Protecting your finances following divorce

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By Celeste Lohrenz

Separating from a spouse is not an easy time. Still, important decisions need to be made related to your finances.

Following a separation, you should figure out how to live on your own income. You also should learn about what is going to become of your retirement assets, what Social Security benefits you might be entitled to and whether you are properly insured.

During such time, it’s important that you make informed decisions relating to your finances. Consider the following tips:

  • First thing is first: You’re going to need to make sure your financial accounts are registered in your name. That may mean closing previously shared accounts and opening new accounts in your name alone. You may want to consider consulting a tax professional to understand your tax responsibilities to avoid any unanticipated surprises.
  • You always need to look at your credit score. The financial burden of divorce may have impacted your credit. Be sure to review your credit history and take measures to repair your credit, if necessary.Chances are you’ll have to figure out how to live on one income. Figure out which expenses you can’t avoid paying every month—like food, utilities, transportation and housing—and then determine how much discretionary spending you can afford on top of that.
  • Try to live within your means, as you don’t want to find yourself accumulating more debt.
  • It’s probably time to update your estate planning as well. Have your beneficiaries changed following a divorce? Have you designated legal guardians for your children? It is likely time to update your will, as well.
  • You should also review your retirement planning. Following a divorce, IRAs are often split via a one-time distribution without early withdrawal penalties. You need to make sure that you’re financially secure over the long haul, so you might want to consider making use of investment services to begin planning for your future.
  • You still may be entitled to Social Security benefits. Under the government assistance program, you may be entitled to half of your former spouse’s benefits, assuming those benefits are greater than what you’d be able to get through your own benefits.

Separating from a spouse is never an easy thing for a variety of reasons. But by being aware of various monetary considerations that result from such a separation, you can thus begin making better-informed financial decisions.

How do I calculate my net worth?

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by Patty Gallagher

Do you know how much money you would amass if you paid off all of your debts and sold all of your assets?

That number is referred to as your net worth. While we would all like our net worth numbers to be near those of Warren Buffet ($65.1 billion) and Bill Gates ($79.1 billion), the truth is there is no “magic” number we for which we should strive. Rather, we should aim for a year-over-year improvement upon that number.

Believe it or not, calculating your net worth is relatively easy. Here’s how you can do it:

  1. You will first want to put together a list of all of your assets. This will include things like your checking and savings account balances, the value of your stocks and bond holdings, any property you might own and expensive items like cars, jewelry, boats and valuable art. You can include whatever else you want into that mix, but for all intents and purposes, that list should likely suffice. (In other words, you might not want to include your DVD collection or that old guitar into this calculation.)
  2. Now it is time to figure out how many liabilities you have. Liabilities include any debts you have incurred such as: student loans, mortgages, credit card balances and car loans. Gather all of those numbers in one place and add them up.
  3. Now it’s time to subtract your liabilities from your assets. That difference is your net worth. No matter what the number is—positive, negative or zero—you should simply focus on improving it every year.

Be aware, that it’s not that uncommon to have zero net worth , as some estimates indicate as many as half of the country has zero net worth, meaning their assets equal their debts.

You might even have a negative net worth. After all, you might have just bought a new house and have a large mortgage or may have just graduated college or graduate school and are still carrying hefty student loans. Neither of those scenarios are necessarily bad things. The good news is that improving your net worth doable. Every time you chisel away at your liabilities, your net worth goes up. Similarly, every time you pad your assets, your net worth increases.

Facts About Current American Net Worth

Every quarter, the Federal Reserve calculates the net worth of American households. Most recently, the banking institution pegged that number at $81.764 trillion—the highest it’s ever been. Following the first quarter of 2009, collective American net worth stood at $55.71 trillion, meaning the number has increased by almost 50 percent in just five short years.

There are roughly 115 million households in the United States, which means that on a per household basis, Americans have $301,000 in assets and are free and clear of debt, according to CNN. Of course, those at the top of the proverbial financial food chain skew those numbers. In fact, America’s median net worth is $45,000. So while the country ranks fourth in the world in terms of average net worth, it ranks 19th in the world in terms of median net worth.

Hidden Ways to Save Money Each Month

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By Lynda Mason

Today’s difficult economic climate has affected many individual’s finances. And it certainly doesn’t help that the prices of everything—from gasoline (did you know gas costs consumers 5 percent more this year than last year at this time?!) to electricity to food—seem to be increasing.

At The Milford Bank, we understand the realities inherent in today’s economy. We also value each and every one of our customers and want nothing more than to see all of their savings accounts grow every month.

