Emergency Fund 101

Let’s face it. Life is full of obstacles, emergencies and trying times that require money. If your furnace blows or you lose your job, do you have cash tucked away to help you through? If the answer is no, this article is for you. That’s because, today, we are talking emergency funds.

What Is An Emergency Fund?

It’s exactly what it sounds like. It’s a cash reserve that you set aside for unplanned expenses and emergencies. This might include something minor like a trip to the doctor, a blown tire or an unexpected school expense. It might be for something major like making up for lost income or a catastrophic health diagnosis.

Why Do I Need It?

Even a minor financial shock can set you back and cause debt to accumulate. Debt has a lasting effect and sometimes negative impact on a family or individual’s finances.

How Much Should I Save?

If you’re living paycheck to paycheck or have an erratic pay schedule, setting aside even a few dollars can be challenging. That’s why it’s best to start with your own savings goal. A good aim for that initial goal is $1,000. However, most experts agree that you should ultimately aim for three to six months of expenses. Even if your initial goal is just a couple hundred dollars, having something to fall back on will be helpful.

How Do I Build My Emergency Fund?

There are a few approaches you might take:

  • Save those windfalls. Tax refunds and overtime income make great seed money for an emergency fund.
  • Pay yourself first. Figure out how much you can feasibly save each paycheck and transfer that amount from your checking to savings before you do anything else. Setting up an automatic transfer to take place on payday is a great way to make sure you are saving toward your goal.
  • Take on a side hustle. Cut grass in your neighborhood this summer or deliver pizzas on the weekend, there are a number of ways to pick up a few extra bucks a month.
  • Set aside extras. If the electric bill is lower than you anticipated, save the money – even if it’s just a few bucks!
  • Sell something. A yard sale is a great way to make some money while clearing out clutter. Have an extra car that you don’t need? The proceeds could go a long way toward preparing you for an emergency.

It may take you a while but having some extra money in the bank will help you avoid debt and give you peace of mind. Even if your goals start small, having that savings when you need it will make a difference!

Need more inspiration? We have written about looking for ways to cut costs. Click below to read more on how you can trim expenses to save more money!

Pay Off Credit Card Debt And Save For Next Christmas

Did you overspend during the holidays? Let’s talk about how to recover.

If you overspent over the holidays, you are not alone. Surveys show that more than one in three Americans racked up debt buying gifts, plane tickets and party supplies to celebrate this Christmas. After a long season of excess, the decorations are now gone, the wrapping paper thrown away and all that lingers is the massive credit card bill.

So, now what?

The last thing you want to do is just pay the minimum payment on your bill. In fact, when your statement comes, study the section that tells you how long it will take to pay off your balance by paying just the minimum payment. Depending on what you owe, it will be years and maybe decades.

Instead, you need to add up all that you owe and form a plan of attack.

  1. Dedicate yourself to paying off that debt so that it doesn’t snowball into a heaping amount of interest. Get your spouse to buy in to the notion that Christmas pay off needs to be the priority before other spending.
  2. Add up how much you actually owe.
  3. Form a plan of attack to pay it off fast. The longer it lingers on your card, the more you’ll pay in interest.

Well, that sounds easy, right?

It clearly isn’t as easy as 1,2,3. In fact, let’s take a closer look at how to form that plan of attack.

  • Update your budget to reflect Christmas Debt as a new line item. Don’t have a budget? Now is the time to make one. You need a clear picture of how much money comes in, how much goes out and where it goes. Need help? Find links at the bottom of this article to help you get started.
  • If your budget is tight, look for ways to cut costs or to make more money. Most households waste money somewhere. It could be through behavioral choices like eating out too much or letting impulse buys get out of control. It could be on big bills like car insurance. Research these expenses by requesting a new quote from your insurance agent or consider refinancing your home if you feel the mortgage payment is too high. Can’t cut costs? Look for a side hustle to help you bring in some extra bucks and knock out that debt quicker!
  • Stay focused on the reward of knowing you accomplished this goal and that you are about to eliminate that debt.

