Blog   Tagged ‘saving’

How Saving Money Differs in Your 20s and 30s

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Have you noticed that your eating, sleeping and entertainment habits changed after high school and again after college? The same is true of your financial situation. With a different lifestyle comes different financial needs, which is why we’re bringing you a few dos and don’ts for these crucial decades.

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Things to DO in your 20s…

Do contribute to a 401(k), one of the 9 financial habits we told you about earlier. How much should you save? At least as much as it takes to receive what your employer is willing to match. Beyond that, 10 to 15 percent of your pre-tax income is a great start.

Do lay a sound financial foundation by developing good habits. Contrary to what you may hear, how MUCH you save for retirement when you’re young isn’t as important as saving consistently starting as soon as possible.

Do find inspiration in growth charts / calculators like these. It’s hard to focus on something that is decades in the future, such as retirement, so calculate how dramatically your goals can be reached if you start early. For example, if you start saving $300/month in your 20s, you could have nearly $100,000 by the time you’re 50 (and that’s only factoring a less than 1 percent annual interest rate).

And one thing to avoid in your 20s…

Don’t ONLY save for your retirement. Many people in their 20s make this mistake. Since you can’t touch this money until you’re 59½  (with limited exceptions), you’ll need to make sure you have separate savings for emergencies and non-retirement goals.

 

Things to DO in your 30s…

Do ask yourself if you should buy a home. The median age of first time home buyers is 31*. While that doesn’t mean that age will be the right time for you, it does indicate that your 30s are a great time to start considering home ownership during this decade. If you’re a star student and are reading this section as a 20-something, good job. Because the money you save in your 20s will come in handy when it’s time to buy a home in your 30s. The down payment, closing costs and inevitable home repairs that pop up as soon as the home becomes yours add up quickly.

Do get life insurance if you now have dependents. It’s a bummer to dwell on, so don’t over think it. You and your family will appreciate the financial peace of mind it gives.

And one thing to avoid in your 30s…

Don’t be afraid to talk to your children about money. If you are among the 30-somethings with children, you can start teaching them as young as pre-school or early elementary school the concept of spending and saving. Playing imaginary restaurant or store with them is a great learning tool.

Stay tuned for how to save in your 40s, 50s and 60s!

 

 

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Reference: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspiration for article from Daily Finance

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Johnson is a VP/Financial Center Manager for UMB Kansas City. He is responsible for driving sales and relationship activities within the Walnut Lobby Financial Center. He joined UMB in 2007 and has 11 years of experience in the financial services industry. Mr. Johnson earned an Associate’s Degree from MCC. He is currently pursuing a Bachelor’s of Science Degree majoring in Management and Finance from Park University.

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Sometimes it’s good to be cheap: money-saving tips from a “cheap” family

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Be Cheap!

Steve and Annette Economides are known as America’s cheapest family, and they didn’t get that label by stiffing waiters or bringing cheap bottles of wine to house parties. The Economides (yes, that’s their real last name, but it’s pronounced econo-mee dis)have developed a method to save money as a family, and they shared a few tips with CBS Arizona affiliate KPHO to help every family around the country cut back on spending.

Teach kids the value of money at a young age
The Economides wrote a book called “the MoneySmart family system,” and one of the main points is about teaching children the right way to go about learning and saving money. The couple believes that if parents show their children smart money-saving habits at a young age, it can help set the right mood for the entire family.

“We would normally spend money on them,” Steve said of his children. “I mean how many parents would normally give their kids $20 to go to the mall? So what we said was, okay, we’re going to give them money anyway, let’s have them earn it.”

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Setting up a point system is one way the Economides got their kids excited about earning and saving money. Their children would earn a set amount of points for completing a chore around the house. At the end of the week, they could turn those points in for money.

The family found a reward-based system helps children learn to budget at an early age. Steve also said their goal is by the time their children turn 11, they should be able to afford to buy their own clothes. By the time they turn 16 and are ready to drive, they should be able to pay for their own car and insurance.

