All You Need to Know About Share Certificates

No one wants to play around with their savings. Whether you’ve just received a lump sum through a work bonus, inheritance or other unexpected windfall, or you’ve been saving for a while until you’ve built a sizeable nest egg, you likely want to park your savings in a place that offers your money its biggest chance at growth without risking a loss.

Lucky for you, as a member of Advantage One Credit Union, you have access to an abundance of secure options for your savings, including savings accounts, [and] money market accounts, [health savings accounts, holiday clubs and vacation clubs].

Another excellent option we offer our members to help their savings grow is our share certificates. Sometimes known as savings certificates, and referred to by banks as CDs, these unique accounts blend higher growth potential of a stock investment with the security of a typical savings account.

Let’s take a closer look at this savings product and why it might be the perfect choice for you.

What is a share certificate?

A share certificate is a [federally] insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and there is generally no monthly fee to keep the certificate open.

Aside from the higher dividend rate, share certificates differ from savings accounts in the more limited accessibility of the funds within the account. A typical certificate will not allow you to add any money to the certificate after you’ve made your initial deposit. You also won’t be able to withdraw your funds before the maturity date without paying a penalty. [However, at Advantage One Credit Union, we do offer more flexible options than the typical share certificate].

Terms and conditions of certificates

You’ll need to meet some basic requirements before you can open a certificate including a minimum opening balance and a commitment to keep your money in the account for a set amount of time.

The minimum amount of funds you’ll need to deposit to open a certificate will vary in each financial institution. It also depends upon the term you choose. Some institutions will accept an initial deposit as low as $50 for a certificate. Others, such as a “jumbo” certificate, will require an opening balance of $100,000 or more. In general, the more money you invest in a certificate, the higher rate of interest it will earn. At Advantage One Credit Union, you can open a certificate with as little as [$X] at an Annual Percentage Yield (APY) of [X%].

Certificate term lengths also vary among financial institutions, with most offering a choice of certificates that run from three months to five years. Typically, certificates with longer maturity terms will earn a higher rate. Here at Advantage One Credit Union, we offer our members certificates that can be opened for just [X] months or as long as [X] years. Our dividend rates start at [X%APY*] for short-term certificates, and going up to [X%APY*] for our long-term options.

Is a share certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you move forward with opening a certificate, be sure you won’t need to access the funds before the certificate’s maturity date. It’s best to have a separate emergency fund set aside to help you through an unexpected expense.

Why keep your money in a certificate?

Here are some of the reasons people choose to open a certificate:

  • Low risk. With each Advantage One Credit Union certificate insured by [the National Credit Union Administration] up to $250,000 [and independently insured up to $XXXX by XXXX], you can rest easy, knowing your money is completely secure.
  • Higher dividend rates. Certificates offer all the security of savings accounts with higher yields.
  • Locked-in rates. There’s no stressing over fluctuating national interest rates with a certificate. The APY is set when you open the account and is locked in until its maturity date. This means you can calculate exactly how much interest your money will earn over the life of the certificate the day you open it.

If a certificate sounds like the perfect choice for you, stop by Advantage One Credit Union today to learn more. We’re committed to giving your money its best chance at growth.

* APY=Annual Percentage rate and rates are current as of [XX/XX/XXXX].

Your Turn: Have you chosen to keep your savings in a share certificate? Tell us why you chose this option in the comments.

Learn More:
investopedia.com
thebalance.com
businessinsider.com

Products for Managing and Tracking Business Expenses

Running a flourishing business means overseeing a constant flow of money. There’s revenue, payroll, suppliers, lease payments, taxes and so much more. It’s a lot to keep track of!  Luckily, though, there are lots of products on the market that can help you cover, manage and track your business expenses effectively and smoothly. Let’s take a look at some of these products and share some tips for choosing those that are the best fit for your business.

