College Financial Reality: Maybe A Cruise Was A Bad Idea

PRESS RELEASE COURTESY THE ASBURY PARK PRESS

Candice Kuipers, an Ocean County College student from Berkeley, speaks at a financial reality fair with Matt Brazinski, business development manager for First Financial Federal Credit Union. (Photo: BOB BIELK/STAFF PHOTOGRAPHER).

 

Candace Kuipers sat down at a table with a calculator, lined up her wages with her expenses, and came up $1,260.09 short.

It was going to be a tough month.

“Probably the cruise,” said Kuipers, 18, of Berkeley. “Shouldn’t have gotten the cruise. Bad idea. And the car. I shouldn’t have gotten a new car.”

Kuipers was one of about 200 Ocean County College students who attended a financial literacy forum here Thursday that was sponsored by First Financial Federal Credit Union.

It was a tough lesson for a generation that has grown up with mixed messages. They have watched their parents struggle in the aftermath of the Great Recession; and they have been bombarded with images of reality stars who live the high life with no discussion about how they pay for it.

A recent survey by the National Foundation for Credit Counseling found only two in five consumers have a budget and keep close track of spending.

Education lacking

“The key is financial education,” said Issa Stephan, president and chief executive officer for First Financial. “That’s what we have been lacking in this country. Since the 2008 problem, there has been more (emphasis on financial literacy) than at any other time. Financial education is the key.”

Students were given a worksheet with the salary they could expect, based on their major. They took out taxes, health insurance and retirement savings to calculate their take-home pay. And then they walked from station to station to see what the world had to offer.

There were new cars and baseball games, yoga classes and pets, mortgage payments and gadgets. And there were unexpected, budget-busting items such as car repairs and parking tickets. Students learned they really can’t have it all — at least, not without going deep in debt.

“I was going to get a house, but instead I got an apartment,” said Isaiah Brown, 18, of Manchester. “Food was $400, now it’s $200. And clothes. Instead of suits, go more casual.”

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Ocean County College students Gabi Tartaglione (left) Brick, and Nicole Flesche, Toms River, participate in the financial reality fair sponsored by First Financial Federal Credit Union. (Photo: BOB BIELK/STAFF PHOTOGRAPHER).

 

Better career paths

The event was part of a course called Student Success that’s designed to prepare students for what awaits them. And educators have found that students who learn these lessons early in their college careers are more likely to graduate and improve their career paths, said Maureen Reustle, dean of academic services at Ocean County College.

The goal is to get them to say, ” ‘Oh my gosh, I have to think about this,’ ” Reustle said.

The students could have been forgiven for losing all hope in their future. Their salaries weren’t nearly as much as they expected. Even a non-luxury automobile could cost nearly $25,000. And how were they going to find money for a security deposit, much less pay their rent?

But Candace Kuipers wasn’t discouraged. The cruise can wait.

“I’m still learning,” she said.

Original article written by Michael Diamond of the Asbury Park Press.

How To Talk Money With Your College Student

SavingMoneyYour child is a college student, and you’ve successfully packed them up, moved them in, made several trips to Bed Bath & Beyond, and they’ve settled into their class schedule for the new year – you can finally breathe a sigh of relief, you’ve covered it all.  Or have you?  How about the skills necessary not to blow whatever budgetary limits that have been set for the first semester?

It’s not an easy maneuver to accomplish. The skills your child probably has to manage their own money are most likely the ones you’ve (hopefully) taught them.  And they may not have picked up as much as you think.  75% of parents say they’re having regular conversations with their kids about money, but only about 60% of kids say the same.

With that in mind, here’s a quick checklist of items to discuss with your son or daughter living at the college dorm:

  • Spending Limits

Some colleges will provide you with guidelines of how much spending money to give your kids. Northwestern University, for example, says about $2,000 will be sufficient for the 2014-2015 academic year, while the University of Arizona says $1,800 (not including books). Stretching those dollars, however, will be hard for kids who aren’t used to paying for their own pizza, let alone laundry and shampoo. It’s important to develop a basic list of what money will likely be used for – and how much those things cost,  to make sure actual expenditures fall in line with these estimates. Richard Barrington, senior financial analyst for MoneyRates.com, also suggests doling the money out slowly – say a month at a time — and for specific purposes.

