Savvy Banking: How much money should we put in a savings account for our child?

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Every month we turn to the experts at First National Bank of NWA – the sponsor of our monthly feature, Savvy Banking — to answer your most pressing money questions.

Levon Ogden, a vice president at FNBNWA answers our latest money question:

Q: I’m looking to start a savings account for our 7-year old and I was wondering what amount would be a good start. Would it be best to add funds weekly or monthly?

This is a great question and one that my wife and I recently had ourselves with the birth of our twins.

Congratulations on taking this step to help save for your child’s future. First, you ask, what amount would be a good start? This is a tricky question as the amount to start depends on several factors.

toy carWhat is your goal for the account? Do you want to save for his car? For college tuition? Or, simply start a nice nest egg for your child?  If for a car or other large purchase, then determine if you want to be able to pay for all of it or just make a down payment.

If it’s for college tuition, which can be a bit trickier, consulting with an investment professional would be the best place to start. There are several plans available that have many benefits.

With either of these options, there is no amount that’s too small. Keep in mind each family’s overall goals and income levels vary. Make sure that what you do fits within your family’s financial goals and budget.

Whether you contribute weekly or monthly depends on what you’re comfortable with, based on your budget. Once you have an amount you want to put into your child’s savings account, you can decide if it’s easier on your monthly budget to make several smaller deposits with each pay check or one deposit each month.

Personally, my wife and I decided that it was easier to do it once a month. On the same day each month we put money into a savings account here at *First National Bank of NWA for each of our kids.

Lastly, when you’re going through this process, get your child involved. This is a great teaching experience and although his or her interest level may be low right now, as your child gets older (s)he will understand it more. This will be a great way to teach your kids the importance of managing finances, as well as teaching them to save responsibly.

Levon OgdenLevon Ogden is a Vice-President Commercial Loan Officer for *First National Bank of NWA with 14 years of banking experience in the NWA market. He and his wife, Courtney, live in Fayetteville with their twins, Levi and Madden Claire, where he is very involved in the community as a board member for Donald W. Reynolds Boys & Girls Club, also working with the Delta Waterfowl Association, as well as Bikes Blues & BBQ.

*Member FDIC. First National Bank of NWA is a division of First National Bank of Ft. Smith.

Savvy Banking: How much should my son start saving at his first job this summer?

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Northwest Arkansas parents, like most parents, are looking for great advice on how to save money.

So we turned to the experts. Every month we share advice from the professionals at First National Bank of NWA, the sponsor of our monthly feature, Savvy Banking.

Brent Leas, a vice president at FNBNWA answers our latest money question:

Q: My son is starting his first summer job this year. I wish I had started saving when I was a teenager. What is a good percentage for him to start saving?

First of all, congratulations to your son! That is a big step!

While getting your first job is one of those exciting, grown up things to do, it still can be accompanied with some nervousness & apprehension. Nothing compares to that first paycheck and knowing that you earned it all by yourself, but then you have to decide what to do with your newly earned moolah- spend it all or put some of it back?

This situation creates the perfect opportunity to teach our kids a lesson in responsibility. Keep in mind it is “their” money, but try sitting down with him/her and assist them with coming up with a budget. This will keep them from squandering away all that hard-earned cash.

monopolyIt doesn’t have to be very complex. Lucky for all of us, there are apps for that! However, a simple notebook and pen will work just fine.

Help them come up with specific categories tailored to their lifestyle and needs and make sure they understand in order for the budget to work, they must stick to them.

Here are 7 possible “basic” budget categories to consider:

  • Savings: A good starting point is about 5% to 10% of your net income
  • Giving: Personally, I believe it is good to instill some sense of gratitude at an early age
  • Gas/Car Maintenance
  • Car Payment & Insurance
  • Food/Snacks
  • Clothes
  • Entertainment: movies, bowling, etc.

You can help your new wage-earner in determining the right amounts to apply to each category listed above.

I always encourage at least 5% in savings and 10% in giving. Then, you can apply the remaining amount to the various categories as best fits your child(ren)’s needs/situation.

