Execute a Successful Saving Strategy, Part 3

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By Pam Reiss

In Part 1 of this series, it was revealed thanks to a recent Gallup poll that a majority of Americans report that they prefer saving their money over spending it. 59 percent of Americans claim to be savers, while 8 in 10 report that they monitor their finances closely. Yet, a large majority of Americans have less than $1,000 in their savings accounts.

Clearly, there is a discrepancy between how much we think we save and how much we actually do. In order to realign our intentions with our actual saving practices, it is important to take time and develop an honest and thorough saving strategy.

In Part 2, we covered some of the important steps you must take to develop your saving strategy. These included: setting savings benchmarks, calculating your net worth and creating a budget.

In Part 3, we will take a closer look at some of the investment vehicles available from Milford Bank. By blending various types of investments, you can customize a saving strategy that suits your budget and your needs.

Here are just a few ways that you can boost your savings.

Certificates of Deposits: CDs are optimal for short- to medium-term savings goals. CDs earn a slightly higher interest rate than a standard savings account, and won’t require a significant investment. While your money will be untouchable for the duration of the term you select, you can stagger them at various intervals to make sure you always have liquidity.

Individual Retirement Accounts: Also known as an IRA, this is one of the most popular investments for individuals that are putting their savings towards retirement. When you contribute to a traditional IRA, you’ll get a tax deduction for the year, providing you a little bit more financial flexibility while you’re young, without sacrificing your savings. Income taken after you turn 59 ½ are taxed at ordinary income tax rates, but since you’ll be out of the labor force, your income may be taxed at a lower rate than it would if you took the hit during  your prime working years.

Permanent Life Insurance: While the common perception is that life insurance is only in place to provide for families in the event of an untimely death, permanent life insurance distinguishes itself with a saving element. Permanent life insurance offers coverage for life, but it also builds tax-deferred cash value when you pay your premiums. If you need a life insurance policy and don’t want to sacrifice your savings strategy, permanent life insurance may help with both.

Tax Deferred Annuities: An annuity is another form of insurance contract. If you’ve already maxed out your yearly contributions for an IRA or 401(k) account, annuities allow you to continue saving. You won’t be taxed on your contribution, made like an insurance premium payment, until you begin taking money back out upon your retirement date.

To get started building a robust and diverse investment portfolio to maximize your saving strategy, stop by any office of The Milford Bank today. You can also learn more and see other helpful resources at our Online Learning Center.

Five Helpful Hints for Managing Credit Card Debt

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By Karuna Kasbawala

For most people, discussing their financial challenges is about as popular as receiving a root canal. As a result, individuals faced with difficult financial decisions often feel like they’re all alone. But the reality is that millions of Americans are facing similar difficulties.

In fact, researchers recently found that the median debt per American household is $2,300—with the average debt per individual reaching $5,700. Getting out of debt can be a long, difficult and stressful process.

But if you develop a clear strategy and stick to it, you won’t have to let your credit card debt rule your life for long. If you’re having a difficult time managing the balance on your credit card, consider applying some of the following hints to your strategy for getting caught up.

Set a budget: In many cases, financial problems aren’t caused by poor saving practices, but by poor spending decisions. By setting a budget, you will get an accurate guideline of what you need to do in order to get out of debt. This will help you put every purchase in its proper context and dissuade poor spending decisions.

Take interest in interest rates: Once you fall behind on credit card payments, it will be the interest rates that make it harder to catch up. If you have multiple credit cards with an outstanding balance, prioritize paying off the card with the highest interest rate. Otherwise, you may want to consider consolidating your debt to get a lower interest rate altogether.

Make multiple monthly payments: Chipping away at your debt may require making minimum payments for a little while. But when you can, make multiple minimum payments within a month. This can reduce your average daily balance, which can lower your interest charges. In addition, making multiple payments will look good for your credit history.

Stop using your credit card: The easiest way to stop racking up credit card debt is to stop using your credit card. This will help you learn how to purchase only the most essential items. But for consumers relying on that line of credit, this might mean having to find an alternative method for making ends meet. Fortunately, many banks are now offering debit cards with the same types of rewards traditionally granted only through credit cards—without any interest rates attached.

Speak with a debt management expert: As previously stated, talking about finances is one of the most difficult conversations you can have. But it is still one of the most important, too. Consulting with a debt management expert will help you learn how to avoid financial pitfalls and strategize your escape from debt in a comfortable and judgment-free setting.

If you’re suffering from credit card debt, you don’t have to go it alone. Stop by any office of The Milford Bank to speak with one of our financial experts, or learn more about managing debt at our Online Learning Center.