Business checking accounts

A designated business checking account makes a company look credible and professional while enabling it to manage and track expenses, taxes and revenue. Separate accounts also protect business owners from losing their personal assets if legal action is taken against the company. Business owners can use their checking accounts to deposit checks made out to their company and to cover business expenses, such as payroll or payments to suppliers.

Here’s what to look for in a business checking account:

  • Generous cash-deposit limit per transaction
  • Generous monthly transaction limit
  • Low or no maintenance fee and other costs
  • Online and mobile banking
  • Possible dividend rate

[If you’re looking to open a business checking account, a Advantage One Credit Union Business Checking Account can be a great choice. Our business checking account has [a low maintenance fee of $xx/month/ no maintenance fees] and convenient features like [XXX]. Call, click, or stop by Advantage One Credit Union to learn more.]

Business savings account

A business savings account is an account designated for funds to be used in cases of emergency or for future business expenses. The money in this account will grow at a greater rate, but access to these funds will be more limited.

Business owners can use a savings account to build a cash cushion for slower seasons, prepare for unexpected expenses or to save up for new equipment, tax payments or an expansion.  Many financial institutions also offer rewards and incentives for businesses opening a business savings account, such as cash-back programs, increased dividend rates for larger deposits and reduced fees.

Here’s what to look for in a business savings account: 

  • High dividend rates
  • Low fees and a transparent fee structure
  • Rewards and perks
  • Online and mobile banking

[Opening a Advantage One Credit Union Business Savings Account will provide you with a favorable rate of [x.x%], generous terms, and convenient features like [XXX]. If you’re ready to open a business savings account, call, click, or stop by Advantage One Credit Union today.]

Business credit card

A business credit card provides small business owners with easy and unsecured access to a revolving line of credit. Business owners can use the credit to withdraw cash as necessary, cover large expenses, make purchases, fund an expansion or meet their monthly bill payments.

In comparison to a business loan, a business credit card is easier to qualify for, but it will nearly always come with a higher interest rate. If business owners are careful only to use the credit card when it is absolutely necessary and pays the bill before it’s due, interest will not accrue. A generous line of credit can be a convenient way to increase a business owner’s purchasing power without risking any assets. Credit debt that is managed well will also build the company’s credit score and may provide the business with rewards and incentives.

Here’s what to look for in a business credit card: 

  • A low interest rate
  • Generous perks and rewards
  • A low or no annual fee
  • Interest-free introductory period
  • Purchase protection and insurance

[If you’re looking to open a business credit card, look no further than Advantage One Credit Union. Our Business Credit Cards feature a generous credit limit, easy qualifying terms, and great perks. Call, click, or stop by Advantage One Credit Union today to learn more.]

Tax software

Tracking business expenses and marking which of them can be deducted from a company’s tax liability can be super-challenging. Tax software designed for businesses makes this task easy. Business tax software, like H&R Block, TaxAct and TaxSlayer, can track all the expenses of a business and help owners file taxes efficiently and easily. The software allows businesses to upload all relevant tax documents, provides online support from tax specialists and helps the business calculate federal — and sometimes also state — tax liability. Businesses will need to pay a fee to download most tax software programs, but the cost is more than offset by the time and money the software can save a business.

Here’s what to look for in tax software for businesses:

  • Online tax filing
  • Low monthly cost
  • Assistance with filing federal and state taxes
  • Compatibility with your devices
  • Money-management apps

Managing expenses for a small business isn’t easy. There’s payroll, suppliers, monthly bills and so many other ongoing expenses that need to be covered. Fortunately, there’s an app for that! Money management apps like Mint, Truebill and ZohoBooks allow businesses to track and review all their expenses in one convenient location. Chart expenses on colorful graphs to visualize cash flow, see where the business money is going, categorize expenses for easier tax-filing and link accounts for automatic syncing of expenditures and income. Tracking business expenses on an app also makes for easy monitoring the business via mobile device.

