Do you Know Your Banking Basics?

With all the banks and credit unions as well as a growing number of other banking options to choose from, how do you choose which is best for you?

Type of Bank

Benefits

Disadvantages

 Commercial Bank
  • Full range of services (including online)
  • Many branches with ATMs
  • High fees
  • Less personal service
 Credit Union
  • Low fees
  • You have a say in setting policy
  • Need to meet membership requirements
  • Limited access to ATMs
 Savings and Loan
  • Lower fees than commercial banks
  • Personal service
  • Some weekend hours
  • Fewer branches than commercial banks
  • Limited ATM access
 Virtual Bank
  • Higher interest on deposits
  • Banking at your own convenience
  • No personal contact
  • Mail non electronic deposits
  • Fees to use ATM
 Brokerage Firm, Mutual Fund, or Insurance Company
  • Low cost or free checking
  • May provide loans against investment balances
  • May require high minimum balances
  • High fees

Most of these institutions offer the same basic services; the key things to consider when you make your choice are the costs of banking, the hours and locations most convenient for you, and customer service.

Source: Morris, A Woman’s Guide to Personal Finance

Family saving money in a piggy bank

Have You Had the Money Talk With Your Kids?

Ask any child where money comes from, and the answer you’ll probably get is “From a machine!” Even though children don’t always understand where the money comes from, they understand at a young age that they can use money to purchase things they want. Start teaching your children how to handle it wisely as soon as they show interest in it. The lessons you teach your children about money will provide a solid premise for making their own financial decisions in the future.

There are four lessons that you can teach your children about money: learning to handle an allowance, opening a bank account, setting and saving for financial goals, and becoming a smart consumer.

Lesson 1: Handling an allowance

An allowance is usually a child’s first experience with financial independence. Your child can begin developing the skills to saving and budgeting for the things they want. It’s up to you to decide how much to give your child based on your values and family budget.

*A rule used by many parents is to give a child 50 cents or 1 dollar for every year of age.*

Here are some things to keep in mind when dealing with allowances:

  • Set some boundaries. Talk to your child about the types of purchases you expect, and how much of their money should go towards savings.
  • Stick to a consistent schedule. Your child’s allowance should be given on the same day each week with the same amount.
  • You may also consider giving an allowance “raise” to reward your child if they handle their allowance responsibly.

Lesson 2: Bank Accounts

Taking your child to open an account is an easy way to introduce the notion of saving money.
Many banks have programs that provide activities designed to help children learn financial basics. Here are some other ways you can help your child develop good savings habits:

  • Help your child understand how interest compounds by showing him or her how much “free money” has been earned on deposits.
  • Allow your child to take a few dollars out of the account occasionally.
    • Your child may lose interest in saving if they never see money coming out of their account.

Lesson 3: Financial Goals

Children don’t always see the value of putting money away for the future. How can you get your child excited about setting and saving for financial goals? Here are a few ideas:

  • Let your child set his or her own goals to give some incentive to save.
  • Write down each goal, and the amount that must be saved on a regular basis to reach that goal.
    • This will help your child learn the difference between short-term and long-term goals.
  • Put a picture of the item your child wants to an item that can represent their goals like a piggy bank.

Your child will learn to make the connection between setting a goal and saving for it.
Finally, don’t expect a young child to set long-term goals. Young children may lose interest in goals that take longer than one or two weeks reach. Over time, your child will learn to become more disciplined in their savings.

Lesson 4: Becoming a Smart Consumer

Children are constantly tempted to spend money, but not wisely. Your child needs guidance from you to make smart purchasing decisions.

  • Set aside one day every month to take your child shopping. This will encourage your child to save up for something he or she really wants rather than buying on impulse.
  • Just say no. Teach your child to thoroughly consider purchases by explaining that you will not buy them something every time you go shopping.
  • Show your child how to compare items based on price and quality. Take them grocery shopping and explain why you are purchasing a certain item over another.
  • Let your child make mistakes. Eventually, your child will learn to make good choices even when you’re not there to give advice.
Guiding Parents with Dignity

Your Parents are Aging, What Questions Should You Be Asking Them?

