Financial Literacy: Adding up the benefits of starting young

It’s never too late to start your financial education, but the earlier, the better. From counting coins in Kindergarten to planning for your retirement years, managing your finances is a critical part of your financial security– regardless of how much money you have.

Financial literacy now

A 2015 National Capability Study published by the Financial Industry Regulatory Authority (FINRA), reported that two-thirds of Americans could not pass a financial literacy quiz that included basic questions about financial risk.

It also concluded that when age-appropriate personal finance topics, like budgeting, interest rates, and debt are incorporated into a school’s curriculum, it positively impacts the decisions, saving, and spending habits in adulthood.

Benefits of financial literacy

Basic financial literacy helps people become self-sufficient and achieve financial stability. This includes being able to save money, distinguish the difference between wants and needs, manage a budget, pay their bills, buy a home, pay for college, and plan for retirement. Literacy helps them create a realistic roadmap that will take them through their daily lives making good financial decisions.

Financial literacy also empowers people. With any lack of financial education, anything that resembles credit, interest rates, or investments is intimidating and leaves individuals at a disadvantage. We’re not saying you need to be a financial guru, but knowing how interest rates work, the difference between stocks and bonds, and the factors that impact your credit rating, for example, motivate consumers to ask questions and seek out their best options. It also decreases their stress level. When people are well versed in the state of their finances, they have the information they need to take action, modify their investment portfolio, or continue with their current strategy.

Understanding your finances helps reduce the risk of becoming a victim of fraud. Some tactics are easy to believe, especially when they’re coming from someone who seems to be knowledgeable and well intended. A basic level of financial education will help people recognize the red flags and, at the very least, talk with a trusted advisor before making any commitment.

Why it pays to start early

With any educational plan, you’re continually building on the information you’ve learned in the past. It’s the same with your personal finances. You need to know how money works before you spend it, and that takes time and practiced application. Too many of us have learned the value of a dollar a little too late in life or what it means to be drowning in a sea of debt.

Early education allows individuals to develop a healthy relationship with money. They learn the importance of earning, saving, and managing their debt, which leads to becoming a financially responsible adult. They’ll have the knowledge it takes to wisely decide how they’ll pay for college, a car, or even a mortgage and know the consequences of debt accumulation, budget-busting purchases, and high-interest predatory lenders. You shouldn’t have to experience a financial misstep to benefit from it. Start teaching financial responsibility when kids can still be kids and when they’re grown-ups, they’ll know no other way.

How to Build an Emergency Fund

Everyone needs to save for the unexpected. When you have nothing in reserve, anything unexpected becomes an emergency that has to go on a credit card.

It could be a job loss or medical bill — or something as small as a car repair or a lost phone. A financial buffer can keep you afloat in a time of need and let you recover without going into debt. That’s why an emergency fund is more important when you’re barely scraping by, rather than later on, when you might have more savings, better credit, home equity or a higher income.

“One of the first steps in climbing out of debt is to give yourself a way to not go further into debt,” says Liz Weston, NerdWallet columnist.

To build an emergency fund, consider these questions.

How big should my emergency fund be?

The exact answer to this depends on your financial circumstances and how much insurance you have, but a good rule of thumb is to have enough to cover three to six months’ worth of living expenses. This can give you enough time, for instance, to find a new job or supplement your unemployment benefits until you do.

But anything in the bank is better than nothing — and $500 will get you out of many scrapes that would otherwise put you in the hole.

Start small, Weston says, but start.

Where do I put my emergency fund?

Since an emergency can strike at any time, having quick access to your cash is crucial. Consider a savings account, since the money will be safe and you’ll be able to withdraw it without hassle. This should be a separate account from one you use daily so you’re not tempted to dip into your reserves.

What steps do I take to start an emergency fund?

• Set a monthly savings goal.This will get you into the habit of saving regularly and will make the task less daunting. Contributing a small percentage from each paycheck, for instance, is one way to do this.
• Keep the change.When you get $1 and $5 bills after breaking a $20, drop some in a jar at home. When the jar fills up, move it into your savings account.
• Tidy up your checking account.If there’s money left at the end of a pay period, move some into your emergency fund.
• Save your tax refund. The average refund is in the thousands, which can give a good boost to your emergency savings. (See “9 Smart Ways to Spend Your Tax Refund.”) When you file your taxes, consider having your refund directly deposited into your emergency account. Alternatively, adjust your W-4 tax form so that you have less money withheld, and direct the extra into your emergency fund.
• Cut back on costs.If you’re falling short on saving, see which parts of your monthly spending you can trim. Some ways to do this include carpooling, cooking meals at home, saving leftovers and avoiding small daily purchases like takeout coffee. Put the money in your emergency fund as you “save” it.
• Get supplemental income.If you have the time and willpower, get a second job or sell unused items at home to accumulate more money for your fund. (See “10 Ways to Find Fast Cash, More Savings.”)
• Assess and adjust contributions.Check in after a few months to see how much you’re saving, and adjust if you need to put in more. This is especially important if you go through a major life event such as marriage or a move to a new city.

