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Financial Resolutions for the New Year

Financial Resolutions for the New Year

by | Jan 2, 2025 | Family Finances, Holiday

Financial Resolutions for the New Year

Family Finances | Holiday

gold-balloons-spelling-out-2025

Are you the kind of person who makes resolutions for the new year? Here are five resolutions we encourage you to consider to boost your financial wellness in 2025.

Resolution 1: Create a budget

One of the best ways to achieve financial stability and peace of mind is by creating a budget. Whether you’ve never had one before or want to improve your current financial habits, budgeting can help you take control of your money and achieve your goals.

  • Set clear financial goals: Before diving into numbers, think about what you want to achieve in the new year. Financial goals provide direction for your budget. Some common examples include: Paying off credit card debt, saving for an emergency fund, building a retirement fund, saving for a vacation or big purchase. Write down your goals and prioritize them. This will help you stay motivated and focused.
  • Track your income: The first step in creating a budget is understanding your income. List all the sources of income you receive each month, including: salary, side gigs or freelance work, and passive income (rent, investments, etc.). Be sure to account for any irregular income, like bonuses or seasonal work. Calculate your total monthly income, which will serve as the foundation for your budget.
  • List your expenses: It's helpful to break them down into fixed and variable categories.
  • Categorize and prioritize: Once you have a clear picture of your expenses, you can start categorizing them. Essential expenses like housing, utilities, and groceries should be prioritized, while non-essential costs (such as entertainment or dining out) should be trimmed down if necessary.

Tip: If your income exceeds your expenses, you have more flexibility to allocate funds to savings, investments, or debt repayment. If your expenses are higher than your income, it’s time to adjust.

The key to a successful budget is consistency. Use budgeting tools like apps (e.g., Mint, YNAB, or PocketGuard) or a simple spreadsheet to track your spending. Compare your actual expenses to your planned budget each month and adjust as necessary.

If you find you’re overspending in certain categories, identify areas to cut back. Alternatively, if you’re saving more than expected, consider allocating those extra funds to your financial goals.

Resolution 2: Manage your Debt

Debt is neither inherently good nor bad – it all depends on how you use it. For most people, some level of debt is a necessity, especially to purchase long-term assets, such as a home. However, when unmanaged, debt becomes a burden. It’s important to stay in control.

  • Keep your total debt load manageable: Don’t confuse what you can borrow with what you should borrow.
  • Consider the "debt snowball" or "debt avalanche" methods:
    • Debt snowball: Pay off the smallest debt first to gain momentum.
    • Debt avalanche: Pay off the debt with the highest interest rate first to minimize overall costs.

Resolution 3: Prepare for the unexpected

Life is full of unexpected expenses, from medical bills to car repairs. Having an emergency fund gives you a safety net to cover these costs without derailing your budget. Aim to save 3-6 months’ worth of living expenses. Start small by setting aside a portion of your income each month until you reach your goal.

Resolution 4: Protect your estate

An estate plan may seem like something only for the wealthy. But there are simple steps everyone should take.

