Archive for the ‘ Banking ’ Category

Money Management for Kids

Some common questions often arise when discussing the topics of money and kids. 

1)      When and how should kids start earning money?
2)      When should they start managing/saving their money?
3)      How do you encourage them to save? 

Kids should start to earn money as soon as they start wanting and needing things.

Adults have all heard from kids “I want this” or “I need that”.  We need to teach them how to earn those items, not just get them. Earnings could be an allowance from their parents for doing daily chores around the house, assisting grandparents, neighbors, birthday money and gifts.  The list could go on and on based on their abilities.   

With that in mind, kids should also start managing/saving money as soon as they start earning money.  Kids will naturally want to spend what they earn.  If they receive $5 from grandma for raking leaves, they’ll want to spend the $5 on something they think they really want or need, then wonder why they have no money.  

How do we get kids to save and manage their money?  We first need to help them put together a plan to earn money. That plan should be fun and workable for them.  Then we need to implement a plan based on the individual. What do they want to do with their earnings?  Do they have something specific they want that’s more expensive?  If so, spending what they earn on smaller, less expensive items will not help them save money to buy that more expensive special item someday.

I offer my children three options with the money they earn.  The first option is putting some money in there wallet to spend on those smaller items that give them immediate satisfaction.  The second option is to have a savings bucket at home to fill for more expensive items.  The third option is a savings account at the bank to save for their future. 

This concept has worked well because they compete with each other to see who saves more and where it’s stored.  If it’s in the wallet, it’s typically spent on junk.  If it goes to the bucket, it’s very likely to accumulate for that special item; and if it goes to the bank, it’s secure and grows interest so they someday have money for education, a vehicle or there first home. 

So parents find a plan that works for your kids and have fun with it! 

By: Brant Drill, Assistant Vice President

Tips for Organizing Your Financial Records

How much time do you spend each month trying to locate bills and receipts because you have them in various piles around your house?  Here are some tips to help you get your financial records organized and begin 2011 with a fresh new start.  Having your financial records organized will save you time and is a simple process which only requires monthly maintenance and a little discipline. 

  1.  Keep all of your records in one place
    What you store your financial records in is up to you as long as they are all kept together.  Inexpensive storage ideas that will serve the purpose include a filing cabinet, three-ring binder, accordion file or a cardboard storage box.  Consider renting a safe-deposit box at your financial institution or purchasing a fire resistant storage unit to keep in your home to store those permanent records that would be difficult to replace. 
  2. Separate your financial records by category
    Once you have decided on your storage unit, separate your financial records by categories depending on your needs.  You can use hanging folders, file folders, labels or colored tab markers to separate each category.  Color coding is also a good way to highlight different sections of your files. 
  3. Review and discard unneeded records
    You may accumulate many financial records over time so it is important to know what and how long to keep them.  Generally a good rule of thumb is personal records, including birth certificates, marriage licenses, wills, divorce agreements and powers of attorney should be kept permanently.  Check book registers, bank statements, pay stubs, tax records and returns, should be kept for at least seven years for all tax-related records.  Receipts and warranties for major purchases should be kept as long as you own the item or until the warranty expires.  Those records that you decide to discard that contain personal information should be shredded before disposal.  Proper disposal of these items will ensure that this information cannot be read or reconstructed.   These are only guidelines to follow and if you have additional questions on financial records retention, please consult a financial advisor. 
  4. Keep up on filing
    Once all records have been filed and organized, set aside time each month to maintain and properly file records.   It takes less time to maintain this process than to start over.  Get into the habit of filing records right away when you are done with them, so the task doesn’t seem so overwhelming.

Don’t waste any more time hunting through piles of papers, good financial records organization can help you save time and money while giving you  peace of mind.  Good luck organizing!

By:  Stacy Merkel, Auditor

Building Your First Budget

As a recent college graduate, I was forced to answer a very difficult question:  How am I going to pay all these bills without any help from Mom and Dad?  I’m still working on answering that question, and admittedly have had to return to the “Bank of Mom and Dad” for a small loan to help cover some gaps in paychecks.  One thing I have done that has helped me through this process immensely is to build and maintain a yearly budget. 