  • The ID Card

The student ID card gets you into the library and the dining hall. And it’s essentially a prepaid debit card, as well. Parents can put money on an account and students use that money for food, copies or whatever other campus services they need. What’s good about these cards is that you (and your student) have the ability to check what the balance is at any time. And, because the amount on tap is capped, there’s not the same risk you’d have if you handed your child a credit card (more on that in a moment). Talk about the card with your child so they can prevent spending all the money on the card right away.

  • Picking the Right Financial Institution

Although it may seem more convenient to have your child bank at the same institution you do – so that you can transfer funds into his or her account in the event of a shortfall – it may also prove to be more expensive. The Achilles heel of the college student when it comes to banking is the $3 a pop (or more) ATM fee at the campus or other local ATM. Unless your child has an account and card with one of those, these ATM charges can add up.  Be sure to investigate the banking situation – does your current institution offer Online Banking with a mobile app and remote deposit?  This may be another great, easy alternative for your student at college.

First Financial’s has a great Student Checking Account available for 14 to 23 year old students, which includes:

  1. A free first box of checks, and an allowance of the first mistake being free+.
  2. Free phone transfers to the account by parents.
  3. No per-check charges – unlimited check writing without getting charged after writing a certain amount of checks.
  4. No minimum balance requirements.
  5. No monthly service charge for having the account.
  6. A personalized Debit Card issued instantly in one of our Monmouth or Ocean County branches.
  7. Free Online Banking with Bill Pay++.
  8. Unlimited in-branch transactions.
  • A Credit Card for Emergencies

Since the passage of The Credit CARD Act in 2009, kids under 21 are not supposed to be issued credit cards of their own unless they have either income to support their spending or a co-signer. But the credit scores of millennials have also suffered as a result.  If you want your child to have credit on hand for either emergencies or regular usage and/or build a credit history while in college, the best way to go about it is to add your child to one of your accounts as an authorized user. Make sure the card you choose actually will report on the child’s behalf to the credit bureaus. Nearly 25% of college students now also have prepaid cards in their wallets. This might solve the budgeting/emergency problem, but not the credit score issue – as prepaid card history isn’t reported to the credit bureaus.

  • Talk to Your Child About Getting a Part-Time Job

The money they’re undoubtedly going to spend on a college campus – like anywhere else – looks far more valuable when they’ve actually earned it.  If there’s room in your child’s schedule, it might be a good idea to investigate a part-time job that’s manageable.

*Article Source Courtesy of Fortune.com by Jean Chatzky

*A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the Bronze Tier. Click here to view full Rewards First program details, and here to view the Tier Level Comparison Chart. Accounts for children age 13 and under are excluded from this program.

How to Plan for Your Child’s Financial Future

Piggybank family isolatedIn this economy and time period, every parent shares a mutual fear. You think to yourself, “What if my son or daughter isn’t financially stable in their lifetime?” You may be nervous that your child will not be able to pay off college loans or purchase a home when they are older. You might also be worried that your child will struggle to meet car payments, or that they won’t be able to save up money in case of emergencies or for when they grow older.

Read the tips below to learn how you can relieve your fears and help prepare your children for their financial future.

  • Teach financial responsibility. It’s natural to fear that your children will take on too much debt or be unprepared for financial emergencies when they reach adulthood. But you don’t have to wait until they make a mistake to prepare them to be financially responsible. It’s important to remember that it’s never too early to start talking to kids about money and saving. When your kids are young, you’ll want to start with simple conversations about money (sharing tips about your purchase decisions with them when you shop), and as they get older introducing more complex money matters (such as the value of having an emergency fund and saving for unexpected events).
  • Use an allowance as an educational tool. An allowance is an ideal way to teach about responsible spending and saving. Provide your children with the opportunity to save and spend their allowance as they please (with some guidance). This flexibility will allow them to learn early on that spending money as fast as they earn it can have consequences. Depending on the age and maturity of your child, you may choose to share with them a financial mistake you made in the past and how you recovered from it.
  • Plan for college. As college tuition increases, many parents worry about how their children will afford to attend, or how you as a parent can possibly save enough to pay for your child’s college education. As parents, consider beginning to save into a 529 Plan early in your child’s life. When it comes time to make college decisions, help your child evaluate the tuition and other college expenses (travel home, club dues, entertainment costs, etc.) for each college he or she is considering. Make sure to educate yourself on current student loan lending practices and options and help your child determine a realistic amount of student loan debt he or she can take on if necessary.
  • Prepare for life’s big purchases. Even for young adults with a responsible mindset, a lack of financial knowledge can be detrimental for large purchases like a car or home. As a parent, you can offset this concern by being open to discuss these things as your child grows older and begins managing their own money.
  • Reframe your money mindset. Changing the way you think about money can go a long way to alleviating your financial fears for your children and, at the same time, help your children learn to make smart financial decisions. The real question you should ask isn’t, “Can we afford this?” but rather, “Do we need this, and if so, is this the best deal we can get on it, and should we wait and buy it when we have saved the money for it?” These may seem like small differences, but they aren’t. How our children think about money will make a huge difference in their ability to wisely manage it and consequentially will have a huge impact on their quality of life.