“Remember we’re slowly transferring the weight of adult responsibilities to the kids so that by the time they’re 18, they’re ready to go to college and they know how to manage larger amounts of money,” Steve said.

The Economides understand that not every 16-year-old will be able to afford their own car. Annette said that even if they can’t purchase vehicles when they get their licenses, it’s wise to have them pay their own car insurance for accountability reasons.

“It’s real important that kids pay for their car insurance because then if they decide to speed and they get a ticket, their car insurance goes up and they bear the consequences for those decisions,” she said.

Paying off debt
The interesting take on savings doesn’t end there for this family. When managing debt, they told ABC affiliate KNXV to write down every person or establishment they owe money to, no matter the amount. They disagree with the many financial experts say to pay off high-interest debt first.

“Don’t worry about interest rates because you have more success if you simply knock off the smallest balance,” Annette said.

Steve suggests getting a second job, working overtime or looking around the house for unused items that you might be able to sell in order to help pay off debt. He said the family recently sold a 3-year-old textbook for $30.

Saving on daily costs
The average family of four spends $800 per month on food, or roughly $9,600 per year, according to WTVM.

Annette told KPHO that one simple way to trim a family’s food bill is to take inventory of what is already stocked in the refrigerator and kitchen cabinets before heading to the grocery store. She said most people have more in their house than they realize, so searching through their pantries reveals a lot of forgotten items.

Remember, adopting even one of these money-saving tips could make a big impact on you budget. Try adding one at a time, and be sure to track the difference it makes each month.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Seeger is a VP/Financial Center Manager for UMB Arizona. She is responsible for leading the sales and client experience teams in the financial center as well as business development. She has 14 years of experience in the financial services industry. She is a member of the Young Professionals Scottsdale Cultural Council Committee and is takes an active leadership role in the Scottsdale community.

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Financial Checkups: A Tune-Up for Your Money

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Drivers know they need an oil change approximately every three months. Did you know that your money needs just as much attention as your motor? Ordinary expenses and extraordinary events can take their toll. Financial checkups help you avoid a breakdown.

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Financial checkups are about where you want to go in life. At the beginning of a new journey, a financial checkup will help you set your goals. Once you have your destination in mind, making a plan will plot the course to achieving your goals. When you’re on your way, a financial checkup will point you in the right direction to make sure you arrive at your destination on your pre-set schedule. If you take a wrong turn along the way, then a financial checkup can get you pointed in the right direction again.

No matter if you do a self check or work with your financial professional, your financial check should focus on where you want to go. No one knows your plans as well as you do. Some families dream about walking in the front door of their first home. Other people see themselves walking along a white sandy beach as they celebrate their retirement. Still others look forward to the day when their children will walk across the stage at their college graduation. Your financial plan should be as special as your dreams.

The steps involved in a good financial checkup depend on where you are in your life and where you want to go. Here are some suggestions to begin:

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  • Inventory - Make a list. Everything you own (assets) – everything you owe (liability) = your net worth.

–Is it what you thought it would be? Is it what you want it to be? Once you know your starting point, move on to the next step.

  • budget analysis will let you know where you’re headed. By looking at your cash flow, you will know where your money goes. If your money isn’t going towards your goals, you won’t make any progress.
  • Goal setting helps you look ahead to where you want to go. If you’re in a long-term relationship, don’t forget to talk with your significant other about his or her goals. Next, start thinking about how much money you need for your goals.

–If you want make a big purchase like a vehicle or a home, use our handy calculators which takes several factors into account to point you toward a monetary goal. (Tip: if you are clueless on what rates to plug in to the home-buying formula, contact  a real estate agent in your desired area to ask for current average rates as a starting point.)

–It’s a great idea to start saving for a home down payment even before starting the pre-approval process. If you already have a goal, reevaluate what you need to achieve it.