Here’s what to look for in a money-management app: 

  • Manageable monthly cost
  • Easy-to-use interface
  • Synchronization across multiple devices

Your Turn: How do you manage your business expenses? Tell us about the products you use in the comments.

Learn More:
entrepreneur.com
investopedia.com
nerdwallet.com
patriotsoftware.com
brex.com

The Importance of Being Financially Fit

Are you ready to stretch those financial fitness muscles? We hope so, because it’s time to get financially fit!

Being financially fit means living a life of complete financial responsibility. The Center for Financial Services Innovation (CFSI), also known as the Financial Health Network, defines four basic components of financial health: Spend, Save, Borrow and Plan. These components reference everyday financial activities. As such, every choice you make in terms of these four activities either builds or detracts from your financial fitness. Like physical fitness, you can beef up those fitness muscles a little bit more each day.

Being financially fit is crucial for a well-balanced, stress-free life. Here’s why (and how):

Expand your financial knowledge

A financially fit person is constantly broadening their money knowledge. They read personal finance books and blogs, attend financial education seminars and are aware of the evolving state of the economy. This enables them to make monetary decisions from a position of knowledge and power, leaving much less up to chance or luck.

Stick to a budget

A financially fit person knows that tracking monthly expenses is key to financial health. They are careful to set aside money from their monthly income for all fixed and discretionary expenses and to stay within budget for each spending category.

Minimize debt

A financially fit person is committed to paying down debts and seeks to live debt-free. Constant budgeting, ongoing financial education and planning ahead enables them to make it through the month, and through unexpected expenses, without spiraling into debt.

Maximize savings 

A financially fit person prioritizes savings. In fact, savings is a fixed item on their monthly budget instead of something that only happens if there’s money left over. This allows them to think ahead and build a comfortable nest egg or emergency fund. In turn, having a robust safety net means sleeping better at night knowing there’s money available to cover unexpected expenses or a change in life circumstances.

Maintain complete awareness of the state of your finances

A financially fit person knows exactly how much money they owe, the accumulated value of their assets and the complete sum of their fixed and fluctuating expenses. This awareness takes the stress out of money management, allowing them to make better financial choices.

Maintain a healthy credit score

A financially fit person knows that an excellent credit history and score is a crucial component to long-term financial health. They are careful to pay all bills on time, hold onto their credit cards for a while and to keep their credit utilization low. This enables them to qualify for long-term loans with favorable interest rates, which saves them money for years to come.

Help your money go further

A financially fit person does not waste large sums of money on interest charges for purchases made using borrowed funds via credit cards or loans. They live within their means and only use these resources for purchases they can actually afford, or for large, long-term assets, like a car or a house. This means they have more funds at their disposal to help build their wealth through savings and investments.

Create concrete financial goals

A financially fit person has long-term and short-term financial goals. This enables them to keep their focus on the big picture when making everyday money choices, empowering them to actually realize their financial dreams.

Achieve financial independence

A financially fit person is independent. They don’t rely on loans from friends or family members to get by, and they don’t need to pay with plastic at the end of the month because they ran out of money. Their well-padded emergency fund means they don’t depend on their monthly income to put bread on the table, either. By sticking to a budget, prioritizing savings and maintaining an awareness of their finances, they are strong, secure and completely independent.

Being financially fit means living a life without battling anxiety about getting through the month or stressing about the future. You can achieve financial fitness by committing to making choices in each of the four components of financial health (spend, save, borrow, plan) that are forward-thinking and help to build your financial wellness.

Your Turn: Why is financial fitness so important? Share your reasons with us in the comments.

Learn More:
femcove.com
doughroller.net
moneybites.com
forbes.com
cbsnews.com

My Savings Has Been Wiped Clean; How Can I Replenish it?

Broken Piggy Bank with coins scattered on tableQ: The last few months have been really tough on my finances, and I’ve been forced to use my savings for getting by. My emergency fund and savings account are basically zero. Now that my financial situation is starting to improve, I’d like to start building these up again, but it’s all so overwhelming. Where do I begin?

