6 Financial Lessons You Can Learn From Basketball

When we should have been in the midst of college hoops March Madness, let’s take a moment to review someBasketball player shooting from free throw line, rear view surprising financial lessons we can learn from the iconic sport and its players.

Lesson 1: Passion breeds success

As any wannabe professional athlete can tell you, it takes more than muscle and talent to be a star. You need to be completely passionate about the sport to really succeed; otherwise, you’ll find it challenging to summon up the single-mindedness and commitment necessary for building your skills and strength.

In much the same way, you’ll see the most success while working at a job you feel passionate about. Your interest in the field will drive you to push yourself harder, set increasingly larger goals and achieve true success on a personal and financial level.

Lesson 2: Discipline is key 

From grueling training sessions to early-morning workouts, basketball requires an endless amount of self-discipline. Athletes must learn to ignore distractions and to devote themselves completely to the game to reach the top. This can mean missing out on social events, pulling all-nighters to keep their grades up and, of course, spending hours upon hours on training sessions and muscle building.

Managing your finances successfully requires a tremendous amount of discipline as well. Will you stick to your budget for groceries this month or blow it all on an expensive product that catches your eye? Will you have the self-control to decline an invitation to join your friends at a pricey restaurant when you already used up your allotted monthly budget for dining out? Will you remember to pay yourself first each month and set aside money for savings when there are so many things you’d love to buy today?

Training yourself to be disciplined with money is the key to a lifetime of financial wellness.

Lesson 3: Set small goals

Young athletes aspiring to compete on a professional level have a long road ahead of them. To bring their long-term goal within reach, they set smaller, trackable goals along the way. For example, they might work on increasing their muscle mass one season and then focus on bringing up their speed the next year.

Setting small goals is equally important when managing your finances. Sure, it’s nice to dream of acquiring your first million or buying a private island, but how realistic are these goals right now? How many years will it take to achieve them? It’s better to set smaller, manageable goals for your money, such as saving up a targeted amount of money, putting away a specific percentage of your monthly income for the future or bringing your monthly discretionary spending down by 10 percent. Just like a professional basketball player, your goals can be progressive, with another, larger goal taking the place of a smaller one you’ve already achieved.

Lesson 4: Diversify, diversify, diversify 

A basketball team cannot be made up of star centers. The team needs every player, each of whom is an expert in their own skill area. The team players then work in perfect coordination, using their talents to compensate for their teammates’ weaknesses and, ultimately, to win the game.

Similarly, the best investors will diversify their investments across different classes to maximize their chance of success. This way, the loss of any investments that don’t work out as planned will be offset by those that do.

Lesson 5: Research, review, revise

Athletes prepare for games beyond training sessions and practice runs. Before a scheduled game with an opponent, coaches will show their players videos of previous games they’ve played against that particular team. This way, the players can get an understanding of what they’re up against, learn the other team’s strengths and weaknesses and develop the best strategy to help defeat them.

In smart  money management, there’s no end to the ways you can build your knowledge. You can check out online financial resources, read the latest in personal finance literature and listen to podcasts on money topics that interest you. You can also stop by Destinations Credit Union to speak to a Member Service Representative about the financial resources we offer members. Use the knowledge you acquire to make smart decisions about general money management, your investment strategy and your long-term financial goals.

Lesson 6: There’s no such thing as the easy way out

Players learn quickly that there are no shortcuts to building their skills, stamina and strength. Those who try to take the easy way out by turning to steroids or other illicit sources to help them reach their goals end up ruining their own careers.

Short of winning the lottery, there are no shortcuts to financial wealth, either. Don’t fall prey to get-rich schemes or miracle investments promising astronomical rewards. Instead, follow the timeless rules of money management to maintain true financial wellness throughout your life: Always pay yourself first, invest early to take advantage of compound interest, spend less than you earn and increase your earning potential by investing in your own skills and knowledge.

Your Turn: Can you think of any more financial lessons we can learn from basketball? Share them with us in the comments!

Sources:
https://www.marketwatch.com/story/financial-lessons-you-can-learn-from-a-football-player-2017-11-01
https://economictimes.indiatimes.com/wealth/invest/financial-planning-lessons-from-football/articleshow/64802776.cms
https://www.shebudgets.com/personal-finance/money-lessons-football/
https://www.forbes.com/sites/ianaltman/2014/09/09/four-valuable-business-lessons-to-learn-from-football/#4bce3cab3242

How to Create a Budget in 6 Easy Steps

Who needs a budget anyway?

