Tuesday, March 28, 2017

Finding The Balance Within Your Budget

Just as it's important to balance your budget, you have to find the proper balance within your budget.

Balancing your budget means balancing your expenses and your income so that you don't spend more than you earn. Balancing within your budget means allocating your income so that you only spend certain amounts in certain categories. There's more to budgeting than paying bills. The true power of budgeting lies in determining how much you want to spend on certain things.


The 50-20-30 rule is a popular strategy that addresses the need for balancing within your budget. It helps you build a budget using three spending categories: necessities, savings, and wants. While there isn’t a one-size-fits-all approach to budgeting, these guidelines can be helpful to people in many different stages of life. If you’re considering using the 50-20-30 rule and want to learn more about it, First Bank of the Lake is here to help you determine if this is the right approach for you.

Let’s Take a Closer Look

To be successful at implementing the 50-20-30 rule, one must have a good understanding of what these categories mean.

‘Necessities’ can also be looked at as fixed costs. It includes rent or mortgage, public transportation or car payment, utilities, groceries and other living expenses. This category is pretty self-explanatory. These expenses are top priority because they are non-negotiable. Once they’re paid, you move on to ‘savings.’


‘Savings’ can be looked at as financial goals. It includes emergency fund savings, investments, and paying off debt such as credit cards or school loans, etc. You should make these contributions and payments after you pay your essential expenses, but before you do any other spending. It’s important to note this doesn’t include 401(k) or other retirement savings that are already taken out of your take-home paycheck. That’s a good thing because it’ll help boost your savings. Experts advise taking advantage of employer-offered retirement programs (especially if they match funds) because you don’t miss money you never see.

‘Wants’ can be looked at as personal or flexible spending. It includes the broadest range of expenses. This category is paid for solely with discretionary income and is the lowest priority on the budget totem pole. It is for things you want but don’t necessarily need, such as restaurants, movies, travel, cable, cell phone, internet, charitable or religious giving, gym membership, and anything else that isn’t 100% necessary for survival. Personal spending includes the most items because many things, such as internet or your cell phone, you can live without even if you don’t want to so they’re not technically ‘necessities.’ Keep in mind that if ‘wants’ are acquired using a credit card, the full balance should be paid each month. The fewer costs you have in this category, the more that can go to ‘savings’ at the end of the month and help you get ahead over time.

How to Start

To start applying the 50-20-30 rule, you need a thorough and accurate understanding of your monthly finances. Start by looking at your pay stub to know exactly what you bring home each month. Next, break down 50%, 20% and 30% to determine your total for each category. Track every cent you spend for an entire month, then divide it into the three categories. See where you stand on the 50-20-30 split and realize that you will probably need to do some adjusting. Be patient and give yourself a few months to get everything where it should be, but don’t give up. 

Why It Works

The 50-20-30 approach is simple, but it offers flexibility. You can bend the percentages each month to adjust your budget and make it work the best for you at any point in time. It’s extremely helpful because it outlines the order you should be spending your money. It’s key to remember that while no more than 50% of your take-home pay should go to ‘essentials’ and no more than 30% should go to ‘wants,’ no less than 20% should go to ‘savings.’ Any extra money you have each month can—and should—be used to boost your savings. 

The simplicity of this rule means that more people will stick with it over time, which will lead them to reaching their financial goals. It allows room for everything—you will pay your bills, add to your savings and still have money left over for fun. If you’re having trouble sticking with your budget, this could be a good approach to try.


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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, March 21, 2017

4 Financial Life Lessons That Should Be Obvious

Handling money wisely is often easier said than done. Talking about how your money should be allocated and how you should reign in your spending is one thing, but incorporating these tactics into your everyday life is often easier said than done. Sometimes, we need a little extra push to help steer us in the right direction.


First Bank of the Lake is here to help provide that extra push. Keep reading to find plain, no-nonsense explanations of pieces of financial wisdom that should be obvious, but many people have trouble incorporating into their daily lives.