  • Create or Update Your Will: A will is the foundation of any estate plan. It clearly outlines how your assets should be distributed after your death. If you already have one, make sure it’s up-to-date with your current wishes and life circumstances, such as new children, grandchildren, or significant changes in assets. If you don’t have a will, now’s the time to write one.
  • Consider a Trust: While a will is important, a trust can provide additional protection for your estate. Trusts allow you to control how and when your assets are distributed. For instance, a revocable living trust helps you avoid probate (the lengthy and often costly legal process that can delay asset distribution), keeping your estate private and potentially saving your heirs time and money.
  • Designate Power of Attorney: A financial and healthcare power of attorney gives someone you trust the authority to make decisions on your behalf if you become incapacitated. This ensures your financial matters and medical decisions are handled according to your wishes, even if you're unable to communicate.
  • Establish a Healthcare Directive: A healthcare directive (also known as a living will) specifies the type of medical treatment you want to receive should you become seriously ill or injured. This document relieves your family members from the burden of making tough medical decisions in times of crisis.
  • Review Your Beneficiaries: Beneficiary designations on life insurance policies, retirement accounts, and other financial assets often override what’s written in a will. This means it’s essential to review and update your beneficiary designations to ensure they reflect your current wishes. If you’ve had a life change (such as marriage, divorce, or the birth of a child), make sure to update these designations promptly.
  • Protect Your Digital Assets: In today’s digital age, your online presence and digital assets need protection, too. This includes everything from social media accounts to cryptocurrency holdings, and online banking services. Make a list of all your digital assets and include instructions for accessing and managing them in case something happens to you.
  • Ensure Adequate Insurance Coverage: Insurance plays a significant role in estate protection. Review your insurance policies—homeowners, life, health, auto, and even long-term care insurance—to ensure your coverage is adequate for your needs. An unexpected event can cause a huge financial burden on your loved ones if they aren’t properly insured.

Estate planning can be complex, and the laws surrounding it vary by location. It’s a good idea to work with an estate planner, financial advisor, or attorney to ensure that your estate plan is comprehensive, legally sound, and tailored to your specific situation.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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10 Tips for Budgeting Your Holiday Season

10 Tips for Budgeting Your Holiday Season

by | Nov 1, 2024 | Loans, Credit Cards, Family Finances, Holiday

10 Tips for Budgeting Your Holiday Season

Family Finances | Credit Cards

Group of friends taking a selfie

While the holiday season is a time of joy and celebration, it often has a significant impact on our finances. As holiday expenses – food, gifts, travel, and more – continue to rise each year, effective budgeting is essential to maintaining financial health into the new year. We have compiled a list of budgeting tips to help you survive he holiday season.

1. Get a Head Start

Did you know that 48 percent of Americans kick off their Christmas shopping before Halloween? While some people think the holiday shopping season is starting earlier every year, there is a reason why. If you wait until the last minute to begin holiday shopping, you risk losing out on the best deals, ample shipping time, and experience a higher financial impact to your wallet. Other benefits include:

  • Wider selection
  • Exclusive deals
  • Reduced holiday stress
  • Better planning
  • Improved shipping times
  • Opportunity for price adjustments

The earlier you shop, the better chance you have at stacking discounts and staying within your holiday budget.

2. Set Spending Limits

A good way to approach the holiday season is to set spending caps on your holiday shopping. First, look at your regular monthly budget, what are your everyday expenses for food, bills, and other necessities? Once you have a clear idea of how much you need to set aside, start adding in how much you expect to spend on presents and other holiday items. If you’re not sure, use last year’s holiday spending as a realistic reference.

Once you have your spending limits, it will help you set expectations early for how much you can afford. For example, you might decide to give four gifts to each of your kids, all totaling a certain amount. If your kids know this ahead of time, it might prevent disappointment Christmas morning. Additionally, if your budget doesn’t allow you to buy gifts for all of your family and friends, you can communicate early on, agreeing on price limits or not exchanging gifts at all.

3. Prioritize Bill and Other Essentials

It is important to prioritize your monthly essentials over your holiday nice-to-haves. There are plenty of memories you can make during the holidays that don’t revolve around money or gifts. Try to curb impulse buying and set aside money for your most important items – rent/mortgage, utilities, insurance, loans, and so on. Try sitting down with your family or friends and come up with ways you can spend time together this holiday season. These experiences may be more fun, less stressful, and easier on your budget!

4. Take Advantage of Holiday Sales

As the holiday season approaches, pre-holiday sales – such as Amazon Prime Day, Walmart Deals, Target Circle Week, Labor Day sales and more – offer consumers significant savings. These events allow consumers to shop early, stretch their budgets, and reduce holiday stress.

5. Track Your Spending as You Go

You do not want to make a holiday budget and then fail to track your spending. You can do it the old-fashioned way by saving receipts or handwriting them on a piece of paper. Or, you can automate it with an app on your smartphone.