Visit First Financial’s website resources tab to view a list of free financial calculators and resources that you and your children can utilize to help save for college and future big ticket purchases like a car, home, and how to save money.

Join us on Thursday, August 7th, for First Financial’s free seminar on this very subject – teaching your children about finances. The seminar will be held at the credit union’s Wall Office on Route 34 at 6pm. Space is limited so we recommend that you register beforehand.

For more information and to register online, click here.

 Article courtesy of Daily Finance Online, by Michele Lerner

How to Get Your Child Financially Prepared for College

college-students-awesomeAfter the high school class of 2014 dons their graduation gowns, they’ll be spending this summer gathering dorm necessities, picking classes and hunting for the cheapest textbooks.

One major point of focus should also be signing up for the right student financial accounts, specifically checking accounts and credit cards. With so many choices, it can be confusing for parents and students, but there are simple approaches to getting college-bound kids financially prepared.

Pick the Right Checking Account

When looking for a checking account, parents may be quick to sign their children up to their own banks or to a major bank close to home. However, that approach may not be the best for the college student.

Since college students may need cash for spontaneous occasions, it is important to have an in-network ATM at or near the college campus. Constant cash withdrawals at out-of-network ATMs can amount to plenty of fees. At the 10 largest U.S. banks, the average out-of-network ATM fee is $2.45. Furthermore, the operator of the out-of-network ATM has the right to impose a surcharge, which typically ranges from $2 to $3.

Besides location convenience, parents also have to consider their ability to fund their kid’s accounts. Parents and students should research which financial institutions are around campus and near home to find the one with a student checking account that would allow them to stay financially connected. Parents, you should also make sure that the financial institution you choose has instant transfers during the times you have to transfer money into your child’s account electronically – you don’t want a 1-2 day delay period.

First Financial’s has a great Student Checking Account available for 14 to 23 year old students, which includes:

  1. A free first box of checks, and an allowance of the first mistake being free+.
  2. Free phone transfers to the account by parents.
  3. No per-check charges – unlimited check writing without getting charged after writing a certain amount of checks.
  4. No minimum balance requirements.
  5. No monthly service charge for having the account.
  6. A personalized Debit Card issued instantly in one of our Monmouth or Ocean County branches.
  7. Free Online Banking with Bill Pay++.
  8. Unlimited in-branch transactions.

Sign Up for the Right Credit Card

Credit cards are less attainable by college students since the Credit Card Act of 2009 took effect, requiring anyone under age 21 to provide proof of reliable income to qualify for a card. If a student can qualify for a credit card on his or her own, it is crucial to evaluate spending and repayment habits to maximize any rewards and minimize interest paid.

For instance, a student who will be driving around campus may prefer to get a credit card that offers rewards on gas purchases. Or if a student doesn’t expect to be able to pay off their balances every month, he or she may opt for a card that doesn’t have rewards but carries a lower interest rate.

The more likely situation would involve parents adding their children as authorized users on an existing credit card account. Parents can limit how much their children can spend on their authorized cards, and when the occasion calls for it, they can raise or reduce the limits accordingly. As authorized card users, students can also start building their credit profiles, which can increase their chances of qualifying for credit cards and loans in the future.

Keep an Open Line of Communication

Do your children know what to do in the case of a financial emergency? College students may encounter dilemmas that cannot be solved with the financial means available to them.

Parents should keep an open line of communication that would allow their children to contact them in the event of financial distress, regardless of how bad the situation may be. It’s important for parents to continue providing financial and emotional support, so their kids can focus on the most important aspect of college: their education.

