Financial Words Parents Should Teach Their Children

Cute little girl is playing with paper money - dollars, isolated over white

Savings: Age 4+
Saving is one of the best topics to introduce at a young age. It’s easy for kids to grasp and can have a huge impact on those who embrace it early. There are plenty of examples parents can use to illustrate, here’s one: Start by giving your child two small pieces of candy during the day. Let them eat one right away and save the other until after dinner. Then each day for a week, give them two pieces but have them save one in a special place. When the week is over, they’ll be excited to have a bag full of candy. Explain that saving money works the same way — when you regularly put a little bit aside, in time it will add up to something big.

Budget: Age 8
A budget is plan that you make to keep track of your money and where it is going. One great way that a lot of parents teach kids how to budget is with “give, save, spend jars.” Whenever the child earns money they divide it between the jars. The “save” jar is money that’s intended for a longer-term goal; money in the “spend” jar can be used any time for smaller purchases; the “give” jar is money that will go to a charity of their choosing. The give jar, in particular, is great for getting kids to think about helping others while allowing them the freedom to choose where to donate their money.

Loan: Age 8
A loan is something that is borrowed, often money, which has to be paid back with interest. Most kids get the basic concept of a loan because chances are, at one time or another, they’ve lent something to a friend or sibling and expected to get it back.

Start by explaining some of the reasons people take out loans. For instance, because it costs a lot of money to buy a house most people borrow money (take out a mortgage) to pay for it. Even kids know that $300,000 is a lot of money, so when they hear that’s the average price of a house they can understand why most people borrow money to cover it. Car loans and student loans are also good ones to discuss.

While taking out a loan isn’t a bad thing, parents need to stress that when you do take on a loan, it’s your responsibility to pay it back.

Debt: Age 8
Loans and debt can be explained together. Like a loan, a debt is money that you owe someone that needs to be paid back. Once again, a mortgage can be a good way to illustrate how debt works.

Interest: Age 8-10
Interest has two sides: it’s either something you pay when someone lends you money or something that you earn when you lend money to someone else. You could explain interest to your child by telling them they could earn interest if, for example, “your sister runs out of her allowance but needs money this weekend. You could lend her $20 but charge her $2 in interest, which she will have to pay you back next week.”  You can also make it into a game to illustrate how it works: Ask to borrow a few dollars from your child’s piggy bank and then set up a schedule to pay it back over the next month with interest.

Explain to older kids how you pay a financial institution interest on a car loan or mortgage each month. Also point out that the financial institution pays interest on deposits you keep in your accounts there.

When kids are older and can calculate simple percentages, have them do some math to see how interest adds up. Show them a credit card agreement that charges 15% interest and have them figure out how much extra money you would have to pay to carry a balance of $5,000 or $10,000 on your credit card, versus if you paid it off right away.

Credit Card: Age 8-10
Credit lets you buy something without having to pay for it right away. For example, if you use a credit card to buy a new bike that costs $200, the money doesn’t come out of your bank account. Instead the credit card company pays for the bike. Then they send you a bill and you have to pay them back the $200. If you don’t pay them back right away, they will charge you extra money (interest).  The longer it takes you to pay back, the more money you will owe in the end. While credit cards are necessary to have — kids need to understand that they should only be used to buy things that they can afford to pay off right away.

Parents should also explain how a debit card is different as it takes money directly from your checking account. When you’re at the store and you slide the debit card, explain that the card is taking the money right out of your account at that very moment.

Taxes: Age 10-12
Chances are most kids know the word but few understand what taxes are. Here’s the explanation: Taxes are payments that go to the government for the work that it does, such as improving schools and fixing roads. They’re taken right from your paycheck and the amount you pay depends on how much money you make.

You can also explain to older kids that doing certain things, which have a positive impact such as donating money to charity or installing solar panels on your house, can lower your taxes.