6. Shop Online and Compare Prices

Online shopping allows you to compare prices, access a wider selection of products, read reviews and research without ever leaving the comfort of your home. Plus, many retailers offer free shipping and returns during the holiday season.

christmas credit card

7. Leverage Cash-back and Reward Programs

During the holiday season, your spending increases on travel, dining, and festivities. Did you know you can maximize your credit card rewards during the holiday season while your spending big? Most credit cards, like the JVB Simply Rewards Visa  Signature Credit offer one point per dollar spent, but multiple points on special categories like groceries, gas stations, discount stores, fast food, or restaurants, depending.

  • Cash Back: If you have a cash back card, this is a great time to build up points. You can get cash back to pay for those Thanksgiving grocery bills or prepare early for Christmas presents.
  • Travel: If you have a travel rewards card, you can book holiday flights with points or build up points by booking flights.
  • Merchandise and Gift Cards: Another way to use your rewards is to get merchandise or gift cards. You can then use these gift cards to buy gifts, or use as gifts!

Whether you’re booking flights, meeting family for a festive dinner, or buying gifts, you can leverage your credit card rewards for significant savings.

8. Manage Credit Card Use

Consider using a single credit card for all holiday purchases, making it easy to track spending and prevent overspending. It’s often tempting to defer payments during the holiday season by using credit cards or buy-now-pay-later options, however, use this with caution. Taking advantage of a 0% APR offer may allow you to avoid paying interest on the balance for 6 or 12 months. However, its crucial you pay the card off before the promotional period ends. To avoid accumulating debt, make sure all payments fit within your overall budget and you have a set timeline for repayment.

9. Reuse Last Year’s Decorations

New can be exciting, but when it comes to last year's Christmas decorations, you can reuse them! Christmas decorations can be expensive, and many of the latest trends are minor changes from the items you have in storage. Save money this year and deck the halls in last year’s ornaments and décor.

10. Open a Holiday Savings Account

Some banks and credit unions offer special, low-fee savings accounts for year-round savers to set aside holiday money, known as Holiday Savings Accounts. Some accounts come with benefits, such as automatic savings deposits and the option to receive the disbursement by a direct deposit or check on a certain day close to the holiday season for as little as $1 to open. There are many benefits to opening a holiday savings account, these include:

  • Build your holiday savings account throughout the year
  • Monitor your progress with online and mobile banking
  • You get a deposit in mid-October to get an early start to your holiday shopping
  • Earn interest on your holiday savings

It’s never to early to start saving for next year’s holiday season. Open a Holiday Savings account today!

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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Pros and Cons of Buy Now, Pay Later

Pros and Cons of Buy Now, Pay Later

by | Oct 21, 2024 | Loans, Family Finances, Holiday

Pros and Cons of Buy Now, Pay Later

Family finances

Group of friends taking a selfie

Buy Now, Pay Later (BNPL) options are an alternative to traditional credit that retailers are using to entice new customers and foster loyalty among existing ones. Companies like AfterPay, Klarna, and Affirm are reimagining online shopping. BNPL offers simple, interest-free installment plans that consumers pay back over a short period.

It’s no secret BNPL has become a popular checkout option since 2019. People like the chance to pay later and get free financing. While the allure of delayed payments and immediate cash is undeniable, buyers must exercise caution.

Consider these pros and cons before using buy now, pay later services.

Pro's

Con's

Split up Payments

One of the top benefits of BNPL services is that you can break up payments into smaller, less expensive amounts. It makes it possible to make a big purchase without having to have all the funds up front.

0% Financing

When you make your payments on time, many BNPL users get 0% financing.

No Credit Check

Not all, but some BNPL services do not check your credit before approving you. This gives younger consumers who are new to credit, a chance to have a financing option.

sFees and Interest

If you miss a payment, you may be charged late fees or interest. These can add up quickly, depending on the amount owed and how many you’ve missed. Just like traditional credit, if you stop paying, you may end up at a collection agency putting your credit score in danger.