Once you’ve paid off this Christmas, don’t stop there! Take all that money that you have been applying to your debt to save for next Christmas. Wouldn’t it feel amazing to pay cash for Christmas 2022 this year? Open a VCNB Passbook savings account and set up automatic transfers to guarantee you’ll save the money. When October rolls around and we open our VCNB Christmas Club again, be sure to sign up for this special savings account!

VCNB Resource Guide

Find useful tips and instructions for getting started with your budget and with finding ways to save money!

Budgeting 101  

How To Stick To A Budget  

Finding Money To Save (Even When You Think You Can’t)

31 Ways To Save Money   

Tips For Teaching Kids Of All Ages To Save Money

We recently celebrated Teach Children To Save Month which is an excellent opportunity for parents to start talking to their kids about saving money. As their parent, you want the best for your children and one way to help them get a good start in life is by teaching the value of money and how to save it for a rainy day or for a goal. Learning to properly manage money is as important as learning to read and write but it can be hard to know where to start.

No matter your child’s age, from toddler to teenager, there are some basic principles that apply to any age.

Give Them A Way To Save – Little kids love putting money in their piggy banks. Give them a bank or maybe a clear jar so they can see their savings grow with every nickel and dime they drop in. Older kids respond better to seeing their savings grow in their mobile banking app so help them set up a savings account.

Let Them Earn Money – Older teens may have jobs while younger kids might pick up a few bucks by walking a neighbor’s dog. Even little kids can earn a little by taking on some kind of responsibility at home. Maybe you give your kids an allowance. Regardless of the source, kids needs to have access to some money of their own so they can learn how to handle it responsibly and possibly even learn from a mistake or two while they’re young.

Explain Needs Versus Wants – This can be a tough topic even for adults sometimes but help your kids understand the difference between what they need and what they want. While they need a new coat for school, they don’t need an expensive name brand coat. They need to eat dinner but it can be cooked at home rather than ordering out. They won’t die of boredom if they don’t have the newest Lego set.

Set Goals – Your teenager will want a car someday. Younger kids may want a new toy or spending money for a special occasion. Talk to them about how forgoing a small purchase today will help them reach their goals.

Establish Some Rules – Establish some simple rules for spending and saving. Do they get to spend all their money all the time? How much should they save? This is a personal question for your family but one basic rule of thumb is to save a quarter or a third of any money they receive.

Talk To Them About Costs –There are many costs to spending money. If you occasionally have your child pay for something out of their own money, they will associate buying the thing with seeing their savings level dwindle some. Talk to them about how if they buy this $5 toy, it will take them longer to save for the $20 item they really want. Help them rationalize how badly they want the small thing versus the bigger savings goal.

Talk About Yourself – Don’t be afraid to tell your kids your personal savings story. Do you wish you had started saving money earlier? Help them learn from your mistakes! Are you a great saver? Share with them why it’s important to you and how you prioritize saving. Talk to them about the choices you’re making every day. Help them understand that clipping coupons and buying store brand green beans is how you can afford to take the family on vacation this summer.

Saving money is like a muscle that needs some exercise. The more you save, the stronger your desire will become to make good money choices. It’s much easier to create a savings habit at a young age than to change behaviors in adulthood.

Vinton County National Bank has a number of tools to help you teach your kids the value of managing their money. Learn more about our Youth Savings accounts and Youth Checking accounts to get started.

Finding Money To Save (Even When You Think You Can’t)

expenses cut.jpgIt’s that time of year when we all resolve to put a lid on our spending and save more money. The internet is full of articles like “Five Ways To Save $1,000 This Year” and advice for folks to save $30 just by cutting back to eating out just three days a week.

But what if you don’t eat out every day and you’re sure there’s not hundreds of dollars in savings to be found in your budget? We don’t claim to have all the answers in this one little story but we do have some things for you to think about and maybe kickstart your way to savings this year.

Think About Your Spending
We all spend money on things we don’t need and sometimes on things we don’t really want. The first thing you need to do is study how you’re using your money. Do this however you like. An easy way is to save your receipts and keep a slip of paper to jot down every time you drop a few bucks in the work vending machine because you’re craving Diet Coke and Peanut M&Ms. Then study your habits and think about ways to cut costs or change behaviors. If you’re buying candy and drinks every day, it might be smart to bring a snack from home.  This is an easy behavior change that could save several dollars a week.