Before long, they will begin to see the reward of putting some back each time they get paid as their savings account balances increase and you get the benefit of knowing you are raising a future self-sufficient, savvy adult!

brent leas, savvy banking, croppedBrent Leas is Vice President – Community Banker for First National Bank of NWA. Brent will be the Retail Team Leader at the new Bentonville branch, which will open early next year. He has banking, investment services and business development experience, including asset management, financial consulting and commercial insurance. Brent began his banking career 21 years ago, here in Northwest Arkansas.

Brent also serves on the Bentonville Public Schools Board of Education as an elected member. He and his wife, Stephanie, have been married for 20 years and they have three children, Breanna, 18, Josiah, 16, and Sophia, 7.

Savvy Banking: Should you keep your accounts separate when you get married?

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In this nwaMotherlode segment, Savvy Banking, you’ll find the answers to a variety of pressing money questions submitted by Northwest Arkansas moms.

This month’s question is:

Q: I’m getting married in August. Is it best to keep our bank accounts separate or combine them?

Holly Wheeler: It seems that there are a lot of strong opinions out there about this particular topic. It wasn’t all that long ago that it was just assumed that a new husband and wife would open a joint checking account, combine all their finances and that’s just the way it was.

Nowadays it is more likely that both people will work and have their own income. It also seems that couples are getting married later, which means they are likely to already have a method to which they handle their finances. The thought of taking your perfectly tuned process and combining it into one joint account with a spouse who has never used a check register could cause an instant panic attack for someone with mild OCD tendencies.

On the other hand, I know couples that believe having a joint account is a fundamental part of a marriage.  When you enter into that life-long commitment with your spouse, everything should be combined, and the two of you shall operate as one.

So, what’s the solution? The answer is that there’s no single right answer! What works for one couple might not work another, and that’s ok!

The foundation of a successful marriage is trust, and with that comes open and honest communication. Many pre-marital counselors suggest that engaged couples discuss and come up with their own financial plan before making that trip down the aisle.

wedding picI’m hesitant to admit that I actually asked my husband for a copy of his credit report before we got married. How unromantic is that?

I think it was the inner-banker in me coming out, but I was relieved and pleasantly surprised to learn that his credit score was higher than mine!

I don’t recommend making a good credit score a requirement of saying “yes” to a proposal, but it is important to know the type of financial situation you are getting into.

Make it a priority to openly discuss the expectations you both have regarding future spending habits, savings goals and financial responsibilities before the Big Day. It probably won’t be the most fun conversation you have, but it will be worth it!

If you know you don’t want to keep your finances separated, but neither of you are sold on completely combining into one account, a common option to consider is to open a primary joint checking account, but also keep separate accounts.

  • The joint account can be used to pay the bills and for other household items.
  • The separate accounts can be used for individual spending money.

This option can work well, especially if your spending habits slightly differ. You can always add each other to your personal accounts if you don’t feel comfortable keeping it completely separate.

The challenge with the 3 account option can come when one spouse makes more money than the other. Will you both contribute the same amount to the joint account each month or will it be based on a percentage of your income? In this situation it’s important to come up with a solution that is fair and acceptable to both parties.

It all goes back to having open & honest communication and doing what works best for your particular situation.

Wheeler Holly Headshot_croppedHolly Wheeler is a Vice President and Private Banking officer for First National Bank of NWA She has 14 years of banking experience in the NWA market. She obtained her bachelors degree from the University of Arkansas and is an Honor’s Graduate from the Arkansas Bankers Association’s School of Lending. She is a Sustaining member and past board member of the Junior League of NWA, as well as the treasurer for both the NWA Delta Delta Delta Alumni Association and Housing Corporation. She is the proud mom to her sons Ross and Charlie and wife to her husband Britton.

Savvy Banking: How should I invest a gift of cash?

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In this nwaMotherlode segment, Savvy Banking, you’ll find the answers to a variety of pressing money questions submitted by Northwest Arkansas moms.

This month’s question is:

My parents have given us a large gift of cash after selling some assets. What’s the best way to invest $10k other than a regular savings account?

Don Paul, an investment executive with First National Investment Services, offers some good advice here:

It all depends on how the rest of your finances are structured.

Do you have credit card debt?

For example, if you have debt, especially in the form of credit cards with high interest rates, my recommendation would be to pay it off first.

