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Flanagan State Bank’s Life Stage Strategies

FAMILIES ON THE GO

Managing the financial responsibilities of family life

By the time you have a family of your own, there will be accompanying expenses such as costs for various activities and lessons for your children, family vacations, saving for college educations or buying a new home. Throughout this time, you should regularly evaluate your progress towards achieving the financial goals you set earlier in your life and adjust your spending, budgeting and saving to make sure you stay on track. With all the demands a family places on your income, it is still important to build your long-term investments.

CAPS Planning Tip - At this stage of your life, you should be balancing your short-term goals (buying a house, eliminating installment debt, etc.) and long-term goals (college and retirement). There should be an emphasis on getting rid of any consumer debt (credit cards, personal loans, auto loans) and saving for retirement. Make sure you are on track for retirement before putting aside too much money for college.

Planning and discipline that determines what and how you spend contributes to your future financial success. Here are some tips Flanagan State Bank recommends for sound financial management during this demanding time of your life.

1. Shop for the best mortgage and consumer loansSeeking the best mortgage or consumer loan by shopping, comparing and negotiating may save you thousands of dollars. A mortgage—whether for a home purchase, refinancing or a home equity loan—is a product, just like a car, so terms may be negotiable. You’ll want to compare all the costs involved in obtaining a mortgage including interest rates, points, fees and down payment and private mortgage insurance requirements.  

With competitive rates, experienced lending professionals and local decision-making, you’ll be sure
to find a loan at Flanagan State Bank that meets your needs. To apply for a mortgage or consumer loan now, click on the links below, or stop by and talk with one of our lending officers.

Mortgage loans– We have a highly trained staff of mortgage loan officers who will offer good counsel along with finding you the right mortgage for your needs. We can usually get your loan closed in around 30 to 45 days.

Consumer/installment loans – Contact your local branch to discuss borrowing money for automobile or other unexpected situations that come up. Collateral for a personal loan might be a car title, a CD or other property.

2. Understand your credit reportYour financial behavior over the past seven years, including how much credit you have, how long you've had it and whether you pay your bills on time is information included in your credit report. Your credit report also carries your credit score ranked between 300 and 850 that many lenders use to decide whether you are creditworthy and will repay a loan. Your credit score can also influence the interest rate you pay. In many cases the higher your score, the lower your interest rate. Your credit score is available from the three credit reporting agencies:  

3. Get a Financial Plan CAPS Financial Group offers a service where a financial plan is developed for a one-time fee. As a bank customer, you qualify for a 33% discount off the regular hourly rate. A financial plan gives you objective advice and a roadmap to reach your goals. There are no products “sold”.

CAPS Planning Tip – WARNING: Be careful of financial advisors that are really salespeople trying to sell you a product. Many financial advisors work on the basis of commissions and this can lead to products that don’t really fit your needs but make the advisor a big commission. Be wary of this type of advisor. To read more on this topic, click here.
4. Start Saving for CollegeBy starting early, when your child is in preschool or before, you can build a realistic fund through the power of compounding over many years. The earlier you start, the less you’ll have to save per month. Through Flanagan State Bank and CAPS Financial Group, you can access products designed to help you fund your child’s higher education. To learn more, or set up an educational account, click on the links below.  

529 Educational Savings Plan - 529 Plans offer the investor tax-free savings if the money is used for qualified education expenses. Flanagan State Bank, with its partnership with CAPS Financial Group, can explain how 529 Plans can help you save tax efficiently for college. Contact Matthew Schwerin at 309-661-6333 for details.

Bank CD product - CD’s can be purchased for as little as $500 and terms range from 30 days to 5 years. Penalties apply for early withdrawal.

Coverdell Education Savings Account Education IRA this account has tax advantages in saving for college, but you are limited to $500 in contributions each year.

U.S. Government EE Savings Bonds - EE Bonds are reliable, low-risk government-backed savings products that you can use toward financing education and other special events. These are available at Flanagan State Bank.

5. Save for RetirementMany people underestimate the amount of money they’ll need in retirement. Be realistic about major expenditures, e.g., will your mortgage be paid off by retirement? If so, you may need less income than you do now. Do you plan to buy a vacation home or travel extensively? Will you have to pay for your own health insurance? These and other financial considerations all come into play.  

CAPS Planning Tip – The most helpful and beneficial outcomes of a financial plan often are: 1) how much someone has to save for retirement, and 2) what date someone can afford to retire.
Now is a good time to increase your contributions to your retirement savings accounts. Talk with Flanagan State Bank’s IRA specialists for traditional bank IRA products or CAPS Financial Group for non-bank IRA products (mutual funds, exchange traded funds, etc.). When saving for long-term goals, the returns you can get from the market have outpaced CD rates over the long term. 

Traditional IRA – Tax deductible contributions to a traditional IRA can help you build long term wealth and reach your retirement goals. 

Roth IRA – Contributions to this type of retirement account are not tax deductible, however, when you retire, distributions are tax free.

CAPS Planning Tip - It is always wise to talk to your tax professional about which type of account would be most beneficial to your individual situation. There are two decisions to make: 1) which type of account you use (e.g., IRA, SEP-IRA, 401K), and 2) the investments you use (CD’s, mutual funds, stocks, bonds). Many people view these two decisions as one; but viewing them as two separate decisions will enhance your ability to find the right solution to meet your goals.

Evaluate your health insurance options – If your family is generally healthy and the children are older, you may want to think about opening a Health Savings Account. Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for eligible medical expenses. HSAs give control back to consumers and assist in lowering healthcare costs. Unused funds can accumulate over time and give you an extra nest egg when retirement rolls around. To get more information on Health Savings Accounts, click here.*

*You must have a high deductible health plan (HDHP) to open a Health Savings Account. Visit with Flanagan State Bank or your insurance provider for more details.

Rent a safe deposit box – This a convenient place to store important items that would be difficult or impossible to replace. Additionally, some insurance companies charge lower insurance premiums on valuables kept in a bank's safe deposit box instead of at home.

Establish wills. Now that you have started a family, it is important that if something should happen to you that your wishes for your assets and your children are communicated and followed. A will is an easy way to make your wishes known.

For help determining the best accounts and products for sound and productive money management during your Career Focused Life Stage, please contact us or CAPS Financial Group at 309-661-6333.