1. Don't Spend More Than You Earn
You don't have to be a mathematician to figure this one out. The concept is simple: if you spend more than you earn, you won't be able to sustain yourself in long run. Ideally, you should bring in more money than you spend every single month. Life is unpredictable, though, and sometimes big expenses are unavoidable (health insurance premiums, new tires, etc). Spending more than you earn on any given month isn't necessarily a bad thing, as long as the scale tips back in the other direction by the end of the year.

2. Keep A Budget
Your budget is the most valuable piece of equipment in your financial toolbox. It allows you to keep track of exactly where your money goes, curb your spending in certain categories so that you don't overspend, and set yourself up for long-term financial success. There are a variety of budgeting strategies you can choose from. Ultimately, there is no "right" or "wrong" way to manage your budget - strategies range from extremely complex to extremely simple. All that matters is that you find a strategy that works for you and that you stick with it. 

3. Use Windfalls Wisely
Every so often, you may find yourself blessed with financial windfalls from various outside sources. You may get a bonus at work, you may inherit money from a deceased family member, or you may get a sizable tax refund. No matter where this extra money comes from, it's important to use it wisely. Most people use the extra cash to buy a new TV or other fun purchase, but we encourage you to use it to your advantage. Put it towards your highest-interest debt, your mortgage, or your retirement account. Allocating your windfall towards these types of purposes will pay off great dividends in the long run.

4. Plan For The Future
When it comes to managing your money, planning for the future is one of the most important steps you can take. No matter where you are currently at in life, it's important to look ahead. Your first step should be to build an emergency fund to cover unexpected expenses that may present. Your next step should be to set up a retirement account and begin contributing to it regularly, no matter how old you are. Retirement may seem incredibly far off while you're still in your twenties, but by beginning your retirement contributions now, you'll have lots of time for compound interest to work in your favor.

First Bank Of The Lake Can Help Set You Up For Financial Success
We can all use a little help from our friends every now and then. Our community bank at the Lake of the Ozarks is here to help you. Our new Kasasa services are designed to position you for long-term success. We offer high-interest savings accounts at the Lake of the Ozarks as well as cash back checking account options. For more information about our bank in Osage Beach MO, visit our website: www.FirstBankLake.com

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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, March 15, 2017

Good Debt vs Bad Debt: Understanding The Difference

Not all debts are created equal. Learn how to understand the difference.

Our culture tends to view debt as a horrible prospect that should be avoided at all costs. Statistics paint scary pictures of debt in modern America, stating that Americans collectively owe billions of dollars in credit card debt, mortgages, and other types of debts. So as to avoid becoming bogged down by debt's great burdens, some people swear off all types of debts so that they live financially solvent lives. However, some types of debts can actually be helpful. First Bank of the Lake is here to help you understand the difference.


Wait - There's Such Thing As "Good" Debt?

Yes, there is! A good debt is money that you choose to borrow as part of a well-informed, well-educated decision. Good debt helps to put you in a favorable situation that you would not otherwise be able achieve. By borrowing the money now, you are able to work towards a better situation in the long run.

Mortgage debt is a perfect example of good debt. Taking out a mortgage allows you to purchase a home that you would otherwise not be able to purchase. In addition to serving as a place to live, your home is a financial investment - when the time comes, you will ideally be able to sell your home for more than your original purchase price. Depending on how much your home's value appreciates and the health of the housing market at the time that you decide to sell, you may be able to turn a profit of several thousand dollars. 

What Makes A Debt "Bad"?

Unlike good debt, bad debt is debt that puts you behind in the long run. Steep interest and copious fees end up costing you far more than the original amount borrowed, without anything to show for it in the long run. 

Credit card debt is a common example of bad debt. Unlike a mortgage, credit card debt does not offer any long-term benefits. In fact, it offers just the opposite. Racking up credit card debt can significantly hurt your credit score, the high interest charged by credit card companies will ultimately cost you far more than the original amount borrowed.

How Can I Know Which Is Which?

It is important to be realistic and honest with yourself about what types of debt are helpful and which types are not. Before taking out a loan, ask yourself the following questions:
  • What long-term purpose will this debt serve? 
  • How much money will this end up costing me in the long run?
  • Will I be able to make this money back by selling my investment?