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Whether your destination features tropical beaches or three bedrooms, you can make sure you’re headed in the right direction with a financial checkup. Just like oil change, a little bit of financial maintenance will keep you on the road to success. 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


John R. Moreau is a product manager for Consumer Loans and Deposits at UMB Financial Corporation. He joined UMB in 2008. Moreau earned a Bachelor of Science from Arizona State University and a Master’s in Economics from the University of Missouri-Kansas City. He is currently pursuing a Ph.D. in Economics at the University of Missouri-Kansas City.

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Don’t Get Sacked Buying a Big Screen for the Big Game

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The big game is just around the corner and many people are thinking about buying a new big screen. You may think you’re getting a Hail Mary of a deal, but make sure you’re not getting blitzed. Here are some ways to score the TV you want and advance your financial goals down the field.

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  • Your budget is your playbook. Even if you can’t execute every play perfectly, the closer you can stick to your plan, the more points you’ll put up on the board.
  • Plan out your maximum price, the features you want and the size you want.

For example, when you start looking, you may be thinking about buying a 47-inch TV for $700, but then you find a great 47-inch TV marked down to $500. Then the helpful sales associate says that they have a 50-inch marked down from $1,000 to $750. They say that with the bigger TV you save 300 dollars instead of 250 and you’re still under your budget.

Watch out: they’re going for an interception!

If you have a budget and you spend the full amount, you did not save any money. You were never going to buy the $1,000 dollar 50-inch TV. When you came in the store, you were thinking you’d be happy with the 47-inch model. Remember the play you’re running, buy the size you originally wanted and you’ll have another $250 to put towards saving. 

  • In the NFL, players will watch hours of game tapes to learn about the other team. Do your homework by checking out customer reviews or other trusted sources.
  • That helpful sales associate may also offer you no payments or no interest for months. But even the worst referee would call a flag on this play. These deals often take the form of deferred interest, so if you don’t pay back the full amount in the given time frame, you could owe interest for the entire length of time. Every loan and credit card is different, so be sure to read the fine print before you sign on the dotted line. You may gain 10 yards on the play, but paying a high interest rate can set you back worse than a 15 yard penalty.

Remember, buying a TV is just one play in one game. For saving money, the season never ends. NFL players train their entire life to get to the big game. We save money our entire life to get to retirement. Don’t let spending sideline you. 


John R. Moreau is a product manager for Consumer Loans and Deposits at UMB Financial Corporation. He joined UMB in 2008. Moreau earned a Bachelor of Science from Arizona State University and a Master’s in Economics from the University of Missouri-Kansas City. He is currently pursuing a Ph.D. in Economics at the University of Missouri-Kansas City.

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It runs in the family: Teaching your kids about money

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As a parent, did you know you are an important part of teaching your kids about savings and money management? You can set an example by practicing good spending habits, but you should also consider talking to your kids regularly about money.

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You don’t have to wait until your kids are teenagers. You can start talking to them about the basics of money as early as preschool. Here are some tips about how to talk to your kids about money at any age:

  • From ages three to five you can teach kids that money can be exchanged for things. Explain to them the difference between pennies, nickels, dimes and quarters.
  • From ages five to nine you can start giving them an allowance. This is also a good time to explain bank accounts and what it means when a bank account earns interest.
  • From ages nine to 13 you can help them open a savings account. Encourage them to save their allowance towards a goal (a new toy or a DVD). You might even consider setting up a matching savings plan like most companies do with a 401(k). This is also a good time to start talking to them about the idea of keeping a minimum balance based on the savings account requirement. You can also introduce the concept of keeping savings in case of emergency. Even though they won’t need to pay for an emergency at such a young age, you can explain the importance of keeping a nest egg.
  • From ages 13 to 15 you can expand your children’s allowance to include more expensive items like clothes or gifts for friends. This is also a good time to introduce entrepreneurship. Encourage your kids to earn their own money with jobs for neighbors and friends.  Arrange for them to have an ATM card so they can withdraw money from their savings account.
  • From ages 15 to 18 and up you can help your children open a checking account with a debit card. Teach them how to manage their account online or with mobile banking. You can even go old school and show them how to use a check register. This is also a good time to talk fiscal responsibility about when they go off to college. Be very clear about what expenses you will pay for which ones they will cover.

