C.S.A.S. Training

The Topeka branches hosted “Central Secret Agent Savers Training” on Saturday at the downtown bank location. The bank partnered with Big Brothers Big Sisters to plan the event, and the day was a great success. “We had eight kids attend,” said manager, Candis Meerpohl. “I think our turnout was definitely affected by graduation, but we are eager to do it again in six months.” The kids started the day with juice and doughnuts, and then went on a bank tour. After the tour, it was explained that the kids needed to complete three missions to become agents:

Mission #1 Make their alias. They picked their secret agent names and made masks to hide their identity from Mr. Splurge.

Mission #2 Learn about saving money! This was a classroom-type event where we explained that when we get little bits of money we can save it and end up with a large amount of money. We also explained earning interest on money and making savings goals.

Mission#3 Human Board Game This mission was designed so that the kids could use what they learned in their class and put it to use. The kids were the board game pieces and picked clues that said either a good money decision or a bad money decision to try and get around the board.

 “I’m happy to say we graduated all eight agents that came!” said Meerpohl. All of the kids had a great day, and a BBBS representative who attended was very impressed with the program and the account.

Central Secret Agent Savers

Working in the banking industry I see the mistakes that the younger generation makes when dealing with their finances. As a parent I have also realized that I can directly influence my children on financial responsibility.  Here are some staggering statistics that should impact all of us.

  • American teens spend $175 billion annually
  • Young adults (ages 20-24) are the fastest growing group declaring bankruptcy
  • Today’s teens and young adults will inherit $12 trillion+ over the next 20 years
  • 85% of students graduate from high school without any instructions in personal finance

I believe these numbers should be eye openers to all parents. You might be asking yourself: “What can I do to instill good spending habits and financial education in a child’s life?”

Central National Bank recently addressed this question and found a great way for kids to learn about savings, and finances with it being fun.  Beginning January 1, 2009, the Central Secret Agent Savings account is a program where your child becomes a secret agent and helps rid the world of wasteful spenders. The account is only $5 to open and comes with a piggy bank, newsletter and a secret agent badge.  Your kids will continue receiving quarterly newsletters which will keep their finances at the top of their mind all year long. Each newsletter consists of missions, jokes and fun activities. When a child brings in their piggy bank full of money to a Central National Bank branch they can pick from a selection of cool secret agent gadgets.

I recently signed my four-year-old daughter up for the account and already she has embraced the concept. She picked her agent name, “Agent Diamond,” and is filling her piggy bank up so she can earn prizes.

If you are interested in teaching your child about the fun of saving money check out a Central National Bank near you and learn more about our Central Secret Agent Savings account.

FDIC Insurance Limits

As part of the FDIC’s temporary liquidity guarantee program, participating institutions get full FDIC coverage for non-interest bearing transaction deposit accounts, regardless of dollar amount, until December 31, 2009. For purposes of the rule, the FDIC’s definition of a non-interest bearing transaction account is a traditional checking account that allows for an unlimited number of deposits and withdrawals at any time, and pays no interest.

Central National Bank is participating in this program, so our customers get full FDIC coverage on every dollar in their non-interest bearing checking accounts, regardless of the account balance. Business accounts and personal accounts qualify for the unlimited coverage, as long as they are transaction accounts that do not earn interest.

To clarify: all of our bank deposit account types are FDIC insured up to the $250,000 limit per depositor. The unlimited coverage is only offered on our non-interest bearing transaction accounts.

 

FDIC’s Press Release: http://www.fdic.gov/news/news/press/2008/pr08105.html

Save Now, Get Rewarded Later

I recently told my friend about a great auto rate at CNB. He bought a Prius a year ago and has a loan with a 7.5% interest rate. I crunched some numbers to show him what his payments would be and the amount of money he’d save in interest if he was approved to be refinanced at 4.74% APY*.

Over a five year period, he would save almost $2,000. No brainer, right? He ended up passing on it.

You see, he lives out of state and to get the deal he had to agree to open a checking account and have the payments automatically deducted. He thought it would be too difficult to have a checking account out of state. I told him he could use his current bank’s online bill pay and send the payment amount to his checking account each month, but he still thought it too troublesome.

When you look at his savings in the long run and what that 2K could do in a Roth IRA, look at the possible returns:

  • Roth IRA in 10 years at 5%…$3,257 at 8%…$4,317
  • Roth IRA in 20 years at 5%…$5,306 at 8%…$9,322

My friend falls into the way numerous members of Generation Y behave financially. Many of us don’t like to think about how much we could have in the future if we looked into ways we could save today.

Instant gratification surrounds us everywhere we go; 0% down, no monthly payments for a year, no interest for three years. All of these deals are thrown at us and we feel like they are too good to pass up. Look at some of these statements members of Gen Y make when it comes to saving:

  • “I can’t socialize and save.”
  • “Why save when you can reverse save?” Reverse saving: spend today, pay tomorrow
  • “When I settle down, I’ll save.” Saving is for older and married people
  • “I love spending money; what else am I going to do with it?”
  • “I just know something great is going to happen to me.”
  • “Banks only care about people with money.”

The skewed view that you can spend now and worry about your nest egg later is one reason all generations are contributing to a negative savings rate. It’s also the reason it is going to get harder and harder for people to truly retire. Do your future self a favor and talk to someone about the benefits of putting money away, and refinancing high interest debt.

