Congratulations! You are to be commended for deciding to take positive measures to make sure you're financially stable from the ground up. Understanding your current financial situation is the first step to maintaining financial security. To help you succeed, Red River Bank has created a set of Financial Tools. They are designed to promote healthy and practical money management skills. With these tools and a little self discipline, you can be on your way to better money management and financial well being. You have the power right in your hands to build a solid financial future and Red River Bank is here to help.
Red River Bank Financial Tools with step-by-step instructions.
It starts with a plan and builds from there. We've identified six areas of finance that most impact your life. By understanding and applying these tools, you'll change the way you look at money for the better. Let's get started.
When you think about your future and what you want to achieve, it's helpful to establish goals. A goal is a very specific result you intend to work toward. When you are realistic about your goals, it's easier to achieve them.
For long-term goals, such as saving for a home or retirement, you may also want to consider investments which may offer higher rates of return. Some common investments are bonds, mutual funds, real estate, and stocks. When considering these types of investments, it's important to remember that savings accounts with banks are protected up to $250,000 until 2013 by the Federal Deposit Insurance Corporation (FDIC) while bonds, mutual funds, real estate, and stocks are not FDIC insured. For more information on investments, call our investment specialists at (318) 561-4094 in Alexandria or (318) 675-2995 in the Shreveport/Bossier City area.
Whether you have short-term or long-term goals, it's important to make plans and save regularly. Your Red River Bank personal banker can help you make choices that are right for you and answer specific questions about the accounts that are available. Once you get started on a regular savings plan, you'll be able to watch your money grow and your dreams come true!
Now you're ready to take the next step toward reaching your financial goals - learning how to make a budget and how to stick to it. All it takes is a plan and some self-discipline.
Budgets are designed to help you:
The first thing you need to do when making a budget is to determine the amount of money you have to work with. How much income do you currently have and how much are your expenses?
To make this task easier, it might be helpful to make a Budget Worksheet (PDF).
Are your expenses less than your income? That's great! If you don't already have a savings plan, you should consider beginning one now so that your money can work for you.
Are the amounts equal, but only because you use credit? Are you making ends meet because you're regularly using credit for what you need and want? If that's the case, you may want to look at how you use credit and learn to borrow only what you need and what you can afford to repay.
Are your expenses more than your income? If so, you'll need to cut your expenses.
There are many reasons to save, ranging from a new wardrobe, a down payment on a house, to a college education or a comfortable retirement. How much you need to save is determined by how much you already have, the cost of what you want, and how long you're willing to save.
The general rule of thumb is to have at least two months income in savings to cover your household expenses or any unexpected emergencies. Another rule suggests that you save 10 percent of your income for emergencies and retirement. It might help to save if you think about your savings account as a safety net that's ready to catch you in case you encounter unexpected financial hardships such as the loss of your job.
Another way to look at saving money is to follow the “pay yourself first” rule. This means that when you're making out your budget, take a certain percentage of your paycheck and put it in your savings account before you decide how much you need to pay your bills. That way, when it comes to the end of the month, you won't find there's nothing left to save. And more importantly, you'll be growing richer each month!
Savings accounts offer different levels of safety, liquidity and rate of return (interest), depending on the types of accounts you choose. You can make the best choices on which types of savings accounts may be right for you and your money when you understand these terms.
Safety means knowing that you'll always get back at least
what you put into the account, no matter what happens.
Liquidity means you can convert your savings (Plus interest earned), into cash without any significant delay.
Return (also called rate of return or interest rate) is the money you earn on your savings, and is almost always related to the degree of risk associated with a particular account.
Your personal banker can be a helpful advisor when it comes to deciding which type of savings account is best for you.
Here lately, folks are wising up when it comes to decisions about their personal finances. Suddenly, saving is making more sense. Introducing Dreambuilder from Red River Bank — it's a great way to save for a vacation, college, a car or even an HDTV.
With Dreambuilder, you make systematic contributions into a special account. Ask a friendly Red River Bank personal banker for complete details.
We as consumers are constantly pressured to buy now. It's easy to get caught up in the moment and make unnecessary purchases. To keep more money in your pocket, you have to think more conservatively in terms of spending. Here are several steps you can take to accomplish this;
Pocket that plastic. Paying with cash whenever possible helps you spend less than if you had charged the purchase. You'll avoid credit card interest charges...
When you choose to apply for a credit card, shop carefully. Watch out for “teaser” rates that offer low rates initially but increase dramatically soon after.
Get rid of debt by attacking the balance with the highest interest rate first. Pay double, or triple, the minimum payment required. Continue paying your bills even in times of financial distress; any late payment may affect your credit score.
Above all, you must distinguish between your “wants” and your “needs.” By thinking about where you spend money, you can save and buy the things that are important to you.
Together with budgeting and savings, credit is a tool that can help you reach your goals. Because it offers an opportunity to buy now and pay over time, it's sometimes tempting to borrow or charge more than you can afford to repay. The following information will help you choose the right type of credit that best meets your needs, and help you to manage your debts and keep your commitments.
Establishing and maintaining a good credit score is critical for securing loans and lines of credit. Pay all bills on time. Safeguard your identity from financial predators. Keep an eye on your debt-to-income ratio — it should not exceed 38% as calculated below.
Payments on Debt/Income = DTI (Debt to Income Ratio)
Secured credit is protected and backed by the value of your property (collateral). This means that if you fail to repay a secured loan, the lender has the right to possess and sell the collateral to recover what is owed. Because the lender is protected this type of loan usually carries a lower interest rate than unsecured credit. Some examples of secured loans are automobile loans, mortgage loans, home equity loans and loans secured by your CD or savings.
Unsecured credit is not backed by collateral. Because the risk to the lender is higher, the interest rate is usually higher than the rate for a secured loan. The most common type of unsecured credit is a credit card.
A credit score (sometimes called a credit rating or a FICO score) is a number based on information in your credit file that predicts how likely you are to pay a loan back on time. The higher your score, the less risk there is that you might default on a loan.
There are three major credit bureaus (Experian, Equifax and TransUnion) which write up your credit report based on information they receive about you from companies that have given them your credit history, the types of credit you have, and the amounts you owe.
Your credit score — a number from 300 to a perfect 850 — is a quick way for lenders to assess how likely you are to make your credit payments on time. You're more likely to get their best available rates the higher your score.
Nope. Money doesn't grow on trees. Teaching your children good financial habits should begin at an early age. Educate your kids on the importance of saving and how money grows over time. Talk to them about how a check works and where the money goes. Help them get a head start by sharing what you know. Ask about our conveniently located coin machines.
With the convenience of drive-thru tellers and ATMs, some busy adults rarely go into their local bank. Convenience is great, but do the young children in your life know how the ATM actually works - that it isn't just money coming out of a machine on the wall?
Bank branch hours are becoming more convenient, with many banks offering late evening or weekend hours.
The next time you have a deposit to make or a check to cash, take the opportunity to go into the bank and show your child around. Many bank employees would be happy to take you and your child on a tour — you might even get to see the vault!
If the young child in your life doesn't have a savings account yet, consider opening one for him/her and explain where that $25 check from Aunt Betty or Grandpa Joe is going. The banker who opens the child's new account can also be helpful in sharing this lesson.
Discuss a long-term savings goal the child can work toward, and schedule regular visits to deposit money from gifts or allowance. Establishing a comfortable relationship with a bank early will help your young child down the road when he/she decides to open a checking account or apply for a loan. Resources.
There are many online resources parents can go to for ideas and activities for teaching their child about financial literacy. To learn more, please see Red River Bank Kids Corner.
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