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April eMagazine

April 27th, 2016 | No Comments | Posted in eMagazine

April_2016

Checking Your Money

April 27th, 2016 | No Comments | Posted in Financial News

shutterstock_188238824Knowing how to successfully manage a checking account and maintain a checkbook register is an important component of sound personal money management.  It allows you to establish a strong relationship with your financial institution and have access to other financial products.  The following tips will help you to stay organized and manage your checking account with ease.

 

  1. Create a spending plan: A spending plan, or budget, will help you organize your finances and maintain your checking account. Develop a plan that makes the best use of your money to be sure your dollars stretch to cover all your financial needs.

 

  1. Maintain your check register: Your check register is an important record of your financial transactions. Remember to record all account transactions in your register, including written checks, ATM withdrawals, online and telephone transfers, and deposits. If your check register is kept up to date, it will always provide you with your current balance.

 

  1. Be aware of float time: The period between when you write a check and when it is debited from your account is called float time. Because retailers can process checks electronically, float time has become virtually non-existent and checks can clear the same day they are written. Therefore, it is important to have enough money in your account to cover the amount of the check on the date that you write it.

 

  1. Know if you have overdraft protection: If you write a check for more than you have in your account, the check will “bounce,” and be returned as non-sufficient funds (NSF).  This can be quite costly, as you may be charged for the NSF.  If you have overdraft protection, however, your financial institution may pull funds from your savings account or from a line of credit in order to cover the NSF. You will still be charged a fee, and possibly interest by your financial institution if you overdraft your account; however, the fees are often less than if you bounce a check. If your financial institution offers overdraft protection, you may need to apply and be approved for the service.

Performing a Home Inspection After Winter

April 27th, 2016 | No Comments | Posted in Financial News

shutterstock_145474468Snow, sleet, hail and more all have the potential to cause substantial damage to your home. And, although some damage is inevitable, it’s important to inspect your home and the surrounding area in spring to see if any repairs are needed.

Here are five areas around your home to inspect after winter:

  1. Exterior: The exterior and siding of your home can be damaged by snow, ice and hail. And, if moisture makes its way inside your home, it can cause wood rot and lead to costly repairs. Also, ensure that the paint on your home’s exterior is in good condition and capable of blocking moisture.
  2. Roof: When snow or ice melts on a roof, it can run beneath the roof and refreeze, causing ice dams. From the ground, check to see if your roof’s shingles are secure and that there aren’t any noticeable leaks.
  3. Gutters: Just like your roof, you gutters are susceptible to ice dams. This can damage your gutters and cause them to dislodge from your home. Consider installing additional protective measures—such as gutter screens or heating elements—to prevent damage in the future.
  4. Foundation: Cracks in your home’s foundation can significantly weaken its structure. Inspect the foundation on both the inside and outside of your home for any cracks, and have them repaired as soon as possible to prevent more damage.
  5. Landscaping: Trees that have fallen over or that have damaged branches can disrupt vital utilities, and shrubs or bushes near your home can damage its foundation. Make sure that the landscaping around your home is properly cared for, and that trees are trimmed regularly to prevent damage.
© 2016 Zywave, Inc. All rights reserved.

Retirement Now vs. Retirement Then

April 27th, 2016 | No Comments | Posted in Financial News

Today’s retirees must be more self-reliant than their predecessors.

shutterstock_155872583Decades ago, retirement was fairly predictable: Social Security and a pension provided much of your income, you moved to the Sun Belt, played tennis or golf, and you lived to age 70 or 75.

To varying degrees, this was the American retirement experience during the last few decades of the previous century. Those days are gone; retirees must now assume greater degrees of financial self-reliance.

There is no private-pension safety net today. At one time, when Social Security was paired with a pension from a lifelong employer, a retiree could potentially enjoy a middle-class lifestyle. In January, the average monthly Social Security benefit was $1,341. The highest possible monthly benefit for someone retiring at Social Security’s full retirement age in 2016 is $2,787.80, or $33,453.60 a year. So in many areas of this country, living only on Social Security does not afford you the same lifestyle you may have had when you were working. Elders who thought they could rely on Social Security to get by have learned a bitter truth, one we should note. We must supplement Social Security with other income streams or sources.1,2,3,4

We carry more debt than our parents and grandparents did. It is much easier to borrow money (and live on margin) than it was decades ago. Some people face the prospect of retiring with outstanding student loans, car loans, and business loans, in addition to home loans.3

Some of us are retiring unmarried. With the divorce rate being where it is, some baby boomers will retire alone. Perhaps they will share a residence with a sibling, child, or friends; that may give them something of an economic cushion in terms of meeting daily living costs. Then again, some married households were single-income households in the 1970s and 1980s, but retirees managed.3

We will probably live longer than our parents did. In 1985, the average life expectancy for a 65-year-old man in this country was 79; the average life expectancy for a 65-year-old woman was 84. Today, the average 65-year-old man is projected to live to 91, the average 65-year-old woman to 94. Our parents could depend on the combination of Social Security, pension income, and fixed-income vehicles for a 10-year or 15-year retirement. In contrast, many of us will have to try some growth investing to keep our money growing across a probable 20-year or 30-year retirement.4

