Managing finances and ensuring you are financially responsible can be confusing at times. Luckily, Teachers Credit Union (TCU) is here to help and guide its members to a secure financial future.
Director of Financial Wellness and Wellbeing at TCU Jeff Sobieralski offered some insight and advice on common financial mistakes and how individuals can fix them.
“Usually, the financial mistakes are going to be caused by financial habits that we need to change,” Sobieralski said.
According to Sobieralski, one of the biggest financial mistakes people tend to make is not having a spending plan.
“Some people spend more money than they should because they don’t have a spending plan,” Sobieralski said. “Others don't save enough because they think that their retirement or savings accounts are there to save them, but they don't realize that there are penalties for taking funds out of those accounts if you have an emergency.”
Another common mistake that people make is having too much debt. People with too much debt are left to worry about making minimum payments, rather than building their savings.
“If they don’t plan a little bit, then they are one emergency away from jeopardizing their long-term dreams like buying a home or buying a nicer car,” Sobieralski said.
To better understand how to be more financially responsible, Sobieralski recommends people figure out their spending cycles which he learned about in financial counseling courses offered by CUNA, a national association of credit unions. According to Sobieralski, there are four different cycles that people typically fall under.
“There's the ‘earn, spend, earn, spend’ cycle. If you’re living in that cycle, basically you’re earning money and then spending it, so what ends up happening is you do that your whole lifetime,” Sobieralski said. “For people who do that, I recommend setting up some sort of automatic transfer when your paycheck comes in.”
Others fall into the the “earn, spend, borrow” cycle.
“This is where people earn money then spend it, then they borrow money and spend that too. These people are financing their whole lifestyle through debt,” Sobieralski said.
People who live in this cycle tend to have a harder time differentiating between a want and a need. According to Sobieralski, adjusting this view can help to break the cycle.
“There’s another cycle called the ‘earn, spend, save’ cycle. People in this group usually try to save money, but what they're doing is they're not prioritizing their savings; they’ll just take whatever is leftover at the end of the month and put it in their savings, and a lot of the time there is not much to save by the end of the month due to smaller emergencies with kids, cars, and things like that,” Sobieralski said.
The fourth cycle – the “earn, save, spend” cycle – helps people to build up their savings more efficiently and effectively.
“These folks have been taught to pay themselves first. They earn their money and they put a portion of it towards their savings before even looking at anything else,” Sobieralski said.
TCU offers a variety of services to help its members become financially stable, including online resources. They are also currently going through a national certification for financial counselors so people who need help making these changes can receive additional support from TCU.
“People should never be ashamed for seeking financial counseling because everyone makes mistakes. It can happen to anyone, and you can’t control every circumstance, so our counselors will be there for them,” Sobieralski said.
TCU is there to support and assist its members in any way needed.
“One of my recommendations when making a savings plan is to be flexible and try to stick with it,” Sobieralski said.
To learn more about TCU, visit its website at www.tcunet.com.
