Do you have a retirement fund? You’re sure to need one, but if you have the option of choosing a Roth IRA or a 401(k), which do you choose? It’s easy for people to advise you to do both, but unless you’re already fairly well off, that may be a daunting proposition. If you have to choose one or the other, how do you decide between the two?
- A Roth IRA is an individual retirement account. An individual can open the account and decide how investments are allocated. Roth IRAs differ from traditional IRAs and most 401(k)s in that they are funded with money that’s already been taxed. Therefore, once you reach the right time to withdraw it, the money is tax-free. Another benefit of Roth IRAs is that you can withdraw the contributions you’ve made at any time, though you will have to wait to access your earnings. Of course, it’s better to leave your retirement account alone, but it’s good to know that you have that money in case of a dire emergency.
- 401 (k)s are retirement accounts sponsored by an employer. This means that, unlike with Roth IRAs, you can’t open a 401 (k) on your own. They also differ from a Roth IRA in that a 401(k) is tax-deferred. This means you can invest pre-tax income and not pay any taxes on that money until after you retire and withdraw your funds. Perhaps the most appealing thing about a 401(k) is that many employers match either part or all of your contribution, which essentially means your employer is giving you free money for your retirement account.
Now that you have a basic understanding of each fund, are you any less confused about which one is right for you? Probably not, because it’s all still pretty confusing. Let’s break it down further, to see how they compare.
- Your eligibility is a major factor. To open a Roth IRA you need taxable income, but to open a 401(k), you need to work for an employer that offers this kind of account.
- Limits on how much you can contribute are different for Roth IRAs and 401(k)s. Both types of accounts have limits, but the limits are much higher for a 401(k).
- Taxes vary depending on which type of account you choose. Remember, if you keep your Roth IRA account for at least five years and don’t withdraw it until you’re at least 59 ½ years old, your money will be tax-free. With a 401(k), you can expect to pay taxes when you withdraw the money.
- Roth IRAs give you some flexibility with your investments. You can set up a Roth IRA through a brokerage firm or using software, at a physical location or online, and invest it however you wish. You can make your own decisions or consult with a financial advisor, or you can set up a robo-advisor to manage your investments for you. With a 401(k) there’s less flexibility. While you’ll be able to change how much you invest and your investment allocations at any time, your employer will limit your options as far as where the money is invested.
- Withdrawing money from a retirement account can be complicated. You’re supposed to leave your money alone when it’s in a retirement account, but typically, you’re allowed to withdraw from both types of account without penalty if you face a hardship like a permanent disability or extremely high medical bills. However, as mentioned previously, you can withdraw the money you’ve contributed to a Roth IRA, and you can even withdraw your earnings early in some circumstances without penalty. On the other hand, early withdrawals from a 401(k) typically come with income taxes and an additional ten percent penalty.
- Both 401(k) accounts and Roth IRAs have required minimum disbursements (RMDs). However, with a Roth IRA, you don’t necessarily have to take money out of your account. When you die, however, your beneficiaries will be subject to the RMD. With a 401(k), the IRA typically requires you to take disbursements at age 70 ½ unless you’re still working.
So the question remains, which type of retirement account is right for you? If your employer offers a 401(k) and matches funds, then that may be your best bet, because it involves free money. Once you’ve maxed out what your employer will match, if you have excess retirement funds, you might want to put them in a Roth IRA. It’s good to know you’ll have money that won’t be taxed when you’re living on a retiree’s fixed income. If you don’t have access to a 401(k), it’s obviously in your best interest to have a Roth IRA. The important thing is to make sure you start putting aside retirement money early and put aside as much as possible.
Since 1941, GCS Credit Union has been serving customers in Illinois, providing loans, basic savings, and other banking services. Having started as a single location, we’ve spread throughout the area, and now support Sangamon, Logan, Macon, Marion, Jefferson, Perry, Jackson, Williamson, Jersey, Macoupin, Montgomery, Madison, Bond, Clinton, St. Clair, Monroe, Washington and Randolph counties. Dedicated to focusing on our members’ financial needs, we’re a not-for-profit, member-owned financial cooperative. If you’d like to know more about the benefits of a credit union, call (618) 797-7993, or contact us through our website.