Possible Overdrafts

BNPL services set up automatically scheduled payments, leaving room for potential checking account overdrafts if you aren’t monitoring your account. It’s important to make note of your BNPL payment schedule to ensure you have enough funds in your account to avoid late payments and potential NSF fees.

Easy to Overextend Finances

One pitfall of using BNPL services is that it can be easy to spend more than you have. Only paying attention to the cost of each payment, especially when you make several BNPL purchases, can easily rack up each month making it challenging to manage.

Returns Can Be Difficult

If you need to make a return after using BNPL services, you may be in for a headache. Unlike making a purchase with a credit card, funds get returned to the BNPL lender, which then get returned to you. While you wait for the return of funds, you are still required to continue making BNPL payments or face late fees and penalties. This may take weeks or months.

Miss Out on Rewards

When using credit cards, you may easily earn points or rewards. However, wen you use BNPL services you’ll forgo your rewards and potential other benefits.

Should You Use BNPL?

Whether or not you use buy now, pay later services depends on you. To responsibly use BNPL services, you should be prepared to pay on time, ensure you monitor your due dates, and not overextend your finances. If this is something you don’t think you are able to do, consider using other financing options such as credit cards, personal loans, and more.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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First-Time Home Buyer Tips

First-Time Home Buyer Tips

by | Oct 1, 2024 | Loans, Family Finances, Mortgage

The Ultimate Guide for First-Time Homebuyers

Loans | Mortgage

welcome mat for first time home buyers

-Congratulations! If you're reading this, you're probably standing on the brink of one of life's most exciting milestones: buying your first home. Whether you’re dreaming of a ranch-style country home or a sleek modern two-story house, the journey to homeownership can be thrilling but also a bit overwhelming. Don’t worry—we’re here to help you navigate the process with ease. Here’s your comprehensive guide to making the home-buying experience as smooth and successful as possible.

1. Understand Your Budget

Before you start browsing listings, it’s crucial to get a clear picture of your budget. Consider the following:

  • Down Payment: Typically, you'll need 5-20% of the home’s price as a down payment. The more you can put down, the better your mortgage terms may be.
  • Closing Costs: These can include appraisal fees, title insurance, and legal fees, often totaling 2-5% of the home price.
  • Monthly Payments: Don’t forget to factor in mortgage payments, property taxes, home owners’ insurance, and maintenance costs.

Tip: Use online mortgage calculators to get an estimate of what you can afford. This will give you a rough idea of your price range and help you avoid falling in love with a home that’s out of your reach.

2. Don’t Skip the Preapproval

We understand it’s exciting to start scouring the internet for the perfect house. However, it’s important to get pre-approved for a mortgage to help set a realistic budget and understand what you can afford.

It’s also important to understand the difference between prequalification and preapproval.

  • Prequalification: A prequalification is an estimate of how much home you can afford. It is informal and based on information you provide.
  • Preapproval: A mortgage preapproval is an official letter from a lender of your choice that tells you how much money you can borrow based on your financial status, such as W-2s, bank statements, and credit score.

What are the benefits of preapproval?

  • Clarifies your budget: You’ll understand how much you can borrow, allowing you to shop within your budget.
  • Stronger offers: Sellers will view you as a serious contender, increasing your chances of securing the home you want and making your offers more competitive.
  • Streamline the closing process: You’re less likely of running into last minute delays with your mortgage lender.

What are the benefits of prequalification?

  • Know where you stand without risking your credit: You’ll receive a ballpark estimate of how much money you may be able to borrow, often times with a soft inquiry that will not affect your credit rating. (Note: Some prequalification’s may require a hard inquiry).
  • Quick turnaround: Getting prequalified is fast and easy. It will provide you with helpful information that can guide you to making better buying decisions.

3. Understand Your Loan Options

Did you know the type of loan you choose for financing your mortgage will influence your down payment amount, the type of home you can buy and more? It’s important to understand your options before selecting a loan.

