Put Your Kids On The Road To Financial Literacy

Chances are you’re not going to find a book titled “The Basics of Financial Literacy” in your child’s backpack from school. But it certainly would be a helpful part of their curriculum.Boy and a Pile of Coins

If your child isn’t learning financial basics in the classroom, like how to save money, how to create a budget, or how to balance a bank account, that means the burden falls on you to teach them the financial ways of the world. Research has shown that kids who have sound money management skills, and who develop good money habits, have a greater chance of personal financial success in adulthood.

So when should you start laying this groundwork? Early on, according to experts. One of the first financial lessons you can teach your child revolves around that time-tested tool – the piggy bank. The simple act of having your child put coins in the bank on a regular basis can set the stage for learning how to save. You can even show them by example by having an “adult” piggy bank they can watch you put money into.

Once your child is a bit older, it’s time to introduce them to real-world situations where money is involved. A trip to the bank is a good place to start. Your child can watch you deposit money into a savings account, and you can explain to them that you’re putting that money aside, just like they do with their piggy bank. You can drive this point home even more by helping them to open a savings account of their very own.

Another great way to teach your child about money is to take them with you on a shopping trip. Even just heading to the grocery store is a great start. Your child can help you make a list of what you need at the store, and you can even have them add an item or two that they want. Once at the store, try to pay with cash so they can see that money is being used to purchase the items – the same kind of money that they have in their piggy bank.

If they have money of their own saved up, you can even let them bring it with them to the store. This can be a good opportunity to explain “needs” versus “wants” with your child. And, by letting them make a decision about whether to spend their money on a toy or a candy bar, or save up their money to purchase a “big ticket item” down the road, they’ll be able to start thinking about the financial choices available to them on a daily basis.

As they enter their teenage years, kids are old enough to understand the importance of creating and sticking to a budget. Again, showing by example is a good way to convey this knowledge. Let them sit with you while you pay the bills and explain what you’re doing. By showing them the importance of knowing how much money is coming in and going out of the household each month, you’ll be driving home a valuable lesson that will help them to manage their own money.

You might also consider helping your teen to open their own checking account. Since you’ll be acting as a co-owner on the account (children under the age of 18 need a parent or guardian to open a bank account with them), you’ll have a chance to oversee your child’s spending and money management habits, and step in when you see they need some guidance. By allowing them firsthand experience managing their own money, they’ll be a lot more financially savvy by the time they head out into the “real world”.

Once your teen proves to be responsible with their checking account, you can introduce them to the world of credit. Explain the basics of establishing credit and what it means to carry a balance on a credit card and pay interest on that balance. You can even walk your child through the process of applying for a credit card if you think they’re ready. And don’t forget to stress the importance of making credit card payments on time and paying at least the minimum required. A later lesson would be to show how maintaining good credit is important when it comes to taking out a car loan or applying for a mortgage.

Let’s be honest; what parent doesn’t want a bright financial future for their child? By introducing your child to the skills and knowledge they’ll need to manage their own money, you’ll be helping them to build a strong financial foundation they can take with them into adulthood.

Teach Good Money Habits with a Children’s Savings Account

As a parent, don’t you want your child to have a strong financial future? If so, the earlier you can start teaching them about money, the better. Research has shown that children start to understand the concepts of saving and spending as early as three years old, and some experts believe that money habits are formed by age seven. One way to get your child on the right track financially, is to give them a savings account of their very own.Young boy putting money in piggy bank

A children’s savings account can help lay a solid financial foundation. From teaching the benefits of putting money aside, to allowing children to discover what interest is all about, a savings account can be a great educational tool.

Some of the specific benefits of opening a children’s savings account include:

  • It gets children in the savings habit. By regularly depositing the contents of their piggy bank into a savings account, your child will foster good savings habits they can take with them into adulthood. By the time they head off to college or out into the “real world”, they’ll already be used to routinely putting money aside. As they say – “old habits die hard” – and saving money is a habit you won’t want them to break!
  • They can watch their money grow over time. One valuable lesson is that you don’t have to spend it just because you have it. Kids tend to get excited when they find themselves with a few bucks, but instead of blowing their money on candy or cheap toys, placing it in a savings account can allow them to save up for something special. It can be a satisfying experience for them to watch their money grow with each deposit they make. And, a savings account that pays interest shows a child firsthand how their money can make more money.
  • It puts them on the road to financial freedom. Using a savings account to save for something special can be a great way for your child to learn about financial independence. Rather than rely on Mom and Dad to buy them a new tablet or skateboard, they can use their own funds to make the purchase. Not only does this provide them with a sense of achievement, but it helps to teach them the value of a dollar. They won’t be as inclined to waste money down the road once they know how much effort goes into saving up for a treasured item.
  • It can serve as a stepping stone to other financial products and services. By managing their funds in a savings account, kids can learn about interest and the difference between deposits and withdrawals. If their account comes with an ATM card, they’ll also learn how ATM transactions work, and what the consequences can be if they overdraw their account. All of these lessons will come in handy down the road when they open a checking account, or try out different savings vehicles like certificates of deposit (CDs), or Money Market accounts.

