Monthly Archives: December 2015

How-to start planning your financial future.

financial planning

New year, new financial game plan. Renew your financial knowledge with fast facts of three financial topics that’ll set you up for a successful 2016, courtesy of Putnam Bank.

Creating a Monthly Budget: How-To

  1. Categorize your expenses: Break up what you spend into relative categories, such as housing, food, auto, and personal. Then distinguish your essential spending from extras, notating the things you can’t live without and the one or two extras that add meaning to your life.
  2. Identify what’s earned, and calculate your spending: You can’t budget if you don’t know what your cash flow is. Nail down exactly what you bring in each month with income after taxes and other side sources of cash flow. Subtract that value from it an estimate of what you typically spend in 30 days. This allows you to see if you’re saving, breaking even, or coming up negative.
  3. Know where you’re going: If you have nothing you’re working towards, what’s the point of a budget? Pick a goal – paying off debt, buying a car – and rework your numbers from steps 1 & 2 to create a way to achieve it.

Understanding the Top 3 Bank Account Options

  1. Savings: Use this account to save money first and foremost. Checks are not typically used with savings as their primary function is accumulating funds and interest. Putting a little each month into your savings will ensure a steady value for years to come.
  2. Basic Checking: Draw money for checks from this account. Typically a checking account acts as the primary account for a person or family. Checking is what is most often associated with paying bills and monthly expenses.
  3. Certificates of Deposit (CDs): Also called time deposits due to the holder’s agreement to keep money in the account for a specified time (three months, six years, etc.). Money deposited in this can’t be touched during that specified time, but it typically yields a higher rate of interest.

Launching a Retirement Plan

  1. Know your needs: Your current age, expected age of retirement, amount currently in savings, and other factors are needed to determine how much you need to set aside. Check out our handy retirement calculator for a rough estimate.
  2. Check your employer’s plan: If your employer offers a 401(k) or similar plan, hop on it. Lowered taxes, matched contributions, and automatic monthly deductions make savings a breeze.
  3. Start saving ASAP: Compound interest is a beautiful thing. Saving smaller for a longer length of time often yields more benefits than if you start saving big late in the game.

If you’d like to strategize a game plan for your financial future, our financial advisors are here to help! Call Putnam Bank to get started today!

Putnam Bank
Equal Housing Lender, Member FDIC

Financial Security Tips for Millennials

millennials financial security

Millennials have taken over the internet, the universities and soon the workforce. This generation is stepping off of college campuses across the United States and moving towards their first career out in the real world. Seven out of ten of these college students graduate with nearly $30,000 in student debt. Putnam Bank wants to help! Here are five money savvy lessons to help secure a financially protected future for those new, and returning, to financial planning.

  1. Spend like a student until you’re not paying like one. Some classmates get a lucky break, landing jobs with salaries that help them pay off their debt fast. Others hop into the workforce with a clean slate thanks to scholarships and grants that prevented debt. If you’re not in either camp, don’t spend like you are. When others are buying new cars or moving to expensive cities, continue spending as frugally as you did in college until you can afford differently.
  2. Harness the power of compounding. Start saving as soon as possible. Save for a car, house, or retirement, it’s never too early to start setting aside a portion of your income. Saving a small amount every month while paying off student debts can greatly impact your financial future, one step at a time.
  3. Take advantage of employer-sponsored programs. If your company offers a 401(k) or similar retirement plan, jump on it. Small, regular paycheck deductions create a consistent boost in your savings without the temptation of spending. Also, deductions reduce your taxable income, meaning less income tax is lifted from your paycheck.
  4. Cash isn’t always better than credit. Cash may help you limit your splurge purchases and stick to a budget but it can’t build your credit score. When it affects your ability to secure a loan, the interest rate you’ll pay on it, and at what credit limit, your score can’t be taken lightly. Over one third of your rating is simply based on making your payment on time. Making monthly purchases and grocery charges with your credit card helps you build credit when you pay off your balance in full each month.
  5. You can’t learn everything online. Yes, the internet gives access to tutorials, FAQs, and budgeting programs that can help you manage your financials; however, it can’t fully replace the expert opinion of a professional trained to diagnose and treat your unique financial status. A financial advisor is invaluable, walking with you through the peaks and valleys of your monetary journey, gently guiding you in the right direction.