A: Watching savings that took you years to build up disappear in just a few months can be disheartening, but it’s important to remember that you’ve made the right choice. Using emergency funds to survive prolonged unemployment, an unexpected large expense or a medical emergency is the best way to make it through a financial hardship. If your savings are depleted, though, you’ll want to start rebuilding as soon as possible to ensure you have the funds to cover a future financial challenge without falling deeply into debt.

Here’s how to start your rebuilding plan:

Set a goal
Before getting started on saving up money, it’s a good idea to establish a tangible goal. What’s your magic number? You can try to recover the value of the savings lost, or start smaller, with a more attainable goal. Bear in mind that experts recommend having funds to cover three to six months’ worth of living expenses set aside in an emergency fund or savings account.

Review your budget and trim your spending
A good place to start finding those extra dollars for savings is by carefully reviewing your spending for ways to cut back. Look for expenses that can make a difference in a monthly budget without dramatically affecting your quality of life. Think about subscriptions or services that are rarely used, a dining-out budget that can be scaled back and expensive recreational activities that can be swapped with freebies. There’s no need to live like you’re broke, but stripping your budget of some extras can give you the boost of cash you need each month to build up your savings again.

Find a side hustle
Another great way to land extra funds is through a side job. There are many ways to pad a wallet without a major investment of time. Some options include taking surveys on sites like Survey Junkie and Swagbucks and doing gig work for companies like Uber, DoorDash and Rover.

Sell your old treasures
If you’ve spent part of the COVID-19 lockdown giving your house a deep cleaning, you may have unearthed some forgotten treasures that can turn into easy moneymakers. You can sell old clothing on ThredUp, unwanted jewelry on Worthy.com, make good money off your unwanted furniture through Chairish, sell or trade unused sports equipment on Swap Me Sports and sell kids clothing and toys on Kid to Kid. Use the cash you earn from these sales to jumpstart your new nest egg.

Make a plan
Once you have a goal in place for building your savings, and you’ve maximized the possible monthly contributions toward savings each month, it’s time to create a plan. Map out a timeline of how long it’ll take to reach your goal when putting away as much as possible each month. Remember: the more aggressively you save now, the sooner you’ll reach your goal.

Start saving
It’s time to put the plan into action! The best way to ensure regular savings happens each month is to make it automatic. You can set up an automatic monthly transfer from your Advantage One Credit Union Checking Account to your Advantage One Credit Union Savings Account on a designated day of the month. You may want to have the transfer go through several days after you receive your monthly salary, or it might work out better to put a smaller amount of money into savings each week. Give us a call at 734-676-7000 to discuss your options.

Put unexpected windfalls into savings
To speed up the process of rebuilding depleted savings, you may want to resolve to put unexpected windfalls into an emergency fund or savings account. This can include tax refunds, a work bonus and gift money. If another round of Coronavirus stimulus checks is approved, consider using these funds for your savings as well. Earmarking future windfalls for savings can shorten the amount of time spent cutting corners in a budget and taking on extra jobs to build up a savings account.

Rebuilding an emergency fund and savings account from the bottom up isn’t easy. It takes commitment, hard work and the ability to keep a long-term goal in mind; however, the security that comes from knowing you have a safety cushion to fall back on in case of a financial setback will make this goal worth the effort many times over.

Your Turn:
Have you started working on rebuilding your savings? Tell us about it in the comments.

Learn More:
policygenius.com
fool.com
moneymanagement.org

Best Ways to Save for Your Mortgage Down Payment

Four simple methods to get the ball rolling on your down payment savings
Buying a home is ajanuaryfeatured_saveforhome huge step in life and begins with a huge hurdle: the down payment. Fortunately, by starting early and thinking things through, you can get a solid jump on saving. Here are some easy ideas to get you started.