Back-to-school season is upon us again, even though it seems like the summer barely got off the ground! Unfortunately, with the back-to-school season comes the dreaded back-to-school shopping, which most parents find stressful because it’s so expensive. According to the National Retail Federation, the average U.S. household will spend almost $700 on getting ready for the school year, and for parents of college kids that number is even higher: it’s a whopping $976.78. How do you get your kids back to school without breaking the bank? It takes a little bit of planning, but you can create a budget for back-to-school and maybe even save yourself some money.
- First, determine what you need. Take the list provided by the school district or teacher, and then look around your house. You probably have a pretty healthy inventory of school supplies at home, so if you organize those, you may be able to reduce your shopping list. While you’re at it, review your child’s wardrobe and make note of additional clothing he or she will need to start the school year. It’s probably not necessary to buy a lot of new clothes, but it’s nice to have a “first-day” outfit, and there are some essentials that may need replacing. Consider less tangible back-to-school items as well, like a new haircut or a physical. Once you’ve compiled your list, estimate what each item on the list will cost, so that you can have a good idea of your projected expenditure.
- Set your spending limit. It’s important to do your back-to-school shopping with a spending limit firmly in place, or impulse purchases may derail your budget. Be fiscally conservative, estimating the cost of items at their regular price and not the current sale prices, so that you’ll have a bit of leeway when you actually go to the store. If the projected expenditure exceeds your limit, take a hard look at the list and see if there’s anything that can wait until later.
- Try to find some extra cash to pad the budget. You might be able to work a few extra hours, or find a temporary side job, just to give yourself some breathing room. On the other hand, if your children are preteens or teenagers, you might talk to them about contributing toward their own expenses. Especially if they want some trendy items that are a bit pricey, they should be expected to help pay for them. This is helpful for you, but it’s actually good for your kids as well, because it helps them learn about financial responsibility.
- If you’ve got a few paychecks between now and the first day of school, divide the expenses between them. Set aside money from each paycheck, and it won’t feel like as much of an expense as it would if it all came out of one check. Look for different ways to set aside money, perhaps challenging yourself to set aside all of one denomination of cash, or round up your purchases and put the extra into your back-to-school fund. You might even put yourself on a discretionary spending freeze, in order to save up for your school shopping.
- Shop wisely. Before you head out for school shopping, study several ads, and determine which store has the best deals. You might even consider hitting more than one shop, in order to cut down on your spending. Look for ways to save even more, by shopping consignment stores, taking advantage of your state’s tax holiday, using coupons, and buying generic. Allow your child a couple of splurge items, but save money wherever you can.
Need to set up a savings account so that you have a place to safely stash your back-to-school cash? Look no further than GCS Credit Union. Since 1941, GCS Credit Union has been serving customers in Illinois, providing loans, basic savings, and other banking services. Having started as a single location, we’ve spread throughout the area, and now support Sangamon, Logan, Macon, Marion, Jefferson, Perry, Jackson, Williamson, Jersey, Macoupin, Montgomery, Madison, Bond, Clinton, St. Clair, Monroe, Washington and Randolph counties. Dedicated to focusing on our members’ financial needs, we’re a not-for-profit, member-owned financial cooperative. If you’d like to know more about the benefits of a credit union, call (618) 797-7993, or contact us through our website.
When it comes to choosing a credit card, one size doesn’t fit all. Understanding your options, spending habits, and credit situation can help you find a suitable card for you. Here are three steps to picking the right credit card.
Check Your Credit Score
Visit AnnualCreditReport.com to see your credit score for free once a year. The better your score, the higher your chance of being approved for a credit card with great perks. If your score wasn’t what you expected, look into improving it—either by changing your spending habits or disputing an error—before you apply for a credit card.
Decide What Kind of Card You Want
The best card for you depends on what you hope to accomplish.
Look for a student or secured credit card to build or fix your credit.
- Student cards may be tied to a parent or guardian, making them easier to qualify for.