Asking these questions can help you identify the consequences taking out a debt will bring, and you can use this information to determine whether or not it will help you or hurt you in the long run.

First Bank Of The Lake - A Community Bank That Cares

At our community bank at the Lake of the Ozarks, we don't try to sell you a loan or service you don't need. Not only that, but we make all of our decisions right here at home, and we use judgment and compassion when evaluating customer requests. Visit our website for more information about our bank in Osage Beach MO.

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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, March 8, 2017

Top 7 (Lame) Excuses For Not Building A Personal Budget

When we think of living paycheck to paycheck, most of us think of low-income families. After all, it is easy to understand how it may be hard to make ends meet when there is very little money coming in. What we have seen, however, is that the amount of money you make is rarely tied to whether or not you live paycheck to paycheck. A single mother making $40,000 per year and a married couple with no children making $110,000 per year could both be scraping by until each payday. Generally, it doesn't have to do with your income - it has to do with your budget (or lack thereof).


At our Lake of the Ozarks community bank, we talk frequently about the importance of budgeting and different strategies for building a budget. No matter how much we talk about it, though, it is ultimately up to you to make it happen. Unfortunately, statistics show that well over half of American do not keep a household budget.

What about you? Do you keep a budget? If not, why not? This week, First Bank of the Lake is here to examine some of the common excuses people give for not building a budget (and why they aren't valid reasons).

1. "I'm Not Good With Numbers."
This is possibly the most common excuse people give. If math is challenging for you, the idea of budgeting may seem difficult or impossible. However, you have access to countless free budgeting resources that will do the math for you. A quick Google search will reveal multiple free apps and downloadable spreadsheets you can use to maintain your budget.

2. "I'll Start Budgeting Once My Income Increases."
This is an other common excuse, but one that can have disastrous long-term consequences. It's true that your income should increase as your career advances, but your expenses will likely also increase as you eventually get married, buy a house, have children, and take on other responsibilities of adulthood. It is easy to get into the habit of putting off budgeting. The only way to ensure that you don't fall into this trap is to start right now, with whatever income you have. 

3. "I Don't Like Tracking My Spending."
If you don't want to see the facts about where your money is going each month, it's probably because you know, deep down, that you aren't spending it wisely. It can also be time-consuming to keep track of every purchase/expense throughout the month. If this sounds like an excuse that you would make, the cash envelope method may be a good option for you.

4. "It's Too Time-Consuming."
This one is partially true - building a budget does take some time, especially in the beginning as you experiment with different strategies to find the one that works best for you. However, once you find your rhythm, things will get easier and faster. It's just a matter of sticking with it long to see these improvements.

5. "I Don't Know Where To Start."
Let us ask you this: did you know"where to start when you studied for your first college exam? What about when you started you first long-term relationship? Your first day at your new job? We rarely know where to start when we first try something new, but we stick with it and eventually it becomes second nature. The same applies to budgeting.

6. "Budgeting Takes Away All The Fun."
This is a common misconception about budgeting. Most people assume that if you maintain a budget, you will never get to spend any money on "just for fun" purchases. However, successful budgets account for fun, miscellaneous expenses - they simply put a cap on them so that they don't get out of hand.

7. "I Don't Have Enough Money To Budget."
This is possibly one of the most dangerous excuses you can make. The reason you don't have enough money to budget is because you aren't budgeting. If you track your expenses and keep them within your income, you will have enough money. If you do it right, you should be able to achieve all of your financial goals such as buying a house, paying off debt, and planning for retirement.

There's No Time Like The Present!
The best time to start building a budget is always right now. Don't let these (or other) lame excuses prevent you from taking control of your finances and claiming the life you deserve. 

First Bank of the Lake is here to help you along your journey in any way we can. Our Kasasa accounts are perfect for young adults looking to improve their financial situation - like you! We offer free checking accounts with valuable rewards, and we can link these accounts to a Kasasa Saver account that automatically puts money into savings. Visit our website for more information about our Kasasa services.

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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