While we might not be able to control your rising expenses, we can offer some advice as to how you can save more money. In this ongoing series, we’ll highlight a few tips that we hope will help:

  • Shop your car insurance. We’ve all heard the commercials, but how many of us actually shop car insurance? The truth of the matter is that, with the chaos and rush of day-to-day life, we’d rather let our policies automatically renew simply because it’s easier. But there are so many insurance companies out there, and they all want your business. Who knows how much money you stand to save annually by switching insurers?
  • Consider who produces your electricity. More than a decade ago, Connecticut deregulated the electricity market, allowing small energy producers to send their electricity over infrastructure owned by the utility companies. Did you know that you’re able to shop around and choose who produces the electricity that powers your home? You may be able to find cheaper rates and switch providers at no cost. Be careful, however, to understand how long the less expensive rate applies, the frequency and amount of any rate increase and how long you are committed to buy from a new energy producer.
  • Cook more meals. Sure, going out is fun. It’s nice not to have to cook, and perhaps even more so not to have to clean. But let’s say you spend $50 every time you go out to dinner, and you go out twice a week—that adds up to a hefty $5,200 a year. You can certainly reduce that expense by cooking more meals at home. And there’s a good chance it will be healthier for you, too.

Just Married: What to do with your finances?

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by Chaz Gaines

Congratulations on tying the knot!

You and your spouse might find yourselves fortunate enough to wonder what to do with your newfound resources.

In either case, do you say “I do” to merging your savings and checking accounts or do you keep it all separate?

Years ago, it might have seemed like a no-brainer for newlyweds to merge their accounts. But today, it’s much more likely that both spouses have their own sources of income prior to getting married.

Either way, the answer varies on a case-by-case basis.

When it comes to your finances, you’ve got three options:

  • Completely merged accounts. There is certainly a level of comfort that comes with combining your savings and checking accounts. Both you and your spouse will know the current state of your finances, and every bill—from utilities to mortgages to groceries—can be paid from the same account. It’s important to keep in mind, that each of you will be supporting the other’s purchases.
  • Partially merged accounts. Is keeping some of your finances separate and merging others the best of both worlds? Couples can consider sharing some of their money while keeping personal accounts to use as they choose. But you still have to consider how you are going to fund that shared account. For example, will the higher earner contribute more?
  • Completely separate accounts. For couples who have both achieved financial independence prior to marriage, keeping completely separate accounts might make the most sense. But keeping finances completely separate still requires you to consider how certain bills are going to be split, for example.

Money is an important aspect of life, but the level of its importance varies from person to person. At the end of the day, it is critical you remember that no matter which option you choose, you should talk openly about your finances. The more conversation that occurs, the more likely your financial objectives will be the same.

Hidden Ways to Save Money Each Month

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By Lynn Viesti Berube

Today’s difficult economic climate has affected many individual’s finances. And it certainly doesn’t help that the prices of everything—from gasoline (did you know gas costs consumers 5 percent more this year than last year at this time?!) to electricity to food—seem to be increasing.

At The Milford Bank, we understand harsh realities inherent in today’s economy. We also value each and every one of our customers and want nothing more than to see all of their savings accounts grow every month.
While we might not be able to control your rising expenses, we can offer some advice as to how you can save more money. In this ongoing series, we’ll highlight a few tips that we hope will help:

• Shop your car insurance. We’ve all heard the commercials, but how many of us actually shop car insurance? The truth of the matter is that, with the chaos and rush of day-to-day life, we’d rather let our policies automatically renew simply because it’s easier. But there are so many insurance companies out there, and they all want your business. Who knows how much money you stand to save annually by switching insurers?

• Consider who produces your electricity. More than a decade ago, Connecticut deregulated the electricity market, allowing small energy producers to send their electricity over infrastructure owned by the utility companies. Did you know that you’re able to shop around and choose who produces the electricity that powers your home? It’s likely that you can find cheaper rates and switch providers at no cost.

• Cook more meals. Sure, going out is fun. It’s nice not to have to cook, and perhaps even more so not to have to clean. But let’s say you spend $50 every time you go out to dinner, and you go out twice a week—that adds up to a hefty $5,200 a year. You can certainly reduce that expense by cooking more meals at home. And there’s a good chance it will be healthier for you, too.

The Milford Bank: Focused on Turning Your Children into Cent$ible Kid$

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By Bob Russo

Recent research indicates that 27 percent of parents with children who are minors don’t have any money saved for them. What’s more, in 2012, the average financial literacy score for high school students was a “D.”

