Finances are a subject many families are hesitant to discuss, especially between parents and children. But as your parents age, there’s a chance that they may become less capable of managing their finances. This can be a delicate subject to approach for everyone involved. While you may be met with some resistance when bringing up the topic, it’s important to have open discussions with parents about their finances and potential issues they may face as they age.

You don’t want to wait until past due notices start piling up or your parents fall prey to a scam to have these discussions. It’s easier to talk about it in advance than to fix an issue after it’s happened.

Here are some suggestions for preparation steps you can take right now.

Be responsible with your own finances

If you plan on helping your parents, you should be in a financially secure place yourself. Make sure that your own financial strategy accounts for your aging parents.

Find the best way to approach the subject

You probably know best about how your parents may react to a conversation about their finances. If they wouldn’t react well to a formal meeting, try to work finance-related topics into your regular conversations. Be patient, as they may not open up initially.

Is there an existing plan?

Talk to your parents about their needs and priorities. Determine if they have an estate plan in place, or if they are working with a planning professional. If they haven’t done so recently, they may want to look into doing so.

Some of the items that may need to be addressed include (but are not limited to):  

• Current will
• Living trust
• Durable powers of attorney
• Medical directives
• Insurance policies
• Credit card and loan documents
• Bank and investment statements
• Social Security information

Don’t go it alone

Be sure to include your siblings in your conversations. They can help ease some of the burden on you and provide support while you talk to your parents.

Be respectful

It can be hard for parents to feel like they are letting go of their independence. They’ve spent most of their lives running a household and being in charge. Many of these suggested steps can be taken gradually, and you can make adjustments as your parents become more comfortable with discussing their financial picture.

If you have questions or are interested in discussing further, please contact your American Federal Banker.

As we near the starting season for colleges and universities, it’s a great time for students to brush up on their financial know-how. These 10 tips from the American Bankers Association are designed to give students an edge on mastering personal finance.

You are in charge.

You are responsible for your finances, and you should act accordingly by creating a realistic budget or plan and sticking to it.

Watch Spending.

You control your money, determining how you spend or save it. Pace spending and increase saving by cutting unnecessary expenses like eating out or shopping so that your money can last throughout the semester.
Use Credit Wisely. 

Understand the responsibilities and benefits of credit. 

How you handle your credit in college could affect you well after graduation. Shop around for a card that best suits your needs.

Utilize Your Bank Account. 

Banks are more than money in a vault. They offer valuable services that students can benefit from like check cashing, debit cards, online banking, personal loans, direct deposit, financial education and more.

Lookout for Money. 

There’s a lot of money available for students, you just have to look for it. Apply for scholarships and look for student discounts.

New is Out. 

Consider buying used books or ordering them online. Buying books can become expensive and often used books are in as good of shape as new ones.

Entertain on a Budget. 

Limit your hanging out fund. There are lots of fun activities to keep you busy in college and most are free to students. Use your meal plan or sample new recipes instead of eating out.

Be particular when it comes to money. 

Don’t just trust anyone with your money. Be skeptical of classmates, friends or salespeople that have ideas for your money.

Things happen, and it’s important that you are financially prepared. 

When your car or computer breaks down or when you have to buy that unexpected bus ticket home, you need to be ready. No matter how small the amount you should start putting some money away immediately.

This is a learning experience, so if you need help, ask. 

Your parents or your banker are a good place to start, and remember, the sooner the better.

If you have questions or are interested in discussing your finances in-depth, please contact your American Federal Banker.

In recognition of American Housing Month, American Federal Bank and the American Bankers Association is highlighting six tips for saving for a down payment on a home.

When considering buying a home, the down payment you put upfront plays a major role in your future housing expenses. The amount you save can greatly influence your interest rate, monthly housing payment and also your need for mortgage insurance. As you prepare for the home buying process, here are six tips to help you cut the extra costs and save a substantial amount for your down payment.

Develop a budget & timeline

Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

Establish a separate savings account

Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.

Shop around to reduce major monthly expenses

It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

Monitor your spending

With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

Look into state and local home-buying programs

Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants. 

Celebrate savings milestones

Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

We’re Here to Help!

If you’re interested in learning more about buying your first home, or any other mortgage products, contact your American Federal Banker.

In recognition of American Housing Month, American Federal Bank and the American Bankers Association are highlighting five questions first-time buyers should consider before purchasing a home.

Owning a home is a great investment, but before jumping into the market it is extremely important for consumers to consider the costs involved and budget accordingly to ensure they’re able to meet all of their financial obligations. American Federal encourages consumers to consider these questions before beginning their housing quest:

How much money do you have saved up?

Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.

How much debt do you have?

Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent.

What is your credit score?

A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. For tips on improving your credit score, visit aba.com/consumers.

Have you factored in all the costs?

Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance.

How long will you stay?

Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.

We’re Here to Help!

If you’re interested in learning more about buying your first home, or any other mortgage products, contact your American Federal Banker.