SAVINGS

Personal savings are at an all time low in our country because of high consumer confidence and low unemployment. While both of those are good things, it still benefits everyone to have a prudent savings plan because we never know when calamity (be it a auto repair or loss of a job) might hit us.

Here are some general concepts you can use to build a savings plan.

#1 THE EMERGENCY ACCOUNT--The first goal is to have three to six months of net income in a liquid savings account (a passbook savings, regular share or money market account). This is money readily available should you need it. The easiest way to accumulate this money is by payroll deduction through your employer. The deduction is withheld from your paycheck and deposited to your savings, so you never see it.

#2 LONG TERM SAVINGS ACCOUNTS --Once you have accumulated an emergency account, you should look at your long-term goals—a new car, a down payment on a home, children’s college education, retirement. Money for these purposes can be put into a long-term investment such as a Share Certificate. Certificates earn a higher rate of return but carry a penalty if the money is withdrawn prior to maturity.

#3 RATE VS RISK—There is a direct relationship between the rate you earn and the risk you assume. Instruments with lower risk, such as certificates in a federally insured financial institution, usually have a lower yield. Instruments with higher risk, such as stocks, can earn substantially more but losses could include the principal. It is important to determine your risk tolerance—you may lose money in the market that includes the original investment, not just earnings.

#4 LIQUIDITY – Money for monthly expenses should be deposited in an interest bearing checking account that you can easily access. Funds that will be used within a relatively short period of time (two to six months) earn more interest in a savings (share) or money market account rather than a checking account and are still easily accessed. Longer term money can earn more in a time deposit such as a certificate.

To plan for future needs, such as education or retirement, use the calculator below to determine how much you need to save on a monthly basis to meet your goal.

BUDGETING

While we are not financial planners, the staff at Montana Educators' Credit Union can still provide you with a few tools to help you manage your budget.

First, make a complete list of monthly expenses. Money to cover monthly expenses should be deposited into a low cost, interest bearing checking (share draft) account so you can pay your bills.

Second, make a list of recurring, non-monthly expenses (insurance, taxes, auto maintenance, etc), then calculate the monthly amount of the non-recurring expenses. Put the monthly amount into a separate share sub-account for those purposes. Our members can set up a number of "sub-accounts" and make deposits via payroll deduction or we can set up an automatic transfer from your share draft account. Either way, the money is there when the bill arrives. You can simply call and have the money transferred to your share draft account and pay the bill.

We can help you segregate your money so you are less tempted to overspend when the checkbook balance looks a little too flush.

Other areas we might be able to help in are debt consolidation loans, our low cost Visa Credit Card program, Montana Medical Savings Accounts and Christmas/School’s Out Club Accounts. Just give us a call at 728-1034 to see what we can do for you.

THE "EXTRA CREDIT" PROGRAM

Our members who have direct payroll deposit and maintain an active share draft account, or who maintain at least $1000 in a share certificate or other share account, will receive a ½% discount on their loans.