The early bird gets the worm, and the early saver gets to enjoy the golden years w/o having to have a part time job!

* Annual percentage rate quoted above available for loan amounts $30,000 or greater for borrowers who meet credit qualifications. APR will be adjusted for different loan amounts. Loan fees and certain restrictions may apply. Auto loans subject to qualifications. Member FDIC.

Gas Saving Tips

As of today (June 5, 2008), the average cost of gas in Kansas is $3.85/gallon and the national average gas price is more than $3.96/gallon!  Here are a few tips to help improve your mpg so you will not have to take out a loan next time you need to fill up.

 

Maintenance – Your vehicle manual should have a maintenance schedule.  Read over it and try to follow it regularly.  A maintained car is an efficient car.

 

Give it Air – Fuel economy can increase by almost 5% if you keep your tires inflated to the recommended pressure.

 

Take Your Time – Let’s be honest; who doesn’t go over the speed limit every now and then?  Speeding takes a hit on your fuel efficiency.  Try to slow down and enjoy the drive, by doing so you will also enjoy filling up less often.

 

Get Off My Back – Don’t tailgate! Lengthen the room between your car and the one in front of you.  This will allow you to brake less and coast more.

 

Cool Off – Try rolling down your windows when traveling at low speeds.  If you are going over 50 miles per hour, it is more cost-effective to turn on the AC.

 

Lighten Up – Get rid of any extra junk in your trunk.  If you don’t need it, why pay to drive it around?

 

Buy Smart – Look for cars that good gas mileage. With gas almost $4/gallon, the extra price of a hybrid is almost offset by the amount you will save at the pump.  Also, they are better for the environment.

 

If you have any further tips that would be beneficial for everyone, please share in the comments section below.

Rule of 219

It’s that wonderful time of year again, TAX TIME!  Hopefully those of you who will be receiving a refund have a plan in mind for your money, if not, I recently heard some figures that will definitely make one stop and think.  At last week’s bank meeting, one of our financial advisors told us about the ‘Rule of 219.’  This rule involves determining the cost of eating for two people during retirement.  Let’s say two people eat three meals a day during retirement and each meal costs $5.  You then take that times 365 days a year, then multiply that by 20 years of retirement.  Here’s the math;

2 x 3 x 5 x 365 x 20 = 219,000

In this situation, it will cost two people $219,000 to eat during retirement. This doesn’t even factor in dessert! Throw in other costs, such as bills, transportation, travel, etc… and the number grows even greater.  One may argue that it will not cost $5 per meal for them, but even at $3 a meal, two people’s cost of eating would be $131,400!  Also, note that this is estimating for only 20 years of retirement.  With life expectancy increasing, it’s easy to raise that number another 10-15 years.

So when sitting down to determine what to do with your tax refund, it may be helpful to visit with a professional.  A financial advisor can help you reach your long term financial goals. They can assist you in making sure you get to spend your golden years eating steak instead of reverting back to the college days of ramen noodles.

 

HSA’s – Taking Care of Your Own Health Care Dollars

When I look at my paycheck and see how much money is taken out for health care, I feel like I’m going to lose my lunch.  After years of not going to the doctor’s office, I wonder why I am paying so much mullah for something I don’t use.  I believe the insurance people are using all my hard earned, unused money, to throw their daughters a sweet 16 party worthy of being on MTV.  When I think of all the things I could use that money for, well, I feel like I might actually need to see a doctor.

There is a way one can keep the money they don’t spend on health insurance; Health Savings Accounts!  HSA’s must be opened in connection with a high deductible health insurance plan, (So ask your boss if you have this, it benefits him too). HSA’s are tax deductible; the money inside them grows tax deferred and comes out tax free for qualified medical expenses.

Health Savings Accounts are ideal for healthy people who want to save money on health insurance by increasing their deductibles. If you don’t spend any of the money in an HSA in a given year the balance carries over to the next year and keeps growing.

Health Savings Accounts are the only investment vehicle where you get a tax break for putting money in, and then the moola (interest included) comes out income tax free.

I don’t know about you, but I’m starting to feel better already.  That HSA guy should be a doctor.
 

How much is a 20-pack really costing you?

$$ After discussing Roth Individual Retirement Account’s (Bank Lingo Roth IRA’s) with an investment professional today, I realized I could have been a millionaire! Don’t get me wrong, I’ll take the $839,343 I will probably make off of the IRA I began at age 25. However, had I started putting three-thousand a year in at age 21, with an average return of eight percent, I would have ended up with $1.1 million.

 

Sure it’s hard to save when you are young, but it’s worth it if you can. How can you? You have to think about items you could cut down on or cut out of your life. I tried to think of something lots of young 21-25 year olds spend their money on. One common item could be alcohol. Now this is a hypothetical, but say you buy a 20-pack of beer every weekend at the cost of $15. If instead of investing $720 a year on beer, you invested it in a Roth IRA. After 40 years your beverage investment of $28,800 would be worth $201,442.32. That is at a conservative eight percent return. The stock market, on average, over any 10 year period since 1926, has had an average return of 10%.

 

I’d strongly recommend meeting with a financial planner and discussing investment options. They can plug in all kinds of numbers and tell you what various amounts over various time periods can yield you. Nobody likes to think about being 65, but if you have to be 65, why not be 65 and Rich? $$