Savings Strategies for Milford, Stratford Residents Nearing 30

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by Cortney Meng

Milford and Stratford residents: do you have a 30th birthday coming up? If so, take a moment to reflect on where you were and what you were doing just 10 years ago. A lot has changed, no? In fact, your twenties can be one of the most transformative decades of your life. By the time you reach 30, you may be entrenched in a career, thinking about getting married, buying a home or even having children. Maybe you’ve already done all of the above!

As such, it is important that you reevaluate your savings strategy to reflect your changing lifestyle as you approach your 30th birthday.

If you’re looking to overhaul your savings strategy, here are a few good places to start.

Start a retirement account: If you haven’t started saving for retirement, you’re not alone. In fact, 57 percent of millennials have yet to start saving for retirement. But the fact remains that the sooner you start, the easier time you’ll have reaching your goals. If your company offers a 401(k), start taking advantage of the benefit if you are financially able to do so. You might also want to diversify by establishing an IRA or investing in a mutual fund too.

Buy life insurance: At 20, you might not have had anyone depending on you. But the game often changes at 30. You might be responsible for your business, your partner, a child, a mortgage or other loans. A big part of that responsibility is making sure your loved ones are taken care of if the worst should happen to you. At 30, you’re still likely young and healthy enough to qualify for an inexpensive life insurance policy. Some forms of insurance, like permanent life and annuities, double as investment vehicles, making them an important part of your savings strategy as you enter your 30’s.

Improve your credit score: A great credit score will open up many doors to you in your 30’s. You’ll be able to secure a larger line of credit with lower interest rates if you can demonstrate that you’ve been historically responsible with your spending. Speak with a credit agency or financial expert to see how you might be able to boost your score, so that you’ll be in a position of strength when you’re ready for the big financial decisions that many of us make in our 30’s.

Take a calculated risk: It is generally considered a best practice to be conservative with your savings when you’re young. Many years of safe, steady earnings can leave you poised to have a great retirement in a few decades. But another benefit of youth is that you have more time to bounce back if an investment doesn’t pan out. Consider taking a small, discretionary sum of money and check out a company or product that you’re passionate about. It might not pan out, but you never know—you might invest in the next Amazon or Apple, too.

If you’re ready to take a serious look at your savings strategy as you approach your 30’s, stop by any office of The Milford Bank branch near you to speak with an experienced financial advisor today. You can also learn more by checking out our Online Learning Center.

Survey Shows Millennials Prioritizing Coffee Over Retirement

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By Matt Kelly

Hey Millennials, how do you take your coffee? Do you pick up a simple $1.00 cup from the gas station during your morning commute? Or are you all about splurging on a $5.00 specialty drink at Starbucks to give you an afternoon pick-me-up? Whether you’re adding cream, sugar or a shot of espresso, there is one trait that is shared by Millennial coffee drinkers: they’re more focused on what’s in their mugs than what’s in their retirement accounts.

According to a recent poll conducted by SurveyMonkey and investing app Acorns, 41 percent of Millennials currently spend more on their morning cup of coffee over the course of the year than they put into retirement savings.

The survey, which polled more than 1,900 18-35 year olds, also found that 41 percent of Millennials believe they will not be financially secure enough to retire until they’re older than 65. While you can’t lay the blame squarely on coffee consumption, these statistics do reveal a frightening pattern of financial neglect.

Of course, there’s nothing wrong with having a cup of coffee to start your day. But if Millennials want to enjoy comfortable retirements, at some point they will have to look a little deeper about their spending and saving decisions.

Consider, for instance, that brewing your coffee at home can save you tons of money every day. If you buy a large container of inexpensive grounds, your home brew might run you less than 10 cents per cup. Even if you prefer K-cups, many brands offer deals that won’t add up to more than 50 cents per cup.

If Millennials were to get serious about cutting into their coffee budgets, they’d be able to start seeing a positive effect on their savings pretty quickly.

An individual switching from $5 per cup of coffee to 10 cents per cup will save $1,788.50 over the course of a year. Even after one month, you’d have an extra $150 in your pocket—enough to cover utilities and grocery bills!

But retirement accounts are long-term investments. So what would your coffee savings look like by the time you reach retirement age? Using the previous example, over the course of 30 years, would amount to $53,655—a figure that sounds like a competitive yearly salary for many. By changing how they think about their coffee drinking habits, Millennials could potentially save enough to retire a full year earlier than they believed possible!

