Monthly Archives: September 2015

Talking to Your Kids about Money

kidsavings

It’s never too early to start giving your kids basic lessons of finance and money. If they are old enough to ask for toys, they are old enough to start learning financial lessons that will last a lifetime.

Use everyday experiences to teach your kids the how money works and the value of saving. Here are some teachable moments that may come in handy:

  • At the bank. When you go to the bank, bring your kids with you and show them how transactions work. Ask someone to explain how the bank operates, how money generates interest and how an ATM works.
  • On payday. Discuss how your pay is budgeted to pay for housing, food and clothing, and how a portion is saved for future expenses such as college tuition and retirement.
  • At the grocery store. Explain the benefits of comparison shopping, coupons and store brands.
  • Paying bills. Explain the many ways that bills can be paid: over the phone, paper or by check, electronic check or through online banking. Discuss how each method of bill pay takes money out of your account. Be sure to cover late penalties, emphasizing the importance of paying bills on time.
  • Using credit cards. Explain that credit cards are a loan and need to be repaid. Share how each month a credit card statement comes in the mail with a bill. Go over the features of different types of cards, such as ATM, debit and credit cards.
  • Browsing the internet. Explain to your kids how valuable their personal information and privacy is to you, to them and to online predators. Tell them the risks that are involved when they share certain information.

Remember, always encourage your kids to ask questions about money. If you don’t know the answer, feel free to let us know and we are happy to help in any way we can.

These tips are provided by the American Bankers Association and the Iowa Bankers Association.

Rent or Buy? Five Questions Consumers Should Ask First

buyvsrent

Farmers Trust & Savings Bank can help you navigate challenges associated with choosing a home, including deciding what is affordable and whether to rent or buy.

Before pursuing a rental or homeownership opportunity, consider the following questions:

  • How much money do you have saved up? Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.
  • How much debt do you have? Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income.
  • What is your credit score? A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving and take steps to raise your score.
  • Have you factored in all the costs? Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance.
  • How long will you stay? Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.