Investment: Age 10-12
An investment is something that you spend money on, which you believe will earn you even more money (a profit) down the line. Kids should know, however, that although people invest in things that they hope will make them more money, it doesn’t always happen that way. That’s why it’s never a good idea to put all of your money in a risky investment, because if you do and the investment fails, you could loose it all.

Stock: Age 12+
A stock is a piece of a company. When you own stock in a company, you own a small piece of its business. Every stock has a price and that price can go up or down, depending on what’s happening at the company.

Stock movements are best illustrated to kids with an example of a company they know. For instance, say you bought one share of Apple AAPL -0.16% stock for $5 . If the company sold a ton of iPhones, which is good for the company, it could make the stock price go up to $8, meaning you would have earned $3 on your investment. On the other hand, if Apple didn’t sell a lot of iPhones and the stock fell to $2, you would have lost $3. Most people don’t own a single piece of a stock (a share) – but tens, hundreds or thousands of shares. And most people also own stock in several different companies. The “stock market” is where people buy and sell (trade) their stocks. There is an actual place where stocks are traded but it can also be done over the Internet.

Learning about stocks can be particularly fun as kids get older. There are a lot of online games and apps they can use to create virtual stock portfolios, which can show them how stock prices move and how much money they would have made or lost if they been dealing with real money.

401(K): 14+
As kids enter the teenage years, it’s a good time to begin preparing them for some of the things they will likely encounter once they enter the workforce, one of which is a 401(k) plan. A 401(k) is a savings account for retirement offered by your employer. The money that you put into a 401(k) is taken out directly from your paycheck, and is intended solely for retirement. You can’t withdraw it until age 59½.

The money that’s put into a 401(k) gets put into different investments. The ideas is that the investments will increase over time, so the money in the 401(k) will grow as well.

Credit Score: Age 15+
Once you plan to give your child use of a credit card, you must explain what a credit score is. Here’s how to explain it: There are three credit bureaus, which calculate your “credit score” or how you use your money. The goal is to have a high credit score. The way to receive a high score  is to have a long history of paying your bills on time. When you don’t pay your bills on time or you have too much debt, your score gets lowered.

It’s important to emphasize that a good credit score will help in the future if you want to borrow money to buy a house or a car. Meanwhile a bad credit score can make it difficult for you to borrow money.

Article Source: Jennifer Ryan Woods for 

6 Things You Can Do to Ward Off ID Theft

magnifier_finger1. Be vigilant with your online information.

Only log into your online banking and financial institution sites from home or a secured location. This may seem simple, but it can be easy to forget.

2. Don’t use a debit card for online purchases.

A debit card is directly connected to your checking or savings account, so if there is fraud, your account can be drained — ouch!

A credit card is just that, credit. If there are purchases you don’t recognize, you can dispute them without your funds having already been withdrawn from your account. Consider having one credit card specifically for that purpose.

3. Monitor your accounts monthly.

When you go “paperless,” it can be easier to neglect checking your statements.  Be sure to review your bank accounts and credit card statements regularly to make sure they are correct and to watch for unauthorized purchases.

4. Simplify your financial information.

When you have multiple accounts and can fan out your credit cards like a deck of playing cards, it’s a challenge to stay on top of things. Consider paring down your accounts in order to better stay on top of them.

Also consider using an aggregation service, such as, so all of your accounts and daily transactions are viewable with one single sign-in. This can help you easily stay on top of your account activity.

5. Check your credit information regularly and take advantage of free (or low-cost) credit monitoring services.

One problem with identity theft is that you may not know what you don’t know. If someone opens an account in your name and changes your address, you are left in the dark.