- Secured cards usually require a security deposit of $200 or more, which is returned to you when you upgrade your account or close it in good standing.
Look for low-interest, 0% APR, or balance transfer cards to lower the interest on existing credit card debt.
- 0% APR cards are good in case of an emergency.
- Low-interest cards let you carry a balance from time to time without a costly penalty.
- Balance transfer offers can help you pay off higher-interest cards faster.
Look for cash back, travel, or rewards cards for valuable perks.
- These higher APR cards are worthwhile if you always pay off the balance and never incur interest.
- Sign-up bonuses, points, miles, and cash back reward you for every dollar you spend.
Look for Tiebreakers
Narrow down the choices in your preferred category by finding a card with all the features you want.
Find a student or secured credit card with:
- A low security deposit
- No annual fee
- The option to upgrade to a more competitive card without closing and reopening your account
- Automatic credit limit increases with consecutive on-time payments
- The option to earn interest on the security deposit
Find a low-interest, 0% APR, or balance transfer card with:
- A long introductory 0% APR period
- A low ongoing APR
- Reasonable balance transfer policies with high transfer limits and low APR
- Free debt payoff planning tools
- Waived late fees and penalty APR
- Ongoing rewards for benefits beyond the initial 0% APR
Find a cash back, travel, or rewards card with:
- High rewards in the categories you spend the most on
- Sign-on bonuses with low spending requirements
- No annual fee OR rewards earnings that offset the annual fee
- No expiration dates on rewards
GCS Credit Union can help members sign up for a Visa credit card with low interest rates, no annual fee, and valuable ScoreCard reward points. To learn more about the benefits of banking with GCS Credit Union, please call us at (618) 797-7993 today.
Some people mistakenly believe that you need to earn six figures, win the lottery, or strike it rich on Wall Street to create a comfortable savings account. On the contrary, anyone can save money if they follow the right tips. Here are some small changes you can make right now that will yield big results over time.
- Don’t delay: Implement these tips today. If you wait until you make more money, you’ll have to contend with the higher spending that comes with higher earnings. Start now to begin seeing the benefits sooner rather than later.
- Start small: Even tucking away 5 to 10 percent of your paycheck can help you build a “rainy day fund.” Your first goal should be to save $1,000. Once you reach that milestone, aim to save the amount you earn in one month. Again, once you reach that point, keep going! The recommended amount of savings for a rainy day is three to six months’ worth of expenses.
- Write out your budget: If you find that you’re spending more than you earn some months, think of ways to cut back. Cook instead of eating out, cancel one of your subscriptions, and stick to your shopping list to avoid impulse buys.
- Direct deposit some of your income into a savings account: Many employers offer the option to split your paycheck into different accounts. To avoid the temptation to spend instead of save, allot a certain portion—perhaps as much as 20 percent—to go straight into a savings account.
- Create an account for big-ticket purchases: Saving up for a new laptop, vacation, or down payment on a car? Create a savings account to keep these funds separate from your day-to-day spending money.
- Take advantage of employer benefits: If you have the opportunity to contribute to a 401(K), Health Savings Account (HSA), or something similar through your employer, take advantage of it! If your employer matches your contributions, your savings will grow even faster.
- Put spare change in a jar: Any time you pay with cash, put the change you receive in a jar. After several months of collecting, you may find you have enough money for a nice date night, holiday shopping, or even a weekend getaway.
- Convert loan payments into an investment account: Once you make the final payment on your car or student loan, keep writing the check, but put it in an investment or savings account instead. Choose one with a high APY, and your money will grow faster than if you simply left it in your checking account.
GCS Credit Union offers multiple personal savings account options to make your dreams of saving big come true. Ready to learn more about which account might be right for you? If so, please schedule an appointment with one of our team members today by calling us at (618) 797-7993.
If you don’t teach your children how to be financially responsible, who will? Here are some pointers for sharing money management tips with your kids at any age.
Teaching Young Children About Money
- Consider giving preschoolers or kindergarteners a small allowance. Keep the money in a small glass jar so they can watch the savings grow.