  • Conventional Loan: A conventional loan is the most common type of home loan. These loans are typically issued by private lenders and are subject to stricter credit and income requirements but offer several different term options with most people choosing between 15 and 30-year terms.
  • Federal Housing Administration (FHA) Loans: An FHA loan allows you to buy a home with less strict financial and credit score requirements making them appealing to first-time homebuyers.
  • Department of Veterans Affairs (VA) Loan: VA loans are exclusive to veterans, active-duty members of the armed forces and National Guard, and qualified spouses. If you qualify, you can purchase a home with 0% down.
  • Shared Equity Loan: Also known as family-backed mortgages, a shared equity loan allows parents or other relatives to help homebuyers obtain financing with a small down payment.

4. Maintain Your Credit

During the preapproval process, lenders will pull your credit history and continue to monitor your report during your buying journey. This is not the time to open any new lines of credit. If it is discovered you have taken out another loan or line of credit, your credit balance has increased, or you’ve started making late payments on your credit cards or loans, it may risk your final mortgage approval or decrease the value of how much home you can afford.

It is important to keep paying your bills on time and avoid opening any new lines of credit. Additionally, you don’t want to attempt to influence your credit ratings, for better or worse, because lenders are looking for consistent and reliable behavior patterns for future payments.

5. Save for a Down Payment

If you qualify as a first-time homebuyer, you can benefit from assistance programs that range from 0% to 3.5% down. However, if you have a down payment for at least 20% of the purchase price, you’ll be able to avoid private mortgage insurance (PMI) on a conventional loan.

What qualifies you as a first-time homebuyer?

According to the U.S. Department of Housing and Urban Development, a first-time homebuyer is an individual who meets any of the following criteria:

  • An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
  • A single parent who has only owned with a former spouse while married.
  • An individual who is a displaced homemaker and has only owned with a spouse.
  • An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
  • An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

If you meet any of these requirements, you may qualify for an FHA loan or other programs that provide down payment assistance loans and grants.

6. Save for Closing Costs

We’ve spent a lot of time discussing saving for your first home. Everyone always thinks about the down payment, but may overlook the closing costs. Closing costs are upfront expenses, ranging from 2 to 5 percent of the total loan amount, that go to your lender on closing day. These might include:

  • Application fee
  • Origination fee
  • Appraisal fee
  • Attorney fee
  • Discount points
  • Homeowners insurance
  • Title insurance expenses
  • Property Taxes

In your Closing Disclosure, you will see your exact closing costs. But don’t fret, as a first-time homebuyer, you may qualify for government-backed grants or loans that assist with closing costs.

7. Writing Down What Makes Your Dream Home a Dream Home

Once you are ready to start house hunting, it’s important to know what kind of home you are looking for. This will not only help you when searching online, but help your real estate agent suggest homes. Start a list of your needs, non-negotiable and nice-to-haves.

Do you need 3 bedrooms but would like to have a swimming pool? Write it down.

This will help you shop for homes and be less stressed when comparing properties.

8. Find a Qualified Real Estate Agent

You found a home online you like, now what? Working with a qualified real estate agent makes the buying process less stressful. They can help by:

  • Finding and showing you homes that fit your needs and price range
  • Helping you decide how much to offer
  • Submitting an offer letter on your behalf
  • Helping you negotiate with the seller’s agent
  • Attending the closing with you

9. Submit Your Offer with Confidence

Don’t risk losing your earnest money deposit, also referred to as good faith deposit. When you are ready to make an offer on a home, make sure you are 100% committed to the purchase of that home. Giving a good faith offer tells a seller you are serious about buying their home. Often, it is equal to 1-3% of your total home price, and goes towards your down payment. If you back out of your offer for a reason not listed in the offer letter, you’ll lose your deposit.