When it comes to retirement planning, it is ideal to begin saving as early as you can. But circumstances aren’t always ideal. Fortunately, it is never too late to get on a path towards financial freedom. By making minor adjustments to your day-to-day spending, you can begin funding your retirement with the money you’ve already got in your pocket.

To maximize the value of your savings, stop by The Milford Bank and speak to one of our experienced financial advisors, or check out our Online Learning Center. We offer a variety of financial services and investment vehicles, ranging from traditional savings accounts, to certificates of deposit, IRAs, money markets and more. Start planning today so you’ll be able to enjoy your daily cup of coffee long into retirement.

Don’t Let Finances Wreck Your Relationship

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By Cortney Meng

Anybody in a relationship knows that love and money will invariably intersect. Relationships are partnerships, and managing finances simply comes with the territory. But the results of a recent survey conducted by SunTrust Bank revealed that finances are the primary culprit for many couples’ relationship stress. According to the survey, 35 percent of respondents cited financial management as the biggest cause of friction with their partner—ten percent higher than second place finisher, annoying habits.

The issue is much bigger than figuring out whether or not to split a restaurant bill. Financial management underlies most of the big decisions that couples will make together, from marriage, having children, purchasing a home, to taking a vacation or planning for retirement. Without developing a stress-free financial planning strategy, couples may end up overwhelmed, stressed out and never attain the goals they set for themselves.

In order to make sure that you and your partner don’t let finances become a bone of contention in your relationship, consider adopting some of these practices for managing your money together.

Set your budget around shared financial goals. If only one partner in a relationship is concerned about reaching a financial benchmark, your finances are likely to become a stressor. To make sure you and your partner are saving in synch, set a series of short, medium and long-term goals which you both aspire to achieve. That way, you’ll be able to stay on track and budget accordingly to reach the carrot dangling in front of you.

Leave room in your budget for separate spending too. Nearly half of respondents to SunTrust’s survey reported that they had different spending habits than their partners. Disproportionate spending is a breeding ground for resentment, so be sure when you’re planning your monthly budget to allocate an equal amount for each partner to use as they see fit, no questions asked. That way, an individual inclined to save more will have that chance, while someone inclined to spend more won’t need to ask permission. And because there’s a set cap on personal spending, the couples’ finances won’t get out of control.

Seek the services of a financial planner. Managing finances within the context of a relationship can be stressful because it is difficult to take the emotions out of a purely mathematical process. In such cases, consider consulting with a financial planner. You’ll receive an objective third-party opinion from an individual that can give you a clear path to meet your goals, as well as investing strategies that will be best suited for your lifestyle needs and wants.

Stop by any office of The Milford Bank to learn about the products you need to achieve your goals. You can also check out more information on our Learning Center here.

Calculating Your Net Worth: Five Common Questions

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by Mark Attanasio

Even if you never actually see your paycheck and it is automatically transferred to your bank account each week, you may still know how much you’re making—maybe even down to the penny. Most people are fully aware of their income. But when it comes to net worth, the story is entirely different.

This is problematic because, unlike your income, net worth encompasses all your assets and debts. Calculating your net worth can provide you with a true measure of your financial well being, as well as providing you the information you need to improve your fiscal standing.

To help you figure out what you need to know about net worth, here are some of the questions others are asking too.

What, exactly, is net worth?

There is a simple formula that easily defines net worth. Add up all your assets—income, savings, investments and property. Then subtract all your existing debts. The total is your net worth.

When will I need to know my net worth?

While you won’t need to keep track of your net worth on a day to day basis, there are critical moments when it’s a good idea to have a firm grasp of your true value. You may want to understand the long-term trends for your net worth (how quickly you’re making or losing value) when planning your retirement or your estate. You may need it when looking to secure a mortgage or apply for student loans on behalf of your children.

I can’t touch my retirement accounts for 30 years. Do they count?

Your liquid assets are only one part of the net worth equation. Even if you don’t receive a distribution from your 401(k) or IRA accounts now, they’re still considered a part of your net worth.

Do I have the same net worth as my spouse?

Depending on how you and your spouse manage your household finances, your net worth may be identical or it could be drastically different. If you’re both listed as co-owners of your home, share a credit card or car, those assets will be attributed to both of you. If you both purchased vehicles separately, only the vehicle to your name will be considered for your calculation. However, if you add your partner’s net worth to yours, you’ll know your household net worth, which itself is important to track.

How do you account for outstanding car loans and mortgage payments?

