by Becky Tudor
We get it… allocating a set amount of your income each month for your savings accounts may seem all but impossible. But it’s important to put money aside for a rainy day; you never know when emergencies (or even retirement) will creep up.
Here are five suggestions to help you save money:
1. Keep Track of Your Spending: To figure out how much you can put aside each month, pinpoint how much you are spending. Tally your monthly expenditures. Hold on to every receipt—no matter if you pay with cash or credit—so at the end of the month you can perform an audit. Take a look how much you spend on recurring items (think rent, cable and electric) as well as one-offs like lunches, movie ticket, and sporting events. Once you’ve aggregated this data, you can set a target for how much money you can put into your savings accounts.
2. Pay Your Savings Account: The best way to save is to make it automatic. For instance, when you receive your regular paycheck, schedule a portion of it to be automatically deposited into your dedicated savings account or 401K—instead of waiting until the end of the month to move it over. In other words, pretend as if that money is not there. When that money is not available, you cannot spend it and, thus, your savings accounts can flourish.
3. Be Careful With Your Credit Cards: All too often, individuals end up paying down the interest on loans, debts and credit instead of paying the actual sum of money borrowed. You may be able to avoid paying interest if you pay off the entire balance each month.
4. Get Creative With Your Social Events: While limiting your entertainment budget is a surefire way to pad your savings accounts, it is incredibly important to find ways to satiate your quest for social gatherings while doing so on a budget. So instead of limiting your social events, get creative with them. Consider going for hikes, playing board games or inviting friends over for a pot luck dinner rather than suggesting pricier social gatherings. Just swapping even one concert night for a karaoke night could save you hundreds of dollars in one month.
There are so many great money saving tips out there, so we want to hear from you! How do you suggest padding your savings accounts each month?
by Pam Reiss
Americans today are having a difficult time saving money for the future. In fact, the independent research firm NextAdvisor recently found that nearly one in every four Americans has no savings at all. With recent history showing how unstable economies can become, parents today would be well-advised to educate their children about the importance of personal finance.
As of now, only 17 states have personal finance classes as a high school graduation requirement. If you live in one of the 33 states that doesn’t have this requirement (Connecticut is one of them) it might be wise to find other means of educating your children in this area.
Here are three tools the Milford Banks Cent$ible Kid$ Program employs to help teach your children personal finance:
1. Games: Yes, kids love games and, oftentimes, parents worry they might love them too much. But when games are educational, research shows it helps children learn. Computer games, like “Cash Puzzler” and “Road Trip in Savings” available through The Milford Bank’s program, entertain kids while teaching them lessons about money and spending.
2. Savings account: Cent$ible Kid$ operates by giving children their own savings accounts. Along with responsibility for this important personal finance tool comes a chance for these young owners to develop their own plan for savings.
3. Newsletter: Visual learning is important to children. Their young minds are receiving educational stimuli when they read our Cent$ible Kid$ newsletter. To get a taste of our children-friendly newsletters, that provides children with visual learning materials, check out the latest here.
by Pam Reiss
These days, smartphones and mobile devices have empowered us to stay connected no matter where we happen to be. Armed with these tools, we’re able to access the same wealth of information whether we’re watching the kids play soccer, putting the last minute touches on a project at the office or waiting for departure at the airport.
In other words, today’s world is an increasingly mobile one. As a business owner, you know full well how your customers are always on the go. Now, thanks to SpotPay, your business can cater to today’s mobile world without a hitch.
SpotPay, which is proudly offered by The Milford Bank, allows your business to accept charge card transactions no matter where you happen to be. All you need is a mobile device and an Internet connection and, voilà, your business can be wherever you want it to be.
By registering with SpotPay through The Milford Bank, all of your card and check transactions will be securely deposited in your business or personal account. As a result, you’ll be able to access your funds quicker.
With SpotPay, you can provide receipts and refunds as well as void transactions right from your mobile device. What’s more, the secure mobile point-of-sale system makes it so that sensitive customer data is not stored on your device.
In addition to the ability to accept charges on mobile devices, SpotPay also has plans to add remote check deposit functionality, mobile balance inquiries and transfers and more, so you’ll be able to better accommodate your customers in the future.
SpotPay costs $8.95 per month in addition to a 1.99-percent fee on most transactions. But that pales in comparison to the untold fortunes the technology can bring to your business. Click here to learn more.
by JoAnn Sabas
A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money for a home.
Mortgage lenders look at your credit score as one of the essential elements when determining whether or not to approve your mortgage application. A higher score reflects a strong credit history.