10. Hire an Inspector

Purchasing your home is likely one of the largest purchases you make in your life – one in which you want as much information as possible. For example, learning that your home will need a new roof in the next year may change your mind about wanting to buy it, or the amount you’re willing to offer. This is why you should not waive a home inspection. Home inspections can uncover potentially hazardous items in a home, such as bad wiring or structural issues, that you may not have noticed when you went to tour the home and save you money in the long run.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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6 Financial Tips for New Parents

6 Financial Tips for New Parents

by | Aug 22, 2024 | Family Finances

6 Financial Tips for Soon to Be Parents

Family Finances

Group of friends taking a selfie

Nursery? Check.

Car seat? Check.

Lots of cute clothes and tiny socks? Check.

How about an updated financial plan?

It’s definitely not the most exciting part about having a baby, but being financially prepared is important. While the choice to expand your family shouldn't be reduced to merely a financial decision, money can't be disregarded completely. 

Here are six tips for soon-to-be parents:

1. Begin Budgeting for a Baby

You may or may not already have a monthly budget, but without a doubt, your everyday expenses are going to look very different with a new baby. Be sure to consider the costs of things like:

  • Food or formula
  • Medical care, including the possibility of higher insurance premiums
  • Diapers and wipes
  • Clothing, toys, blankets, and other supplies
  • Childcare

If you’re new to budgeting, there are plenty of websites and mobile apps that can help you track your monthly expenses. Factoring these new costs into your spending plan can help you spend less time worrying about money and more time focusing on your little one.

2. Ramp Up Your Emergency Fund

If you don’t have an emergency fund yet, now is the time to start one. The purpose of an emergency fund is to provide a financial cushion in the event of something unexpected, like costly home repairs or an illness or disability that leaves you unable to work for a period of time. As a parent, you may also need to take off work if your child becomes sick or needs to go to a medical appointment. An emergency fund can help you make up for any lost wages until you are able to return to work.

As a rule of thumb, you should save up enough to cover 3-6 months’ worth of expenses. Start small by setting more manageable goals for yourself, such as saving $1,000 for each member of your household, and you’ll be there in no time.

3. Prioritize Retirement Savings

If you have to choose between saving for your child's college and saving for retirement, choose retirement. Your child will likely have more than one option to pay for college - including scholarships, loans, work-study programs, and grants - but you can't make up lost retirement savings. 

4. Adjust Your HSA Contributions

HSAs, or health savings accounts, are often an underappreciated pre-tax benefit that can be used to pay for a variety of current or future healthcare expenses for you and your family. The best part, any money you contribute and don't use in a given year will roll over to the next year. The money in your HSA account can be used for a wide variety of health-related products and treatments, including doctor's fees, breast pumps, and even baby sunscreen!

5. Consider Participating in a Dependent Care FSA

Similar to an HSA, a dependent care FSA is a pre-tax account you contribute to that's sponsored by an employer. The maximum contribution in 2024 to a dependent care FSA is $5,000 for families. Because these accounts are funded with pre-tax dollars, using them can lower the cost of eligible child care expenses and helps lower your total taxable income. Unlike HSAs, dependent care FSAs do not carry over to the next year, so whatever you don't use, you lose. Because of this, be sure to carefully budget for the amount of child care expenses you actually have.

6. Update Your Insurance and Estate Plan

Adding a baby to your health insurance is essential, but you may want to consider other types of insurance as well. Life insurance can help protect your family by ensuring that your loved ones will be financially secure in the event that you or your partner passes away. Disability insurance (which is often offered as a part of employee benefit packages) can also provide security in the event that one or more of the adults in your household is unable to work for a period of time. Talk to your HR representative at work or consult a licensed insurance agent to find out what options are available to you. 

Now is also a good time to either create a will or update your existing one. In addition to stating how your financial assets are to be distributed, a will can also include provisions for who will serve as guardian for your child if you and/or your partner pass away or become incapacitated. A licensed attorney can help you to create a plan that meets your needs. 

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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How to Build an Emergency Fund

How to Build an Emergency Fund

by | Aug 13, 2024 | Family Finances

How to Build an Emergency Fund

FAMILY FINANCES

blue water - red and white life saver floating in water

We all know that the unexpected can happen at any time. But when it involves expenses you did not anticipate, are you prepared?