If someone you know could benefit from Financial Literacy 101, get in touch with one of our advisors at Putnam Bank today!

Putnam Bank
Equal Housing Lender, Member FDIC

How to Keep a New Year’s Resolution the S.M.A.R.T. Way

new years resolutions

Think fast! What was the last New Year’s Resolution you saw through from start to finish?

Don’t strain yourself racking your brain. If you’ve struggled maintaining your resolution, you’re not alone. Putnam Bank challenges you to pick a financial goal from the top of your list, and see it through to the end with these S.M.A.R.T. techniques to stay the course.

Specific: Throwing out a flighty “I want to save more money” will end as quickly as it was decided without direction. Be clear with yourself.  Striving to save $5,000 to kick start your emergency savings fund gives you a target to aim for that goes beyond a hopeful thought.

Measurable: Buckling down to accomplish a long-term goal feels awesome. Part of that rush comes from gauging your progress leading up to the big moment when you accomplish your objective. Identifying concrete ways to assess your goal, and structuring simple milestones for success, keep you on track towards your financial target. Know your bank accounts, check them regularly, and strategize the numbers you’re seeing to elevate progress.

Attainable: There are many goals you can put in front of yourself to strive towards a more rewarding financial future. Making sure these goals are attainable ensures you’re working towards a truly possible reality. If you plan on becoming a millionaire in three weeks, you may be in for a letdown.

Realistic: Just because you can, doesn’t mean you should. If you want to pay off the rest of your mortgage two years ahead of schedule, could you do it? Technically, probably, yes. However, how realistic is that goal when you factor in everything else on your plate? Don’t burn yourself out with a goal that extends your boundaries and comfort too far.

Time-Bound: When life stressors appear, personal goals are the first thing to go. If you’ve given yourself concrete deadlines, skipping out on your financial target becomes much, much harder. Whether that’s a daily timeline, or a date a few months down the road, a time-bound goal helps keep you on track and moving forward.

When the going gets tough, the tough remember their S.M.A.R.T. techniques. Reach out to Putnam Bank if there’s a financial goal we can help you tackle in 2016.

Putnam Bank
Equal Housing Lender, Member FDIC

 

Give to others, and yourself, with tax deductions this season!

tax deductible giving

During the season of giving, Americans dig into their pockets to give back to their favorite charities. You can give and receive this holiday season with tax deductions on charitable donations, minimizing taxable income and lowering the total amount you owe come April 15. Check out charitable giving FAQs from Putnam Bank to help you make the most of your generosity.

Where does my gift need to go to make it tax deductible?

Score a deduction by itemizing and filing a 1040 form when you donate to a qualified organization. Non-profit institutions like religious groups, public government causes, nonprofit schools and hospitals, public parks and recreation areas, and war veterans’ groups fall under the qualified category, whereas for-profit entities, individuals, and political candidates for public office, don’t make the cut.

What’s with itemizing?

There are two types of deductions: standard and itemized. Standard is a fixed amount that reduces the income you’re taxed based on your filing status and age. Itemized lets you list your deductions on a schedule, which includes filings like property taxes and charitable donations. If you claim standard instead of itemized on gifts, you may not receive the deduction you deserve.

How much can I deduct from charitable donations?

If your cash benefits a public organization, deduct up to 50 percent from that year’s Adjusted Gross Income (AGI). That means that a $25,000 donation from your $40,000 AGI will only let you claim $20,000 on your charitable gift in the year that you give it. You can, however, roll over that extra $5,000 up to five years after donating. For contributions to private donations like the Bill & Melinda Gates Foundations, use the same rules but swap 50 percent with 30.

I donated stuff, not cash. Does that count?

Yep! Household goods (clothing, furniture, certain appliances, etc.) and other personal property can be claimed based on fair market value; however, it must be in good or better shape than when it was first purchased in order for the IRS to count it as a deduction. Regardless of the item, keep track of receipts from your donated items, which is required for donations of more than $250.

Happy giving and happy holidays from Putnam Bank!

Putnam Bank
Equal Housing Lender, Member FDIC