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At American Savings Bank, we believe in helping our customers thrive financially. One of the ways we help you do that is providing solutions, tools, calculators and articles that you can explore on your own.
It’s not uncommon to put in time and effort to better yourself and live a healthier lifestyle. You might make an annual trip to visit your doctor for a wellness checkup. But what about your financial health? Creating and maintaining healthy personal saving habits are just as important to your overall wellbeing.
Set yourself up for financial success by examining your personal spending and saving habits with a financial checkup. The American Savings Bank team has put together this easy-to-use guide that will take you through your next financial checkup.
Healthy financial habits start with knowing how much money you have and allocating it with budgeting. The goal of a budget is to organize your finances and help you spend less than you make, giving you the freedom of extra income. Good budgets come from a critical look at what you spend your money on and recognizing what expenses are “must haves” versus “nice to haves.”
How do you create a budget?
Your first task to setting a realistic budget is to add up your monthly expenses. Remember to include rent or mortgage payments, utilities, and credit card expenses. To make your expenses more organized, group them into two categories: known and unknown. Known expenses will include any recurring payments you may have. Unknown expenses give you room to estimate expenses that might fluctuate, such as a credit card bill. You can estimate your unknown expenses using the average cost for the previous six months.
Once you know your monthly expenses, add up all of your monthly income. Income is most commonly money that is paid from an employer. However, remember to include other sources of income as well, such as items sold online or investment dividends.
Compare your expenses and income to see if you have an overage or shortage. If you have an overage, you can put that extra money towards savings goals. If you happen to come up short, you’ll need to evaluate your expenses and determine if anything can be cut. Once you have your expenses lower than your monthly income, keep record of your spending and savings habits so you can stay on track with your newly-created budget.
Worried you might forget an expense or income source when creating your budget? Use our Home Budget Analysis Calculator. This handy tool breaks down expenses into categories. Simply input your numbers and see how much you will have left over for savings each month.
Living 100% debt-free is ideal, isn’t it? Not necessarily. Although the word “debt” might bring to mind an image of a shady debt collector, some debt is necessary. The key to managing debt is to understand the different types of debt. Generally, debts can be classified into two categories: Good Debt and Bad Debt.
- Good Debt: This debt is considered a long-term investment. Most good debts will grow in value over time: this includes student loans and mortgages.
- Bad Debt: Bad debt is used to purchase things that have no long-term value. Carrying a balance on high interest credit cards and cash advance loans are examples of bad debt. Generally, cash advance loans offer cash for a fee. These loans typically have a short repayment period and extremely high interest rates. If you fail to pay back the loan, you can pay another fee and roll the cash advance loan into a new one. This lending model often traps people into debt that’s very difficult to escape.
Staying Out of Debt
While it’s generally a good idea to keep an affordable amount of good debt for your credit score, there are ways to avoid unnecessary or bad debt. The general rule for maintaining a good amount of debt is to spend less than 25% of your income on required debt each month.
For example, if you consistently rack up a large credit card bill, switch to using a Checking Account instead. We offer Overdraft Protection and Text Banking. Overdraft protection offers a line of credit to protect your account if you accidentally go below $0. Text banking, on the other hand, keeps you connected with your account on the go.
Borrow Money Wisely
Perhaps the easiest way to avoid unnecessary debt is to be smart about borrowing money. In other words, use your credit wisely. Just because credit is available for a purchase doesn’t mean you should always use it. Look at different loan options available when making a large purchase such as a car or house to find the best interest rate.
Sometimes you find yourself with several different debts at once. Those various debts might have a wide range of interest rates or monthly payment amounts. Debt consolidation i s the practice of replacing existing debts with a single new debt. Often debt consolidation is used to get a better interest rate or lower monthly cost by combining multiple loans into one. Not sure if you could benefit from debt consolidation? Check out our Personal Debt Consolidation Calculator.
- Online Banking: Access your accounts from your desktop, tablet or mobile phone.
- ASB Hawaii Mobile App: Download the mobile app to have banking at your fingertips.
- Bill Pay: Pay your bills online from one central location. You can even set up automatic recurring payments to ensure your bills are paid without having to do a thing!