Students need to be financially prepared not only before college, but also post-graduation. Check out some of our graduate products and services that we offer here at First Financial – from a Checking Account to an Auto Loan offer exclusively for recent graduates! 

Click here to view the article source courtesy of Simon Zhen of US News.

*A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the Bronze Tier. Click here to view full Rewards First program details, and here to view the Tier Level Comparison Chart. Accounts for children age 13 and under are excluded from this program.  + Call or visit a branch to request refund of the first fee incurred. We must receive request within 90 days of date fee is charged in order to be eligible for refund. The eligible fees are NSF, Overdraft, and Courtesy Pay fees.  ++ Bill Pay is free as long as 3 bills are paid through Bill Pay each month, otherwise a $6 monthly fee applies.

4 Things Your Teen Should Know About Debt

student bankingWithin five years of leaving home, most teens are faced with the decision of taking out student loans, buying a car, signing up for credit cards or even taking out a mortgage. And it’s up to you as a parent to instill some wisdom in your son or daughter, to prevent them from making some serious financial mishaps.

Your teen shouldn’t be burdened with your financial stress, and he or she definitely doesn’t need to know the nitty gritty about any financial mistakes you may have made along the way. But they should know the basics of the common financial situations they’re bound to encounter. Whether you’ve done right with your money, made some financial mistakes, or a little bit of both, here are some worthwhile discussions to have with your teen:

Student Loans. While student loans are often times a necessary debt, they’re still money owed to someone else. And unlike many other forms of debt, this one cannot be discharged in bankruptcy. If you had student loans yourself, you can help your teen by telling them how long it took you to pay them down, as well as what you had to sacrifice along the way.

Need a Student Loan resource, or does your child already have Student Loans that could be consolidated?  Look no further than First Financial.  Get started by applying for a private Student Loan or consolidating Student Loan debt today.*

Car Ownership. If you don’t have a car loan, you should let your teenager know why you paid in cash or how you paid off your car. If you do have an auto loan, it might be helpful to explain that it’s more than just a monthly payment. Sit down and run the numbers with them, demonstrating the money lost to interest.

First Financial has a first-time car buyers program, First Auto.  If it’s your teen’s first time buying a car and they meet the criteria, they’ll receive a .25% rate reduction on their approved APR.  If they don’t meet the criteria, but still qualify for a First Financial auto loan, they’ll get a $100 gas card.** If it’s not their first time buying a car but they are a recent college grad, we have a special auto loan offer with their first payment deferred for 45 days, up to 100% financing, and an additional rate discount of .25% APR when a graduate checking account is opened at loan closing.***+

We’ve also got a free, handy auto loan payment calculator tool called AutoCalcubot.  Calculate your potential car payments instantaneously, save them for later, email a friend, or set-up alerts to let you know when our auto loan rates change.

Credit Cards: If your 18-year-old has a pulse and a mailing address, credit card companies will find them. Your teen should know the responsible ways to build credit and the dangers lurking behind every unnecessary swipe. You can try to convince them that credit cards should be paid off in full each month. If you’ve ever had credit card debt or you do now, your teen should know all the work that goes into paying it off.

If you have a soon to be college graduate, then First Financial has a great starter credit card – guaranteed to have a $500 limit.  Higher limits may also be available, based on income, additional credit, and other criteria.+

Mortgage: While a mortgage usually isn’t seen as a mistake, the timing in getting one can be – especially if one isn’t ready or doesn’t have enough saved. Make sure your teen knows the various considerations that go into buying a home, such as the details of the housing market, private mortgage insurance, and interest rates.

First Financial also has a First Mortgage Special Offer for recent college grads, which includes the waiving your first mortgage processing fees with a first mortgage from us!+

What might be second nature to you is a whole new world for your soon-to-be independent teen. The more he or she knows about finances, the better. And sharing your personal financial experiences — the good, the bad and the ugly — will help. Let them learn from your mistakes — and, in the process, keep them from making a few of their own.

Article Source: http://www.dailyfinance.com/on/4-things-your-teen-needs-to-know-about-debt/

*Private student loans should be used as supplemental funding after exhausting all other sources of financial aid, including grants, scholarships, and federal student loans. Federal loans offer more attractive terms when compared to most other borrowing options, including private student loans. For more information on federal loans, visit http://www.fafsa.ed.gov.