A children’s savings account can be a great way to lay the groundwork for sound financial habits. As for deciding where to open your child’s account, there are many options out there. You can go with an account specifically tailored to children, you can opt for an online-only account – which typically offer higher interest rates than traditional accounts – or you can open an account at your regular bank. Generally, you’ll want to look for an account that offers a competitive interest rate, and that doesn’t have a minimum balance requirement or monthly maintenance fee. And keep in mind that no matter what type of account you choose, any child under the age of 18 will need a parent or guardian listed on the account as well.

Starting the Financial Aid Process with the FAFSA Application

Going to college is expensive, and it seems to get more expensive every year. That’s why parents and students turn to the FAFSA application to explore their chances of obtaining financial help for college expenses.AdobeStock_78887285

FAFSA stands for Free Application for Federal Student Aid. Administered by the U.S. Department of Education, the FAFSA determines a student’s eligibility for financial aid, which can take the form of grants, loans, and work-study funds.

Every year, billions of dollars are handed out to eligible students who submit a FAFSA application. But those funds aren’t available to you if you don’t apply. Believe it or not, it’s recommended that every student considering college fill out the FAFSA form. Some students think they won’t qualify for financial aid because their parents earn too much money, or they already have a college savings plan. However, what a lot of students and parents don’t realize is that the majority of students who submit a FAFSA are eligibleAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! for at least some form of funding. In fact, according to the National Center for Education Statistics, during the 2014-2015 school year, 86% of first-time, full-time undergrads received some type of financial aid.

One important thing to note is that the FAFSA should be submitted every year you’re attending college. The deadline for submitting a FAFSA application varies depending on which state you live in and what school year the aid is for. To determine which deadline applies to you, visit https://fafsa.ed.gov/deadlines.htmAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. Regardless of when your FAFSA deadline is, you should keep in mind that some schools award financial aid on a “first-come, first-served” basis, so it’s best to apply as soon as possible. You can submit your application as early as October 1st each year.

Before you jump into your application, you should first determine whether you qualify as a “dependent” student, or an “independent” student. This distinction is very important, as a dependent student must enter both their own financial information, and their parents’ financial information on the form, while an independent student only needs to enter their own information. To help determine which type of student you are, visit https://studentaid.ed.gov/sa/fafsa/filling-out/dependencyAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!.

It’s also important to gather some specific information and items before starting the application process, such as:

You can easily complete and submit your application online, just be sure to do so via the official FAFSA website: https://fafsa.ed.gov/As a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. Keep in mind that FAFSA will never charge you to submit an application, so if you see any mention of fees, or are prompted to enter your credit card information, it should serve as a warning that you’re on site that is not affiliated or endorsed by the U.S. Department of Education.

If you submit your application on the FAFSA website, it will be processed faster than if you sent in your application by postal mail, and it’s likely to be more accurate because the FAFSA website is designed to automatically catch common errors. With an online application, you can also save and continue your FAFSA form at any time using an FSA IDAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. An FSA ID consists of a username and password that can be used to log into the FAFSA website.

It’s important to go into the FAFSA application process with a clear head, and be careful not to rush through the form. Providing the wrong information on a FAFSA application could delay processing and impact your chances of getting financial assistance. Here are some common errors to watch out for when completing your form:

  • Entering the wrong permanent address;
  • Leaving fields empty. Blank fields can cause miscalculations and ultimately lead to a rejected application. To avoid this, enter a “0” or “not applicable” instead of leaving a field blank, if it doesn’t apply to you;
  • Listing an incorrect Social Security number or driver’s license number. Double and triple-check these numbers to ensure they are entered accurately;
  • Forgetting to sign and date the application;
  • Using commas or decimal points in numeric fields. Numbers should always be rounded to the nearest dollar;
  • Listing student or parent marital statuses incorrectly;
  • Entering the wrong amount of federal income tax paid. You should obtain this amount from your income tax return, NOT your W-2 form;
  • Listing your “Adjusted Gross Income” as equal to your “Total Income”. These figures are different; generally, Adjusted Gross Income is larger than Total Income;
  • Forgetting to list the college(s) the student is applying to, or planning on attending.

Although there’s a lot involved with submitting a FAFSA application, it can greatly pay off in the end. There’s a good chance you could receive the funding necessary to make your college dreams a reality, but you’ll never know unless you take the time to apply. 

How Safe are Paper Checks?