If you’re always wondering how you’re going to pay the next bill, feel guilty when you indulge in overpriced treats and you can’t seem to find money to put into savings, then you probably need a budget.

A budget is not a magic potion that will automatically solve all of your money problems, but it will help you gain financial awareness. That, in turn, will help facilitate more responsible decisions.

Lots of people think budgeting is overly tedious, and that living within a budget means never indulging in a $6 latte or a pair of designer jeans again. The reality, though, is almost the complete opposite. A well-designed budget may initially take time to create, but once it’s up and running, it shouldn’t take you long to maintain. You’ll then sleep better at night knowing you can comfortably cover all your expenses. And, perhaps most shockingly, a good budget allows for the occasional treat—without the guilt.

Here’s how to create a budget in 6 easy steps:

Step 1: Gather all your financial information

Collect all of your financial documents and receipts for three consecutive months. This includes all account statements, bills, pay stubs, receipts and more. You can save all these documents over the three months, or you might be able to access this information online, especially if you’re a heavy card user who rarely uses cash.

Step 2: Tally up your totals

Divide your documents into expenses and income. Then, list the corresponding numbers on a spreadsheet. As you work through these lists, include occasional and seasonal expenses, dividing these expenditure groups by 12 to spread them evenly throughout the year.

When you have your numbers, take a look at how they match up. In the best-case scenario, your income will exceed your expenses. If the numbers are too close for comfort, or your expenses outweigh your income, you’ll need to trim your spending and/or look for ways to boost your income so you don’t end up deeply in debt. You can also review your fixed expenses to see if there’s any way to bring those values down, such as refinancing your mortgage to a lower rate, switching to cheaper car insurance policy or cutting out a monthly bill you don’t really need.

Step 3: List all your needs

Take a look at how you’ve spent your money in the recorded time and weed out all the actual needs from your list. This will include fixed expenses like mortgage/rent payments, savings, insurance premiums, car payments, minimum loan payments and childcare costs; as well as fluctuating but necessary expenses, like groceries, clothing and other dry goods. To keep it simpler, list your fixed expenses first, followed by your non-fixed expenses.

Separating your needs from your wants can get a bit tricky, and you’ll need to use your common sense. For example, you need to eat, but do you really need to eat organic? If this is an important value to you, the answer may be yes, but if it’s something you’d only prefer if possible, it may be more of a want.

As you list each need, write down its corresponding cost. When you’ve finished creating this list, add up the total.

Step 4: List your wants

Your next step is going to be all about the stuff you love to spend money on but can really live without. Include entertainment costs here, as well as eating out, gifts, expensive hobbies and anything else that costs money, but is not an absolute necessity.

Here too, jot down the monthly cost of each item on your list and tally up the total when you’re done.

Step 5: Assign dollar amounts to your expenses

You’re now ready to do the nitty-gritty work of budgeting. Open up a new spreadsheet and copy your lists of expenses, starting with the fixed-cost needs, then your non fixed-cost needs, and finally listing your wants. Remember to include your occasional and seasonal expenses here as well. Assign a fixed amount to each of these costs and plan to have that amount automatically transferred into a special savings account. This way, when you need to meet that expense, you have the money on hand to cover the cost.

There are several schools of thought when it comes to creating a budget. To keep things simple, we’ve outlined just two of the most popular budgeting methods for you to choose from.

The traditional budget involves assigning a specific dollar amount to each expense category. If your budget allows, simply use the average amount you’ve spent in each category for the last three months to set the cap for that expense. For example, if you spent an average of $600 on groceries, jot down that number near this category in your budget. Continue until every dollar is accounted for and you have enough money in your budget to cover every need, want and occasional expense. If your expenses outweigh your income, you’ll need to trim some expenses for your budget to work.

The 50/30/20 budget is simpler but requires more discipline. Set aside 50 percent of your budget for your needs, 30 percent for your wants, and the remaining 20 percent for savings. If you want to use this kind of budget, divide up your numbers accordingly to see if it can work for you. Does 50 percent of your income cover the total amount you listed for your needs? Is 30 percent enough for your wants? If it can work, this type of budget allows for more individual choices each month and less accounting.

Going forward, be sure to spend only the assigned amounts for each expense category.

Step 6: Review and adjust as necessary

Review your budget each month to see if you’re staying on track. If you consistently overspend in a category, move some numbers around and spend less in another area so you have more money available to meet your needs. Remember: A budget should be freeing, not restrictive. If yours is not working for you, adjust and tweak it until you can stick to it easily.

Your Turn: Do you stick to a strict monthly budget? Share your best budgeting tips with us in the comments.

