How Gift Cards Can Help You Save Money

Strategies involving gift cards to save you cash

There are two main ways you can save money with gift cards: One has to do with buying them, and the other has to do with using them. Read on for more information.

Use only gift cards while shopping
Shopping with gift cards can be an extremely effective budgeting tool. Determine your monthly expenses (go beyond rent and utilities) and place them into categories such as groceries, pharmacy, household items, auto maintenance, clothing and more. Next to each, list the stores where you most frequently shop, starting or listing first your top-choice vendor. Buy a gift card and shop for your items at that store using only the gift card. It will save you from overspending on any given category.

Buy discounted gift cards
To take even better advantage of gift cards as a budgeting tool, you can buy those gift cards at a fraction of the normal cost. How? People often utilize online auction sites such as eBay to sell off cards that they know they won’t use. Peruse your options there or visit an online gift card exchange site such as CardHub, CardCash, Cardpool or GiftCards.com.

Herb Weisbaum of CNBC also recommends checking big-box, bulk retailers such as Costco to find gift cards being sold at less than face value. Additionally, don’t forget to check into your loyalty program or credit card reward points — they are also good sources for gift cards on the cheap, and some even offer them at a redeemed-point discount!

“This is a great untapped resource for savings,” said Bankrate.com’s Janna Herron in a CNBC article. “It’s an easy way to stretch your rewards and your…budget, and maybe use up points or miles that are about to expire.”

Finally, keep an eye out at the shops you frequent for any discounts or promotions they may be having — especially during the holiday season, when there is a big push to get people to come back into their stores once the holidays are wrapped.

Both buying discounted gift cards and using them to stay on budget are great ways to cut prices on purchases you are going to have to make anyway — so what are you waiting for?

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Is It Still Important to Know How to Balance a Checkbook?

Even in the digital age, knowing how to balance your checkbook is still relevant

People used to learn to balance a checkbook with a registrar log of all their daily marchfeatured_balcheckbooktransactions to better keep track of their money. The digital age, and the immediate access we now have to our bank accounts online, has made this skill less necessary. Yet it’s still important for several reasons.

To start, it’s still a tried-and-true method for verifying your financial institution’s statements, reports an October 2016 article on financial resource website The Balance by contributor Deborah Fowles. Although it’s rare, financial institutions can still make mistakes; they typically allow a maximum of 60 days to inform them of an error, so it’s important to stay up to date on your transactions.

Keeping a written record of all your daily transactions, as with balancing your checkbook, is also a helpful way to ensure you don’t overdraw on your account’s funds, reports an article in Investopedia by contributor Amy Fontinelle.

“In the age of electronic banking, checkbook balancing is not as straightforward as it once was – most people have money entering and leaving their accounts through methods other than writing and depositing traditional paper checks, such as direct deposits from an employer and ACH transfers to pay your bills online,” says Fontinelle. Keeping a written log will ensure you don’t forget about any transactions that haven’t yet posted to the account.

An example, adds Fontinelle, is a check you’ve written and sent to someone for his or her birthday. Sometimes, people hold on to checks for a while before depositing them, and if you’ve forgotten about the check you’ve written, you may not have sufficient funds in your account when the check is finally processed. Not only will you incur an overdraft fee from your financial institution, but the person depositing the check could also incur a fee, and may ask you to pay it.

“Because we have the electronic means, we don’t feel compelled to balance our checkbook. But by not looking at what you’re doing on a monthly basis, you’re not keeping good track of what’s going on with your finances,” says owner of Boucher Financial Planning Services Frank Boucher in a January 2013 article on Bankrate.com. And if you’re not keeping track of your finances, you’re bound to overspend and will end up paying fees you could have avoided.

There have also been cases when a financial institution has moved extra money into an individual’s account, reports Fontinelle. Although it is the financial institution’s error, you will be billed a theft fee if you spend this money and can’t maintain funds to cover the extra money. It’s important to monitor your balance so you can notify the institution immediately if such an error occurs.

According to a January 2013 article on Bankrate.com by contributor Marcie Geffner, reconciling or comparing your written checkbook registrar to the financial institution’s monthly statement is also a good way to detect fraud or unauthorized transactions made to your account. In addition, having a written record of your daily transactions can help protect you from identity theft, especially in an age rife with cybercriminals.

