips on ways you can teach your kids (no matter what age) good financial habits. You can view the segment below: