Tuesday, May 23, 2017

How To Pay For Your Child's College Education

In today's competitive workforce, a college education is more important than ever. A four-year degree, especially when followed by higher education, offers the potential for increased salary, more advancement opportunities, and better all-around job satisfaction. Unfortunately, tuition costs are raising substantially every year. For many parents, the prospect of paying for their children to attend a university is daunting (to say the least). If you are trying to figure out how to afford your children's college educations, First Bank of the Lake is here to help with these quick suggestions. Here's a hint - student loans aren't your only option!


Savings

As with all big expenses, the best way to prepare for it is to plan ahead and save in advance. A 529 college savings plan is a special type of savings account that is specifically designed to cover the costs of tuition, books, room, board, and other college-related expenses. In some states, parents with a 529 plan qualify for an income tax deduction or credit on the contributions they make to the account.

Scholarships

Scholarships are gifts awarded based on merit or need. Unlike loans, a scholarship is a gift of "free money" that will not need to be repaid. There are countless different types of scholarships available. Academic scholarships, athletic scholarships, and cultural scholarships are commonly offered by college institutions. Third-party organizations and countless online sources also commonly offer scholarships. A high school counselor or the financial aid office in a university are good places to begin the hunt for scholarships.

Grants

Federal grants (also commonly called "financial aid") is another potential way to offset the costs of funding your child's education. These grants are needs-based and, as such, do not require repayment. Students must fill out the FAFSA (Free Application for Federal Student Aid) in order to be considered. Federal student loans may also be available for qualifying students.

Work-Study Programs

Most universities offer a host of on-campus job opportunities for students that are part of a work-study program. Many of these programs are needs-based (qualification will be determined after the student submits the FAFSA), but most colleges offer a few additional positions that may be filled by any student, regardless of household income. These programs are generally an ideal way for students to offset the cost of tuition and to earn a little extra spending money. Students can generally get positions in the department of their chosen degree, which helps strengthen their resumes.

Student Loans

Funding college without going into debt is obviously the most attractive option, but in some cases, it may not be feasible. While you can combine the other strategies we have discussed so far to cover many of your expenses, student loans are always available if you need to fill in the gaps. Many families use student loans to cover approximately 20% of the total cost of their children's education. Federal student loans often offer cheaper interest rates than private loans, so it is best to start your search there. 

Reducing Costs

Finally, one of the best ways to afford a big expense is to lower the price tag. Some universities are more expensive than others, so if money is a concern, it may be in your best interests to look at schools that fit more easily into your budget. You can also reduce costs by encouraging your children to earn some credits as part of a dual enrollment program or at a two-year community college, as these options are often significantly more affordable than traditional four-year institutions. Your children can then transfer to their chosen institution to complete their degrees.

Good Luck!

On behalf of everyone at our Lake of the Ozarks bank, we wish you the best of luck on this worthy endeavor. A college education will serve your children for years to come, so it is wise to begin preparing well in advance. If you would like to learn about our savings accounts at the Lake of the Ozarks or other investment options (such as CDs), visit our website at www.FirstBankLake.com.

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065


(573) 348-2265

Tuesday, May 16, 2017

5 Damaging Money Management Myths

We live in a world where information travels rapidly. Social media has made it remarkably easy for people to share content with their friends, families, and coworkers, and distant circles - if a headline catches your eye, you may find yourself clicking "share" or "retweet" without a second thought. 

Unfortunately, many people often neglect to investigate the validity of the information before they share it. As a result, misinformation spreads across social media (and the rest of the internet) like wildfire. Some articles, though inaccurate, are relatively harmless. Others may carry damaging misinformation that can negatively impact its readers.


Financial misinformation is a prime example. A person's financial health and literacy greatly influences his ability to lead a successful, financially solvent life. If he is constantly fed misinformation about the best way to handle his money, he may struggle to get on top of his financial situation.

Our local bank at the Lake of the Ozarks is here to help protect people like you from the rampant money myths that plague our culture. Keep reading to learn the truth behind some of the common personal finance myths you may have heard.

Myth #1:
You Can Save For Retirement "Later"
If you're in your twenties or thirties, retirement is probably the furthest thing from your mind. You have other financial priorities, such as buying your first home, getting married, paying off student loans, buying a car, or supporting your young family. Since retirement is decades away, it may seem only natural to wait a few years before you actively begin saving for it. The longer you wait, however, the more you limit your overall investing potential. In order to maximize the true benefits of compound interest, it's best to start saving for retirement as soon as you earn your first paycheck.

Myth #2:
You Should Invest In Gold Or Other Precious Metals
Gold has traditionally been one of the most popular options for people looking for safe ways to invest their wealth. While owning some gold may not be a bad option, it is better to diversify your investments. CDs, high-paying savings accounts, bonds, and/or stocks work together to create a diversified portfolio that will better guard you against risks. If you put all your eggs into one basket, your savings may be totally wiped out if that one basket "tips over."

Myth #3:
Credit Cards Should Be Avoided At All Costs
Thanks to the steady increase of credit card debt in our nation over recent years, credit cards have earned a bad reputation. Many people believe that the only smart way to handle credit cards is to chop them in half. If used wisely, however, credit cards can be a great financial tool. Keeping your balance low and paying it in full every month can contribute to a strong credit rating. It may also allow you to reap the rewards various credit card companies offer, such as airline miles or cash back.

Myth #4: 
Buying A Home Is Smarter Than Renting
This myth is almost as common as its counterpart: "renting a home is smarter than buying." People tend to have firm beliefs from each perspective. The truth is, however, that renting vs buying should be evaluated on a case-by-case basis. If you anticipate moving to different cities frequently (every 1-3 years), renting is likely the better option for you. If you plan to stay in the same area for a minimum of three years, on the other hand, buying a house will likely make more sense financially. After about three years, the increased upfront costs of buying a house will likely outweigh the steep monthly costs of renting, making homeownership the more affordable option in most cases.

Myth #5:
Only Wealthy People Need To Worry About Financial Planning
It's true that if you are wealthy, financial planning will likely be more of a priority for you. However, it is just as important (and possibly more important) for people with limited funds to take active financial planning steps as well. When you have limited income, every penny counts. By budgeting your money wisely, you can still accomplish your financial goals (both long-term and immediate) even with a smaller paycheck.

Help Spread The Word
We would love your assistance in our efforts to debunk these common myths about money management. Please share this article with those you think could benefit from the information.

Consider Us Your Local Financial Resource!
First Bank of the Lake is proud to be your local banking resource at the Lake of the Ozarks. We offer a variety of financial services designed to help you enhance your financial situation, including CDs, IRAs, and high-paying savings accounts. For more information, visit our website: www.FirstBankLake.com

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

Thursday, May 11, 2017

5 Reasons Why You NEED A Household Budget

It's time to set the record straight - budgeting isn't just for people with lots of money, barely any money, or too much time on their hands. Budgeting is an essential skill that every adult should possess. It doesn't matter if you plan your expenses ahead of time so that you only spend certain amounts in certain categories, if you tally up your expenses at the end of the month to see how much you spent, or if you choose to handle it a different way entirely. What matters is that you do it.


Why You Need A Household Budget

If you think budgeting can't benefit you, think again. The truth is that no matter how much your weekly, monthly, or yearly income is, tracking your finances can help you become (even) more financially successful. Here are a few reasons why it is important to maintain a household budget, courtesy of First Bank of the Lake.

1. Know Where You Stand.
First and foremost, budgeting offers a valuable glimpse into your current financial situation. Without carefully tracking your expenses, you'll have no way of really knowing whether you are in the black, in the red, or breaking even on any given month. You can't plan for the future until you know where you are in the present.

2. Prioritize Your Spending.
What do you consider to be your most important expense categories - groceries, gas, mortgage/rent, or something else? Are you putting more money towards these important categories than the less important ones, like restaurants or shopping? Tracking your spending is the only way to identify how much you are actually spending in each category. By maintaining a consistent budget, you can prioritize your spending accordingly.

3. Plan For The Future.
Once you identify your current situation, you can make a legitimate plan for the future. Depending on what your present circumstances are, you may make plans to pay off debts, save up for a down payment on your first home, plan for retirement, or any number of other financial goals.

4. Track Your Progress.
Budgeting is not a "one and done" process. Once you determine where you currently stand and what plans you want to work towards, you can use your budget to track your progress towards achieving your goals. If you quit budgeting, you'll have no way of knowing whether you are getting closer towards (or further away from) your goals.

5. Be Confident In Your Finances.
The best part about maintaining a consistent budget is that it gives you the peace of mind that can only be achieved by knowing exactly what your financial situation is. By tracking your expenses, you'll know exactly whether or not you are able to afford a bigger purchase you may wish to make, such as a new car or a new flat-screen TV. If you don't have the money to make the purchase right now, you'll be able to make a plan to save up for it. 

First Bank Of The Lake Is Here To Help!

Trust us - it's never too soon (or too late) to build a household budget. Even if you've never attempted it before, you can become a budgeting pro simply by applying yourself. If you're trying to figure out where to begin, see our earlier blog post with sample budgeting strategies you can steal.

Happy budgeting!

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065


(573) 348-2265

Wednesday, May 3, 2017

The Credit Card Trap: What It Is, How It Happens, & How To Get Out Of It

You're normally so good at managing your credit card. You've always kept all your expenses below your credit limit and paid off your statement balance in full every month. Everything was going great - until all of a sudden, things got out of hand.


Sound Familiar?

No one gets a credit card planning to go into debt, but credit card debt is currently sweeping our nation. Eventually, something will happen that may tempt you to use your credit card to make a purchase that you would otherwise not be able to afford.

Maybe your credit card company raised your credit limit, making it harder for you to keep your spending in check. Maybe you were planning a wedding and needed a little extra help paying for some of the supplies. Maybe cash was tight, and you needed to use the credit card to pay for some of your utilities. No matter what happened, you may suddenly find yourself with a higher statement balance than you can afford to pay in full.

The Credit Card Trap

The scenarios we just described are situations many people experience. Unusual circumstances can shake up your routine, which may make it harder to keep up with your normal money management strategies. 

Because of their immense convenience (and possibly also because they don't require you to specifically watch your money leaving your possession), credit cards make it all too easy to spend beyond your means. Unfortunately, it's also easy to rationalize the extra spending. "It's okay just this once," we tell ourselves. "I'll pay it off soon enough that I'll barely notice the interest." 

However, the truth is that many people rarely follow through this promise. Even though that big expense that tipped you over your limit may have been a one-time thing, the rest of your monthly obligations will stay the same. You may keep using your credit card out of habit and/or convenience, causing your overall balance to steadily increase. Before you know it, you may find yourself faced with a formidable debt that seems impossible to get out from underneath.

Fighting Your Way Out Of The Trap

Should you find yourself in this type of situation, it is important that you take action immediately. Allowing credit card debt to remain unpaid will likely hurt your credit score. If it remains unpaid for long enough, you may also find yourself being sued by creditors for your delinquent debt.

If you notice that you are accumulating a significant balance on your credit card, stop using it. Switch to cash or your debit card for your monthly purchases. At the very least, make the minimum monthly payments on your credit card. Because credit cards often have high interest rates, it may be wise to focus your attention on eliminating this debt first and foremost. Put any extra money towards repaying this debt.

It may take several months or several years, but if you make the minimum monthly payments without continuing to rack up increased debt, you will eventually be able to get your credit card paid off.

Avoiding The Trap Altogether

While it is possible to get out of the credit card trap, your best bet will be to avoid falling into it altogether. Using a credit card requires a great deal of financial responsibility. If you can't trust yourself to only use your credit card to make purchases you could just as easily make with cash, you may be better off sticking with a debit card.

Get The Benefits Of A Credit Card WITHOUT The Risk!

One of the primary reasons many people sign up for credit cards is to get the cash back rewards they offer. However, credit cards are no longer your only option. If you are interested in being rewarded in cash for purchases you make every single day, ask our local bank at the Lake of the Ozarks about Kasasa Cash Back® Checking.

Our Kasasa Cash Back® Checking account doesn't have any monthly fees. In fact, this account PAYS YOU by refunding ATM withdrawal fees and rewarding you in cash for your monthly purchases. Earn 4.00% cash back on all your purchases - up to $120 per year!*

Contact First Bank of the Lake for more information.

Qualifications and rewards may vary by account.  Account approval, conditions, qualifications, limits, time frames, enrollments, log-ons and other requirements apply.  
Contact institution’s service representative for additional information, details, restrictions, rate calculations, processing limitations and enrollment instructions.
* APY = Annual Percentage Yield      Member FDIC

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

Tuesday, April 25, 2017

5 Worst Things To Do With Your Tax Return (And What To Do Instead)

It's refund season! April 15th has come and gone, and many people are already receiving their tax refunds. If you're one of the lucky people who are getting a tax refund this year, what you do with your money now can impact your future situation. Don't make the mistake of wasting your refund! Our Lake of the Ozarks community bank is here to help by offering these money-smart alternatives to what might be your first impulses.


Mistake #1: 
Blowing Your Refund On A "Just For Fun" Purchase
Whether from your tax refund, a gift, or an inheritance, blowing a financial windfall on a single purchase is never a wise move. While the urge to treat yourself to a brand new TV might be tempting, chances are you don't really need a new one. Instead, consider using the money to make any repairs or home improvements you may have been procrastinating. Performing needed upkeep on your home helps maintain/boost its value, which builds valuable equity.

Mistake #2:
Repaying Debt That Will Build Right Back Up
Using tax refunds to pay down credit card debt is a popular option, and not necessarily a bad one. Your tax refund can be an excellent way to get out from underneath high-interest debt. If your debt will simply rack right back up, however, your efforts may be wasted. If you have a history of consistently building up credit card debt, you may want to use your refund to pay down other debts instead, such as car loans or your mortgage. As for the credit cards, you might be better off limiting your spending and paying your balance in full every month.

Mistake #3:
Letting Someone Borrow Your Cash
Loaning money to friends or family in times of need may seem like an honorable gesture, and indeed, it sometimes can be. Unfortunately, it often creates a great deal of unnecessary stress in once-close relationships. Many experts suggest making it a personal policy to refrain from loaning money to friends or family under any circumstances. To avoid getting pressured, try not to talk about your refund with anyone other than your spouse. If they don't know how much you got back, other people may be less likely to ask to share a piece of the pie.

Mistake #4:
Parking Your Refund In A Low (Or No) Return Account
Once your refund is in your possession, it has to go somewhere. If you choose not to spend or invest it, don't make the mistake of parking it in a checking or savings account that offers little to no interest. You could get a lot more "bang for your buck" by instead putting the money in a higher-interest account, such as the Kasasa Saver at First Bank of the Lake. Your money has to sit somewhere - it might as well earn you money in the process!

Mistake #5:
Not Thinking Long-Term
The moral of the story is simple: when it comes to your tax refund, the smartest thing you can do is strategize ways that you can use your extra influx of cash to put yourself ahead in the long run. Anything that focuses only on the immediate moment (such as spending it on a "just for fun" purchase or funding a last-minute vacation) wastes a valuable opportunity to improve your overall financial situation. Investing your refund in an individual retirement account (IRA) is an example of a particularly advantageous way to use your refund to put you ahead in the long-term.

First Bank Of The Lake Is Here To Help!
Whether you are looking for a high interest-bearing savings account at the Lake of the Ozarks or a place to set up an IRA in Osage Beach, First Bank of the Lake is your local resource. We offer a variety of different financial services to help you put your refund to good use. For more information, visit us online at www.FirstBankLake.com.

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

Wednesday, April 19, 2017

3 Lessons Every Financially Literate Person Must Learn

Financial literacy refers to having a good working grasp of fundamental financial concepts and being able to apply those concepts to real-life situations. People who are financially literate tend to make smart, educated decisions about how to handle their money, and as such typically lead successful, financially solvent lives. Unfortunately, statistics show that nearly half of Americans do not possess the knowledge or skills they need to be financially literate.


In order to raise awareness of this attribute, April has been designated Financial Literacy Month. In order to help others in their quest to become more financially literate, our Lake of the Ozarks community bank has is here to address three basic lessons that every financially literate person has mastered. By familiarizing yourself with these important lessons, you'll be one step closer towards being the financially savvy adult you deserve to be!

1. When It Comes To Loan-Shopping, You Have To Look At The Big Picture.

What sounds better: a $10,000 four-year amortizing loan with an interest rate of 3% or a six-year amortizing loan at 3.25%? At first blush, it seems that having a $153.06 monthly payment on a six-year loans sounds much better than a $221.34 monthly payment on the four-year loan. However, the total payments on the four-year loan is $10,624.43 as compared to $11,020.12 on the six year loan – meaning that you would pay $395.69 more in interest on the six-year loan (even though the monthly payments were more attractive). Financially literate people know that you can't judge a loan by its interest rate - you have to do the math in order to figure out which one will save you more money in the long run.

2. When The (Stock Market) Going Gets Tough, The Tough Keep Going.


You can't expect your investment process to always be smooth sailing. The market will dip and rise periodically. Financially literate people recognize that it's important to stay in the game even when the market looks bleak. Historic averages show that investments should continue to increase in overall value, even though they will experience minor dips here and there. By maintaining your investments even through the volatile periods, you will be in a position reap the rewards when the market rebounds.

