First Bank of the Lake: April 2017

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!

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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

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.

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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

Thursday, April 6, 2017

Financial Lessons To Teach Your Kids (Part 1)

Being a parent is a big responsibility. As your children's guardian, protector, and number one role model, your actions are hugely influential in their lives. You will be impactful in all arenas of your children's lives, but for the purposes of this blog, our community bank at the Lake of the Ozarks is here to look specifically at the financial aspects of your children's lives. Here is a quick overview of some simple (but crucial) financial basics to teach your children.

"Money Has To Be Earned."

It's important that your children learn the value of money. The best way to do this is to offer financial rewards in exchange for the completion of household chores. (We recommend that you refrain from offering them an allowance that they receive weekly, regardless of whether or not they helped out around the house.) This will help them to grasp that their work is valuable, and so is their money. It will help instill a work ethic and help them to appreciate the money that they earn. When they receive money as gifts from family members for their birthday or holidays, they will be more likely to appreciate the value of the gift.

"You May Have To Save Up Before You Can Buy."

Delayed gratification is a tough lesson for many of us, but it's a crucial component of maintaining a proper spending/buying balance. Children must learn that they have to save enough money to make certain purchases. Help them count the money in their piggy bank, and then ask them if it's enough to pay for the $10 toy they have their eye on. If it is, great - it's time for a trip to the toy store. If it's not, tell them how they can earn the rest of the money they need to make their purchase (such as by helping with household chores).

"You Have To Use Your Money For Different Purposes."

Part of proper money management is learning how to allocate your funds for different uses. You can instill this concept in children beginning at a very young age. Instead of using a single piggy bank, consider giving your child three piggy banks and labeling them with specific categories: "saving," "spending," and "sharing." When they receive their allowance, encourage them to divide it evenly between these three categories. The "saving" bank can be used to save up for more expensive purchases, whereas the "spending" bank can be used for inexpensive treats. The "sharing" bank can be used to donate to a charity or buy birthday presents for their siblings, which will help instill a sense of generosity and teach the benefits of giving.

"Once You Spend Money, You Don't Have It Anymore."
In your children's eyes, it may seem like you have an infinite supply of money. It's important to teach them that every dollar you spend is a dollar you don't have anymore. Teach your children this lesson by encouraging them to make their own purchases. Have them take money out of their piggy bank, and let them be the ones to hand their money to the cashier in exchange for their purchase. Letting them be closely involved in this manner will likely be much more effective than trying to explain the concept verbally.

Check Back Next Week For More Tips!

These four lessons are important ways to begin to teach your children the value of money, but they aren't the only steps you can take. Next week, we'll offer a few more lessons to help you round out your children's financial foundation.

Remember: your children are guaranteed to learn about money from someone. By proactively teaching them smart money habits, you can help them avoid learning bad habits.

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First Bank of the Lake - Striving For Excellence

Member FDIC. Equal Housing Lender.