An emergency fund is for emergencies

What’s an emergency? Something that affects your health or ability to earn money.

What’s not an emergency?

• Holidays, birthdays and mental pick-me-ups for yourself or significant others.
• A car repair if you can hitch a ride or take the bus.
• A great deal on something you don’t need.
• Expenses that aren’t surprises, like car insurance.

Draw a line between savings for emergencies and savings for anything else. In fact, once you’ve hit a reasonable threshold of emergency savings, Weston says, it’s a good idea to begin another account for irregular but inevitable items such as car maintenance, vacations and clothing.

7 Smart Ways to Improve Your Credit Score

Your credit score is likely the most critical, unbiased representation of your financial life, past and present. Apply for a car loan, a mortgage, or a credit card, and the credit bureau sums you up in one unprejudiced number that can make or break you. Heck, you might even get a cheaper auto insurance rate based on your credit score.

It defines your creditworthiness, your ability to manage your finances and how you handle the responsibilities that come with it. There are no opinions, explanations, or excuses. Your credit score doesn’t care that the check got lost in the mail, you were on vacation, you thought your spouse paid it, or that you ran out of stamps and didn’t have internet access. Make sure your score tells the story you want people to know, and if it doesn’t, improve my credit score would be a fantastic New Year’s resolution.

What’s your score?

If you don’t know your credit score, it’s important — and easy — to find out. Consumers are eligible for one free credit report from each of the three major credit bureaus per year. (Bonus – if you’re a Georgia resident, you can get two additional free copies from each credit reporting agency per year.) Simply visit the federally authorized site, annualcreditreport.com, to request your free copies. Review them in detail and dispute any inaccuracies. Yes, the credit agencies make mistakes, so be sure you’re not taking the heat for someone else’s mishandling.

Any score over 750 is generally considered excellent credit. Kudos to you if you’re at the top of the heap — you can probably stop reading now. If your score falls anywhere between 700 and 749, you’re doing well, but there’s always room for improvement. Fair credit is any number between 650 and 699. Poor credit is a score between 600 and 649, and anything less than 600 is viewed as bad credit.

Ready to raise your score? Here are a few ways to do it:

1. Pay past due balances. Your payment history accounts for one-third of your credit score, so it’s super important to get those accounts current. Wait too long and they’ll be sent to a collection agency, and that’s something you really want to avoid.
2. Stop charging. Each credit purchase you make not only increases your debt, but it also raises your credit utilization. Credit utilization is the amount of your outstanding balance compared to the approved credit limit. Whenever possible, use cash for any necessary purchases.
3. Pay down your debt. Find ways to send extra payments to your outstanding credit card accounts. It might take some creativity, so think about your talents and your time and how you might use them more wisely. Consider a part-time job. If you’re handy, offer your services to neighbors. Sell items you no longer need on eBay, Craigslist, or your local garage sale site. Crafty? An Etsy account may be worth a look.
4. Don’t open any new credit accounts. When you’re trying to raise your score, every hard inquiry into your credit history counts. When a lender checks your line of credit, especially when it’s done too frequently in a given period of time, it can be damaging. Don’t worry, though — it doesn’t count against you when you request a copy of your own credit report.
5. Make your payments on time. Late payments are the killer of credit scores. Make every effort possible to send your payment early or on-time. Build a calendar with your due dates, set reminders on your phone, or set up automated payments. Do whatever it takes.
6. Don’t close any accounts. We’re back to credit utilization rates again. If you have a zero balance on an account and a $5,000 credit limit, your combined borrowing power will be higher, which is what the credit score calculator likes to see.
7. Call your credit card company or your lender. Let’s face it, we all run into hardships now and then. If you’re having difficulty making your payments, call them before they call you. It shows that you want to work through the tough time you’re having. They’ll be more receptive to a compromise and might even be able to offer some solutions that could help.

Your credit score won’t improve overnight, but these tips will ultimately start moving it in the right direction.