When incorporating existing loans into your net worth calculation, you cannot truly consider houses or vehicles as assets until they’ve been paid for in full. So if you took out a $100,000 mortgage and have paid off $99,000, your home is still considered a $1,000 liability. But once you’ve made your last payment your home becomes a $100,000 asset.

Now that you have a better grasp on your net worth, stop by any office of The Milford Bank to see how you can continue to improve your financial standing today. You can also learn more at our online Learning Center or check out more financial calculators here.

Starting to Sweat the Cost of Tuition? We Can Help!

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By Patty Gallagher

Even from the time your child enters high school, teachers and advisors are beginning to prepare your children for higher education. The idea that your son or daughter is going to graduate might seem far off then, but by the time he or she enters junior year the prospect starts to get real.

All of a sudden, you start researching the cost of tuition—between $21,000 and $23,000 for one year at Connecticut’s state schools—and wonder how you’ll be able afford higher education. But don’t be alarmed by the sticker shock. There are ample resources available to your family to ensure your child can get a college degree.

Here are just a few ways you ensure your child earns a degree without you having to empty your savings account.

  • Financial assistance: Click here to check out the scholarship finder in the left hand column of the Milford Bank Learning Center. By entering your child’s SAT, ACT and GPA, as well as the state where he or she wants to go to school, you can receive a free customized scholarship report detailing available funding emailed to you directly—and at no cost. You’ll also find educational resources to learn about student loans and grants.
  • Take introductory classes at community college: Many course credits earned at community colleges will satisfy the basic requirements of degrees at more expensive schools. Learn which credits will transfer, have your child complete a semester or two at community college, and then begin applying to other schools.
  • Apply as a commuter: Half the cost of tuition goes to paying to live in dorms on campus. Based on the average state school tuition, your child could commute from home and save your family roughly $900 per month. Even if he or she is adamant about moving out, a $500 per month apartment near campus would still help your bottom line.
  • Make minor lifestyle adjustments: If your student is just entering junior year of high school, that means you have roughly two years before they head off to college. That’s 730 days of expensive lattes, going out to eat instead of dining in, and all the other expenditures that seem trivial until you add up the costs. By making minor lifestyle adjustments—even if just for the next two years—you can give your savings account a sizable padding.
  • Select an investment vehicle: There are many ways to invest your savings. Some accrue interest more quickly than others. Speak with a bank representative about your student’s goals, your timeframe and the amount of money you’re looking to save and you’ll be able to find the right strategy for your family.

The sooner you start planning for your child’s future, the easier time you’ll have when that future becomes the present. Come down to any Milford Bank branch location and start earning your education on saving for college today.

When Should You Start Saving for Retirement?

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by Patty Gallagher

Even if you love your job, you’re probably looking forward to the day you punch your last time card and can begin your retirement. But while you may have a 401K and social security coming your way, the bulk of your retirement stash may still fall on you and your ability to save.

With that said, when should you start saving for retirement?

It is never too soon.

Relying solely on a 401K or social security can be a risky bet. Your 401K is tied to the success of the stock market. Even if your 401K performs well for 30 years, a sudden economic downturn could erase your earnings just when you need them.

Social security, too, is growing increasingly uncertain. According to 2015 findings from the Social Security Administration (SSA), the ratio of workers to SSA beneficiaries is currently at a record low of 2.8. (By comparison, when social security was first rolled out, there were 41 workers supporting the program for every social security recipient.) As the baby boomer generation ages that number is anticipated to continue shrinking, raising questions about the long-term viability of the program as it currently exists.

Both of these pillars of retirement planning can be highly unpredictable. That’s why it is so important to begin planning your retirement savings early.

To ensure a long and happy retirement, here are the two easiest and most impactful things you can do:

Change your spending habits: Increasing your savings for retirement isn’t just about earning as much as you can during your working career. Making slight lifestyle adjustments to alter how you spend that money can have just as large an impact. What is that five-dollar specialty Starbucks drink you get every day worth to you? Over the course of a 40-year work history, it would add up to $73,000—more than enough for a down payment to help you move into a relaxing, beachfront condo.

Diversify your investments: While your 401K can be viewed as a risky investment, it is still a safe harbor for your savings as long as you have other types of investments for balance. Certificates of deposit, savings bonds, annuities and IRAs are other financial tools that can provide safekeeping for your savings. Or, if you’re handy enough to take care of your own repairs, real estate can also be a good place for your money. In an economic downturn, gold and silver prices typically do well by comparison, so having a small supply of precious metals might provide an additional safety net.

To learn more about how you can prepare for a prosperous retirement, stop by any office of The Milford Bank and speak with a financial expert.