So how can you give your credit a boost to improve your chances of getting the lowest possible mortgage rate? Let’s take a look:
• Begin by getting your credit score: You have to know where you stand in order to improve. Get started by running your credit reports. By law, you’re allowed one free credit report from each of the three major credit reporting bureaus every 12 months. The reports will explain how your score was determined. For instance, your FICO score—which many lenders use to assess an applicant’s credit risk—is calculated using both positive and negative information in your report. That information is broken down into five main categories: payment history, amounts owed, length of credit history, new credit, and types of credit used.
• Fix errors on your credit report: This is a crucial step that can dramatically improve your score. If you find errors on any of your reports, dispute them immediately with the appropriate bureau. The first step is to inform the responsible credit bureau of the inaccurate information. Next, do the same with the creditor or information provider, and explain why you’re disputing the item.
• Pay down your debts and pay bills on time: Keeping your loan balances low can have a positive impact on your FICO score because your “amounts owed” category accounts for around 30 percent of your FICO score. If you can swing it, paying down your credit card debt balances to 30 percent of your total limit is an easy way to give your score a bump. Also, late payments and collections leave major blemishes on your credit report; paying your bills on time and avoiding late payment is the only way to keep a positive payment history. In addition to bankruptcy, foreclosure and judgments, collections and habitual late payments are the worst things to see on a credit report.
Undeniably, it’s important to go into the mortgage process with the best potential credit position. Just make sure to give yourself ample time to find and correct credit report errors. What’s more, doing this clean-up in advance will also speed up the mortgage process.
If you have questions about how to read your credit report, whether you might be eligible for a mortgage or any financial products or services, please contact us. We’re here to help!
by Paul Mulligan
If you are looking to purchase a home in Stratford, CT, you would not be alone! This gem of a town is continually growing in population with 51,384 residents and 19,276 households, according to the Town of Stratford. So how do you go about finding affordable mortgages in Stratford, CT so you can start your Stratford life today? Here’s what you need to know:
• The median cost of a house is $250,000 in Stratford, CT, according to the aforementioned report. To determine a mortgage amount that will fit comfortably within your budget, take a look at your income, recurring monthly debts, and the percentage of a down payment that you can make on your purchase. One of our friendly bankers can help you calculate a payment that should be affordable for you.
• Set a realistic target date for purchasing your next home. Living the American Dream is possible, but it doesn’t come without laying the groundwork for a savings and budgeting plan. As you begin your quest for mortgages in Stratford, CT, take a look at your current financial standing to determine when you are ready to make your purchase a reality. If you can’t financially make it work until six months from now, that’s OK—just start saving today.
• Determine what type of mortgage you will need. For instance, are you looking for a fixed-rate home loan, which means you pay the same interest rate for the life of the loan and steadfast payments each month? Or do you want an adjustable-rate mortgage that comes with a changing interest rate over the life of the loan? We can help you determine which mortgage loan program might work best for you.
You can be moments away from securing your home mortgage; you just have to make sure to do your research first. For more on securing mortgages in Stratford, CT, click here. At Milford Bank, we are always a phone call away and ready to help you live the American Dream today.
by Jorge Santiago
To increase the ease with which commerce is conducted and to control inflation, countries need a strong banking system. After all, there has to be some force working to ensure a country remains fiscally sound. America’s finances are governed by the Federal Reserve, the country’s central banking system. The Federal Reserve Act was signed into law in 1913 by President Woodrow Wilson, largely in response to the stock market panic of 1907, in which the New York Stock Exchange lost nearly half of its value within a year.
The central bank was initially charged with ensuring maximum employment and keeping inflation and interest rates in check, but its role has expanded over the ensuing century. Charged with managing the stability in the American economy, the Fed manages the country’s monetary policy and regulates other banking institutions as well.
Just as we deposit our paychecks at our banks, so too do our banks deposit their money with the Fed. But the central banking institution also requires that banks have a certain percentage of their deposits on hand at all times.
Generally speaking, to increase the flow of money and credit, the Fed buys assets with America’s fiat currency: the dollar. These assets are usually treasury securities purchased from banks. To pay for those securities, the Fed will credit the bank’s reserve the cost of those securities. Banks then have to keep a percentage of those deposits while lending the excess amounts to stimulate the economy. In theory, the Fed could purchase any amount of securities because it creates money.
When the Fed wants to decrease the flow of money and credit, it sells these securities. In such a scenario, the Fed reduces the banks’ accounts. Banks then have less money to lend, which likely increases interest rates and thwarts spending.
The establishment of the Fed wasn’t America’s first attempt at forming a central bank. At the behest of Alexander Hamilton, then secretary of the treasury, Congress established the First Bank of the United States in 1791. Then a country made up of farmers and merchants, most Americans were against the idea of a central bank. After its charter ran out 20 years later, Congress didn’t renew it.