Subscribe to a credit monitoring service, like ID Theft Protection from First Financial. Don’t wait until it’s too late! Check out First Financial’s ID Theft Protection products – with our Fully Managed Identity Recovery services, you don’t need to worry. A professional Recovery Advocate will do the work on your behalf, based on a plan that you approve. Should you experience an Identity Theft incident, your Recovery Advocate will stick with you all along the way – and will be there for you until your good name is restored and you can try it FREE for 90 days!*

Our ID Theft Protection options may include some of the following services, based on the package you choose to enroll in: Lost Document Replacement, Credit Bureau Monitoring, Score Tracker, and Three-Generation Family Benefit. To learn more about our ID Theft Protection products, click here and enroll today!**

6. If you see something, report it right away.

If you suspect that your identity has been compromised, you can place a fraud alert on your credit file by calling any one of the three major credit reporting agencies shown below. A fraud alert is a notation on your credit file to warn credit issuers that there may be a problem. The credit issuer is asked to contact you at the telephone number that you supply to validate that you are the person applying for the credit.

TransUnion: 1.800.916.8800

Experian: 1.888.397.3742

Equifax: 1.800.685.1111

In accordance with the Fair Credit Reporting Act, it is permissible for consumers to request a free copy of their credit report once every 12 months from each of the three major credit reporting agencies (TransUnion, Experian and Equifax).

To order a free credit report:

*Available for new enrollments only. After the free trial of 90 days, the member must contact the Credit Union to opt-out of ID Theft Protection or the monthly fee of $4.95 will automatically be deducted out of the base savings account or $8.95 will be deducted out of the First Protection Checking account (depending upon the coverage option selected), on a monthly basis or until the member opts out of the program. **Identity Theft insurance underwritten by subsidiaries or affiliates of Chartis Inc. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions. 

Article Source: Nancy Anderson for,


10 Ways Too Many People Throw Money Away

Packs of dollar in the garbage can. Waste of money or currency collapse concept. 3d

There are all sorts of ways to cut spending and boost your savings, and there are just as many ways to sabotage your own finances. In addition to missing out on money-saving discounts, making unwise shopping decisions, and purchasing unnecessary items, you might also be throwing your money down the drain without even realizing.  Keep reading to ensure this doesn’t happen to you!

1. Never redeeming gift cards.

Even if you don’t want your gift card, at least give it to someone who will use it. According to statistics compiled by Gift Card Granny, more than $41 billion in gift cards went unused over a 6 year period. American households also average $300 in unused gift cards, and nearly half of recipients do not use the full value of the card. Don’t let dollars go down the drain!

2. Letting Groupons expire.

According to Yipit, roughly 15% of Groupons go unredeemed by the time the expiration date rolls around. Make a note of your daily deal coupon’s expiration date to ensure this doesn’t happen to you. And if your Groupon does expire, you may be able to contact the merchant directly to get some value from it.

3. Buying tickets and not showing up.

Purchasing tickets for a concert, sporting event, or other cultural activity often requires planning far in advance. But if you change your mind later or something comes up, you’ve already spent that money. These days people even buy movie tickets in advance online. If you can’t get a refund, you may be able to at least pass along your tickets to a friend. To make every dollar count, when possible it’s best to wait until you are certain to actually buy your tickets.

4. Paying late fees.

Even small late fees add up quickly. This can include everything from overdue library books, Redbox DVD rentals, or late payments on utilities. To avoid incurring late fees on your credit card, pay in advance of your due date, schedule automatic payment, or set a reminder for yourself. If you are hit with a late fee, call customer service and ask to have the charge waived. On your first offense many companies are willing to let the late fee go.

5. Paying bank fees.

It seems like every year big banks come up with new ways to nickel and dime their customers. Between minimum balances, fees for checking accounts, and ATM fees – these charges can add up. Avoid these unnecessary fees by joining a local credit union like First Financial! Credit unions typically offer free checking accounts and savings accounts with better interest rates.

6. Not returning unwanted goods.

It’s easy to let unwanted items or gifts just sit there in the closet, but with a little effort, you could be getting money back in your pocket. Even if you are past the return date, give it a try anyway. You may be able to at least get store credit. For online purchases, many retailers even cover the cost of shipping for returns. Some retailers will even take returns without a receipt.