If you are a recent graduate of either high school or college, it is very likely that you have never developed a budget before.  No worries!  I found an interesting article from MSN.com that had some great pointers for building your first budget, and I have pasted a link at the bottom of this entry to the article.  I have also attached an Excel file with an example budget (https://www.citizensmn.com/custom/citizensmn/pdf/Budgeting101-ExampleBudget.xlsx) for you to use.  Simply enter in the amounts you expect to pay up top, and the amounts you actually paid in the bottom (you may need to add or delete some rows to tailor the budget to fit the actual expenses you have each month).  This will help you determine whether you’re able to keep your budget in check, and will help you identify where you’re spending too much if your budget is going awry.  I filled in January with some example numbers to show you the idea.  Erase those, enter your own figures, and the worksheet should do the rest of the calculations for you!

Notice that the example budget calculates a “Budget/Actual” at the very end?  This is a calculation of the difference between the amount you planned on saving versus the amount you actually saved.  Positive numbers mean you were able to save more than you planned, and negative numbers mean you may have to make some changes to your spending habits in order to reach your financial goals. (Notice in the example budget, my Budget to Actual was a negative $61.89, meaning I saved about 62 bucks less than I had planned on saving – better make some changes if I’m going to be able to afford that Ferrari I’ve had my eye on by the time I’m 30!).

http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/HowToBuildYourFirstBudget.aspx?page=1

By Joe Geistfeld, Marketing Intern

The Truth About Refinancing

Mortgage rates are low but does that mean refinancing is right for you?  Everyone has different goals or situations in their life.  One size doesn’t fit all when discussing mortgage refinancing.

A few things to think about when considering refinancing:

1)     Are you looking for additional monthly cash flow?

2)     Do you want to shorten the term of the loan and save interest expense?

3)     Should you refinance the existing mortgage and pull additional equity out of you home for various reasons?

4)     Will you be moving out of your current home in the next 3-5 years?

5)     What are your personal financial goals?  Age of children, retirement, etc.?

We’ll ask these questions so that we can give you the best advice and options.

If you are shopping to refinance your mortgage:

1)     Beware of the full cost of refinancing your mortgage.  The rate is only a part of the cost.  It is very important that you also know what your total closing costs will be.  It is a “package deal”.  You may be quoted a low rate only to find out that the closing costs are very high.  Review the closing costs and understand what they are.

2)     Is it important to you to be able to stop in and talk directly to your mortgage lender or are you comfortable with contacting your lender via an 800 number for questions or service?  This is the difference between a Service Retained and Service Released mortgage loan.

To summarize:  Be comfortable with your mortgage lender.  Trust that person to do the best job for you and to put your best interest first!

At Citizens, we are available to answer any questions that you may have.  Our goal is to make sure that our clients have the right mortgage!

Shirley Laraway, Vice President

Equal Housing Lender - larger

Banking Acronyms 101

Ever received a text you didn’t understand? For example; Ur my BFF! LOL! IDK, where r u? They assume you understand all the little acronyms in the message. Well, don’t assume anything. The same goes with banking. Because I have been in banking for several years I assume everyone knows the banking acronyms as well as I do. I see them everyday, you don’t. So, here’s a small lesson in banking acronyms: 

ACH – Automated Clearing House
A computer-based clearing and settlement facility for interchange of electronic debits and credits among financial institutions.

APR – Annual Percentage Rate
The amount of interest the borrower actually pays, including loan interest points, and origination fees.

APY – Annual Percentage Yield
The amount of interest expressed as a percentage rate, a deposit account (or a share draft account) would earn in a year at a stated interest rate. The APY disclosure, showing the effect of interest compounding, assumes that funds remain on deposit for a full 365-day year at the advertised rate, and no additional deposits or withdrawals are made.

ATM – Automated Teller Machine
A computer terminal activated by a magnetically encoded bank card, allowing consumers to make deposits, obtain cash from checking or savings accounts, pay bills, transfer money between accounts, and does other routine transactions as they would at a bank teller window.

CD – Certificate of Deposit
A receipt for a time deposit  issued for a stated time period and normally paying a fixed rate of interest.

DBA – Doing Business As
A name used for business purposes that is not the legal name of the individual or organization actually conducting the business. A proprietorship commonly operates under a DBA, as in John Smith DBA John’s Auto Body.

DDL – Daily Dollar Limit
Refers to the maximum dollar amount you can withdrawal from your ATM card at an ATM within a 24-hour period.

EFT – Electronic Funds Transfer
A transfer of funds between accounts by electronic means rather than conventional paper-based payment methods, such as check writing.

