Better Business Bureau tips for enriching your money skills
Money is one of the top stressors for most Americans in almost every survey; often ranking No. 1. Even before the pandemic, 30 percent of Americans reported being within three paychecks of needing to borrow money or skip paying one or more bills.
Our BBB feels helping consumers and businesses with any skills to improve their understanding and knowledge of money management is vital to empower our marketplace.
As community members we have been an active partner of Chicago Money Smart Week, promoting and providing tools to assist people in their money matters because, as they say, "Money doesn't come with instructions."
This year Chicago Money Smart Week will be held April 9-16. It's a timely reminder to review your finances and engage in some "spring cleaning" of your financial house.
Two of the pillars to gaining control of your finances are setting up a monthly budget spending plan and learning the power of compound interest.
A few items are needed to establish your spending plan: a piece of paper, pencil and a calculator. Write down your sources and amounts of income for the month and your expenses. Make sure you include income and expenses that may fall outside of a given month. (taxes, insurance premiums, etc.)
Many people who start a spending plan are shocked by various monthly services and bills that in many cases can be trimmed or eliminated.
It is difficult to argue that saving more is detrimental to your financial health. A spending plan can give you insights to cut costs to boost your savings.
Various accounts attribute Albert Einstein saying, "The most important powerful force in the universe is compound interest." Time and a disciplined savings plan could allow you to leverage this powerful financial force.
The power of years of compounding interest can be spectacular, especially for those who start saving earlier in life. There's a golf story often told about compounding. If you bet a friend a dime a hole and agreed to double the wager each hole, by the fifth hole you would be betting $1.60 a hole. By the time you were teeing off on 18, you would be playing for $13,107.20.
Seemingly small, initial amounts of savings can add up to dramatic long-term balances over time through the power of compounding.
Compound interest can work for you, or against you. The average credit card debt of U.S. families is $6,270, according to the most recent data from the Federal Reserve. Paying down high interest credit debt is a key tip for financial health.
Another way to boost your savings is participating in a deferred savings plan. If your employer offers a sponsored retirement plan with matching contributions, set a goal to "max the match." The target contribution percentage would initially be based on maximizing your employer's contribution.
Money is complex, and one of the other vexing issues that people report is finding the right financial professional for assistance and help provide peace of mind.
We have teamed up with the Financial Planning Association of Illinois to equip consumers with a powerful and free e-book full of easy-to-understand information for assistance in developing a well-coordinated financial plan.
The free e-book is intended to help consumers navigate and understand the often complicated and confusing world of financial services.
The guide is designed to help you:
• Determine your financial planning needs;
• Identify strategies for engaging higher quality professionals;
• Learn how to avoid high-pressure sales tactics; and
• Identify resources and links to assist in your search for a financial professional.
The core of the BBB mission is educating and protecting consumers and promoting better businesses. We are honored to partner with the Financial Planning Association of Illinois, another organization with standards of excellence, to bring this valuable information to help people in an era when finances have never been more important.
• Steve J. Bernas is president and CEO of BBB of Chicago and Northern Illinois and can be reached at email@example.com.