In a 2024 report by the Federal Reserve, 37 percent of adults would not have been able to cover a $400 emergency expense without having to borrow or sell something. Having an emergency fund can help you get through these moments without any long-term consequences, as well as help you maintain financial wellness. Here's how to build an emergency fund and when you should use it.

What is an Emergency Fund?

An emergency fund, or "rainy day fund", is money you set aside for unexpected life events such as a medical bill, a loss of income, home or car repairs, and other needs. The rule of thumb is your emergency fund should cover your basic expenses for three to six months. These funds should not be used as discretionary spending and should be set aside in a savings account.

In general, emergency savings can be used for large or small unplanned bills that are not part of your normal monthly expenses and spending. These extra funds provide peace of mind because you know you'll be able to handle an unplanned job loss or bill if you ever need to. Without one, you could face financial set backs, that turn into debt - potentially having a lasting impact. 

How to Start an Emergency Fund

1. Determine how much money you'll need.

The amount you need to have in an emergency fund depends on your situation. If you haven't yet, create a monthly budget that shows all of your income and expenses. This will show you how much money you'll need each month to stay financially stable should an emergency happen. Then, multiply that monthly number by three to six months - this number is your money savings goal.

2. Identify how you want to build it.

Building a savings of any size is easier when you're able to consistently put money away. If you're not in a regular practice of saving, here are some healthy saving habits:

  • Set a goal. Once you've determined how much money you'll need, set up goals. This can help you stay motivated. Use our financial calculator to calculate how much money you should save each month to reach your goal. 
  • Create a system for making consistent contributions. There are many different ways to save, but setting up reoccurring transfers or direct deposits is often one of the easiest methods. It may also be that you put aside a specific amount of cash every day, week, or month. Aim to make it a specific amount. 
  • Regularly monitor your progress. It's important to regularly check your savings. Whether it's an email or text notification or a monthly statement, watching your progress can offer gratification and encouragement to keep going. 
  • Celebrate. If you've hit your first goal, don't miss the chance to celebrate what you've accomplished. But most importantly, don't forget to set your next goal.
birthday party-opening card

It's also important to remember that when the opportunity presents itself, you should take advantage of one-time opportunities to save. There may be certain times of the year - holidays, tax season, bonuses, and more - where you get an influx of money. While it's tempting to spend it, adding a portion of that money to your savings can help you quickly set up your emergency fund.

Where should I keep it?

Where you keep your emergency fund is up to you. You want it to be safe, accessible, and in a place you're not tempted to spend it for non-emergencies. Here are a few options, you can choose the one that makes the most sense for you:

  • Bank account — If you have an account with a bank, this is generally considered the safest places to keep your money. It might make sense to have a dedicated account where you can keep and monitor your funds. JVB has a variety of Savings and Money Market Accounts to choose from and are happy to help you figure out which account is right for you. 
  • Prepaid Card — A prepaid card is a card you can load money onto that is not connected to a bank. You can only add and spend the amount that's on your card.
  • Cash — The third option is keeping cash on hand for emergencies. But remember, cash can be lost, stolen, destroyed or easily spent on non-emergencies.

When should you use your emergency funds?

Before using your emergency fund, review your financial need to ensure you are making the right decision. Is the item essential? Is it urgent? Or, can you go without it for now? Not every unexpected expense is a dire emergency, but try to err on the side of caution. Having an emergency fund can help you avoid relying on other forms of credit or loans that can quickly turn into debt. 

However, don't be afraid to use your savings if you need it. If you spend it, just work on building it back up.

Start Saving Today!

A great way to start your emergency fund is with a JVB Money Market Account. This account allows you to earn interest on any amount. Another option is a JVB idLock checking account, which gives you the added benefits of writing checks, pay bills, and the use of a Visa®  Debit Card to pay for emergency expenses.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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