As you age, you may find your parents struggling with illness as they age as well. As their daughter, you may be responsible for their care. The emotional and financial strain can be exhausting and the commitment may compromise your career. It can be difficult know where to start when helping your aging parents. Here are some questions to ask yourself to get started:

  • What institutions hold your assets?
  • Ask your parents for a list of their bank, brokerage, and retirement accounts, including account numbers and online usernames and passwords, if applicable.
  • You should also know where to find their insurance policies (life, home, auto, disability, long-term care), Social Security cards, titles to their house and vehicles, outstanding loan documents, and past tax returns. If your parents have a safe-deposit box or home safe, make sure you can access the key or combination.
  • Do they currently work with any financial, legal, or tax advisors? If so, get a list of names with contact information.
  • Do they have a durable power of attorney? A durable power of attorney is a legal document that allows a named individual (such as an adult child) to manage all aspects of a parent’s financial life if he or she becomes disabled or incompetent.
  • Do they have a will? If so, find out where it’s located and who is named as executor. If it’s more than five years old, your parents may want to review it to make sure their current wishes are represented. Ask if they have any specific personal property disposition requests that they want to discuss now.
  • Are their beneficiary designations up-to-date? Designated beneficiaries on insurance policies, pensions, IRAs, and investments trump any instructions in your parents’ wills.
  • Do they have an overall estate plan? A trust? A living trust can help manage an estate while your parents are still living.

(Questions from 360 degrees of financial literacy)

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Women examining her finances

Your Financial Assets, Defined

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit. Assets have four characteristics:

Maturity: Short-term or Long-term

Short-term assets are available for use within one year. One example of a short-term asset is a cash holding. A long-term asset is a stock, bond or other asset that an investor plans to hold for a long period of time. An example of a long-term asset is a retirement account.

Use: Personal, Investment, or Business

A personal use asset is a type of property that an individual does not use for business purposes or hold as an investment. An investment property is a real estate property that has been purchased with the intention of earning a return on the investment. A business asset is a piece of property or equipment purchased exclusively or primarily for business use.

Tax Treatment: Qualified or Nonqualified

A qualified asset refers to the special tax treatment given to investments held in employer-sponsored or individual retirement plans. Non-qualified holding is an investment that does not qualify for any level of tax-deferred or tax-exempt status. They are taxed on an ongoing basis as they earn income.

Security Type: Fixed Income or Equity

Fixed income assets or bonds are types of investing or budgeting styles. Real return rates or periodic incomes are received at regular intervals and at reasonably predictable levels. Equity is a stock or any other security representing ownership.

Source: Investopedia.com

Financially Savvy Women are educated about investments

3 Simple Steps to Becoming More Confident with Your Money

Women are notorious for putting off making important financial decision or even facing their financial life, why? The most common answer is “I don’t know enough” or “I don’t understand it all.”

As a result they hold off and procrastinate until a crisis forces change (not a great strategy).

So how much do you really have to know in order to make progress with your investment?  It really all starts with three simple steps:

  1. Know how to read your statements: Come to us and we will gladly coach you through these statements so that each month you are crystal clear as to what your money is doing for you.
  1. Know what returns you are trying to achieve:  We have determined a number of factors that can help you achieve financial independence, one of those factors is your “Average rate of return” If you can’t remember this number ask us.  This number should be your guide as to how well you are doing because it’s really all about you achieving your goals.
  1. Know the function of each of your investments: You don’t necessarily have to understand the inner workings of the investment but you should know whether the investment is designed to protect your principle, generate income, grow at a steady pace, reduce risk or provide tax deferred growth.

Are You Prepared For Change?

You love enjoying your financial security; you’ve established your career, you earn a nice income, and you’ve already paid for a home and college tuition’s. However, drastic changes like disability, illness, job loss, divorce, or aging parents can blindside you and your finances. You need to prepare yourself for unexpected changes to protect the financial security you already worked hard for.

