Subscribe for Updates

Sign up to get updates from Carter Cares delivered to your inbox.Subscribe

Balancing Financial Priorities: All About Debt, Savings, and Investing

Education Posted on January 12, 2021

For financial planners, 2020 was exactly the sort of year you save for: one where years of good prioritizing left you comfortable and prepared in the midst of drastic, unexpected changes. Savings rarely ever means no worries at all, but if your pre-2020 financial priorities aligned this list, you certainly breathed easier at night.

We realize that may not have been the case for everyone, and if you’re just beginning your journey to investing in your future security? That’s ok – read on! We can help you balance your financial priorities to better weather the storm.

Emergency Funds

Before we advise any of our customers to start saving for the long-term future, we emphasize – and reemphasize – the importance of an emergency fund. For most, this is the equivalent of three months’ living expenses: your rent or home payment plus any mandatory expenses like insurance, groceries, transportation, et cetera. Having this money set aside gives you more peace of mind than you can imagine during years like 2020. And just as importantly, it keeps you from adding to your debt liability in the form of credit card payments. It’s an easy fund to build with helpful digital tools that come with every checking account – they can help you build your safety net a few easy dollars at a time!

Cutting Down Your Liabilities

Debt takes on many forms – and not all of them are bad! Student loans, for instance, usually come with low-interest rates and even forgiveness or forbearance options. Credit card debt or back taxes, on the other hand, usually come with high interest that can grow your balance well past its original size. When paying off your debt, it’s helpful to focus first on the debt that has the highest interest rates and has the most severe enforcement penalties – often credit card debt, but sometimes car payments or back taxes.

With our free debt payoff calculator, you can quickly get an idea of how long it’ll take to pay off your current liabilities no matter what form they take, or how much you need to set aside to meet a timeline of your own. Many of our customers find our credit card payment calculator especially encouraging: you’d be surprised how much faster your balances decrease when you add just a little extra to your minimum payments.

Intelligent Savings

If you’ve paid off your serious liabilities, the next step for most will be focusing your savings, not investments, and that’s just fine. “Simple” savings help spread the costs of large decisions and big expenses out over the course of years. Never feel pressured into investing in your future through “fancy” schemes: the biggest dividends you’ll ever receive in the future are the ones you pay yourself now!

Saving can take on a variety of forms, from a simple, interest-yielding savings account with a monthly automatic deposit from your checking account to certificates of deposit (CDs) that limit access to your funds in return for higher interest rates. Our team would love to walk you through the saving options available at Carter Bank & Trust!

Retirement Investments

If you’re able to do so, you might also consider putting aside additional money into an individual retirement accounts (IRAs) in addition to regular savings. These sorts of investments are rarely used for things like college funds or home purchases because withdrawing your money hinges on your being 59 1/2 years or older – but in return, they offer sizable tax benefits versus traditional savings to encourage retirement saving specifically. We focus specifically on Roth and non-Roth IRAs, which treat your earnings on deposited amounts differently and answer to different needs. You can learn more about our IRA options here and even use our calculator to get a rough outline of how hard your money can work for you in the years to come.

Ready to Talk About Your Future

No matter the stage in your financial wellness you find yourself in, our team is always happy to provide you insight, options and encouragement. Based out of Martinsville, Virginia, you’ll find our friendly folks all throughout the western half of the Commonwealth as well as North Carolina. Schedule a call or an appointment with your branch today.

Recommended Posts

Share This