**See branch for details on credit qualifications. APR = Annual Percentage Rate. Rates shown are lowest possible and may not apply to every borrower, and higher rates may be charged depending on credit qualifications. Rates as low as 3.99% for up to 60 months. For example, a $15,000 loan at 3.99% APR with a term of 60 months would have a monthly payment amount of $276.18. Subject to credit approval. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

***Must not have had other vehicles previously financed. Requires automatic payment for monthly loan payments from a Graduate Checking Account.

+All graduate accounts or products and services must be from within 30 days prior to or 12 months after graduation; have a diploma or other proof from a registrar’s office from an accredited two or four-year college or university. For Graduate Loans and Credit cards, verified employment or verification of employment offer from an organization; no derogatory items on credit history. Graduate products and services are not eligible for Rewards First Program.

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Jackson Memorial Students Get Taste of Financial Reality

Tri-Town News article by Andrew Martins:

DSCN0228Financial independence can be a scary thing for young adults who are beginning to make their own way in life after graduating from high school or college. Unexpected costs arise, debt can become bloated, and temptations to spend frivolously crop up every day.

For a group of freshmen at Jackson Memorial High School, the sobering reality of money and adulthood was put on display during an event dubbed the Financial Reality Fair.

“The goal of the fair is to teach the kids the value of money and how to manage their money when they leave high school,” said Issa Stephan, First Financial Federal Credit Union president and CEO. “It is very crucial these days to be financially savvy, and there is a lot of temptation out there.”

Financial responsibility is a subject that Stephan believes should have a bigger focus in public schools. He cited the economic downturn that began in 2008 as a prime example for why such responsibility is imperative for the future.

“I think that since 2008, people are more conscious about money,” he said.

On Jan. 8, students tackled financial issues in a hands-on manner without potentially destroying their credit rating.

“These days, it is easy to get in trouble,” Stephan said. “Twenty years ago, you had to drive to the mall and take your cash to spend it. Now you can be sitting in your bed, clicking yourself away into financial trouble” on a computer.

The idea for the fair, according to First Financial Marketing Manager Jessica Revoir, was based on similar events held throughout the state by the New Jersey Credit Union League Foundation, which sponsored the Jackson Memorial High School event.

DSCN0230Students were initially instructed to choose a career. After each student selected a job, that career’s starting salary after taxes was used as the baseline for a monthly budget. The young adults were informed that some expenses were required, including food, clothes and rent; and some expenses were not required, including gym memberships and vacations.

Stephan said the point was to illustrate the importance of determining what is needed and what is not needed.

“If you move out [of your parents’ home], you have to pay rent and insurance, but people usually get in trouble with what I call ‘variable expenses,’ ” he said. “A lot of people see a smartphone as a fixed cost … but it is not. There are ways to make even a necessity much more affordable in the long run. If you shield the students from reality, they fall.”

Stephan said students were led astray on purpose as a means of letting them see the difference between what they want and what they need.

At the transportation booth, for example, a binder was purposely left open at a page featuring luxury cars and sports cars for purchase, rather than being left open at a page with less expensive vehicles or public transportation.

“We are trying to teach these kids that if they let themselves be manipulated financially when they get older, they can get into some serious trouble,” First Financial Investment and Retirement Center Coordinator Samantha Schertz said.

To Lisa Scott, who teaches honors economics and financial literacy, the fair provided an opportunity for her students to take a more tactile approach to learning the importance of finances.

“This really is experiential learning for our kids because, to them, the class is just the textbook and something they need to graduate, but then they come here and realize they need this to live and get through adulthood,” Scott said.

The fair was a sobering realization that made freshman Claudia Besse take a moment to consider her future.

“I learned that I am very grateful for my parents, for one,” Claudia said. “I never realized that your gross pay is not your takehome pay and that there are so many expenses. Cars are so expensive.”

Scott said those realizations are fueled not only because of the way that financial education is traditionally handled in school, but also because some parents provide everything for their children.

DSCN0223“What I am hearing as the kids go through the fair is they ask, ‘Does that cost that?’ A lot of kids don’t have to pay for the things they enjoy right now … so for some kids, this is a revelation,” Scott said.

Stephan said he and his staff hope the students will take what they learned at the event and apply it to their lives.

“I saw some kids calculating and trying to make smart decisions, and I saw others just not caring as much. And that, in a way, reflects society,” he said. “We need to try to catch people before they get into financial trouble.”

Click here to view the original article from Tri-Town News.

*First Financial is not responsible for any content listed on external websites.