Explaining money management to your kids can start out with something as simple as giving them an allowance. If you talk to them regularly, teach by your own fiscally responsible example and give them the right tools, you will do more than teach them about money basics. You will instill in them a respect for earning and saving money that will hopefully set them on a path to being financially independent and responsible in adulthood.


Ms. Pierson serves as executive vice president of Consumer Banking. She joined UMB in 2011. She received a Master of Business Administration from Rockhurst University and a Bachelor of Science in Industrial Engineering from the University of Missouri. Ms. Pierson is actively involved in the community, having served on a number of boards including the Kansas City Area Development Council, LISC of Greater Kansas City, the University of Missouri Industrial Manufacturing Systems Engineering Board and the Lee's Summit Education Foundation Advisory Board.

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Financial planning is a marathon, not a sprint

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Whether you have just started the race and you are at the beginning of your career, or you are closing in on the finish line of retirement, you should stay on track with your financial planning. Much like running a marathon is different than a sprint, planning long-term financial goals is different than simply paying your bills every month. A knowledgeable financial partner can coach you through this and make the process seem less daunting. Similar to a mile marker showing you what point you are at in a marathon, certain life events signal when and how you should financially prepare.

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  • Just starting out

    Start saving as soon as possible to set the pace for this long-distance run. Consider opening a savings account and set aside whatever you can from each paycheck. With most banks, you can set up an automatic transfer from your checking account to a savings account so you won’t even have to think about it. Also consider a retirement fund—either a 401(k) or similar employer-sponsored plan, or an Individual Retirement Account (IRA) separate from your current job.

  • Planning for a family

    Thinking about starting a family? This is an important decision and one that you must be prepared for financially. Much like training before you run a marathon, adjusting your budget and saving for having kids is important. Paying for medical bills when the baby is born or financing adoption fees is no simple task. Not to mention childcare and other expenses related to children once you have them. Bottles, diapers, clothes, toys, it all starts to add up quickly!

  • Children’s education

    If your children plan to pursue higher education after high school, you will need to save for that expense. A four-year degree is estimated to cost $442,697.85 for students enrolling in 2031 if tuition increases seven percent per year. Does that number make you nervous? Planning ahead and starting to save when your children are born will help with some of that anxiety.

  • Pre-retirement

    As you see the retirement finish line in the distance, it is important to meet with your financial partner(s) to understand when you can retire and feel comfortable with your finances at that time. Ask how your retirement fund(s) is/are performing and whether or not you need to increase/decrease your contributions. Want to spend your retirement vacationing at that lake house you have always dreamed of? It doesn’t have to be a dream if you start budgeting now.

  • Post-retirement

    Now it’s time for the post-run cool down and stretch. After you retire, it is more important than ever to monitor your finances. You aren’t contributing to a retirement fund or planning to pay for your children’s college; instead you are now working on a fixed income and have to ensure that it will last for the rest of your life.

Marathon runners train very hard for a long time to prepare for those 26.2 miles. Often they don’t do it alone and will work with a trainer who helps them through the preparation. Utilize the expertise available at your bank and start preparing for the long-term so you can reach the finish line when and how you want.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Miles serves as assistant vice president and banking center manager in Denver. He is also a member of the UMB Consumer Advocate Team. He joined UMB in October of 2007. He is currently studying Organizational Leadership at Colorado State University.

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Making the most of your HSA

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As health savings accounts (HSAs) become more popular with employers and employees, you should be well-informed about the benefits and rules around this option. For example, did you know you can use an HSA as a savings/investment tool? Most HSAs are tax-advantaged, offer investment options and you can use them in retirement planning.