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Financial Skills Everyone Should Have

Basic money management skills every adult should havemarchfeatured_essnfinskills
Basic money management skills are key to a financially successful life. Conversely, if you don’t learn the basics of your finances, you can end up in serious debt and struggle to make ends meet.

Basic management skills
As an adult, you should be able to manage your money, including income coming in and bills and purchases going out. This is not to limit yourself but rather to free yourself, enabling you to spend realistically based on how much money you actually have, so as to avoid going into debt.

According to Jesse Campbell in a May 2015 article in Money Management, a financial counseling and education service provider, one of the foremost skills every person should have is how to maintain a budget. Campbell suggests starting simple and making a plan for your income based on your bills, spending needs and savings. As budgeting tends to become more complicated with age (adding in mortgages, retirement accounts and even college savings plans), it’s crucial to know how to budget and stick to a plan.

A February 2016 article in The Balance written by contributor Miriam Caldwell adds that understanding how to set financial goals, including how to break them down and actually meet them in a realistic amount of time, is essential to planning for long-term savings and spending needs, like emergencies or even retirement. This will further help you budget as you set aside money for different spending goals.

Caldwell also reports that with the digital age and the advent of online banking, many people have forgotten or no longer practice the skill of balancing a checkbook. This basic skill is a must for all adults. Computers can still make mistakes and it’s important to still know how to check your spending each month to ensure your accounts reflect the correct balance. Clerical errors or fraud can go unnoticed and hurt you in the long term if not taken care of immediately.

Understanding credit and financial agreements
Even in the digital age, you should be able to know how to read a bank or credit card statement.

Whether your financial statements are printed out or available online, understanding them and the information provided is imperative to managing your money and maintaining organization. You should also get in the habit of reviewing your statements on a regular basis, whether daily, weekly or monthly, Campbell reports.

When opening a new credit card or debit card, or applying for a loan, you should be able to read through and understand the terms of your loan or line of credit, including interest rates and fees, Campbell adds. An offer that looks great on paper may end up sinking your budget if you overlook or don’t know the conditions and terms of your agreement.

Furthermore, every adult should know how to build good credit and understand the benefits of good credit history. Caldwell notes that it’s especially important to know how to manage your credit cards and pay your bills on time to keep your debt low and help build good credit.

Although it’s tempting to avoid using credit altogether, doing so is essentially the same as creating a bad credit history, Campbell adds. In the long term, it will only hurt your ability to get credit when you need it later, like for a mortgage, a car or another major expense.

Should you have concerns about your financial life, don’t shy away from consulting a financial adviser of other resource.

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How Online Banking Can Help You Budget Better

Benefits of online banking that can aid in your budgeting process

Online bankingfebruaryfeatured_onlineacctaccess can make a personal budget much easier to manage. Enrolling will offer you numerous benefits to constantly ensure that your finances are on track, such as the following:

It will list all your accounts in one place. With online banking, you don’t have to worry about how much money per paycheck you need to avoid spending in order to save enough for that summer vacation. Make that expenditure or savings goal its own account and either manually or automatically transfer that amount. That way, you will be able to see your total amount of assets, but you won’t be tempted to, or accidentally, spend the money you needed for the plane ticket while shopping at the department store.

You may be able to organize your expenditures by category. Some software that your financial institution may utilize, like FinanceWorks, as well as third-party apps or web browser extensions such as Mint allow you to create expense categories-or better yet, do it automatically for you. This is beneficial for future budgeting purposes or to make adjustments, because you can see how much was paid in a specific area (e.g., electricity, groceries, phone service).

“This saves time and confusion from sorting through months of paper statements and allows you to compare spent amounts with budgeted amounts – so your budget resembles your real life as closely as possible,” says professional money manager and Investopedia contributor Ryan Barnes.

Scheduling and alerts allow you to avoid late payments or overdraft fees. These little charges can take a toll on your finances if you don’t stay ahead of them. Automatic bill paying and scheduling recurring payments will send a set amount of money to a certain payee on the exact date you request, so you can avoid late fees. You can also schedule alerts to tell you if your account balance is getting low, which is helpful to avoid both overdraft and returned check fees, as you can immediately transfer money from another account and conveniently get the information you need to adjust your budget.

You can see your finances in real time. Paying bills and other financial operations are almost immediate (or at least more so than writing a paper check, sending it through the mail and having to wait for it to clear). The widespread adoption of mobile banking (online banking, but not tied to a personal computer) has also facilitated these benefits.

