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Colorado Credit Union

Financial Tools

Piggy Bank Basics Workbook Activity: Financial Literacy
Colorado Credit Union has a free educational challenge for children ages 3-7. Bring your child to any Colorado Credit Union branch to pick up a “Piggy Bank Basics” workbook.

This free resource helps children become familiar with the concept of money and financial terms in a fun and engaging way. Once the workbook is completed, return it to any branch location to receive a special thank you gift.
Here at Colorado Credit Union, we value financial education and awareness. We have provided useful financial tools to utilize which includes different financial calculators, coaches and other articles and activities.

We hope you find these tools helpful. Check out the full library of Banzai Financial Tools and resources, completely FREE to our members.  

Budget Starting Points:
Your budget is your blueprint for keeping cash flow positive, and for sticking to your saving goals. Even if you and your partner will be paying for expenses separately, it's essential to have one overall household budget.
Remember a budget is there to help you, and it's not written in stone. Create a spreadsheet, or use an app, to list all your anticipated monthly expenses. It can be helpful to divide them by how frequently they occur.

Fixed v. Variable Expenses:
For the fixed expenses, such as rent or phone, it's easy to fill in the exact amount you know you'll have to spend. On the other hand, with the variable expenses, like groceries, there is no single exact amount. But based on what you know you spend, you should be able to estimate a fairly accurate number for most weeks.
The next step is to compare your income to your expenses. In order to achieve (and maintain) a positive cash flow, you may have to adjust some of the variable expenses—which probably means cutting back or cutting some of them out altogether.
You should revisit your budget on a regular basis. Remember, it's there to help you both, and it's not written in stone. Adjusting it if your overall household income changes is important. Check out this budget coach to walk you through the budgeting experience.
A part of budgeting, is saving. A simple, practical rule of thumb for individuals who want a budget that is easy to implement is utilizing the 50/30/20 rule. Play with the 50/30/20 calculator to see how much you can save. 

Budget Coach

50/30/20 Rule:
Now that you've mastered how to budget and save with the 50/30/20 rule, how much can you save in a year? Check out the savings calculator below to see how much you can save over a certain period of time while earning interest. 

Savings: How much can you save? 

Credit Scores:
A credit score is a number that potential lenders will use to determine whether they should lend you money, how much, and at what interest rate. Your credit score, also called a FICO score, is an actual number, between 300 and 850.

The higher the number, the better: a score of 740 to 799 is considered very good, though the average is closer to 700. FICO is an acronym for Fair Isaac & Co., the company that is responsible for tabulating your credit score.
Each of the three main credit agencies – Experian, Equifax, and TransUnion - have a score for you based on your credit report at that individual agency.

The agencies tend to have different information on the people they track, which means your credit report and score will vary from agency to agency. Those scores are what potential creditors, landlords, employers and insurers look at for an instant judgement on your creditworthiness. That’s important because lenders believe that people who are creditworthy will pay back what they owe.

That’s why better credit reports and higher credit scores make it easier, and cheaper, to borrow. It also makes it easier to rent an apartment, buy a house, get insurance, and a number of other day-to-day essentials.

Credit scores are the result of a compilation of several different sources of data that are available in your credit report. That data falls into four distinct categories, which are listed in order of how much weight they usually have in informing your score:
  • Payment history
  • Amounts owed
  • Length of credit history
  • Types of credit used
You’ve heard before that paying credit card bills on time is crucial – and the list above is why. Your payment history – if you pay on time, if you pay in full or only the minimum balance, and if you have late or missed payments – is the single most important factor in determining your credit score.

Avoiding a Bad Score:
There are two ways to have a bad credit score. The first, not surprisingly, is by not using credit wisely. That means spending more than you can afford, not paying your bills on time, and having too much outstanding credit, often spread across multiple credit card accounts.

The second is not as intuitive but is still a factor: you can have a bad credit score if you don’t use credit at all. In order to determine your score, there needs to be some kind of history to base it on. So simply cutting up your credit cards, or never having a credit card account, isn’t the path to a high credit score.

One important thing to know about credit scores is that the information is limited to how you use credit – there is no information about your race, religion, medical history, or lifestyle. There’s not even any data on your checking and savings accounts or your investment accounts. It’s all about how you use credit.

To Buy or Not to Buy: Mortgages
If you're planning to buy a home, you probably have good reasons for your decision. It may be that you share the feeling that owning your own home is a key part of the American dream. But there are also financial issues involved in buying real estate that you need to consider as well. 

There are strong emotional reasons for buying a home — and potentially stronger financial reasons. Owning can help you feel grounded, and part of a community. It can provide a sense of accomplishment and a place to build family traditions. Often, you have more space than you would in a rental unit that costs the same amount of money. And owning can save you money.

Thinking of buying a car? 

When shopping for a car, it's usually best to start by shopping for a car loan. When you’re shopping for a car loan, remember that what it costs you to borrow depends on three things:

  • The finance charge, expressed as an annual percentage rate (APR)
  • The term, or length of time the loan lasts
  • The principal, or amount you borrow

The APR is a percentage of the loan principal that you must pay to your credit union, bank, or other lender every year to finance the purchase of your car. This finance charge includes interest and any fees for arranging the loan. The charge gets added to the amount you borrow, and you repay the combined total, typically in monthly installments over the course of the term.

For example, if you take a $15,000 auto loan from your credit union with a 7.5% APR that you repay over four years, you’ll owe $362.69 every month. Over a year, those payments would total $4,352.28, and over the life of the loan, $17,409.12. That means it costs you $2,409.12 to borrow the money to buy the car.

When you’re looking for a loan, you want the lowest APR you can find for the term you choose. The higher the rate, the more borrowing will cost you.

The term of your loan also affects what it costs you to borrow. A shorter term means higher monthly payments but a lower total cost. On the flip side, a longer term means smaller monthly payments and a higher total cost.

For example, the same $15,000 loan at 7.5% APR that cost $362.69 a month for a four-year term would cost $466.60 a month for a three-year term and $300.57 for a five-year term. But the three-year term would cost you just $1,797.60 in finance charges—$611.52 less than the four-year loan. And the loan with the five-year term would cost $3,034.20, or $625.08 more than the one with the four-year term.

It should come as no surprise that the more you borrow, the more borrowing will cost. After all, the finance charge is determined by multiplying the interest rate times the principal. So the more you can reduce your principal, the more affordable borrowing will be.

One thing you can do to cut down your overall cost is to make the largest down payment you can afford so that you reduce your interest costs. Looking for a car that will have a good trade-in value, and trading it in while it’s still in good condition, will help you save money later on as well.

Auto Loan Affordability Calculator

Need more financial tools? Check out more calculators on many different financial topics. 

If you have enjoyed these useful financial resources, check out our library of Banzai Financial Tools and resources, completely FREE to our members. 

Disclaimer: While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

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