Once you know what you’re spending money on, ask yourself some questions. What are you buying that you don’t need or that you buy out of habit? Are you actually using what you buy? Is it truly a need or a want disguised as a need?

When our bankers visit third graders to talk about spending and saving money, they typically understand the difference between a need and a want. For example, you need shoes but you want Nikes. However, when we talk to teens, we find they think they need Nikes and that no other shoes will do. What do you truly need?

Food is a major money leak for many American households as so much of what we buy spoils before we use it. If you find yourself throwing away most of the celery every week, it might be time to ask yourself if you’re buying celery because you like it or because you always buy it (or because it just looks good in the cart).

Plan, Plan, Plan
Planning is half the battle when it comes to spending and saving. How many times have you gone to the store and couldn’t remember what you need to buy so you just buy a bunch of stuff that sounds good? Whether it’s school clothes, groceries or holiday shopping, make that list and stick to it.

Also, be sure to research your purchases ahead of time. Find out what’s right for you, what’s most economical and what’s most likely to last so you’re not buying a replacement next year.

Planning a purchase also may involve delaying a purchase. In this world that delivers up to the second news and overnight packages from across the country, delayed gratification is becoming a lost art. Do your research and think about how badly you really want or need what you wish to buy. How many hours must you work to pay for it? This question alone may impact your views.  Sleep on it and revisit the purchase later. You may find you were more excited about buying something new than you were about the thing itself.

Don’t Overlook The Big Stuff
You need homeowners insurance but when was the last time you read your policy or comparison shopped? You need a car but can you afford your car when you consider the cost of insurance, maintenance and monthly payments? You need a place to live but could you downsize or find a more affordable neighborhood?

These changes may seem drastic but if you’re serious about saving money, the effort could be worthwhile.

Once you’ve found ways to plug those money leaks, both big and small, be sure to actually have a plan in place to save that money and make sure your budget reflects any changes in spending. If you are saving $50 a month on your insurance, why not set up an automatic transfer from your checking to your savings account?

Saving money isn’t always about the obvious advice to avoid the expensive cup of coffee. It also involves some thinking, research, planning and maybe even a little soul searching to figure out what’s best for you and your finances.

Do you have tips to share? How are your savings efforts working out in this new year? Tell us about it in the comments below!

Four Ways To Spring Clean Your Finances

Spring is a great time to clean up your finances! Here are four easy ways to get started!

  1. Review your credit report –It is important to make sure your credit report is accurate and free of mistakes. By law, you are entitled to order one free credit report each year from each of the three major credit bureaus. Access yours here. 
  2. Review your budget and plan to pay off credit card debt – Is your budget current? Do you even have a budget? Every person with an income and expenses needs a budget to help them know what is happening with their money. While reviewing your budget, also look at your debts. Do you still have leftover holiday debt hanging around? It’s time to knock that out.
  3. Start an emergency fund – Most Americans have less than $1,000 saved. If faced with a crisis, how would you pay for it? Putting away just a few dollars every payday can be a big help in an emergency. Click here to open a Passbook Savings at VCNB with as little as $100.
  4. Organize and shred old financial documents – Sort through your old files and only keep what you absolutely need. Remember, the IRS has up to six years to audit you so be sure to keep tax records and supporting documents for that long. Learn more here.

A couple more thoughts – take a look at your bank accounts, credit cards and even the way you pay your bills. Are you paying too much credit card interest? Are you pleased with your checking account? Talk to a VCNB account representative about how you can be rewarded for your credit card purchases with a Platinum Visa© Card and for your everyday banking habits with a Rewards Checking Account at VCNB. Also ask about how Online Bill Pay can save you time and money and even prevent late fees!

Finally, we just confirmed some shred days for two of our offices:

May 5, 2018 from 10 a.m. to Noon
Canal Banking Center
 
June 9, 2018 from 10 a.m. to Noon
Friendly Bremen Banking Center (W. Fair Avenue location)

This is a great, free way to safely dispose of important documents that you do not need to keep. We’ll post more information as it becomes available!
 