Much like other types of debt, we’re often taught to fear credit cards. However, when used wisely, credit cards can be one of the best ways to maximize the value of your money.
A common benefit to opening a credit card is to build or increase your credit score. Credit scores take into account a range of factors, but one is amount of credit available. Credit Cards can help your credit score in this area. For example, you might open a credit card with a credit limit of $5,000 but only spend $2,000. That $3,000 of available credit can positively impact your score. All of the credit cards offered by ASB give you free access to your FICO® Credit Score.
Another reason to open a credit card is to receive rewards or other perks. Many credit cards offer a program that rewards you for every dollar spent. You can then redeem your rewards for things like gift cards, merchandise, or even cash back, depending on your card.
Need to make a big purchase and worried about interest rates? Some credit cards provide low interest rates if you do have to carry a balance. To avoid paying interest at all on a credit card, pay down your balance to $0 each month.
Building Credit Helps Increase Your Credit Score
Have no credit history? Start building credit today using a secured credit card or loan. A secured card or loan allows you to use money you already have as collateral to receive credit. With a Secured Visa® Card offered by ASB, you can choose your own credit limit, subject to approval, by making a one-time deposit up to $5,000. Likewise, you can use your ASB savings account as collateral for a personal Savings Secured Loan, for qualified applicants.
Establishing savings for life’s major events is one of the most important ways to prepare for your future. Getting married, having children, buying your first home, sending kids to college, and enjoying retirement are life events most of us hope to one day enjoy. A healthy savings also protects us against the less fortunate events, such as a new roof if you already own your home. Getting started saving money doesn’t have to be difficult. Every small piece you put towards your savings can have a lasting effect on your future financial wellbeing.
Make a small goal to save each week or month instead of only thinking of long-term goals. For example, aim to save $20 each week. This helps you stay on track as you immediately fulfill each small goal.
Establishing saving habits - Pay yourself first
A good rule of thumb is to put 10% of take home pay in savings and live off the remaining balance. Auto Transfer money each month into your savings account with our auto transfer capability in online banking.
Set up a retirement plan
Retirement plans are accounts that save money over time specifically for retirement. Often a retirement account will have some sort of tax benefit to it as well. Always remember to consult your tax advisor on tax-savings with retirement plans. Some types of retirement accounts include:
- IRAs: an IRA is an individual retirement account separate from an employer retirement account. These usually come in two types: Roth and Traditional IRA. With a Roth IRA, the money you put in is taxed at the time you contribute, but can be withdrawn income tax-free in retirement. Traditional IRA contributions can be deducted from your current taxes but are taxed when you withdraw money in retirement.
- 401(k): A 401(k) is an employer-sponsored plan. Many 401(k) plans feature an employer match program where the employer will contribute money to an employee’s account up to a certain percentage of the amount that employee contributed.
- Pensions: Pension plans are an employer-sponsored retirement plan that pays a set amount to an employee in retirement based on years worked and salary history.
Selecting the Right Accounts To Develop Savings
You can maximize your savings by using several different account types. Each type of savings account has different benefits.
- Savings and Money Market Accounts: A regular savings account holds your money for safekeeping and earns a modest interest rate. Money Market accounts earn high interest rates for higher balances and give you access to your funds by check.
- Investment Accounts: These accounts put your money to work on the market. You may choose to put your money into stocks, mutual funds, bond, ETFs, or a combination of these types of funds.
- Direct Deposit: Send your paycheck or other funds directly to your savings or checking accounts.
- CDs: Earn a set amount of interest, usually higher than an average savings account, by putting money into a CD for a set term. We offer terms from 7 days up to 10 years.
Tools To Help You Develop a Savings
ASB provides a range of banking tools that can help you start saving today.
Buying a home, whether it is your first time or you’ve bought before, can be a stressful process. We are here to remove that stress with solutions that meet your needs.
First time home buyers in Hawaii
Hawaii residents looking to buy their First Home will benefit from the knowledgeable resource of a local home loan expert. First time home buyer programs often include lower down payment requirements.