It’s never too early to start learning about finance. That’s precisely why we at The Milford Bank launched our Cent$ible Kid$ program in 2008, designed to educate our community’s children about the importance of saving money. As participants in the program, kids in Milford and Stratford schools are able to open savings accounts that they can put money into each week.

We believe that it doesn’t matter whether those deposits are 50 cents or $10. What’s important is having children begin the process of understanding their finances. Smart savings habits will help sculpt future shrewd behaviors related to spending, saving and investing.

Three-quarters of adults indicate they believe that it’s important to offer financial advice to our children, but only 36 percent of them do. We’re trying to bridge that gap with Cent$ible Kid$.

In addition to giving them the opportunity to save, we also use Cent$ible Kid$ as a platform through which to offer comprehensive bank-related education to today’s youth, like how money is protected in a bank thanks to the Federal Deposit Insurance Corporation, how it grows with interest and more.

From piggy banks to pads and pens and everything in between, members of our program will also get freebies with coupons in our seasonal newsletters. Click here to learn more about the program.

What Do You Know about Defunct U.S. Currencies?

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By Pam Reiss

Today, for the most part, we exchange bills that bear the visages of George Washington, Abraham Lincoln, Alexander Hamilton, Andrew Jackson, Ulysses S. Grant and Benjamin Franklin during financial transactions. Occasionally, you might also stumble upon a $2 bill adorned by Thomas Jefferson.
But did you know that the United States also had five larger currencies in circulation years ago? Though President Richard Nixon discontinued them in 1969—so as to discourage large scale black market transactions from occurring—they’re still legal tender. But because they’ve become collector’s items, it’s likely whoever has their hands on them won’t be letting go anytime soon.
Let’s briefly explore these five bills:
• The $500 bill had a few iterations, with Chief Justice John Marshall depicted on the 1918 version and a scene of Hernando de Soto’s 1541 discovery of the Mississippi River on the back. In 1928 and 1934, the bill was updated to feature President William McKinley, who was assassinated in 1901.

• There were also two modern versions of the $1,000 bill that were circulated (other iterations were introduced in the 1800s). The first one was featured Hamilton on the front and a bald eagle on the back and was released in 1918. In 1934, President Grover Cleveland adorned the bill.

• America’s fourth president, James Madison, is featured on the $5,000 bill, which was printed in 1918 and 1934. The first printing’s backside featured a scene of Washington’s resignation.

• You might be surprised to that the $10,000 bill—the largest bill ever in public circulation—features a not-as-popularly-known figure in U.S. history, Salmon P. Chase, who was a senator, governor, treasury secretary and Chief Justice of the Supreme Court. The 1918 version of the bill’s backside featured a Pilgrim-related scene.

• The largest bill ever printed by the treasury was the $100,000 bill, a gold certificate featuring President Woodrow Wilson. The bills, which were only printed for three weeks, were used to facilitate large transactions between different Federal Reserve branches.

Three Things You Wish You Knew about Finance in Your 20s

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Hindsight is an amazing thing, particularly in the world of finance. Take our word for it because we’ve lived through those years: There are a whole lot of things we know now about finance that we wish we did when we were in our 20s. But, like you, we were too busy getting our first jobs, moving into our first places and starting families of our own.
The world of finance is complex, and the list of advice we could give you could span volumes. But we figured to start small, so here are three things those in their 20s should take to heart right away:
1. It’s never too soon to start saving. Many people live paycheck to paycheck. While some have to, others don’t. The fact is you’ll never amass the kind of fortune you want if you don’t spend less than you bring in. Whether it’s choosing to cook dinner at home a few times more a week or waiting an extra year to upgrade your smartphone, make sure to put money into a savings account to build up a nice cushion. You can do that by moving in with your parents for a few years after college or at least living with roommates for a bit, too.

2. Start putting money in your 401(k) as soon as possible. When you get your first job out of college, retirement is probably the last thing on your mind. But if your employer offers a 401(k) plan, you should take advantage of it. Trust us. These retirements accounts are tax-deferred, meaning your pretax dollars are invested in mutual funds and grow accordingly over time. Sure, you’ll have to pay taxes when you withdraw from the account in retirement, but your money will grow significantly before then. What’s more, many employers offer matching plans, meaning they will contribute to your account in some fashion. Consider it a bonus of sorts.

3. There is something called compounding, and it’s a beautiful thing. Money that is invested grows over time. Consider this: If you were to open a Roth IRA investment account with the $5,000 your generous grandmother gave you on your college graduation day and you earned an average of eight percent on that investment each year, by the time you retired, the money will have grown to $154,000. If you were to wait to do the same thing on your 40th birthday, however, that money would grow into a little more than $34,000 by the time you turned 65.