There was a time when people didn’t give a second thought to paying their bills by check and sending them out via postal mail. But with all the fraud going on in the world today, you may be wondering just how safe those paper checks really are.AdobeStock_39616999

The truth is that checks can pose a host of problems from a security standpoint. For one, the front of a check typically contains an abundance of sensitive information such as name, address, financial institution, routing number, and bank account number – quite the payload for a crook.

To make matters worse, there are some retailers and government entities that require you to write your driver’s license number or Social Security number on a check before they will accept it. And after the check is handed over, there’s no telling how many employees could have access to that information.

If your check falls into the hands of someone who isn’t trustworthy, it could open a Pandora’s Box down the road, including identity theft and account takeoverAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. Just by having the account and routing numbers, thieves can go on an online spending spree.

And even if you limit your check writing to just paying a few bills by postal mail each month, there’s still a possibility that your mail could be intercepted along the way. According to the United States Postal Inspection Service, in an average year it responds to more than 27,000 consumer fraud complaints, including reports of identity theft. And, it arrests around 10,000 criminal suspects each year for crimes like mail theft and possession of stolen mail.

It’s also important to keep in mind that if fraudulent transactions occur as a result of thieves stealing your bank account information from a check, your legal protections are generally more limited than if your credit card was compromised. In most cases, financial institutions require that any check-related fraud be reported within 2 days, or you could be liable for up to $500 of the fraudulent transactions. What’s more, if you fail to report the fraud within 60 days, you could be liable for all the money that was stolen. It’s worth noting that some financial institutions offer more extensive liability protection for check-related fraud, but they’re not required to by law.

Given how easy it could be for a criminal to access your personal and banking information via a paper check, you might be asking – should I use them at all? The truth is that checks are still around for a reason, and in some cases they still could be your best bet.

  • They can help you avoid extra fees – In some cases, government agencies or utility companies may accept credit card and debit card payments, but charge extra for them. If you’re looking to pay your car tax bill, and you’re going to be slapped with a fee for paying with a card, you might be better off sticking a check in the mail.
  • You can still make payments during a power outage – If your community is hit with a hurricane or other major weather event, you could find yourself without power for days. Unfortunately, you’ll likely still be expected to pay your bills on time. If you don’t have access to the internet to make online payments, you may find yourself needing to pay by check.
  • Not everyone accepts credit card payments – Believe it or not, some independent contractors and small, local businesses don’t accept credit card payments. For a lot of businesses like photographers, home improvement contractors, and flea market vendors, checks are still preferred over credit cards.

So, if you do find that having a checkbook is a necessity for your lifestyle and current financial situation, just keep these tips in mind to help avoid becoming a victim of check fraud:

  • Use online bill pay whenever possible so that payments are withdrawn directly from your checking account without you having to write a check. Another option is to use a peer-to-peer payment system like PopMoney, PayPal or Venmo to pay bills, friends or contractors.
  • Limit the number of paper checks you write as much as possible. That includes reducing or eliminating altogether the use of checks at physical retail locations.
  • If paying bills by postal mail, drop off the mail at a U.S. Postal Service mailbox or at the post office. These mailboxes are typically much more secure than your personal mailbox at home. And make it hard to tell that there are checks in the envelopes, by covering them in plain white paper, or using security tint envelopes.
  • Never carry around a checkbook or blank checks with you. If your purse is stolen, or you lose your checkbook, a crook could easily get their hands on your personal and financial information.
  • Always write a specific name of a business or person on the line that says “Pay to the order of.” And never write “Cash” in this space. If the check is misplaced or stolen, and it says “Cash”, anyone can cash it.
  • Check your bank statements online at least once a week to ensure that any checks you have written are being cashed and that no fraudulent activity is occurring with your account.

Paper checks can still be helpful in some instances, but it’s important to know the risks associated with them. By keeping these precautions in mind, you can help to keep your bank account, and your checks, as safe as possible.

Tax Tips for a Safer Tax Season

Did you know that if you haven’t filed your tax return yet, a criminal could beat you to it? This type of crime is becoming more widespread every year. But luckily, there are some tax tips you can follow to help protect your return from these unscrupulous criminals.Tax form concept

Because the Internal Revenue Service only accepts one tax return per Social Security number, the sooner you file your return, the less likely you are to have a thief snatch up your rightful refund.