7. Failing to ask for a refund.

Consumers who are dissatisfied with their service often don’t take the time to voice their concerns. The ones who do however, could end up with a full refund or at least a discount. If you have a bad experience, don’t be shy about speaking up. Even if you don’t get any money back, retailers and service providers should know when their customers aren’t satisfied.

8. Never disputing mistakes on a bill.

If you think your bill may be incorrect, it’s worth disputing the charges with the company. At most respectable businesses, the error will quickly be corrected. Unexpected medical bills are also a growing problem, and patients almost never file a complaint with a state agency. The Consumers Union online insurance complaint tool is a good place to start.

9. Forgetting to follow up on a rebate.

The sneaky thing about mail-in rebates is they are designed to be so complicated that consumers either forget to mail them in or do so incorrectly. More than $500 million in rebates go unfilled every year, often due to deceptive practices. The Wall Street Journal reported that about 40% of mail-in rebates go unredeemed or are filed incorrectly and denied. Think twice before getting involved in a rebate in the first place. If you are waiting on a rebate check from weeks or months ago, file a complaint with the Federal Trade Commission.

10. Not claiming money that’s yours.

Every year, unclaimed money is reported by the government, and rightful owners are encouraged to step forward and claim their funds. In 2013, states, federal agencies, and other organizations together reported $58 billion in unclaimed cash and benefits. This can include unclaimed IRS refunds, old bank accounts and stock holdings, unclaimed life insurance payouts, mortgage refunds, forgotten pension benefits, and more. Health insurance companies report forgotten funds as well. And if that money isn’t claimed, it gets turned over to the state.

The moral of the story – pay attention, follow up when necessary, and don’t throw good money away!

Article Source: Chloe Della Costa,

Emergency Savings – Here’s What You Really Need

3D Illustration of a Piggy Bank and a Stethoscope

Costs related to an unexpected illness or accident can spiral. Here’s the truth about savings in America: We all talk a lot about how much we should be saving and spending, but the majority of us don’t save enough to pay for a surprise expense that must be covered immediately.

More than 60% of Americans don’t have enough money stashed away to pay for unforeseen expenses such as a $1,000 visit to the emergency room or a $500 fender-bender, according to a study.

The same survey found that 82% of us keep household budgets — mostly with pen and paper or in our heads, but we look to outside help to pull us out of a financial crisis.

Staying afloat after a job loss.

We also seem to have a blind spot about how much emergency savings we actually need. Most financial experts will tell you to stockpile three to six months of paychecks in an interest-earning account like a money market that you can get your hands on without tax or early-withdrawal penalties. But what many unwittingly discovered after job layoffs in the depth of the recession was that three to six months of paychecks for emergency savings wasn’t nearly enough when unemployment lasted six to 12 months, sometimes even longer. It also matters if you’re single or if you’re part of a two-income household, and if you rent or if you own a condo rather than a house.

Cushioning the blow of surprise expenses.

Gauge your emergency savings needs not just on income — but on what you own and what replacement costs might be. How much would a replacement roof be? What about a new transmission in your car?

How about a health emergency? It’s the most feared and pricey crisis Americans face and for good reason, since it’s the #1 cause of bankruptcy. HelloWallet has created a calculator to allocate emergency savings into three tiers: minor emergencies, major emergencies and job-loss protection.

  • Minor emergencies

They’re what you’d expect: health-care deductibles and negligible car and home repairs. But be sure you are prepared to cope with multiple minor emergencies around the same time. For example, there could be a domino effect of emergencies, like a car crash could lead to a broken leg and an unexpected car insurance deductible as well as a healthcare deductible.

  • Major emergencies

The good news is that major emergencies don’t happen with the same regularity that minor ones do. A key premise here is that the cash you have on hand — a liquid asset, can be used for any major emergency. The caveat for those with health savings or flexible spending accounts is that those accounts can cover health costs but are hands off for other emergencies.