7 Signs You’re Living Beyond Your Means And How To Fix Them

In the age of plastic spending and mobile payments, it’s easier than ever to buy stuff you couple looking at billscan’t pay for right away while supporting a lifestyle you can’t really afford.

Let’s take a look at seven red flags that might mean you’re living beyond your means and the steps you can take to get back on track.

1. You’re carrying a credit card balance from month to month

Credit cards are a great way to earn rewards, pay for emergency purchases when things are extra-tight and build a strong credit history. Unfortunately, though, they also make it far too easy to fall into the spending trap. It’s a lot harder to feel like you’re spending money when all that stands between you and a purchase is a plastic card.

If you have an outstanding balance on one or more credit cards and you’re only paying the minimum payment each month, you can end up carrying this balance for years while paying hundreds of dollars (or more!) in interest. You might also be tempted to make more purchases on this card since you already have an open balance.

The fix:  Try to double down on your monthly payments and/or make one extra payment each month instead of paying just the minimum amount. Stop using your card until the debt is paid off.

2. You stress about paying your bills

No one likes paying bills, but if you’re losing sleep over your bills, you need to take a step back to review your monthly budget and spending habits. Bills should be fixed into your budget and you should be able to pay them easily without any stress or nail-biting involved.

The fix: Take a long look at your monthly budget to find ways at cutting back. Cancel a subscription you never use, trim impulse purchases, start brown-bagging it at work more often or tighten the belt in any other way possible.

3. You can’t save 5% of your monthly income

Financial experts recommend putting 20% of your monthly income into savings, or even more if you can swing it. At the very least, you’ll want to sock away 5% of your monthly take-home pay to fund your retirement and any other expensive purchases or events you might need to pay for in the future. If you can’t possibly do that now, and you’re left with little or no money at the end of the month, you’re living beyond your means. Savings aren’t an extra; they are a necessity that should be a fixed part of every budget.

The fix: Again, you’ll need to trim your expenses and restructure your budget to include a minimum of 5% for savings.

4. You don’t have emergency and rainy-day funds

Unexpected expenses, like a household repair or extra tutoring for your child, can disrupt your monthly budget and really set you back-unless you have some way to pay for them. Ideally, you’ll want to have an emergency fund to cover major unexpected expenses, like a job loss or a medical emergency, and a rainy-day fund for small expenses you can anticipate, like replacing an aging appliance and sending your child to summer camp.

The fix: Start building your funds now by putting away as much as you possibly can each month.

5. Your mortgage payment eats up more than 30% of your monthly income

Most financial experts agree that your monthly mortgage payments should not exceed 30% of your take-home pay (that’s after taxes). Take a few minutes to do the math. If your mortgage is more than 30% of your income, you’re in over your hea

The fix: You have two choices here:

  1. Find ways to boost your income. You can seek a raise or promotion at your current job, freelance for hire or find another side hustle to bring home extra cash.
  2. Scale back your mortgage payments by considering a refinance. [Speak to a home loan counselor at (credit union) to see if this is the right choice for you.] If your mortgage is really crippling your budget, you might want to consider downsizing to a smaller and cheaper place.

6. You lease a car you can’t afford to buy or finance

Leasing lets you live the life of a high-roller without the huge bills. The problem is that many people can’t really afford their leases either. You might be covering your monthly payments, but if you can’t do that while also putting money into savings and meeting your other expenses, your car is too expensive.

Can you afford to pay for or finance your car? If the answer is no, you’re in financial trouble.

The fix: Downgrade your vehicle to one you can actually afford.

7. Your financial decisions are influenced by your friends’ spending habits

Thanks to social media and the hyper-sharing culture it introduced, the pressure to keep up with the Joneses is stronger than ever. If you find yourself making financial decisions-from what kind of footwear to buy to where you vacation-based on your friends’ choices, you’re likely spending more money than you can afford.

The fix: Stop looking over your shoulder and keep your eyes on your own life and your own wallet. If your friends have expensive tastes, try to be the budget-conscious influence in the group. You may just start a new, financially responsible trend!

If you’re in over your head, Destinations Credit Union can help! Stop by today. Our HOPE Inside Financial Wellbeing Counselor will be happy to help.

Your Turn: What’s your personal red flag that your spending has gotten out of control? Share it with us in the comments.

SOURCES:
https://www.google.com/amp/s/www.hermoney.com/invest/financial-planning/warning-signs-of-living-beyond-your-means/amp/

https://www.investopedia.com/articles/pf/08/in-over-your-head.asp
https://rockstarfinance.com/7-signs-that-you-might-be-living-well-beyond-your-means/

Can Living Frugally Make You Happier Than When Living Lavishly?