We will likely have to insure ourselves if we retire before age 65. The national average retirement age (according to a SmartAsset study of Census Bureau data) is now 63. With private health insurance becoming the new normal, that means many of us will have to find some kind of private health coverage if we retire too young to be eligible for Medicare. Furthermore, the cost of many out-of-pocket medical expenses not covered by Medicare is certainly greater than it once was.5

We must rise to the financial challenge retirement presents. During the 1980s, more than 40% of U.S. private sector employees participated in a pension plan designed to bring them eventual retirement income. In the middle of that decade, Social Security accounted for 65% of U.S. retiree income. Right now, 19% of private firms offer traditional pension plan programs and Social Security represents but 27% of retiree income.4

Our retirement will differ from that of our parents. It will likely be longer and arguably feature a better quality of life. Every aspect of our later years may become more comfortable, more bearable for ourselves and our loved ones. Retirement planning is one of the most valuable tools to assist you in realizing that goal.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker [2/17/16]
2 – faq.ssa.gov/link/portal/34011/34019/Article/3735/What-is-the-maximum-Social-Security-retirement-benefit-payable [2/18/16]
3 – blog.nsbank.com/retirement-planning-3/ [12/14/15]
4 – marketwatch.com/story/how-retirement-has-changed-in-the-last-30-years-2016-02-16 [2/16/16]
5 – smartasset.com/retirement/average-retirement-age-in-every-state [10/28/15]

Should You Downsize for Retirement?

April 27th, 2016 | No Comments | Posted in Financial News

Some retirees save a great deal of money by doing so; others do not.

shutterstock_346889072You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven’t fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it’s time to downsize.

Lower housing expenses could put more cash in your pocket. If your home isn’t paid off yet, have you considered how much money is going toward the home loan? When you took out your mortgage, your lender likely wanted your monthly payment to amount to no more than 28% of your total gross income, or no more than 36% of your total monthly debt repayments. Those are pretty standard metrics in the mortgage industry.1

What percentage of your gross income are you devoting to your mortgage payments today? Even if your home loan is 15 or 20 years old, you still may be devoting a significant part of your gross income to it. When you move to a smaller home, your mortgage expenses may lessen (or disappear) and your cash flow may greatly increase.

You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could be in a state or region with lower income taxes and a lower cost of living.

You could capitalize on some home equity. Why not convert some home equity into retirement income? If you were forced into early retirement by some corporate downsizing, you might have a sudden and pressing need for retirement capital, another reason to sell that home you bought decades ago and head for a smaller one.

The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up, or maybe you don’t want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows.

On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends close by).

Sometimes retirees underestimate the cost of downsizing. Even the logistics can be expensive. As Kiplinger notes, just packing up and moving a two-bedroom condominium’s worth of furniture will cost about $1,500 if you are resettling locally. If you are sending it across the country, the journey could take $5,000 or more. If you can’t sell or move everything, the excess may go into storage, and the price tag on that may be well over $100 a month. In selling your home, you will probably pay commissions to both your agent and the buyer’s agent that add up to 6% of the sale price.2

Some people want to retire and then sell their home, but it may be wiser to sell a home and then retire if the real estate market slows. If you sell sooner instead of later, you can always rent until you find a smaller house that could save you thousands (or tens of thousands) of dollars over time.

Run the numbers as accurately as you think you can before you make a move. Downsizing always seems to have a hidden cost or two, but for many retirees, it can open a door to long-term savings. Other seniors may find it cheaper to age in place.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – nerdwallet.com/blog/mortgages/two-ways-to-determine-how-much-house-you-can-afford/ [2/3/16]
2 – kiplinger.com/article/retirement/T010-C022-S002-downsizing-costs-add-up.html [4/1/16]

April, 2016 – Monthly Economic Update

April 27th, 2016 | No Comments | Posted in Monthly Economic Update

April, 2016 - Monthly Economic Update

Recipe For Financially Literate Kids: Talk Money Once A Week After Age 5

April 27th, 2016 | No Comments | Posted in Lifestyle

What topic makes you clam up in conversation with your kids? Surprisingly, 58% of parents reported being at least somewhat uncomfortable discussing finances with their children.

Things don’t bode well for kids if their parents don’t step up to the plate and start talking about money. This doesn’t mean divulging salary details to your brood, but parents should take advantage of teachable moments at least once a week to help their kids gain a strong financial footing. That’s according to Stuart Ritter, a CFP and senior financial planner at T. Rowe Price.

The firm’s new study surveyed more than 1,000 parents of kids aged 8-14. Only 33% of parents cleared the bar of discussing financial topics once a week or more.

There’s no doubt that kids will inevitably learn about money with or without parents’ help just as they do with other touchy topics like death and sex. For the most part though, it’s in their best interest to get the correct information at home. Fourty-four percent of kids surveyed report they talk about money with their friends “a lot.” Thirty-five say their parents are uncomfortable discussing money with them.