  • Job loss

In general, there’s a 10% probability that any one of us could lose their job in any given year, according to the Bureau of Labor Statistics. Those numbers, of course, are skewed during recessions and economic hiccups like we’ve seen in recent years. In these cases, according to the BLS, more than 10% of those who are jobless need more than a year to find employment.

Add that all up and the advice is to save enough to cope with a year of unemployment. That’s a tall order, but remember you don’t have to do it all in one year and it doesn’t necessarily mean a year’s worth of paychecks – but rather a year’s worth of expenses covered. Unemployment insurance is considered too. In two-income families, it’s unlikely that both people will lose their jobs during the same year, but they should be covered as if the higher income gets knocked out of the equation.

Hopefully you will never need to worry about most of the items on this list, but it’s always better to be financially prepared and plan ahead when you can!

Article Source: Jennifer Waters,

The Ultimate Guide to Getting Out of Debt

Debt Management Plan. Magnifying Glass on Old Paper with Red Vertical Line.

1. Commit to getting out of debt.

Getting out of debt is hard. It takes maintaining discipline over a long period of time. It demands lifestyle changes.

While you shouldn’t build a plan so strict that it would be impossible to stick to, you will have to make some tough choices. If you’re used to treating yourself to spa days or shopping sprees, you’re going to have to give up some of these tangible and expensive pleasures in order to obtain being debt-free. If you and your partner are collectively in debt, they’ll need to be on board as well. It’s not possible to do this on your own if your other half is still spending up a storm.

For motivation, create a visual reminder of what you’re working toward, such as a photo of the kind of house you’d like to buy, or the destination you plan on hitting when you can afford it. Put the image in your wallet, on your computer or wherever you spend money — to remind yourself of what you’d really like to do when you get out of debt.

2. On a spreadsheet, list all your debt, balances, interest rates and minimum payments — and find out the total of what you owe.

Knowing the total will give you a rough sense of how long this might take. If you’re shocked by the number you see, just remind yourself that this is the highest the number will be. Within the next month, it will start to get smaller. Knowing your minimum payments will help you budget, and having your interest rates will help you decide on your debt repayment strategy. List your debts in order of highest-interest rate to lowest. Tally up your minimum payments so you know the minimum amount you need to put toward your credit cards every month. Keep the list easily accessible and editable so you can refer back to it in the coming months.

3. Try to make 0% balance transfers, get your APR lowered, or refinance.

Now that you’re committed to paying down your debt, it would really help if it weren’t simultaneously increasing bit by bit. If you’re eligible for 0% balance transfers, see if it makes sense to transfer your credit card debt.

But beware the fine print. If the 0% offer only lasts six months, be sure you can pay that debt off within that timeframe. If not, you could end up paying higher interest than you were before — and it could even apply to the initial six-month period (look for the term “accrued interest” to see if this might happen). Also, calculate what the balance transfer fee is and make sure that even with the fee, you’ll still save money on the transfer.

If you’re not eligible for a 0% balance transfer or decide it doesn’t make sense for you, call your credit card company to see if you can negotiate the APR down. If your main debt is a mortgage, look into refinancing.

First Financial’s Visa Platinum Credit Card has no balance transfer fees, a Cash Advance Fee of 1% of advance ($5 minimum and $25 maximum), and a Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount.* Rates are also as low as 10.9% APR and first time card approvals are eligible for 2.9% APR for the first 6 months on purchases and balance transfers!**

4. Start tracking your spending.

In order to pay down your debt, you’ll need to find ways to free up the money you already have. Knowing where your money goes will help you spot where you can cut expenses. Look for big expenses that don’t align with your priorities. If you’re surprised to see you spend $200 a month for work lunches, start packing lunch from home. Also keep an eye out for expenses that you’re not utilizing (do you actually use that monthly gym membership or Netflix subscription?). And note anything that was more expensive than it should have been, and get used to searching for coupon codes for online purchases and only shopping at in store sales.

