Ka Wai Ola - Office of Hawaiian Affairs, Volume 34, Number 4, 1 April 2017 — 10 Money Savings Tips [ARTICLE+ILLUSTRATION]

10 Money Savings Tips

By ūamian Davila, MBA 1Review your withholding twice a year: About 73 percent of Hawai'i residents withhold too mueh in federal taxes every year. Grab your latest paystub and search online for the IRS Withholding Calculator, whieh will tell you how to adjust your W-4 form and optimize your withholding. While getting a refund sounds enticing, remember that the IRS pays you no interest on current refunds. By withholding the right amount to cover your tax liability, you're able to increase the take-home portion of every paycheck throughout the year and give more breathing roomto your monthly budget. 2Enroll in your employer-sponsored retirement plan: By contributing with pre-tax dollars to your nest egg, you'll effectively reduce your taxable ineome.

3Maximize employer matches to your retirement account: Most employers that offer a match require you to contribute 6 percent of your paycheck to maximize employer contributions. Consult your human resources department for details. 4Setup a flexible spending account (FSA): This enables you to use pretax dollars for eligible medical expenses and dependent caring expenses not covered by your current heahh plan. 5Choose index funds: Many studies have shown that cost is the only reliable predictor of investment performance. Whether it's for your 40 l(k) or investment account, choose low-cost index funds to minimize investment fees. 6Shop for better banking options at credit unions: In Hawai'i, credit unions provide higher savings rates for deposits and lower costs for loans. Here's an example: in December 2016, the Hawai'i average credit card interest rates at banks and credit unions were 17.68 percent and 11.57 percent, respectively. Compare the rates from your current bank against those from the 65 credit unions headquartered in the state.

7Cut down on your daily Hawaiian nut latte: Assuming a price of $3.50 per eup, yourcaffeine fixis costing you $105 per month or $1,274 per year! Cut this expense in half and use the savings to pay down faster any high-interest credit card debt. 8Build an emergency fund: By saving for a rainy day, you won't need to rely on credit cards. Set an automatic transfer from every paycheck to a savings account until you have enough to cover essentials for a six-month period. 9Buy life insurance: If you're the main breadwinner and have dependents, you need to plan for them in case of your absence. Right now is the lowest that you'U ever be charged for life insurance, so get a quote today. 10 Order y°ur free annual credit report: To prevent identity theft and have a full picture of your credit history, request your credit report every 12 months at AnnualCreditReport.com. ■ Mennces: 2014 IRS tox doto https://www.irs.gov/uoc/ soi-tox-stats-historic-table-2 ( UNA Hawaii credit union data https://www.cuna.org/ Research-And-Strategy/DownLoads/Factsheet/Hawaii/

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April is nalional Financial Literacy Monlh in recognition of the importance of eeonomie and financial education. - Photo: Shutterstock