Lifestyles of the Broke and Famous

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by Mark Attanasio

Many people look to celebrities as an embodiment of the American Dream. Whether it’s an athlete inking a $100 million contract, a musician reaping the rewards of a platinum album or an actor raking in gold from an appearance on the silver screen, the rest of us see these individuals as the lucky ones that hit it big.

While it might seem like they’ll never have to worry about money again, the truth is that many celebrities end up in the same dire financial straits as the rest of us. Financial success isn’t only about how much money you’re bringing in, but rather how well you manage your assets, control your spending and avoid risky and potentially costly life choices.

Here are several high-profile names and their stories to serve as a reminder of the fact that financial success has less to do with your paycheck than you might think.

Nicolas Cage: Between 1996 and 2011, Cage banked over $150 million from his prolific acting career. He proceeded to spend it all on a lavish lifestyle revolving around sports cars, exotic pets, a rare collection of dinosaur fossils and private islands in the Caribbean. By the time the IRS came calling for its share—$13 million—the money was gone.

Reality check: It doesn’t matter how much you earn if you don’t put any money away for a rainy day.

Fred and Jeff Wilpon: The Wilpon brothers, majority owners of the New York Mets baseball team, became protagonists in a financial cautionary tale in 2008 when news broke that their fortune was ensnared in the ponzi scheme orchestrated by investment advisor Bernie Madoff. The Madoff case was discovered to be the largest financial fraud case in U.S. history and cost the Wilpon family between $500-700 million. They nearly had to sell their beloved franchise, but were eventually able to deal with their reversal of fortune.

Reality check: Even if you have entrusted the management of your finances to a professional, stay involved and know how your funds are being handled. Nobody, not even an advisor, will be more concerned about your bottom line than you are.

Willie Nelson: This legendary country music singer is perhaps as famous for his run-ins with the law as he is for his boisterous stage presence. Despite his commercial success, Nelson ran into tough times over the course of his career thanks to unpaid tax bills and a series of drug-related offenses that have cost him mightily over the years.

Reality check: Crime doesn’t pay. If you party like a rock star, you may end up broke as your life savings end up in the pockets of lawyers.

At The Milford Bank, our goal is to help you make the smart decisions with your money. Stop by any of our offices to learn more about protecting your wealth.

Think Your Old Phone is Worthless? Think Again.

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by Sindy Berkowitz

Imagine walking into a Porsche dealership and offering up an old cell phone as your payment. Not even just a down payment—the whole thing. You’d probably be laughed out the door. Finding someone willing to make such a lopsided deal might seem impossible, but believe it or not, one California teenager was actually able to accomplish the task.

Steven Ortiz, a 17-year-old from California, started out with an old cell phone given to him for free by a friend. After browsing the bartering page of Craigslist, he realized he could potentially turn trash into treasure.

Over the course of two years, Ortiz made 14 trades before ending up with a 2000 Porsche Boxster. He first traded for a better phone, then up to an iPod Touch. From there, he bartered his way to a dirt bike. After trading several dirt bikes, Ortiz found himself with a MacBook Pro. With a brand new laptop, the ingenious teenager was able to upgrade to a Toyota 4Runner and promptly swap the vehicle for a customized golf cart. After a series of trades involving dirt bikes, street bikes and beat up old cars, Ortiz found himself with a 1975 Ford Bronco. From there, Ortiz was able to trade for the Porsche.

Not a bad investment, considering that he started out with a free cell phone.

But besides being an interesting story, there’s a lesson here. How often have you simply given or thrown away something without giving it a second thought? With a little patience, careful research and a willingness to negotiate, you can take Ortiz’s example and turn some of the unused items in your home into something valuable.

There’s also another lesson here: Sites like Craigslist, Ebay and Amazon can be bountiful for individuals willing to get creative and apply a little elbow grease. In another highly publicized example from 2008, a man in Canada was able to work his way from being the owner of a single paperclip to becoming a homeowner in Saskatchewan, a province of Canada.

Even without relying on the bartering section of the site, such sites offer plenty of other ways to earn extra income. Buying used furniture and restoring it to increase its value is one such way. There are even websites with free items that simply require your time and energy to pick up. Anything sold would be pure profit!

The old adage that one man’s trash is another man’s treasure is alive and well in the digital economy. While it certainly wouldn’t be prudent to bet your retirement on bartering cell phones and paperclips, a world of opportunity exists to gain supplemental income from goods you may be ready to discard.

To hear about some of the more traditional means by which you can improve your financial outlook, stop by any office of The Milford Bank and talk to us about your goals.