5. Do a first pass at your budget.

Figure out your annual take home pay — what hits your bank account after taxes and 401(k) retirement contributions. If you receive a paycheck every other week, multiply the amount by 26, then divide by 12 to get the exact monthly figure. Tally up your necessary expenses: housing, transportation, utilities and groceries. Try to come up with a reasonable amount for your monthly groceries that you can stick to.

If the sum of your necessary expenses is greater than 50% of your take home pay, it might be hard for you to pay off your debt in an expedient fashion. (If you have other necessary expenses like childcare, which allows you to work, then it’s fine to go over the 50% threshold). Otherwise, if you’re exceeding the 50% mark, see if you can cut back on any of these necessary expenses in any way.

6. Work your debt and discretionary expenses into your budget.

Now, calculate what percentage of your take home pay your minimum debt payments are. If your necessary expenses are 50% or less, aim to put 20% of your take home income toward your debt.  If your minimum payments are less than 20%, you’ll be able to put more than the minimum toward your debt each month.

Finally, see how much you have left to live on each month. From your monthly take home, subtract your necessary expenses and your projected 20% debt payment. Divide the leftover by 4.33 to see how much you can spend each week. Is this enough to live on each week for your dining out, shopping, gym, entertainment, travel, gifts, cable, health and other costs?

If not, get the numbers to a ballpark range that feels doable, even if it means not hitting that 20% debt repayment goal. Expect that you’ll have to go through a period of trial and error before you find the exact plan for you. But make a decision, and head into the next step knowing what you’ll be paying toward your debt every month.

7. Start your debt repayment plan.

Now that you have a monthly debt repayment target, go back to your debt spreadsheet. Pay the minimums on every debt except the highest interest rate debt. Put the rest of your debt repayment money toward that debt every month until it’s gone. Afterward, cross it off the list and do the same for what is currently the second highest interest rate debt. Continue like this down the list. This method of repayment will ensure you pay the least interest.

8. Stick to your weekly allowance.

The only way you’ll be able to pay off your debt is if you don’t keep adding to it. This means being vigilant about living within your means. Depending on your income and the cost of living in your area, this can be difficult unless you keep an eye on it. If you know you need to make a shift in your spending habits, try using cash. Take out your weekly allowance in cash each week and only let yourself spend that amount until it runs out.

9. Adapt to your new lifestyle.

Now that you’ve started on your plan, you need to learn what behaviors will support it. If you feel comfortable doing so, tell friends and family about your debt repayment goal so they understand why you’re suggesting more potlucks. If a friend suggests an activity that will be difficult on your budget, look for good free or inexpensive alternatives.

Even for non-social activities like personal hobbies, look for ways to cut costs: If you dropped the gym, can you run outside or play tennis with a friend?  Maybe you realize that with advanced planning, you can more cheaply stock up on household items by buying in bulk. To freshen up your wardrobe, browse good local thrift shops or hold clothing swaps with friends.

10. Earn more money, and put gifts and windfalls toward your debt.

Finally, one of the best ways to get out of debt — is to earn more money. While cutting costs might free up a few hundred every month, a solid side gig could give you an extra $1,000 or more to put toward your debt. Do you have a hidden talent that you could put to work for you? If so, let everyone in your network know that you’re looking for freelance gigs. Put your gifts and windfalls to work as well. If you receive a large sum, put the vast majority toward your debt. With a little discipline, you really can become debt free!

Don’t forget about First Financial’s free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

*APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**The 2.9% promotional rate will apply to purchases and balance transfers only for six statement cycles from the new account holder’s initial balance and/or initial transfer to the First Financial VISA Platinum card. The balance transfer promotional rate does NOT apply to cash advances.

Article Source: Laura Shin,