Five years later, public sentiment shifted toward support of the bank. In 1816, the Second Bank of the United States was established. Populist Andrew Jackson was elected president in 1828 and vowed to defeat the bank. He was successful, as it wasn’t renewed following its 20-year charter either.
But it would still take another 77 years for today’s central bank to be established.
Today, the Federal Reserve is chaired by Janet Yellen, who is head of the Board of Governors, the banking system’s seven-member governing body. Each member of the board is appointed by the president and confirmed by the Senate to serve 14-year terms.
Headquartered in Washington, D.C., the central bank also consists of 12 regional reserve banks that are positioned in major cities around the country, the Federal Open Market Committee and other private banks and advisory councils. The federal government is the beneficiary of the Fed’s profit, less dividends paid to stakeholders. In 2012, $88.9 billion was deposited by the Fed in the Treasury.
by Pam Reiss
When should you start planning for retirement?
Assuming you want to stop working one day—and still be able to provide for your family and be comfortable financially—the answer to that question may be yesterday. But the good news is that it’s never too late to start planning for the future.
If you haven’t started preparing for your retirement, rest assured you’re not alone. Believe it or not, more than half of Americans haven’t calculated how much money they’ll need to live comfortably during their elder years. That’s according to the United States Department of Labor (DOL), which also asserts that 30 percent of workers in the private sector don’t participate in a retirement contribution plan, like a 401(k).
According to the Social Security Administration, the average monthly benefit for retired workers was $1,294 in December 2013. Does that sound like enough money to live on? If not, you’re going to need an additional source of revenue to live comfortably during your retirement, which is why you may want to start planning now. With that in mind, let’s look at three steps you can take to invest in your future:
First things first: Make a plan. As with any other goal in life, to be successful in your retirement, you should plan a course of investment. The DOL recommends that you first calculate your net worth, or your assets minus your debts.
Next, you’re going to want to determine your retirement goal. How much money do you anticipate needing to live comfortably each month? Try to figure out a ballpark age around when you might retire. You might be able to work a few years past the age of 65. Heck, you might even want to.
Then, think about how you’re going to invest your money. Do you feel more comfortable buying into a 401(k) plan, or would you rather open a Roth IRA and invest your after-tax money on your own? There are no wrong or right answers; choose what you think will work best for you.
Consider taking advantage of any available retirement plans. Many employers’ generously invest in their employees’ futures. If your company offers such a plan, it’s definitely something you would want to consider.
For example, let’s say your employer matches half of your 401(k) contribution, up to 6 percent. So when you put 6 percent of your salary in your retirement account, your employer tacks on an extra 3 percent. This money is essentially a 3-percent raise to your base salary.
Try not to think about this money. If you touch this money before your retirement, you may have to pay a substantial penalty.
It might be easier said than done, but when you’ve got an account that’s diversified enough, you should set it and forget it. Thanks to compounding interest, it is possible you may see your $100 per month, for example, grow into quite the sum. If you contribute $100 a month into your 401(k) and it earns 8 percent, that money could grow into more than $150,000 over 30 years.
By not thinking about the money—and thinking about it more as a savings account you can’t access for quite some time—you won’t stress over it. And when you do decide to take a look at how your nest egg is coming along, there’s a good chance you’ll be surprised by the results.
For more information about investing for your retirement, please feel free to contact us.
By Lynda Mason
Have you ever gone to a bank where, when you walked in, you’d experience an icy sensation from the stuffy environment; you were likely afraid to touch anything or even make a noise? Many of us have been in that kind of bank, too.
And that’s why we work hard at The Milford Bank to ensure that we provide our customers with an inviting climate every time they come through our doors. In fact, we pride ourselves on creating an environment in which our customers feel comfortable.
Let’s take a look at three things you can expect when you walk into The Milford Bank:
1. A warm welcome. Our employees aren’t typical bankers or salespeople. Rather, we focus on delivering customer service that is unmatched by our competitors. We really try to go above and beyond in making our customers feel at home. As such, our knowledgeable and friendly staff will likely even learn your name.
2. A personal touch. Our staff is encouraged to send out little “thank you” notes to our customers over the course of a week. We also periodically call our customers to ask them how they’re doing. We find that our customers really enjoy our approach to banking. In fact, some of them even pop in just to say hi.
3. No pressure. We understand how important your finances are. If we think one of our customers is missing a product or service that is a good fit for him or her, we’ll talk about it. But, whereas our competitors might push a product, our recommendations are made with a light touch. At the end of the day, we just want to make sure our customers have everything they need. In other words, we won’t hype so-called “products of the week.”