Ritter says opening up the dialogue signals to children they can approach their parents with any pressing money questions and concerns.

How young is too young?

Forty percent of the parents surveyed, all of whom have children between 8 and 14, say their kids are too young to talk about money and finances. They are wrong, according to Ritter’s philosophy.

Ritter was taken aback when swiping his credit card at the grocery checkout prompted his 6-year-old daughter to ask if she, too, could partake in plastic paying.

If you have a credit card, you just show it to them and you can have anything you want in the store, she rationalized with her financial planner father.

pexels-photo-large (2)

“She was already coming to conclusions about what was going on. It was my responsibility as a parent to give her more context,” says Ritter.

When to start? Sooner than you think, probably around age 5. “As soon as they realize money can do things,” says Ritter. He realized it was time to start having money conversations with his daughter after their checkout chat.

Concepts as simple as the mechanics of money and earning money for hard work are good places to start with young children, says Ritter. Involving children in the process of prioritizing money is another way to encourage them to make positive financial choices. Some parents do this with allowances (80% of juvenile respondents say they get an allowance and 69% have to earn it), but it all depends on how your child learns, says Ritter. “You know your child best.”

“Help them reconcile the idea that not everybody can have everything,” says Ritter. Another family may go on an exotic vacation while your family drives a new car, he says. Kids will notice other people’s money choices so help put those into context.

Money On Their Minds

Opportunities to introduce kids to financial concepts arise every day and parents should be having mini-money conversations at least once a week. Says Ritter, “This is not a formal sit-down eye-rolling living room conversation that takes 6 hours. ” It won’t happen on its own, however. Parents need to be proactive.

Saving is not something children are able to naturally observe; 33% of kids say they don’t know if their parents set money aside for saving each month but they do know their parents should be saving.

Ninety-one percent of kids surveyed agree saving for emergencies is important. However, just as with adults, acknowledging something’s important is a far cry from effectively putting it into action. Show kids exactly how to ‘walk the walk’ so they don’t become adults who only know how to ‘talk the talk.’

Changing the language can help kids appreciate an emergency fund–call it the “Life Happens” fund or something kid-friendly and creative. Showtime’s ‘Shameless’ Gallaghers call theirs the ‘Squirrel fund’ and everyone over age 8 has to pitch in for winter expenses. (Just be sure to keep yours in the bank rather than the kitchen to protect your cash cushion.)

Another way to relate to kids is by sharing money missteps. Buyer’s remorse is not exclusive to adults. Kids know the pain of shelling out allowance only to soon tire of the latest toy or gadget. Reflect together on mistakes you’ve both made and learn from that process.

Encouraging older children to add personal finance courses to their class schedule is a good way to help them be accountable for their own learning. (For more resources on how to start the conversation go here.)

Contextualizing College

The most important financial decision anyone under-18 makes is, of course, college tuition. The price of higher-education is more money than most 16-year-olds can wrap their heads around.

Growing up during what many have coined the student-debt crisis, young people are understandably debt-averse. Seventy-eight percent of kids surveyed would attend a cheaper college to avoid loans.

Perhaps the alarming headlines and trending stories of saddling student debt have done more harm than good to the generation growing up in the so-called crisis.

“The concept of college has become this big giant idea in their head, this colossal overwhelming expense,” says Ritter. He says today’s teenagers even so far as see college as a binary option: a college that costs a quarter of a million dollars by the time you’re done or no college at all.

In reality, there are many different price points, including community college and part-time curriculum on the lower-end of the spectrum. “The latest data shows that 1 out of 3 kids graduate from college with no debt,” says Ritter. “That story often gets lost.”

College is a value judgement that will be easier if kids are familiar with making financial decisions based on their greater priorities. If $50K a year isn’t worth it to your family, that doesn’t rule out college entirely. Consider public state universities or something more local like community college. The average cost of yearly tuition and fees for public four-year college is $9,139, compared to a whopping $31,231 for its private counterpart, according to The College Board. Help your prospective college student identify what they want out of college and how different options align with their goals. (See Forbes Best Value Colleges list).

Parents should open the discussion about the cost of college and accompanying budgeting topics far before their child takes the SAT and pens college essays. Encouraging new drivers to yield on the quality of their first car or the luxuriousness of their Spring Break trip, for instance, can help them prioritize and save more for college.

The thrill of admission makes it easy to skip the value judgement part of enrolling in a college, but it’s a crucial step for your wallet and your child’s future. If you’ve done your job of discussing money early and often, they’ll already know what opportunity cost is, so outline specific trade-offs involved while making the college decision together. For instance, attending a cheaper college may allow more financial freedom to attend graduate school or study abroad.

Any parent knows you can’t choose your kid’s priorities, but teaching them to align their finances to fit their goals is a gift any parent can afford.

Source: forbes.com

Asking for a raise: Women vs. men

April 27th, 2016 | No Comments | Posted in Videos

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