Automate Your Savings
At your usual financial institution, open a savings account specifically designated for your down payment/mortgage. Not only will this allow you to conveniently transfer funds from one account to the other, it will also allow you to automate transfers or directly deposit part of your paycheck into the specified account.

Make a Budget
Create a spreadsheet that lists all of your monthly expenses and monthly net income. Not only will this tell you how much you can put into savings, it can also help you discern what monthly mortgage payment you can afford. If the buffer between expenses and income is already too small, this is an early red flag that you will have to start doing some things differently to afford your mortgage.

“Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits (meaning spend less) and avidly look for new savings sources,” says Peter Miller, The Simple Dollar contributor.

Invest Your Funds
If you are looking to buy a house within the year, Kathryn Vassel of CNN Money recommends keeping your money liquid; but if your plans are more long-term, it is a good opportunity to invest in order to boost savings. If you are looking at a 10-year time frame, stocks could be a good option for you, Vassel writes. If you think you’ll buy a house in five to seven years, consider investing in bonds: 50 percent in longer-term bond funds or individual bonds and 40 percent in short-term bonds that mature in one to three years, plus 10 percent in cash. Finally, try higher-interest CDs if you are still two to four years from buying a home.

Research Home-Buying Programs
One of the first steps toward saving for a mortgage is setting a goal. A general rule of thumb for the down payment is 20 percent of the home’s selling price, but many available government programs also offer lower down payments, down payment loans or grants, or housing discounts. For lower down payments, look into GSE loans or loans through the FHA, VA or USDA.

Whether you choose one of these savings methods or all of them, they will help you come up with the down payment for the home you’ve always wanted.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The Power of Compound Interest

Why it really pays to invest early in a retirement account
Money in a savingsjanuaryfeatured_compoundinterest or retirement account grows over time as it earns interest. But the interest rate isn’t the only factor that determines how much it grows; compounding interest helps your funds grow faster because it lets you earn interest on the money you deposit plus previously earned interest.

Compounding interest gives young investors great power to save for retirement, even if they don’t currently have much to save.

People in their 20s and 30s who are working to build their careers are often tempted to put off investing in retirement for a time when they are more established financially. By doing so, however, they miss out on the big advantage they have over older, wealthier savers: time.

“If you invested $10,000 in a mutual fund and the fund earned a 7% return for the year, you’d gain $700,” according to NerdWallet. “Over the years, that money can really add up: If you kept that money in a retirement account over 30 years and earned that average 7% return, for example, your $10,000 would grow to more than $76,000.”

To test out the power of compound interest for yourself, try the Compound Interest Calculator from NerdWallet. It can show you exactly how far your money could go if you started saving today. Just plug in hypothetical savings amounts at https://www.nerdwallet.com/banking/calculator/compound-interest-calculator.

The earlier you start investing, the more time your money has to compound, and when you do the calculations, it becomes clear that saving a little bit of each paycheck today can add up to a much bigger sum at age 65 than if you wait a few decades to start saving, even if you can afford to save more each month when you’re older. The bottom line is that to truly take advantage of the power of compound interest, you need to start saving as early as possible, and the advantage you gain by doing so cannot be overstated.

Business Insider calculated how much you would need to save each month to reach $1 million by age 65 at a 6 percent return rate, and the results are astounding. If you start saving at age 20, you only need to invest $361.04 each month, while starting at age 30makes the required monthly savings nearly double to $698.41. If you wait until you are 50, you need to put away $3,421.46 each month to end up with the same amount at age 65.

You can see a chart that illustrates the calculated monthly savings required for each age group at http://www.businessinsider.com/compound-interest-monthly-investment-2014-3/#.U6xcEI1dWVh.

“When you start saving outweighs how much you save,” says Business Insider contributor Libby Kane. “Retirement accounts such as 401(k)s and Roth IRAs aren’t just savings accounts-they’re actively invested, and therefore have the potential to make the most of this benefit.”