In additional to filing as early as possible, it’s important to do everything you can to shield your personal information from potential criminals. If they can’t get their hands on your Social Security number, they can’t file a return in your name. Here are some general recommendations to keep in mind:

  • Ensure that your computer and mobile devices have the latest web browsers, and security software installed. This is your best line of defense in protecting the contents of your device, and the information you share online.
  • Always use a secure internet connection when you submit or transfer sensitive information online. You can tell that a website is secure by checking for a URL that begins with “https://”, and a padlock symbol alongside the URL in the address bar of your internet browser.
  • Remember to shred paper documents that contain sensitive information, instead of just tossing them in the garbage. These types of documents could include drafts of your tax returns, copies of your W-2 forms, pay stubs, medical bills, or credit card and bank account statements.
  • Don’t give out your Social Security number unless absolutely necessary. And don’t carry your Social Security card in your wallet or store the number on your computer or cell phone.
  • Do your homework before hiring a tax preparer. Make sure you can trust them with your personal information. And ensure that they sign your return with their IRS Preparer Identification Number. The tax preparer identification system was developed as an added layer of protection against tax fraud.
  • Don’t use public wireless networks (such as those in coffee shops and restaurants) to work on your tax return or file it. Cyber crooks can intercept internet connections on these unsecure networks and gain access to your information.
  • Use strong, complex passwords for all of your online accounts, especially your online tax e-filing account, if you have one.
  • Consider using a USB memory stick or external hard drive to store sensitive tax data that you need to prepare your return. This will lessen the chance of cyber crooks stealing the information directly from your computer. The external drive or stick also serves as a backup should you encounter a crash or other problem with your computer.
  • Be aware that the IRS will never email or call you concerning tax issues or any back taxes you may owe. If the IRS needs to contact you regarding a tax matter, they will do so via regular postal mail. So, if you receive an email or phone call from someone who says they are from the IRS, odds are that they’re an imposter looking to steal your personal information. Never provide them with your bank account credentials, or your credit and debit card information, and never wire them money – you’ll never get it back.

It’s a shame that there are so many criminals out there looking to get their hands on your hard-earned tax refund, but armed with these tax tips, you should stand a much better chance of protecting yourself this tax season.

You Have Choices When Your CD Matures

If you have a CD reaching maturing soon, have you given thought to what you’d like to do with the funds in it? Deciding what path to take when a CD matures isn’t as easy as coming to a fork in the road. There are actually quite a few options available. It’s just a matter of weighing all those options, and then choosing the one that’s right for you.choices-when-your-cd-matures

Before exploring your choices, it’s important to note that your financial institution is required to notify you in advance before your CD matures. Once you receive that notification, you typically have only a week or two to decide what you’d like to do with your funds. If you don’t instruct your bank on what to do with your CD when it matures, they will make the decision for you. In most cases, the financial institution will automatically roll over the funds to another CD with a term length similar to your old one. But beware – the new CD may have a lower interest rate than your old CD. To prevent your money from ending up stuck in a CD with an undesirable rate, it’s a good idea to make your own informed decision about your funds when your CD matures, rather than letting your bank make the choice.

  • One option available to you is to deposit additional funds into the CD and then roll it over into a new term. Unless your CD is an “add-on” CD, your maturity period is likely your only opportunity to add funds to your existing balance. If you decide to go this route however, be sure that you know what rate you will receive for the new term before you agree to it.
  • If you have a big purchase on the horizon, it may be a good time to withdraw the funds. Typically, CD maturity is the only time you can pull your funds out of a CD without incurring an early withdrawal penalty. Taking your money out of a CD once it matures can be ideal if you have specific objective in mind, such as placing a down payment on a house or buying a new car.
  • If you think you may need the funds in the not-too-distant future, but don’t have an immediate need for them, your best bet may be to withdraw the money and place it in an interest-bearing savings or checking account. By taking the money out of your CD, it will no longer be tied up for a locked-in time period, and you’ll have the flexibility of withdrawing it without penalty whenever you’re ready.
  • Another option is to pursue a different investment vehicle, depending on your level of risk tolerance, and your financial goals. Other investment opportunities could include stocks or bonds, retirement accounts, or college savings plans. Just remember that it’s always a good idea to consult with a tax professional or an investment advisor before making any major investment decisions.
  • If you’d like to keep your money in a CD, another possibility is to choose an entirely different CD to roll your money into. You could go with a different CD at the same financial institution, or you could open a new CD at another bank or credit union. Sites like DepositAccounts.comAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! and Nerdwallet.comAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! can useful when comparing CDs across multiple financial institutions.
  • Depending how much money is in the maturing CD, you may want to consider splitting the funds and placing them into two or more new CDs with varying term lengths. This strategy is referred to as “CD laddering”. Generally speaking, CD laddering involves buying a series of CDs with different terms so they mature at different intervals. So over the course of the CDs’ various term lengths you’ll have access to funds on an ongoing basis, because you’ll have a CD regularly reaching maturity.

No matter where you are in your financial journey, if you have a CD reaching maturity it’s important to think proactively about your goals and immediate financial needs before determining what to do with your funds. A little planning goes a long way, and you’ll thank yourself later!