Facing Disability, Illness, or Job Loss:

The greatest costs you retain when you become disabled or ill are medical provider charges. These charges include hospital, doctor, and medication bills. It pays to have health insurance especially if you can obtain reduced rates through your employer’s group plan. You may consider disability insurance if it pertains to you. Researching and picking the right insurance for you will provide the coverage that will protect you from paying high medical bills out of pocket.

Losing a job is always a drastic and immediate change. You need to develop some risk management like setting up an emergency fund that will cover all expenses while you are between jobs. Also, think POSITIVE. A job loss can lead to a new career, or a better position in your field of expertise. You may also decide to take some time off to travel, spend time with your family, or try out a new hobby during this time.

(Morris, A Woman’s Guide to Personal Finance)

House and glasses on papers

When Mediation is NOT the best choice.

As a woman it’s easy to let your feelings of guilt, desire for closure and avoidance of conflict to undermine your divorce process, especially when engaging in mediation. When the emotions are running high you may be better served with a lawyer who can intervene when you are not making the best decisions for your future.

In mediation while the lawyer can suggest steps you should take to clarify financial values they can’t do more than just suggest. You may need someone to take you by the hand and lead you to the path that is best for your future. Remember in most cases it’s not just YOUR future it often includes your children as well.

Remember that it’s important to speak to a financial advisor, before, during and after a divorce, as lawyers are legal representatives, not financial ones? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Woman looking through binoculars

What do Women Want from their Financial Advisor?

Women are now the principal breadwinners in four out of 10 families with children younger than age 18, reports Pew Research (63 percent of such women are single and 37 percent out-earn their husbands). The financial-services industry is taking notice of gender differences, and so should you.

Finding an Advisor who speaks the female language is crucial. Presentations that focus on a portfolio’s return, investment style, market capitalization and performance compared with a benchmark tend to work well with men. This style does not work with women. Women prefer a more personalized conversation that focuses on their visions and goals.

When speaking with your Advisor, do you know what you want? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Man and woman

Understanding Men, Women, and Money

For most people, money is never just money; it is a tool to accomplish some of life’s goals. It is love, power, happiness, security, control, dependency, independence, freedom and more. When two individuals form an enduring relationship with each other, money is always a partner, too.

Men and women vary in their idea of personal boundaries because they are both raised largely by women. Men have to psychologically disconnect more from women because of the sex difference; women do not have to separate so rigidly, and therefore can afford less distinct boundaries.

Second, men are raised to see the world as hierarchical and competitive. Women see the world as cooperative and democratic; they share. In addition, it is accepted that women are needy and vulnerable, while men are discouraged from such display.

When men make more money than their spouse, they believe their superior earnings entitle them to greater power in decision-making. By contrast, women who make more than their mates almost always desire democratic decision-making.

Money issues are different from other problems in a relationship. These problems are significantly more difficult to talk about and harder to resolve because of our extensive cultural conditioning. The most important thing in communication is empathy. It’s more important to be heard and understood than to have a partner agree with what you say without listening.

Mellan, Men, Women, and Money

What do you think? Can you relate? Or, is your situation different? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Boomer Couple in Front of Their Beach House

Women and Financial Power

Too many women lack the confidence necessary to take control of their financial lives. Women fear making investments, managing their finances, planning and monitoring their spending, managing investments, and increasing their wealth.

Why aren’t women more confident with their finances?

The answer is that women are stopping themselves from being assertive. Many women leave their financial lives to their husbands, boyfriends or parents, and because of this way of thinking, they lack financial power. Financial empowerment must come from within. Women must seize it with fervor, reflecting an unshakable determination to take control of their financial lives. You must tell yourself that you can become empowered, and that you will not let outdated notions of gender hinder your success. Keep “EMPOWER” in your mind as an acronym representing these concepts:

Education is critical
Motivation inspired by your values
Protection against risk
Ownership of your future
Work — claiming what is yours requires effort
Emotions should be kept out of decisions
Responsibility to yourself

Do you use any acronyms to motivate you with your finances? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Gibbons, EmpowHer! Why more women are taking the financial lead