- Let your children pick out and pay for a new toy with money from their allowance jar. Explain that if they earn $1 a week, they can afford a $5 toy in five weeks. Once enough money has accumulated, empty it, take it to the store together, and have your child hand the cash to the clerk. This practical experience is much more memorable than a lecture.
Helping Preteens Manage Money
- Give elementary and middle schoolers a “commission” where every chore they perform earns them a predetermined amount of money.
- Teach your children the concept of “opportunity cost.” In other words, if they spend their money on a video game, they won’t have any left for new shoes.
- Discourage impulse buys. If your preteen wants a new $20 dress, explain that she can use her well-earned commission money, but she should think it over for a day. If she still wants it just as badly tomorrow, you can return to the store together, and she can buy it then.
Showing Teens How to Spend & Save Wisely
- Open a student checking and savings account for teens. When you remain tied to the account as the responsible parent or guardian, you can continue monitoring your child’s spending and saving habits.
- Encourage teens to save a portion of their commissions (or money from a summer job) to start saving for college.
- Help your teen sign up for a credit card. Teach them that the best way to manage their money is never to spend more than they have in their bank account. While building credit is important, you may want to start with a debit card to get your child accustomed to swiping plastic without the risk of overspending.
- Talk about how you plan to pay for college. To keep costs down, encourage your teen to apply for a community college or trade school, seek scholarships and grants, and work part-time while going to school. Loans should only be considered if you have exhausted all other options.
- Show teens the basics of creating a budget. Even if they don’t have as many bills as an adult, you can help them balance their income with their expenses, such as car payments, car insurance, gas money, cell phone bills, and clothes.
If you’re ready to help your child open an account or credit card at GCS Credit Union, schedule an appointment with a team member to get started today. We’ll help you and your child find financial success through our services. For more information, please call us at (618) 797-7993 today.
Employers tend to offer multiple payment methods to their employees, the most popular of which is direct deposit. This is when your paycheck, social security payment, or pension is automatically transferred to your bank account on payday.
Nearly all employers these days provide this option in place of mailing or hand-delivering paper checks. In fact, as of 2016, 82 percent of American workers are paid by direct deposit, compared to 74 percent in 2011. If you haven’t signed up yet, here are the benefits of direct deposit you should consider.
- No possibility of misplacing the check: If you tend to misplace things, direct deposit is the ideal payment method. It’s impossible to lose something that’s added to your bank account automatically!
- No more lost or stolen mail: Direct deposit eliminates the chance of having your check lost or stolen in the mail. In fact, because of security and reliability issues, the US Department of Treasury has all but eliminated paper Social Security checks, requiring all new recipients to sign up for direct deposit or Direct Express cards instead.
- No need to wait in line to deposit a check: Most people get paid on Fridays, so banks and credit unions are extra busy that day as eager employees stop in to deposit their checks. With direct deposit, you can skip the line and simply log into your online account to ensure the payment went through.
- Immediate access to funds: Without the need to physically deposit your paycheck, the money is available immediately. There’s no delay between when your payment is deposited and when you can withdraw it.
- The payment still clears, even if you’re out of the office: On vacation, taking a personal holiday, or calling in sick on a Friday? It doesn’t matter if you’re not in the office on payday—your direct deposit will still go through.
- Paperless paychecks help the environment: There’s no need to print paper checks or send letters in the mail with direct deposit, making it a smarter choice for the environment.
- More secure payment option: Because your check isn’t sent in the mail or passed around the office on its way to your desk, there’s a smaller risk of your confidential banking information leaking out. This makes direct deposit the more secure way to get paid.
- Budget and save: Many employers offer the option to deposit a portion of your check directly into your savings account, helping you resist the temptation to spend when you really should save.
At GCS Credit Union, we make it easy to sign up for direct deposit from your employer. All you’re likely to need is your routing number (at GCS, this is 281076853) and your account number. Ask your employer if there are any other forms you need to fill out, and you’re all set! To learn more, or for help opening an account at GCS Credit Union, please call us at (618) 797-7993 today.
Do you need assistance with your account after hours or when you’re not near a credit union branch? If so, then you need to meet MARTI! MARTI is the automated teller at GCS Credit Union and can help you with a variety of transactions, saving you time and hassle.