If you’ve been inspired by the mathematical magic of compound interest, harness that motivation by talking to your financial institution about opening up a retirement account or by committing to making regular contributions to your existing savings and retirement accounts.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The Secrets to Saving More Money

Knowing which accounts to use can help you save more

Today, there are manysavingsecrets_featured options for where to put your money. From using regular checking and savings accounts to deciding whether to open a money market account or a CD (certificate of deposit) to even opening an account for holiday savings — each offers something to help you save a little more.

Money market accounts and savings accounts
In an article in the Houston Chronicle, finance contributor Leigh Anthony compares these two types of accounts. Both offer interest on all deposits made and are insured by the federal government, making them safe, low-risk investment options.

Both account types also have a federal limit of six transfers per month out of the account. However, money markets act more like checking accounts, giving you the ability to write checks, make electronic transfers, and withdraw money with an ATM or debit card. With savings accounts, you can transfer money, but you may or may not be able to withdraw funds directly without talking to a bank teller, depending on the institution.

“Interest rates on savings account[s] are typically very minimal as there is not a minimum balance required,” reports Anthony. “[W]ith a money market account, the interest rate is higher and may fluctuate based on a schedule posted by the [financial institution].”

A savings account would therefore be more appropriate for putting away cash that you want to save for emergencies or a future large purchase, whereas a money market account would be better for savings that you need to access more often, such as for major home renovations.

CD accounts
Anthony also discusses the difference between a CD and a money market account. Unlike money markets, a CD account has a set interest rate that doesn’t change through the investment term. You can set this term from anywhere between 30 days and five years — and then sit back as your money grows.

Furthermore, according to an article in the Wall Street Journal, CDs are reported as low-risk savings accounts with an interest rate that could be higher than a money market account. The money is (probably) federally insured, “and you’re guaranteed to get back what you put in, plus interest once the CD matures” through its predetermined term. But make sure not to withdraw funds before the maturity term ends, or you’ll face a hefty penalty.

Holiday savings accounts
While some institutions offer actual “holiday savings accounts,” this term is broad enough to encompass savings specific for holiday spending. Many people spend a lot of their money during the holidays for gifts and family meals, and a great way to make sure you have funds set aside for these purchases is to open an account just for holiday savings.

“The key is to think about holiday spending the same way you would other recurring, non-monthly expenses, like annual insurance premiums, quarterly tax estimates and home maintenance. Set up an account, and automate deposits from your paycheck like any other bill,” says CFP® Tom Gilmour of LearnVest Planning Services in a November 2014 article in Forbes.

If you need more guidance on what type of savings account to open, contact us and we’ll be happy to help.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Saving Versus Investing Over Time

Does one take precedence over the other?

It’s the age-old questionSaveVsInvest_Featured to which everyone wants an answer: Is saving over time or investing your money more likely to make you the big bucks?

While both strategically saving and investing will make you money, investing is more likely to up your financial game over the long term, and is best for helping you reach those faraway goals, such as saving for a wedding or a child’s college education. Savings accounts work better for goals in the near future, such as going on vacation or making a large purchase.

While investing over the long term certainly has its advantages, it can pose many more risks than saving accounts do. With funds ensured by the federal government, money up to $250,000 would be restored if anything happened to your financial institution with a savings account. In addition, savings are ready at hand in the event you need money quickly — a possibility investing doesn’t always provide.

Investing, however, offers the potential for major profit and a higher return than a regular savings account. Over time, your investment may appreciate, which will increase your net worth. So if you sell what you invested in for a higher price, you make a profit. With a savings account, you can earn interest, but that’s generally much less than an investment profit.

Of course, when you invest money, you risk losing some or all of it. The key with investing is focusing on the things in your control.

“The only thing that you can control is the amount of capital you invest. Even during periods of low market returns, the frequent addition of investment capital can have a lasting effect,” says Director of Investor Education Bob Stammers of the CFA Institute. “Consistently adding capital to your portfolio, [when combined with] the long-term returns earned on that capital, is an excellent way to steadily move toward your overall financial goals.”