EIN – Employer Identification Number
A Taxpayer Identification Number  for entities other than individuals, such as partnerships, corporations, estates and trusts.

FRB – Federal Reserve Bank
One of the 12 banks that, with their branches, make up the Federal Reserve System.

FHA – Fair Housing Act
A law enacted as part of civil rights legislation that prohibits discrimination of home sales, rentals and financing based on race, color, national origin, religion, sex, familial status or those with disabilities.

IRA – Individual Retirement Account
A tax-deferred retirement account allowing an individual to contribute a pre-set amount annually from personal income.

IRS – Internal Revenue Service
An agency of the federal government that is responsible for the administration and collection of federal income taxes.

PIN – Personal Identification Number
A numeric identification code used by bank customers when making transactions at a self-service electronic banking terminal, such as an automated teller machine.

POA – Power of Attorney
An instrument by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal.

POD – Payable on Death
A regular bank account that names a specific person as the beneficiary of all funds once the bank account holder dies.

POS – Point of Sale
A system that uses a computer terminal located at the point of sales transaction so that the data can be captured immediately by the computer system.

PR – Personal Representative
The generic term for an executor for the estate of a deceased person who left a will or the administrator of an intestate estate.

RTN – Routing Number
A numeric coding facilitating check clearing among banks. The ABA numbering system, managed by the American Bankers Association, assigns a unique identifier to each U.S. financial institution.

SBA – Small Business Administration
A United States government agency that provides support to small businesses.

TIN – Tax Identification Number
An identifying number used for tax purposes in the United States. It is also known as a Tax Identification Number or Federal Taxpayer Identification Number. It may be assigned by the Social Security Administration or by the IRS (Internal Revenue Service.)

UGMA – Uniform Gift to Minors Act
A UGMA provides a child under the age of 18 (a minor) with a way to own investments. The money is in the minor’s name, but the custodian (usually the parent) has the responsibility to handle the money in a prudent manner for the minor’s benefit. The parent cannot withdraw the money to use for his or her own needs.

UTMA – Uniform Transfers to Minors Act
The Act allows the donor of the gift to transfer title to a custodian who will manage and invest the property until the minor reaches a certain age. The age is generally 21, but is different in some states (usually 18 in those cases). In the interim, the custodian can also make payments for the benefit of the minor out of the corpus of the gift.

By Cindy Lewis, Customer Service Director

Equal Housing Lender - larger

An Interesting Alternative to Student Loans

http://www.npr.org/templates/story/story.php?storyId=129727074

I found this interview, which ran on NPR on September 8, 2010, quite interesting.  The interview is with Neoga Leviner, General Manager, Lumni Inc., a company that has created an interesting alternative to traditional student loans.

Traditionally, students borrow the money they need for college and are able to defer interest from accumulating until after their graduation.  Once they graduate, students may have thousands or dollars worth of debt to pay off – a sizeable hole that students are forced to climb out of before they can even dream about saving for a car, a house, or – gulp! – retirement.

Lumni offers students an alternative.  They will loan students up to $6,000 a year for college – not enough to completely fund a college education, but an amount meant to help bridge the gap between the amount available to the student and the amount needed by the student.  In exchange, students sign a contract to pay Lumni a percentage of their salary (the actual percent is not mentioned in the interview) for a fixed period of time, usually 10 years, after they graduate.

Lumni was started in Latin America, and this year will be making their first loans to students in the United States.  If you are going to start college soon and are forced with the dilemma of financing your education, you may wish to check with Lumni. Would this type of loan interest you?

By: Joe Geistfeld, Marketing Intern

Equal Housing Lender - larger

Tips for Saving on Bank Fees

These 3 simple tips are very basic, but worthy of a reminder and a monthly check-up.

1. Read the information you receive from your bank. Remember to check your monthly account statements for new deposits or withdrawals that you did not know about.

2. Protect yourself from overdraft fees. Keep up-to-date records of your transactions, and make sure you have enough money in your account to cover checks you have written or other types of withdrawals.  If your funds are running low, consider a cheaper alternative to overdraft protection, such as, a checking account linked to a savings account or a small dollar loan.

3. Protect yourself from ATM fees. Only withdraw cash from your own bank’s machines.  If you have to use another bank’s ATM in an emergency situation, be aware of the fees you may be charged. Also consider checking with your bank to see if any products are offered that may refund ATM fees.

By Linda Kretsch, Cashier

Equal Housing Lender - larger

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