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.
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
4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065
(573) 348-2265
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