In our current interest rate environment there is no product that will pay a higher interest rate than what the credit card is charging. Or perhaps you have a medical bill or some other form of consumer debt that could be completely paid off with this gift- wipe it out before you considering investing.

Emergency Savings Account

coinsAfter your credit card debt has been handled, I would then recommend an Emergency Savings account.

This would be a typical bank Money Market or Savings account for storing money that you would need in the event of an emergency. An emergency would NOT be a down payment on a new car or booking an elaborate vacation.

A true emergency would be automobile problems, a washer or dryer going out, medical issues that need immediate attention, etc.  An Emergency Savings Account is money that is ready and available to handle these issues, without going into debt. A good base for this account would be somewhere between $2,000 and $3,000.

Investment Options

After these two issues have been properly satisfied then a very conservative mutual fund that pays monthly or quarterly dividends would be a great starting point. Mutual funds can be purchased through a local Investment Advisor and can be very good investments for the long haul.

Money can be added to a mutual fund or even withdrawn if needed. It can be added on an automatic system monthly or even random deposits at your convenience. My recommendation would be to meet with an Investment Advisor and talk over the many options before making a final decision.

Don Paul, FNBDon Paul is an investment executive for First National Investment Services. He has been working with individuals and families in the areas of financial services for over 23 years specializing in Financial and Retirement Planning. Don is a graduate of the University of Arkansas and is the father to three boys. He and his wife Terri live in Fayetteville.

The fine print: Arkansas Insurance Producer License #32555 located at 3706 Pinnacle Hills Pkwy, Rogers, AR 72757. Securities and Insurance Products offered through Cetera Investment Services LLC, member FINRA/SIPC.

Advisory services are officered through Cetera Investment Advisors LLC. Neither Cetera Investment Services nor Cetera Investment Advisors is affiliated with the financial institution where investment services are offered. Investments are: Not FDIC Insured · No bank guarantee · May lose value · Not a deposit · Not insured by any federal government agency

Savvy Banking: How to protect yourself financially when your marriage is breaking up

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This money segment with First National Bank of NWA has become really popular because it addresses questions from local parents.

Click here to read previous Q&As with First National Bank of NWA which focus on money questions like how to save for your kids’ college, how to bank from your smartphone and deciding how much house you can afford.

Here’s the newest question from a Northwest Arkansas mom:

Q: I just separated from my husband this week. How can I protect myself financially (bank accounts, credit cards, etc) and begin the process of separating our finances?

Marital separation or divorce is a stressful and emotional time. It can also have a big impact on your finances. Every couple’s situation is unique, and regardless of your net worth, there are two important things to keep in mind.

1. It’s important to have a good understanding of the assets and debts that you and your spouse have. Knowledge is power!

Assets:

  • Bank accounts
  • Retirement accounts
  • Life Insurance policies
  • Real Estate
  • Personal property, etc

Debts:

  • Mortgages
  • Bank loans
  • Credit cards, etc.

2. Before you make any big decisions, the first thing you should do is speak to an attorney that specializes in family law. They will be able to advise you of your legal rights to your shared assets and how marital property should be divided. Property division laws can be very complex and vary from state to state.

Other things to keep in mind:

Both parties are also responsible for joint debt. Even if one spouse has been making the monthly payments, a creditor will hold both borrowers accountable as long as they are both on the debt. If your spouse stops making payments, your credit will be negatively impacted as well. It’s a good idea to reach out to your bank or financial institution and make them aware of your situation so that you can stay in front of any potential credit problems.

As a banker, I’ve seen several instances in which a Divorce Decree will state that one of the parties is responsible for a particular debt(s). It is that person’s responsibility to refinance the debt into their own name. Until this happens, the creditor can and will continue to hold both parties accountable!

Wheeler Holly Headshot_croppedHolly Wheeler is a Vice President and Private Banking officer for First National Bank of NWA She has 14 years of banking experience in the NWA market. She obtained her bachelors degree from the University of Arkansas and is an Honor’s Graduate from the Arkansas Bankers Association’s School of Lending. She is a Sustaining member and past board member of the Junior League of NWA, as well as the treasurer for both the NWA Delta Delta Delta Alumni Association and Housing Corporation. She is the proud mom to her sons Ross and Charlie and wife to her husband Britton.