“Consumers have a greater handle on their money since they only need a mobile connection to access their accounts. No Internet service is required,” says Bankrate.com Editor Janet Stauble. “There are fewer surprises, as customers can check their balances and transactions anytime.”

Being able to analyze your finances in real time is especially helpful in the small business realm, says Chris Joseph of Small Business Chronicle, as you can see all your accounts and expenditures right in front of your eyes, while knowing exactly what is liquid and what assets are tied up.

Whether you use it for personal or for business reasons, online banking offers many advantages that can be vital to keeping a successful budget. Check out MyBranch Online Banking by visiting our site!

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The Dangers of Taking a Personal Loan to Finance Your Wedding

Consider the long-term costs of taking a loan to pay for one day of happiness

The cost of weddings has risen in recent years, leading to couples taking out loans or paying for items with credit cards. Yet starting your married life in debt could be a dangerous financial decision for more reasons than one.

Weighing the Costs
According to a survey conducted by renowned wedding resource site TheKnot.com, the average cost of a wedding in 2015 was $32,641. While some will gladly pay this amount for the wedding of their dreams, most Americans do not have enough money saved up to do so without resorting to borrowing.

In an article on TheKnot.com, contributor Rachel Torgerson advises against taking out a personal loan to finance your wedding, agreeing with financial planners on the dangers of taking on such large debt for one day of your life.

“The problem with personal loans is that most often people are taking them out because they’re trying to spend cash they don’t have. I would also lump in credit card spending here, because I think a lot of people pay for wedding-related things with a credit card and they may or may not have the cash to pay it off in full,” says CFP Laura Lyons Cole, personal finance contributor for financial planning website MainStreet.com.

If you’re considering taking out a large-sum loan, it means you probably don’t have the money to afford such a high-cost wedding in the first place. In general, money and financial stress are top issues that couples will argue over. In fact, studies have shown a high correlation between high-cost weddings and divorce rates.

Additionally, Josephon advises to consider how your ability to put money toward other savings, like a retirement savings account or your future children’s college savings, may be hampered when you start your marriage off with serious debt.

Paying Long Term for a Short-Term Event
With a consumer installment loan, you will be required to make payments for both principal and interest through the wedding loan term, Karimi explains. This means you will end up spending more for your wedding day than the actual cost of the event.

Karimi notes that a $32,000 loan at a 7.5 percent APR would take 48 months to pay off, with minimum payments at a bit under $775 per month-and that’s for buyers with excellent credit.

Even if you can afford such high monthly payments, think of the time it would realistically take to pay off this single-day event. Additionally, you would be carrying debt during a time of major change in your life; you may want to buy a home or a new car, or start a family, and such debt could prevent you from being able to open other lines of credit to pay for these expenses.

Don’t forget that creditors and lenders will look at your current financial standings, including other loans and lines of credit you have out. With a majority of young adults saddled with high student loan debt, their loan amount and interest rate offered will be affected by their total debt.

While you can get a loan with a lower credit score, you will ultimately pay more for it because of higher interest rates. Most financial advisors warn against taking such a loan, known as a bad credit personal loan.

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The Secrets to Saving More Money

Knowing which accounts to use can help you save more

Today, there are manysavingsecrets_featured options for where to put your money. From using regular checking and savings accounts to deciding whether to open a money market account or a CD (certificate of deposit) to even opening an account for holiday savings — each offers something to help you save a little more.

Money market accounts and savings accounts
In an article in the Houston Chronicle, finance contributor Leigh Anthony compares these two types of accounts. Both offer interest on all deposits made and are insured by the federal government, making them safe, low-risk investment options.

Both account types also have a federal limit of six transfers per month out of the account. However, money markets act more like checking accounts, giving you the ability to write checks, make electronic transfers, and withdraw money with an ATM or debit card. With savings accounts, you can transfer money, but you may or may not be able to withdraw funds directly without talking to a bank teller, depending on the institution.

“Interest rates on savings account[s] are typically very minimal as there is not a minimum balance required,” reports Anthony. “[W]ith a money market account, the interest rate is higher and may fluctuate based on a schedule posted by the [financial institution].”

A savings account would therefore be more appropriate for putting away cash that you want to save for emergencies or a future large purchase, whereas a money market account would be better for savings that you need to access more often, such as for major home renovations.

