When you’re balancing a family or starting a new job, it can feel like your paycheck evaporates faster than a popsicle on a summer day. But don’t worry—whether you’re just starting out or looking to fine-tune your financial skills, this guide will walk you through essential money management tips. These practical steps are tailored for individuals and/or families earning a modest income, so you can take control of your finances without feeling overwhelmed.

1. Monthly Money Management Habits: How to Make Your Budget Work

Let’s talk about Chris—a recent graduate who just landed his first job. Chris is nervous about managing his money, especially after seeing how unprepared people were during the pandemic. He’s also unsure what an IRA, HSA, or 401(k) even are. If that sounds like you, you're not alone.

The first step in effective money management is creating a budget that works. Start by tracking your monthly income and expenses. Chris, for example, realizes he’s spending too much on takeout and streaming services. By cutting back just a bit and reallocating those funds to savings, he’s able to start building his emergency fund.

Pro Tip: Use First Alliance Credit Union’s Budget Worksheet to help track your spending and identify areas where you can cut back. It’s a simple way to get a clear picture of where your money is going and make adjustments as needed.

Get Ready to take control of your budget!

2. Saving for the Future: Money Market Accounts vs. Savings Accounts

Chris knows he needs to save for the future, especially for emergencies, but he’s unsure where to stash his cash. Should he put it in a savings account, or is a money market account a better option? What’s the difference anyway?

A money market account offers a higher interest rate than a standard savings account, but it might require a higher minimum balance. It’s a great option if you’re like Chris and want to keep your emergency fund accessible while earning more interest. On the other hand, a savings account is easy to open and has no minimum balance requirements, making it a good starting point.

Pro Tip: First Alliance Credit Union offers both savings and money market accounts. Compare the options to see which one fits your needs.

Explore our Savings Calculator to estimate how much your money will grow over time.

3. Building Credit: The Secured Credit Card Solution and Managing Debt

Chris is hesitant to get a credit card because he fears ending up with bad credit. However, without a credit history, getting a loan or even renting an apartment can be challenging. That’s where a secured credit card comes in handy.

A secured credit card requires a cash deposit that acts as your credit limit. It’s a safe way to build or rebuild credit without the risk of overspending. For example, Chris could deposit $300 to open a secured card, then use it to pay for regular expenses like gas and groceries, making sure to pay off the balance in full each month. This responsible behavior will gradually improve his credit score.

But that’s just the beginning. To build good credit, Chris needs to be aware of a few key factors that affect his credit score.

Credit Card Utilization: The Secret to a Good Score

One of the most important aspects of your credit score is credit card utilizations—the percentage of your credit limit that you’re using. Ideally, you want to keep your credit utilization below 30%. For Chris, that means if he has a $300 limit on his secured card, he should try not to carry a balance higher than $90 at any time.

Low utilization shows lenders that you’re responsible with your credit and not overextending yourself. It’s a crucial factor in maintaining a healthy credit score.

Pro Tip: If Chris finds it difficult to stay under 30%, he could make multiple payments throughout the month to keep his balance low, even before the statement is due. This helps keep his utilization rate in check and improves his credit score over time.

Paying Off Student Loans: Balancing Debt and Credit

Like many recent graduates, Chris has student loans to pay off. Managing these loans is essential not only for his financial well-being but also for his credit score. Consistently making on-time payments on student loans is one of the best ways to build a strong credit history.

If Chris is struggling with student loan payments, he might explore income-driven repayment plans or refinancing options. Income-driven plans adjust payments based on income, making it easier to manage monthly payments. Refinancing, on the other hand, could potentially lower his interest rate, reducing the overall cost of the loan.

Pro Tip: First Alliance Credit Union offers free financial counseling sessions. Chris could meet with a money navigator to explore student loan repayment strategies that fit his budget while also improving his credit score.

Schedule a free financial counseling session!

Understanding Credit Reports and Scores

Chris should regularly monitor his credit report to ensure that everything is accurate. Errors on a credit report can drag down his score, so it’s essential to correct any mistakes as soon as possible. Fortunately, First Alliance Credit Union offers tools to help members stay on top of their credit.

Pro Tip: Chris can use First Alliance Credit Union’s credit monitoring tool to check his credit score and get alerts about changes. This way, he can track his progress as he builds his credit and address any issues immediately.

Final Thoughts on Credit and Debt Management

Building credit isn’t just about getting a credit card or making payments; it’s about understanding how credit works and using it wisely. By keeping his credit utilization low, making on-time payments on his student loans, and monitoring his credit report, Chris is setting himself up for financial success.

And if he ever feels overwhelmed, First Alliance Credit Union is here to help with personalized financial guidance and tools designed to make managing credit and debt easier.

4. Understanding Investment Options: What Are IRAs, HSAs, and 401(k)s?

Let’s dive into some of the financial jargon that’s been making Chris’s head spin. Understanding these accounts can be a game-changer for your financial future.

• IRA (Individual Retirement Account): An IRA is a tax-advantaged account you can use to save for retirement. Contributions may be tax-deductible, and your investments grow tax-free until you withdraw them.

• 401(k): A 401(k) is a retirement savings plan offered by employers. Contributions are made pre-tax, and some employers even match a portion of what you contribute—free money!

• HSA (Health Savings Account): If you have a high-deductible health plan, you can use an HSA to save for medical expenses. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.

Chris is unsure about investing in these accounts, but here’s the deal: starting small and consistently contributing can lead to big gains over time. For example, Chris could start by putting just 1% of his paycheck into his employer’s 401(k). That might not seem like much, but over time, it can snowball into significant savings.

Pro Tip: Use First Alliance Credit Union’s Compound Interest Calculator to see how your savings can grow over time, whether you’re contributing to a 401(k), IRA, or other investment account.

5. Preparing for the Unexpected: How to Save for a Recession

Chris is worried about another recession and wants to build a safety net. Financial experts often recommend having 6 to 9 months’ worth of expenses saved up. But where should Chris keep this money?

While a money market account is one option, another is a certificate of deposit (CD), which offers a fixed interest rate for a set term. CDs can be a great way to save for a specific goal, like Chris’s emergency fund, but keep in mind that withdrawing money before the term ends may result in penalties.

Pro Tip: First Alliance Credit Union offers CDs with competitive rates. You can use their CD Calculator to see how much interest you can earn based on different terms and deposit amounts.

Start building your financial safety net!

6. Final Thoughts: Don’t Be Afraid to Ask for Help

Money management can feel overwhelming, but you don’t have to go it alone. Like Chris, you may benefit from sitting down with a money manager or financial advisor to map out your financial goals. Whether you’re saving for a rainy day, trying to figure out which accounts are right for you, or working on your credit, having a plan can make all the difference.

Remember, smart money management isn’t about making huge sacrifices—it’s about making small, sustainable changes that add up over time. Whether you’re just starting out like Chris or already balancing a family, these tips can help you build a brighter financial future. Ready to get started? Check out First Alliance Credit Union’s tools and resources to help you on your financial journey. From budget calculators to financial advisors, we’re here to help you make the most of your money.