Life Stages
At The White House FCU, we are firm believers in providing financial education to members. When you are financially literate, you are better able to make informed judgments about your money and you are more likely to avoid fraud.
To help you develop and improve your financial literacy, we have created a series of short articles. Since everyone’s financial needs change throughout a lifetime, these articles are divided into different age groups.
Financial Basics For Children
Teaching children how to manage their money responsibly helps them to become better money managers as adults. These lessons don’t have to be complex. They can be as simple as teaching your child about how money is earned, how to create a savings plan, and how to allocate his or her money.
Earning Money
Most young children get their money from a variety of sources. Sometimes, the money comes as gifts on birthdays and special occasions, or from an allowance for household chores performed by the child. Now is a good time to introduce the concept that most money is earned by hard work. Even a very young child can perform a household task and be rewarded with a small sum.
Developing A Plan
A child’s budget can be relatively simple. Ideally, the child should set a financial goal, such as purchasing a video game. Then, parents can help the child create a savings plan to reach that goal, such as setting aside a certain amount of the child’s allowance at regular intervals.
Spending Money
Once the financial goal has been determined, it’s a good time to sit down and discuss how the money is to be used. Some of the funds can be used to buy the item that the child wants. The child can also be taught about comparison shopping to ensure that he or she pays a reasonable price for whatever he or she wants to buy. If desired, some of the money can also be given to charity, so that the child understands how important it is to help the community.
This is a good time to open a Young Savers Account or a Regular Share Account at the Credit Union. The child will be able to learn how money grows and how it earns dividends that increase the child’s account balance.
Financial Basics For Teens/Young Adults
During the transition from childhood to young adult, setting monetary goals, improving regular savings habits, and learning how taxes affect their income will play a bigger role in your children’s financial lives. Helping them to learn how to use financial tools becomes very important. Also, teaching them how to safeguard their personal information is vital.
Using Goals And Regular Savings Habits
At this age, it’s especially important to have well-developed financial goals and to acquire the lifelong habit of putting some money into a savings account each payday. Even if the amount saved is small, regular saving now can lead to a bigger account balance and a strong financial foundation later.
Taxes
When that first paycheck comes in, it’s often surprising for a teen or young adult to see what a difference income tax makes to a paycheck. Parents can use this opportunity to discuss taxes and how to file tax returns, if necessary.
Using Financial Products
As the child grows older, he or she is eligible to use the Credit Union’s more sophisticated financial products, such as Checking (Share Draft) Accounts, VISA Debit Cards and VISA Credit Cards. Using these products can help your young adult learn how to properly manage money, live within their means, avoid debt problems and build a good credit history. It’s also a good time to discuss credit ratings and how they are determined.
Safeguarding Personal Information
With thieves regularly using the Web as a goldmine for identity theft information, it’s smart to pay attention to the information your child reveals to others. Monitor your child’s use of social networking websites to be sure that no private information is provided online. And, be sure to tell your child how scam artists operate and how to determine when an e-mail, phone call, instant message or other communications is the beginning of a fraud.
Financial Topics For Adults
By now, you’re at a point in life where you have many financial responsibilities – rent or mortgage payments, vehicle ownership expenses, health care, insurance premiums, utility bills, family-related expenses and other similar expenses. Staying within your budget, saving regularly, and watching your credit rating help you save money and afford long-term goals such as college, a vehicle, or a home.
Creating A Budget And Saving Regularly
Because there are so many demands on your finances, creating a budget helps you gain a clearer understanding of your finances. First, list all of your income sources and expenses for a month to determine what you are earning and what you are spending. By analyzing the list, you can determine more easily where your money is going and how expenses could be trimmed to save you money. Your budget should also be reviewed at regular intervals to ensure it continues to meet your financial needs.
It’s also wise to avoid the temptation of overspending and to maintain the habit of regular saving on each payday. Through regular deposits into a savings account such as a {[Money Market Account] – [Money Market Accounts section of Checking & Savings webpage]}, you can build up a fund for life’s unexpected financial emergencies. By knowing that you have the funds to cope with unforeseen bills, you’ll be able to enjoy more peace of mind. For longer-term goals, there are other Credit Union accounts such as Share Certificates or Special Share Accounts.
Good Use Of Credit
A good credit score affects many parts of your life – your ability to get a job, rent a home and qualify for a loan. Paying all of your bills on time and keeping your long-term accounts open can positively affect your credit score. Similarly, watching the number of new accounts you open and use, and steering clear of financial problems such as bankruptcy or wage garnishments can also affect your score.
Check your credit reports regularly for errors and get them corrected if necessary. By federal law, you are entitled to a free credit report each year from each of the credit reporting agencies – Equifax, Experian and TransUnion. Visit www.annualcreditreport.com for more information. Your credit report does not include your actual credit score, which can be purchased from each of these agencies for a small fee.
College Financing
With the cost of higher education continuing to rise, starting a college fund as early as possible makes good sense. The White House FCU offers several Share Certificates with various terms. These Share Certificates are useful for building a college fund. For more immediate tuition needs, it’s also possible to raise the necessary funds through a Home Equity Loan or a Home Equity Line of Credit.
Buying A Vehicle
Buying a vehicle can be a complex process. You’ve got to research the value of your current vehicle before you trade it in, find a new vehicle to buy, find a manufacturer’s rebate, comparison shop at different dealers, get financing and negotiate with the dealer before signing the final contract. The White House FCU can simplify the process of buying a vehicle through loan pre-approvals, auto buying services and budget-friendly loans.
Home Buying
Buying your first home might feel daunting at first. However, proper preparation can help you. First, take a look at what monthly payment you can afford, taking principal, interest, private mortgage insurance, escrow for taxes and homeowner insurance premiums into account. This is also a good time to meet with a Credit Union Loan Officer to discuss what type of mortgage best suits your needs and to consult with a tax advisor about mortgage interest deductions.
The Loan Officer can also pre-approve your loan so that your financing is secure. Then, talk to a sales agent, do research to find the home you want, take a tour of the home, make a bid for the buyer to accept and get the home inspected by a qualified inspector. After the necessary paperwork is completed, congratulations! You have become a home owner and can move in!
Financial Topics For Older Adults
Regular saving and good financial planning can create a well-funded retirement. In addition, choosing the right way to save and when to retire makes a difference, too. It also helps to factor in estate planning, to ensure that your family is protected in the event that something happens to you.
Saving For Retirement
The first thing to do is to estimate how much money you will need for your retirement years (a time span of approximately 20 to 30 years) and how to reach that goal. You will also need to pay attention to other factors such as your Social Security income, medical costs, emergency expenses and inflation, which will also have an effect on your finances. Ideally, you should regularly review your progress at least once a year to ensure your savings stay on track.
Selecting a retirement account is essential. The White House FCU offers several savings products to help with retirement saving: Roth, Traditional and SEP (Simplified Employee Pension) Individual Retirement Accounts and IRA Certificates. In addition, a Member Service Representative can explain the difference between these accounts and help you make a selection.
Knowing When To Retire
When is the best age for you to retire? The right answer varies from person to person, depending upon the year you were born, how much you have saved toward retirement and your financial needs. The Social Security website has a useful Retirement Planner that can answer many retirement questions.
Estate Planning
Early estate planning is crucial for making sure that your family is protected in the event that something happens to you. You will need to review your assets, make a will or set up a trust, and be clear about what assets go to which person, to reduce familial conflicts later. It also helps to give a trusted person your medical power of attorney so that they can make medical decisions for you if you are incapacitated. Although many people are inclined to delay their estate planning, doing it early offers you the contentment of knowing that the people you love are properly protected.