Vacation Homes or Investment Property in Hawaii
Many people choose our beautiful island as their destination for a second home. A local residential loan officer can help you determine your borrowing situation for your second home. ASB also offers competitive rates for investment properties in Hawaii.
Loans that Exceed the Conforming Loan Limits in Hawaii
Looking to get your dream home, but worried the purchase price is too high for a regular mortgage? We offer Jumbo Loans created to serve high-value properties. Let our experienced residential loan staff help you prepare to make this large financial decision and provide you with the resources you need.
Veterans Buying a Home in Hawaii
U.S. Department of Veterans Affairs (VA) Loan: The VA loan program is backed by the U.S. Department of Veterans Affairs and is available for eligible service members and veterans. Plus you can take advantage of the zero down payment up to the VA county loan limit.
Tools To Help You Buy a Home in Hawaii
Getting ready to buy your Hawaii dream home? We offer a variety of tools to help you plan for your big purchase.
- Attend a Mortgage Seminar
- Rent vs Buy Calculator
- ARM vs Fixed Rate Mortgage Calculator
- Find a Loan Officer
- Get Pre-Qualified
Leverage the value in your home in Hawaii
Existing homeowners can benefit from paying down their mortgage. Each payment towards your loan’s principal helps build your equity in the home. This equity can be used to make changes to the home, like renovations or upgrades. You can also use the credit built from your home loan to lower your monthly payment or decrease your interest rate through a refinance.
- Home Equity Line of Credit: This line of credit is secured by the equity in your home (up to $1,000,000), we also have Fixed Rate Equity Loan Options available.
- Lower Your Payment/Term: We have rate/term refinance options. Talk to one of our loan officers for more details.
- Use the Equity for Improvements/Investments: We have Cashout refinance options. Talk to one of our loan officers for more details
Saving for life’s big moments is a scary and exciting undertaking. Whether you are looking to fund college, are getting married, planning a family, or setting yourself up for success in retirement, it’s important to plan for these events. You can utilize the benefits of various accounts to create a rounded savings plan for the future.
- Savings: Getting in the habit of saving is important for everyone. Explore our savings and money market accounts to learn more about which meets your needs.
- Investments: One of our financial consultants can assist you at every stage of the planning process.
- CDs: Receive higher returns than a typical savings account with terms ranging from 7 days to 10 years.
- 529s: A 529 account is a college-savings account that allows for tax-deferred treatment on contributions. Consult your tax advisor about 529 plans.
Tools To Help You With Big Life Purchases
We’ve made it easy to put together a savings plan for life’s biggest moments with our savings tools.
Starting a business in Hawaii is a dream of many residents. Saving money to start your business is daunting, but it can be done. Much like saving for other important life events, you can use a variety of savings tools to reach your goals. Check out our Hawaii Business Start Up Guide for an easy checklist to get your business off and running and our Business Health Check for practical tips on the pain points of your business. Identify how much money you will need to start your business and consider areas where you may be able to save on costs, such as buying used equipment.
Let ASB Hawaii Help You Open Your Business:
Unfortunately, no matter how well you prepare for life, sometimes it doesn’t go as planned. Car accidents, for example, are too common of a tragedy that can result in loss of a loved one or their permanent disability. Alternatively, unexpected illnesses can take you away from your family far too soon. Life Insurance and Long Term Care as well as Accidental Death and Dismemberment offer financial protection to your loved ones in the event that you pass away or are unable to continue providing for them.
While some identity thieves still dig through trash, many have taken to hacking online retailers for credit card information. Even more common are phishing scams, where a thief pretends to be a legitimate government agency or company to obtain your data. Using Personal Identity Theft from ASB can help keep your data protected. If you believe you are the victim of identify theft, you can Report Identity Theft with the Federal Trade Commission. For information on how to keep your personal information safe online check out this Cybersecurity Guide from the FDIC. They also have a Cybersecurity Guide for Businesses to keep your business accounts safe.
Completing a financial checkup is just as important as a regular doctor visit. By managing your debt and spending to create a budget, you can be prepared for all of life’s biggest moments as well as the unexpected turns. At ASB, we want to help you on your financial journey so you can best enjoy our island home and all life has to offer.