Using MARTI is easy once you are a member of GCS Credit Union. When you open a credit union account, you will be issued a PIN. Then, whenever you need to use MARTI, you can dial (618) 797-7005 or (800) 392-8092 and wait for the prompts. You will be asked to enter your account number and the PIN you were given. After your information is verified, MARTI will walk you through a number of transactions you can perform via phone.
In addition to telephone banking with MARTI, GCS Credit Union also offers mobile and online banking in O’Fallon for your convenience. You can learn more about all of our services by calling 618-797-7993.
Student loans are among the largest and most challenging kinds of debt that most people face. Although many people come out of school with tens of thousands of dollars in debt—and some people who pursued medical or law degrees facing hundreds of thousands of dollars in repayments—it is possible to tackle your debt without postponing the rest of your financial growth. Your credit union can be a great source of information in that regard, so be sure to use the services that they provide. This advice will also help.
Understand Your Loans
For many people, student loan debt trouble starts with not truly understanding their loans. Over the course of a college career, loans can be moved from lender to lender many times, and there may be several small loans from different lenders that make it difficult to understand what you owe and who you need to pay. Take a moment to be sure that you truly understand all of your loans and that they are all accounted for as you consider repayment terms.
Ask Your Employer
Some employers offer student loan forgiveness plans or assistance with loan repayments, so ask what is available to you. In some cases, you can choose a job that comes with substantial loan forgiveness. For example, some states offer loan forgiveness after a certain window of time making payments, if you work in public service.
Sign Up for Auto Payments
Enrolling in an auto payment program on your loan will usually allow you to get a lower interest rate. Although the reduction in rate will usually be modest, it can add up to a significant amount of money over time, which will help you pay off your debt faster. Plus, you’ll never need to worry about missing a payment.
Find out more about smart financial strategies by scheduling an appointment with a team member at GCS Credit Union. We’re here to serve our members, not profit off of them, and we’re invested in your financial success. You can learn more about joining our credit union in O’Fallon by calling (618) 797-7993.
Because checking accounts and savings accounts are not credit accounts, closing them will not impact your credit. However, keep in mind that closed banking accounts may show up on banking reports, so your closed account could impact your future ability to open new accounts.
GCS Credit Union is committed to helping all of our members understand credit and other parts of managing their finances effectively, so that they can reach their goals. To learn more, contact our credit union in O’Fallon at (618) 797-799.
If you’re considering making a large purchase, a personal loan could help you finance the expense. These kinds of loans are installment loans, which means that you will receive a lump sum and then repay it through monthly payments, until you have completely paid it off. Unlike auto loans or home mortgages, personal loans aren’t for anything in particular, and you can generally use them for anything. However, as with any kind of loan or credit you get, it is important to consider the terms and your ability to pay it back before signing for a personal loan. Is a personal loan right for you? These are some of the signs that you should consider getting one.
You have high-interest debt that you want to consolidate.
If you have high balances on credit cards, a personal loan could be a good solution to get your bills under control. Most personal loans have lower interest rates than credit cards, so by getting a loan to pay off all of your credit card balances, you can save a significant amount of money on interest expenses. If you’re paying on multiple cards, then consolidating your debt in this way will also streamline the process of paying off your cards, since you’ll only have to make a single payment going forward. However, resist the urge to drive your balances back up once you zero out your credit cards.
You’re planning a home improvement project.
Home improvement projects can be great investments, since they can add value to your home. However, financing them sometimes means running up big credit card bills with high interest rates or borrowing against your home. A personal loan allows you to avoid these scenarios and pay for your project with an unsecured loan with lower rates than your credit cards.
You have considered how to repay it.
In order to stay in control of your finances, avoid borrowing any money you haven’t made a plan to repay. Be sure you understand the terms of the loan up front, so that you can plan for repayment accordingly.
If you’re interested in applying for a personal loan, contact GCS Credit Union. We offer competitive rates and can help you find the best loan for your needs. Call our credit union in O’Fallon today at (618) 797-7993.