Learn more about our Rewards Checking Account, Platinum Visa, Online Bill Pay and other VCNB products here!

How To Budget When You Have Seasonal Income

Rewarding careers don’t always come with a steady paycheck. For people who work in agriculture, construction, tax preparation, entertainment, landscaping or other types of freelance and seasonal businesses, income may vary wildly depending on the time of year. This uneven cash flow makes budgeting especially challenging, but it’s by no means impossible.

Here’s how to budget for long-term financial stability when your income changes with the seasons.

Determine your average monthly income
With most traditional budget plans, you start by determining your monthly income. But how can you complete this first step if your income keeps changing? The most effective strategy is to use your average monthly income. To calculate this, add up your post-tax income for the past three or more years and divide that sum by the total number of months. If economic conditions have — or are projected to — hit your industry or business hard, you may want to deduct 15% to 20% from this number to create a safety cushion.

Calculate your average monthly expenses
When work is seasonal, expenses often fluctuate, too. During busy times, you may have to spend more on gasoline, utilities, equipment maintenance and office supplies. If you spend more during your busy season, determine your average monthly costs by adding up your personal and work-related expenses for at least one year and dividing that figure by the total number of months.

Fine-tune your budget
Subtract your average monthly expenses from your average monthly income to get your baseline budget figure. If you find you’re cutting things close or dipping into the red, you’ll need to make some adjustments. Consider cutting unnecessary expenses or picking up extra income by expanding your existing business’s volume, taking temp work during slow times or offering complementary services that peak during your off-season.

Become a saver
Having a savings plan is an especially important safety net when income is irregular. When planning your budget, be sure to include a line for saving each month. It’s best if you can put away 10% or more of your income, but even small amounts deposited consistently add up significantly over time with compound interest. Aim to save at least three to six months’ worth of expenses to ensure you can live comfortably during lean times or emergencies.

Additional survival tips
To help even out cash flow and make the most of seasonal income:

  • Make it easier for customers to pay you quickly by improving your invoicing procedure, offering options such as PayPal or Square to accept credit card payments, or setting up direct deposits to your account with customers.
  • Negotiate with vendors and suppliers for discounts or extended payment terms.
  • Take advantage of financial and budgeting software such as QuickBooks.
  • Consider offering discounts and promotions during slow times to boost business.
  • Track your cash flow regularly and adjust your budget as necessary.
  • Even with your budget plan in place, keep spending to a minimum during slow seasons.
  • Stick to your budget during your busy season to avoid spending the cash you’ll need during the down times.

Seasonal income doesn’t have to mean financial feast or famine. With proper budgeting, you’ll be able to live well no matter what the season.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

Avoid Christmas Debt This Year

Christmas and BillsLet’s talk Christmas. We know it’s only August but it’s time.

Christmas is now less than five months away. That means in just a few months we will be celebrating this joyous season. What comes to mind? Family traditions, delicious food, stockings filled with candy and buying gifts? The song tells us it is the most wonderful time of the year but that isn’t the case for everyone.

Unfortunately, Christmas also is the most expensive, most stressful and most debt filled time of the year for millions of Americans. As Santa’s Wish List grows every year, so does the amount of debt Americans owe every January. If you typically are still paying for Christmas when Groundhog Day rolls around, now is the time to think about how to avoid debt and the interest that comes with it, beginning this year.

There are several ways you can tackle this problem. The first is to shop year round. If you need generic gifts for co-workers or if you already know what you are giving someone, watching sales and clearance racks is a great way to pick up nice gifts while saving a few dollars. If you buy just one or two gifts a month, when December rolls around you’ll be ahead of the game. Start with after-Christmas sales, to save a bundle for next year.

Another way to go is to begin saving a little bit each month. Start by adding up all your anticipated holiday expenses: gifts, cards, stamps, wrapping paper, bows, food, travel costs and anything else that is an added expense during the holiday season. There are five months until Christmas. Is it possible to save a fifth of the total each month?

If the answer is yes, that’s terrific! Start squirreling away the money today!

If the answer is no, think about how much you can save. Are there expenses you can trim to get you to your goal? Maybe you have something to sell. Maybe you can cut back on the holidays some and lower your savings expectations.