3. When You Can't Afford A Purchase Out-Of-Pocket, Don't Make It.

Modern technology has granted us a lot of financial conveniences, such as the ability to transfer funds virtually from one account to another and view our account balances online. However, none are perhaps so potentially dangerous as the ability to spend money without even touching it - and in some cases, without even having it in the first place.

Credit card debt is quickly becoming the modern consumer crisis. Many people are quick to reach for the plastic when they're planning a purchase that they would not otherwise be able to afford. "I had to put it on my credit card - it was the only way I could pay it," is a common excuse. While credit cards do serve a purpose, it is important to recognize that putting a purchase on a credit card with the intent to pay it off later is essentially the same as taking out a loan in the exact amount you need to make a certain purchase. The only downside is, that particular "loan" could have an interest rate of 16-18% (or greater).

The moral of the story is: if you cannot afford to make a purchase without paying cash, you are better off avoiding the purchase altogether. If for some reason it is non-negotiable, consider taking out a personal loan at the Lake of the Ozarks. The interest rate you can secure from a local bank will likely be significantly lower than the interest rate you would be stuck with if you used your credit card.

Happy Financial Literacy Month!

There road to financial literacy is never-ending; there is always more to be learned in the world of personal finance. However, by embracing these three lessons, you will be well on your way to a more financially successful lifestyle. 

How can First Bank of the Lake help you on your way to a more financially successful you? Call 573-348-2265 or visit www.FirstBankLake.com to find out!

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

Thursday, April 13, 2017

Financial Lessons To Teach Your Kids (Part 2)

Whether they pick up information from you, their friends, their friends' parents, their teachers, or TV shows, your children are guaranteed to learn about money from somewhere. As the parent, it's important that you proactively teach your children how to handle money wisely so that they are less likely to learn bad habits from other sources. Last week, our Lake of the Ozarks community bank discussed four important financial lessons to teach your children:
  • "Money has to be earned."
  • "You may have to save up before you can buy."
  • "You have to use your money for different purposes."
  • "Once you spend money, you don't have it anymore."


Each of these are important lessons that, once learned, will help guide your children on their paths towards becoming financially solvent adults. However, they aren't the only lessons your children will need to learn. Keep reading to find a few more important lessons to teach your little ones, courtesy of your friends at First Bank of the Lake.

"Your Money Should Always Be Working For You."

The piggy bank may work well for the first few years of your child's life, but once she gets old enough to understand the concept of depositing money into a bank, switch her savings over to a local bank at the Lake of the Ozarks. It's never too soon to start teaching your child the importance of letting her money work for her by earning interest in a savings account. Help her keep track of her account balance and be sure to point out the interest that she earns in the account. If she internalizes this lesson now, she'll be more likely to invest her money when she is an adult.

"You Have To Be Selective About Your Purchases."

Children have to learn that money is not limitless. It's important to teach them how to count the money that they have, and then translate that amount into the purchases they can afford to make. For example, let us suppose that your son has $20 in his piggy bank. He can buy two toys that are both $10, but he cannot buy two toys that are both $15. It's important to help him see that when he buys the $15 toy, he will only have $5 leftover. He'll have to save up some more before he can afford the second $15 toy he has his eye on.

Helping your child think through his purchases in this manner will help introduce the concept of budgeting. This is a critical lesson for children to learn at a young age, before they have access to credit cards. Credit cards make it easy to spend money that you don't actually have, which can make it tempting to be less selective about purchases in the manner we just described. Instilling this lesson in your child at a young age will help him be less likely to rack up expensive credit card debt. 

"Take The Time To Find The Best Price."

If your child sees a toy at the department store she wants, take the opportunity to teach about bargain hunting. Explain that before she buys the toy here, it might be smart to look for the same toy at a different store or online, since she might be able to find it for a cheaper price somewhere else. If she is able to find it for a lower price, she'll have more money leftover to buy another toy in addition to that one. 

Grocery shopping is another great time to talk to your children about comparing costs. As they get older, you can begin to introduce the concept of calculating the actual cost of items that are sold in varying quantities. For example, a single granola bar priced at $1.00 costs more per bar than a box of ten granola bars priced at $9.00, even though $9 is greater than $1.

Open Your Child's Bank Account At First Bank Of The Lake!

If you are ready to introduce your child to the concept of banking, consider opening a checking or savings account with First Bank of the Lake. Our community-centered bank is here to put your and your family's needs first. For more information about opening a minor checking account at the Lake of the Ozarks, give us a call at 573-348-2265.

Want More Awesome Finance Tips? Sign Up For Our Newsletter!


First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.


Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265