CD accounts
Anthony also discusses the difference between a CD and a money market account. Unlike money markets, a CD account has a set interest rate that doesn’t change through the investment term. You can set this term from anywhere between 30 days and five years — and then sit back as your money grows.

Furthermore, according to an article in the Wall Street Journal, CDs are reported as low-risk savings accounts with an interest rate that could be higher than a money market account. The money is (probably) federally insured, “and you’re guaranteed to get back what you put in, plus interest once the CD matures” through its predetermined term. But make sure not to withdraw funds before the maturity term ends, or you’ll face a hefty penalty.

Holiday savings accounts
While some institutions offer actual “holiday savings accounts,” this term is broad enough to encompass savings specific for holiday spending. Many people spend a lot of their money during the holidays for gifts and family meals, and a great way to make sure you have funds set aside for these purchases is to open an account just for holiday savings.

“The key is to think about holiday spending the same way you would other recurring, non-monthly expenses, like annual insurance premiums, quarterly tax estimates and home maintenance. Set up an account, and automate deposits from your paycheck like any other bill,” says CFP® Tom Gilmour of LearnVest Planning Services in a November 2014 article in Forbes.

If you need more guidance on what type of savings account to open, contact us and we’ll be happy to help.

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How Much Should You Spend on a Car Based on Your Income?

Using your income as a base so you don’t overextend yourself

Buying a car is oftencarpricevsincome_featured one of the largest expenses an individual will incur, and most will finance such a purchase. It’s crucial to plan ahead so you don’t inadvertently buy a vehicle that you can’t afford.

“Because financing a car means committing to a monthly loan payment for a period of time, your monthly budget plays the biggest role in deciding how much to spend on a car,” explained Managing Editor Jamie Page Deaton in a July 2015 article in U.S. News.

Using your net income as a basis
Before you even start the car shopping process, you should know how much you can afford to spend each month. Then you’ll be able to narrow down your vehicle search to those that fit within your budget.

Start by getting out a piece of paper and writing down your monthly income.

“To calculate how much you have available to spend on your car payments, first take into account your essential monthly expenses. These can include mortgage or rent, utilities, phone, food and entertainment, savings, and other expenses,” reported an August 2014 CarFax article in its CarFox blog.

“The total from this [deducted calculation], your disposable income, is the amount you have left to cover the cost of your new car.” Note that this estimated number is meant to cover all car expenses including gas, insurance and maintenance, and not just the monthly payment for the car.

Calculations: example 1
CarFax suggested you spend 10 to 20 percent of your monthly disposable income on a car payment and expenses. As an example, CarFax shares calculations for an individual with a monthly income of $4,000.

“If your gross pay is $4,000 a month and you spend $2,165 on essentials like mortgage, food and utilities, your disposable income is $1,835 a month. Spending 10 percent of your disposable income would mean a $184 car payment. Twenty percent of this would give you a car payment of $368.”

Calculations: example 2
Deaton suggested a calculation model for spending ability at no more than 15 percent of your net monthly pay, as long as you don’t have major debt other than a mortgage.

As an example, Deaton posited that someone who makes $50,000 per year will likely take home an annual net income of $44,180 after taxes. He noted in a July 2015 article in U.S. News & World Report that other expenses, like health insurance and retirement saving, will likely lower this net amount and offered a monthly estimate of $3,681 in net pay for this example.

At 15 percent, this person should be able to afford, at most, $552 per month for all car-related expenses (not just the car payment). Taking into consideration the median U.S. insurance rate at $100 per month, and assuming this person spends $125 per month on gas and saves or uses $50 per month for repairs and maintenance; this hypothetical person will have $277 left over each month for a car payment.

“Plug this number into a car affordability calculator with a $2,000 down payment, 4 percent sales tax and a car loan lasting five years with no interest, and a car costing just under $18,000 makes financial sense for this person. Of course, this person may not qualify for a no-interest loan, and shortening the loan term will increase the payment. [He or she] could also lower the monthly payment by having a larger down payment,” noted Deaton.

If you do have more debt, such as from credit cards and student loans, Deaton advised you look at your total monthly debt as a whole in determining how much you can afford for a car. You’ll want to spend less than 36 percent of your monthly net income on your total monthly debt.

If you need more help calculating what you can afford, contact us and we’ll be happy to help.

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