Even if you can save just a small amount of your goal before the holidays, it will give you a leg up when shopping season arrives.

Speaking of savings for the holidays, in October we will begin enrolling folks for the 2016 Christmas Club. You decide how much you would like to save each month and we will automatically take your payments from your checking or savings account. In October 2016, you’ll receive a check from us for the full amount of your Christmas Club savings. There is a $20 fee for an account that is closed early. See an account representative for details.

Imagine starting the year without Christmas debt. It can be done if you get organized and begin in advance!

The Fifties: Playing Catch-Up

We are nearing the end of Retirement Week by talking about what you should be doing to prepare for retirement when you are in the Fifties age group. Thanks to NerdWallet for providing us such great advice for you today! Check out other decades from earlier this week – Twenties, Thirties and Forties.

There’s one truism about retirement that has stood the test of time: It’s never too late, or too early, to start saving. Whether fresh out of school or winding down in a career, there are things you can do to successfully prepare your nest egg, as well as places where it’s easy to stumble. Financial institutions such as Vinton County National Bank can help you set up a retirement account and personalized plan. But it’s up to you to do the heavy lifting throughout the decades.

Is retirement in your future?

By Cait Klein, NerdWallet

As you straddle the equator of youth and older age, if you haven’t been funding a retirement account, it’s time to play some serious catch-up. Individuals over the age of 50 can make catch up contributions to a Roth IRA before the end of the year of up to $1,000 in 2015. With a 401(k) and other retirement accounts, you can make additional contributions up to $6,000.

The biggest mistake people make as they round the corner toward retirement is getting fixated on a certain image of what life ought to look like. If you envisioned traveling the world or parking on a beach, you may be sorely disappointed if your savings fall short. Remember the adage, you can’t take it with you. Consider downgrading your lifestyle now — moving to a smaller house, selling off additional cars or assets and limiting vacations. Start adopting the lifestyle of a fixed income, if that’s where you’re heading.

NerdWallet
When it comes to credit cards, insurance, loans or expenses like hospital costs, consumers make almost all their decisions in the dark. NerdWallet is changing that by building accessible online tools and providing research and experts that can’t be found anywhere else, all to help consumers take back control of their choices in a marketing-driven, trillion-dollar industry. Find out more at www.nerdwallet.com.

The Forties: Staying Focused

Retirement Week continues! Every day we are posting retirement advice from NerdWallet. Read about preparing in your Twenties and Thirties. Today’s focus is on the Forties.

There’s one truism about retirement that has stood the test of time: It’s never too late, or too early, to start saving. Whether fresh out of school or winding down in a career, there are things you can do to successfully prepare your nest egg, as well as places where it’s easy to stumble. Financial institutions such as Vinton County National Bank can help you set up a retirement account  and personalized plan. But it’s up to you to do the heavy lifting throughout the decades.

 

By Cait Klein, NerdWallet

Despite having another twenty years until retirement, it’s time to get more serious. If you’ve been heavy on the investments and stock portfolio, you may want to start pulling back a bit and shifting to more conservative strategies, such as government bonds. One rule of thumb is to subtract your age from 110 and to have the result be the percentage of your savings that’s invested in the stock market. For example, 45-year-olds may want 65 percent of their savings in stocks as opposed to the 80 percent or more that 30-year-olds might want. Consider refinancing your home if there are better rates available. It’s also time to start paying down credit card and other high-interest debts and allocating that money back into your future.

Don’t let your current life get in the way of a future one — particularly in your forties. People often take a detour from saving to fund higher education for their children. But doing so could put both generations in financial danger. If you aren’t prepared for retirement, you could be a major burden to your own children, preventing them from establishing savings. It’s important to have three to six months’ living expenses saved in an emergency account to prevent the need to draw on retirement funds in the event of a medical crisis, roof leak or for higher education.

NerdWallet
When it comes to credit cards, insurance, loans or expenses like hospital costs, consumers make almost all their decisions in the dark. NerdWallet is changing that by building accessible online tools and providing research and experts that can’t be found anywhere else, all to help consumers take back control of their choices in a marketing-driven, trillion-dollar industry. Find out more at www.nerdwallet.com.