So, what else do you need to know? To get the most out of an HSA, you need to understand some of the long-term benefits of this health care savings strategy and what options are available when you sign up for an HSA.

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  • Move past the “use it or lose it” mentality

    HSAs are different than flexible spending arrangements (FSAs), because your unused HSA balance rolls over from year to year so you will not give up the money and your account may grow over time. FSA funds that aren’t used by the customer within a certain time period are lost.Here is an example of how an HSA can be used to save for future expenses.You’re a generally healthy, 20-something male who doesn’t have many major health care expenses. You would like to save for future health care expenses for when you start a family or possibly for when you are closer to retirement age and are more likely to have substantial health care costs. You should consider an HSA.

  • Take a long-term view

    Eligible HSA deposits are tax-deductable, earnings grow tax-free‡(1), and withdrawals for qualified medical expenses are tax-free1. These features may make the HSA a more appealing choice than other tax-advantaged financial instruments such as an IRA. With an IRA, you will pay income tax on your withdrawals used to pay for medical expenses and you may have to pay a penalty for withdrawing money too early. If you withdraw from an HSA for a non-qualified medical expense, you will have penalties and tax implications similar to an IRA.Many HSAs offer investment options. You can invest part or all of your HSA into money market accounts‡(2),or self-directed brokerage accounts (3) for mutual funds or individual stocks. Like all investments, other factors will determine the actual returns on those made within an HSA, but the reality is that these options are underutilized by most HSA accountholders.

  • Learn more and determine next steps

    If your company offers a high-deductible health insurance plan with an HSA, talk to your benefits department about what is included with the HSA. Determine if an HSA is right for you at the time. Many benefit partners will offer “people like me scenarios” to give you a better idea of how you can benefit from an HSA.Here is another example of how an HSA can be used to save for future expenses within a shorter timeframe.

    You’re a woman in your 50s and you are preparing for your retirement in the next 10 to 15 years. You have noticed that your health issues are more frequent and more expensive. You realize that the HSA makes the most sense for you to start investing in now, while you’re still eligible. You also learn that you can make a catch-up contribution to your HSA since you are over age 55. It’s not too late for you to consider an HSA.

To learn more, click here.

UMB CFO Mike Hagedorn discusses the innovation of HSAs and how they have become an important part of the payments industry. He explains the distinction between product and innovation and how a company can poise itself to be a leader in innovation.

 

1All mention of taxes is made in reference to federal tax law. States can choose to follow the federal tax-treatment guidelines for HSAs or establish their own; some states tax HSA contributions.  Please check with your state’s tax laws to determine the tax treatment of HSA contributions, or consult your tax adviser. Neither UMB Bank n.a., its parent, subsidiaries nor affiliates are engaged in rendering tax advice.

2 Contributions up to the $1,000 peg balance are FDIC insured.  Any funds over the peg balance that are swept into a money market mutual fund are not insured or guaranteed by the FDIC or any other governmental agency.  Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market mutual fund.

3 Investments made through your HSA Self-Directed brokerage account are not FDIC insured.  Investments offered through UMB Financial Services, Inc., member FINRA, SIPC.  UMB Financial Services, Inc. is a subsidiary of UMB Bank n.a.  UMB Bank n.a. is a wholly-owned subsidiary of UMB Financial Corporation.  UMB Financial Services, Inc. is not a bank and is separate from UMB Bank n.a. and other banks.

Investments in securities, whether through the money market sweep account or through other investment options available in the self-directed brokerage account are:

Not FDIC-Insured · May Lose Value · No Bank Guarantee

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Dennis Triplett is chief executive officer of UMB Healthcare Services. He is responsible for the strategic direction in healthcare banking and manages the sales and marketing activities, plus product development and relationship management. Dennis has more than 29 years of experience in the banking industry. He currently serves as board chairman for the Employers Council on Flexible Compensation, chairman of America’s Health Insurance Plans’ HSA Leadership Council and a charter member of the American Bankers Association’s HSA Council.

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