If you’ve not yet experienced The Milford Bank, we encourage you to come into one of our seven locations and say hello. You can also contact us by clicking here.
by Cortney Meng
Though we always know when the holiday season falls, it seems as though it approaches faster and faster every year. And with the holidays come a seemingly never-ending list of expenses that includes presents, plane tickets and fancy dinners.
With a finite amount of cash on hand and a stockpile of bills that continues to grow, it can seem quite difficult to enter the New Year without massive amounts of debt.
Don’t sweat it: We’re here to help. Let’s take a look at five tips we hope will help you keep your wallets full this holiday season:
- Make a list, and check it twice. When you know exactly how much money you can spend, you’re able to make better informed, more manageable purchasing decisions. Sure, you might want to buy your family and loved ones everything under the sun. But chances are your budget has a ceiling. So consider making a list of who you need to buy presents for and how much money you can spend on each. Worried your list of those you have to give to is getting too long? Why not get a group of family and friends together and opt for a Secret Santa swap instead?
- Choose cash over credit. Even though you’re technically spending more or less the same amount of money when you pay for items via cash or credit, it’s a heck of a lot easier to get overwhelmed with debt if you choose plastic as your primary method of payment. By simply withdrawing the amount of money you can spend during the holidays from your savings account, for example, you can be sure that you’re not biting off more than you can chew and instead are living with your means.
- Get creative. Maybe you’re an artist. Maybe you’re a handyman. Maybe you’re a poet. Whatever your hobby is, it’s important to keep in mind that you don’t necessarily have to buy the presents you give to your friends and family. If money’s tight, you could very well turn to your own talents and create a gift rather than buying one. Ten years from now, your brother won’t remember the sweater you got him, but he will remember the heartfelt poem you wrote that documents your strong relationship.
- Look for coupons and other special deals. There’s certainly no shortage of sales that take place every holiday season. Whether you’re someone who compulsively clips coupons or routinely checks Groupon, if you’re looking to save money as the year winds down, keep your eyes open for any special deals going on. And remember, Black Friday and Cyber Monday sales are actually pretty incredible.
- It’s the thought that counts. You don’t necessarily have to buy your friend or family member a Rolex. Oftentimes, smaller gifts can be more impactful, anyway. After all, we all have our collections of trinkets and other charms that carry sentimental value that is truly priceless. So at the end of the day, it’s worth remembering that the thought behind that gift can be more valuable than the gift itself.
The holidays are a stressful time for all of us. But you don’t need to make it any more difficult than it needs to be. By making a serious effort to manage your budget upfront, you can start 2015 off on a financially sound foot!
by Janet Harrison
If you had all the money in the world, what would you choose to do for work?
That’s the question we’re supposed to ask ourselves to identify what we’d prefer to do for a living. Maybe your response to that question indicates that you’d like to become a photographer, for example, or that you’d like to make jewelry. Identifying your dream job is surely encouraged; there’s a good chance, however, that you’re not quite ready to quit your job and pursue your hobby full time. That’s because you likely don’t have all the money in the world to do so.
But there’s no reason why you shouldn’t at least consider whether the possibility exists that you could make money by turning your hobby into a home business. Sure, you can’t expect that such a business would take off overnight. But who knows? Maybe after a few years, you’ll actually be able to quit your proverbial day job and focus your efforts on making a living while doing something you love.
Before you make a decision, you must ask yourself an important question: Are people willing to pay for what I make?
Prior to launching a home business, you have to be sure that there’s a market for the items you make or the services you offer. Ask your friends how much they’d pay for a bracelet you made, for example. Once you’re comfortable with their responses, it’s time to ask a stranger how much he or she would pay. Satisfied with that answer? It might be time to begin looking into starting a business on the side.
In order to establish your business, you need to be able to prove that you’re trying to make a profit. If you lose money year-after-year and aren’t turning a profit, the IRS could very well view your business as a hobby, limiting your deductions as a result. Here are some tips to help establish your profit motive:
• Create a business plan that clearly defines the fact that you are indeed trying to make money.
• Run your business like a business. That is, keep records of all your expenses and all of your sales.
• Make decisions to increase profits. After all, the goal of a business is to make money, so make sure your actions work toward that goal.
If you begin to realize some level of success, you might want to consider incorporating your business or establishing an LLC so as to reduce your personal liability. In doing so, you’re able to protect your personal assets—like your home, your car and your investment accounts—from creditors.
On top of that, you’ll also appear more serious to those on the outside. The IRS will see that you mean business and might be more inclined to view your operation as a business than a hobby. Customers might think the fact that you’ve incorporated or started an LLC lends you more credence. Additionally, it might be easier for you to get business loans, as banks and other investors might also take you more seriously.
Turning your hobby into a business might be a fun way for you to bring in some extra cash. After that, who knows? The sky could very well be the limit.