Even if you’re investing your money, it’s still important to be good at saving as well.

“An average saver will do better than a great investor who doesn’t save,” says CFP Professional and Principal David A. Schneider at Schneider Wealth Strategies in New York City.

In addition, whether you save or invest, it’s best to start sooner rather than later.

“The sooner you start saving and investing, the easier it is on your budget,” says President Carrie Schwab-Pomerantz of the Charles Schwab Foundation. “The sooner you start, the less you have to save because you have time on your side.”

“Every $1,000 saved in your mid-20s grows to over $10,000 at retirement, assuming 6 percent growth every year. But waiting until your mid-30s means that same $1,000 will only grow to $6,000,” explains Chartered Financial Analyst and CEO Shane Leonard of Stockflare. Think of it this way: Investing a mere dollar at age 25 could be more than five times as valuable as doing so at age 45.

Stop by to see what kind of investment and saving options we have for you today.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Saving for a Child’s Education While Paying Off Your Own Student Loans

Should you save first or prioritize paying down your own loans?

Determining how much482232067(1) to save for your children’s education and how much to spend paying off your own loans can be a confusing prospect. Should you focus on your current loans, or look toward the future? Many people feel conflicted because they feel like they should put their children first, but know they need to pay off their loans in order to help the financial prospects of their whole family.

The following information can help you determine the right path for your family. Although deciding how much to spend paying down debt and how much to save for the ever increasing costs of college can be an emotional conundrum, there is actually a fairly clear-cut answer. Before focusing on just your children, you need to protect the financial interests of your entire family. This means ensuring that you have sufficient savings and that you pay down debt quickly.

First things first, many financial experts suggest that your main priority should be ensuring that you have sufficient savings for an unforeseen circumstance like a medical emergency, or a job loss.

“With the uncertain economy, experts suggest that you squirrel away at least four to seven months’ worth of living expenses,” states Scott Westcott on Yahoo News Finance.

Once you put aside enough money for an emergency, you have to determine where the rest of your money should be spent. Performing some simple calculations can help you see how far your dollar will go in each scenario: paying down debt or saving for college. Most likely, you will find that paying down debt is your best option as far as getting the most bang for your buck.

“Calculate if the potential earnings on your investments for your child’s education will likely outpace the interest rate you’re paying on your student loan debt,” states Westcott.

Even if you can create an investment portfolio that is well diversified and may perform better than the interest rate on your loans, there are many reasons to pay down your debt before saving for college. It’s important to keep in mind that you’re not being selfish, but rather are helping your entire family by paying down your loans.

“If you’re concerned about saving for your child’s future education, eliminating your own loans should take priority,” according to the Women & Co. blog at the Huffington Post.

When your child approaches college age, the amount of debt you have will likely influence the places he or she applies to. Paying down debt will also help you obtain a loan in the future when you more accurately know how much college will cost.

“If you pay off your loans and build a solid financial base then you will have more options to pay for college down the road. If you don’t build a solid financial base, then it is harder to not only help your kids but yourself,” states personal finance advisor Andrea Travillian, who is the founder of Smart Step, Inc. “No one will give you a loan to retire, but worst case scenario your child can take out a student loan.”

The realities of retirement planning should be a serious consideration. Not only will your options for retirement savings decrease as you get older, the investments you do make will not have time to go as far if you wait.

“But putting off saving for retirement until you’re debt-free could cost you the most valuable asset you have: time,” warns Sandra Block from Kiplinger. “Thanks to the magic of compounding, even small contributions to a 401(k) or similar retirement plan will grow significantly, especially if your company matches contributions.”

The fact that you should focus on your own debt and retirement doesn’t mean that you will be ignoring the needs of your children until your debt is gone. If you make a very serious budget, you can tackle your debt most efficiently and start putting away money for your children faster.