Tell us how you handle money, and we’ll tell you which Walking Dead character you are!

Mobile banking…what happens after I make the deposit and why don’t you need the actual check?

Today’s technology has turned our telephones into many things, but a bank teller? One of the most convenient services offered by financial institutions today is mobile check deposit. Snap a picture of your paper check with your smartphone camera, submit it to your bank and the funds are headed to your account.

Long gone are the days where you have to trek uphill both ways, in the snow to get to the bank, deliver the signed check and a paper deposit slip to the teller, and wait for it to hit your account in a day or two. Today you can deposit money from your desk, from your car, or from your couch. It’s like pressing the EASY button.

But really, have you ever thought about it? Wondered how it works behind the scenes? I know it’s not something that keeps you up at night, but curious minds want to know, so we’re taking a look.

There’s an app for that

Many financial institutions offer an app that allows you to access many of their services, including mobile check deposit. Choose the account you’d like the funds to be deposited, enter the total dollar amount of the check, take a picture of the front and back of your signed check, and submit. Your funds will typically be available in your account within 24 hours. C’mon, it doesn’t get better than that.

It’ll save us both a few bucks

Mobile check deposit is secure, fast, convenient and efficient– and isn’t that what we’re all looking for? From the institution’s perspective, it not only helps their customers, it also saves them money because it’s less labor-intensive. An in-branch check deposit typically costs a few dollars to process and a mobile check deposit costs only a few cents. That’s especially important in a credit union where profits are passed along to their members in the form of higher returns on savings accounts and lower interest rates on loans. Makes total ‘cents,’ right?

Say cheese!

Typically when a paper check is presented to an institution, it’s put through a scanning device that takes a picture of the front and back of the endorsed check. Sound familiar? The picture, which includes all the data and the account information, is then sent electronically to the paying bank.

Your smartphone does the exact same thing during the mobile deposit process. It turns the paper check into an electronic image that can be forwarded to the appropriate institution for payment. The difference is that you’ve already created the image by the time the check is presented to your bank.

Check this off your list

The majority of people have the same question about mobile deposits: How long do I have to keep my deposited checks? It’s almost like they don’t believe in the magic of technology so they want to keep them for eternity—just in case. Honestly, there’s no need. Check with your financial institution, but generally, after 14 days and once you’ve confirmed that the correct dollar amount has been deposited into your account, you should be able to destroy your deposited checks.

Some checks do get rejected for poor photos or other missing information, so be sure to look for confirmation from the app that the deposit was accepted. You’ll also want to verify that it was credited to your account by using the app or by logging into your account online.

Let’s face it, life is busy. Mobile check deposit is just another service that can make your day a little easier. Not only does it offer additional convenience and save you some time, it might just save you a few bucks on gas, too!

Same Day ACH Debits Coming September 15th, 2017!

You have probably gotten used to a little lag-time between giving your account number to a merchant or biller for a one-time payment and when the item actually clears your account. On September 15^th this will be changing for many of those transactions made by phone, on-line, and for electronic checks and those checks converted to ACH. The Federal Reserve will begin processing same-day ACH (Automated Clearing House) debits.

What does this mean? In the past, ACH debit transactions were processed only once daily. After September 15th, ACH debits will post multiple times per day just as credits currently do. This means that payments you make may post to your account the same day. Most importantly, many items that you currently see pending for a duration of time when logged into online or mobile banking may no longer do so. Same Day ACH Debits may also enable you to make faster on-line bill payments as well as faster crediting when you are moving money among transaction accounts that you own at different financial institutions. Your scheduled recurring items are not affected, only one-time payments.

Tips to be Prepared

• Don’t assume funds will clear the day after you make a purchase or payment. Make sure you have the money available in your account at the time you give your account number or write a check to any merchant or biller.
• Even if you write checks when making purchases in person, retailers can choose to convert your checks to ACH and now process them within hours on the same day.
• When reviewing your account balance on-line or on the mobile app, please be sure to look at the “Available Balance” amount, and not the “Current Balance” or “Ledger Balance”. Other pending transactions like debit card transactions that you have made earlier may “hold” the money from the time of authorization until the merchant processes the items. The “Available Balance” helps keep you from spending the authorized funds.
• The credit union has no control over when transactions clear your account. It depends on when the company you scheduled the transaction with processes those transactions. We also cannot guarantee your direct deposit will go into your account before any transactions are processed that day. If you have questions about your balance, please use our online or mobile banking services or contact our Member Services Department.