Do you believe money is the key to happiness?63e01-piggyeducation

Somewhere deep inside, we all know that money cannot buy happiness. Many people overspend and rack up thousands of dollars in credit card debt to live a lifestyle they believe will make them happy, only to discover they are living beyond their means. This, in turn, adds stress and worry … causing unhappiness. Believe it or not, living frugally can actually make you happier than living lavishly.

Living a frugal lifestyle isn’t necessarily about pinching pennies and denying yourself things you want. It’s about making your life easier and worrying less about money.

If you’ve decided it’s time to start living more frugally, ask yourself why you want to do it and establish a goal. Without a reason to change your spending habits and a goal to work toward, it’s easy to fall back into old habits. Maybe you’d like to retire early, or travel the world or buy your dream home. Maybe you’d like to work less and spend more time with your family. Whatever your reason, write it down. Place reminders of your goal where you’ll see them often.

Once you’ve started your new frugal lifestyle, you may be pleasantly surprised at your newfound happiness. Below are some benefits of living the frugal lifestyle that can lead to more happiness and better money management.

  • You’ll learn to appreciate what you have. You’ll become thankful for your resources and learn to make the most of them. Rather than throwing away old items, you learn to repurpose them and let little go to waste.
  • You’ll tend to choose experiences over objects. Rather than going to the mall and purchasing a new outfit or the newest video games, you’re more apt to go for hike, to the beach or play board games with friends or family. These experiences provide memories and happiness that can last a lifetime. Conversely, that new outfit or video game will provide only temporary happiness.
  • You’ll start to notice your debt diminishing. The burden of debt often ties people to jobs and locations that they hate because they feel they have no other choice. Once your debt disappears, you’ll have the freedom to choose a profession and location that makes you happy.
  • You will have more leisure time. Once you’re able to pay down debt, you won’t need to work as many hours to make ends meet. This will give you more free time to spend on hobbies and other leisurely pursuits.
  • Living frugally may put you on the path to early retirement. Rather than spending your golden years working, you could be gardening, traveling, enjoying your grandchildren or any number of more pleasurable things. Being able to put more funds away for retirement will help you reach a financially comfortable level long before many of your colleagues.
  • You might find joy in helping others. By reducing your own expenses and saving money, you are able to give more to others and support social causes that are important to you.

Now, you may be thinking – the frugal lifestyle doesn’t sound all that bad, but how do I get started? The key is to start small. Make a list of what you’d like to accomplish, how much money you’ll need to achieve it, and formulate a plan. Figure out expenses you can live without. Instead of buying high-priced gourmet coffee at a drive-thru in the morning, brew your coffee at home. Brown bag your lunch rather than eating out. Make a weekly meal plan and cook your meals at home. These items alone can potentially save you hundreds of dollars a month.

If you’re paying down multiple credit cards, look into consolidating them into one loan or to a single, lower-interest credit card. This can give you significant savings on interest charges. Check out Destination Credit Union’s low interest credit card options and apply online. Once you’ve consolidated your credit card debt, keep your your oldest credit card, but use it infrequently and close all others. Keeping your oldest card open may positively impact your credit score. Leaving the others open, though, may lead to a temptation to use them again, thus defeating the purpose of paying them off.

Learn to stretch your money as far as you can. When purchasing groceries, clip coupons and look for sales. When purchasing clothes or other non-grocery items, check thrift stores, yard sales and clearance racks for the best possible deals.

Look for ways to lower your monthly bills. Are you paying a huge bill for cable TV? Could you live without it? Many people pay a large cable bill and only watch a handful of channels. Check to see if there is a cheaper package available. Is your electric bill higher than it should be? Try hanging your clothes outside to dry rather than using your clothes dryer whenever possible. Also, washing your clothes in cold water instead of hot will save your hot water heater from working as hard – and your clothes will still get cleaned. Another good habit to get into is unplugging electronic devices when you’re not using them.

Give frugal living a try! You have nothing to lose but debt and can gain some unexpected happiness along the way.

Your Turn: Does saving money make you happy? How do you save – and enjoy the process? Share your thoughts with us in the comments!

SOURCES:
http://www.wisebread.com/how-living-on-a-tight-budget-makes-you-happier  

https://www.thebalance.com/frugal-living-4074014  
https://toughnickel.com/frugal-living/101-Frugal-Living-Tips-You-Need-to-Know  
https://www.thepennyhoarder.com/life/frugal-living-rich-life/  
https://www.thebalance.com/lower-your-electric-bill-1388743