Lyz Lenz from the Mint Life blog describes how she was able to plan for her own education debt and her children’s by enforcing a strict budget. They bought bulk groceries, cut down on clothes shopping and even reused sandwich bags to save, and it all added up.

“Two months ago, we were able to pay off one loan two months early and we’re inching closer to our goal of eliminating my college debt by early next year,” states Lenz. “‘What will we do with all that money, when we don’t have to pay Sallie Mae?’ I recently asked my husband. ‘We’ll save it for more college,’ he replied.”

The bottom line is to talk to your financial institution about a savings account so that you have money saved for any unforeseen circumstances and find out what your best options are for retirement savings. In the meantime, get serious about your budget and you will place yourself in the best position to begin saving for your children’s education.


Used with Permission. Published by IMN Bank Adviser
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Financial Tips for College Graduates

Preparing for the real worldFinancialSkills_2 can be a daunting task for a college student and knowing where to begin might seem hopeless. One of the most important things to work on as you begin to contemplate your life after college is building solid financial skills. Having well-grounded financial skills will help you not only personally, but also professionally. Here are some tips to help you get on the right track.

According to Nancy Anderson of Forbes.com, nine out of 10 baby boomers provide their adult children with some kind of financial support. While every parent wants to help their children succeed in life, it’s also important that parents don’t compromise their retirement savings in the process. Teaching their children how to effectively manage their money can make a significant difference – and it’s never too late to start. Some of Anderson’s financial tips include:

Understand the value of the dollar
Especially for college students who are eating at all hours of the day or night, being mindful of their spending is important. Instead of having that pizza delivered from down the road or buying three coffee drinks from the library cafe, try thinking ahead before an all-nighter of studying; pack snacks that you already have on hand and bring a thermos of coffee. The small expenses can quickly add up to a big chunk out of your budget.

Keep a good credit score
As you contemplate moving into the real world, there are things you’ll want to do that your credit score will have an impact on such as renting an apartment, buying a new car, etc. Sign up for a credit card with a low spending limit and set ground rules for yourself when it comes to using it to avoid getting yourself into trouble. Parents can consider setting up a joint card while their kids are in college and work together to pay off the balance each month to get a good start on good credit.

Save, save, save
Putting money into a savings account that you don’t touch is one of the key factors to success; the standard rule is to have approximately six months of expenses saved to ward against the unexpected. Your financial institution may offer the ability to auto-draft money from your checking to your savings account so you’re automatically saving money with each paycheck. According to research by Bankrate.com, 76 percent of Americans live paycheck to paycheck; another study from CashNetUSA revealed that almost half of those surveyed had less than $800 saved for emergencies.

When it comes to learning more about managing your finances, you may come across terms that seem foreign and intimidating; however, taking some extra time to research these things now and understand how they can impact your financial future is important for your success.

“Young college graduates, who start saving now, can save far less money and be much wealthier than Americans who realize in their 40s and 50s that they have to get busy stashing money away,” according to Lynn O’Shaunessey of CBSNews.com. Here are some of O’Shaunessey’s tips:

Maximize your savings with compound interest
Even if you start your savings account with meager contributions each month, compound interest, like a snowball, can turn those contributions into something more significant as the years go on.

Open a Roth IRA
A Roth IRA is basically your retirement savings account; even though retirement may seem like decades away, you want to make sure that you’re comfortably prepared for it, so opening an IRA now will be sure to benefit you in the future.

Work on creating a stock portfolio
Investing in stocks can have a major impact on your finances and also teach you a lot about money as you become more experienced with the process. Start by investing in just one category while setting the goal to eventually spread your finances across large-cap and small-cap index funds, which will provide you with the best return for your investment.

Manisha Thakor of Forbes.com suggests that parents talk to their college-aged children about their own financial successes and blunders: “The more intergenerational dialogue we have about the basics of personal finance the better off this country will be.”


Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.