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3 Effective Uses of an Allowance

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allowanceFor many families, using an allowance to encourage children to do chores is an effective means of both teaching responsibility and money management. For other families, linking chores to an allowance means that the children only learn to help out around the house in exchange for payment. It is important for parents to sit down and talk about what they hope their children learn from the experience of getting an allowance. Here are three common methods you may wish to consider implementing:

The “You’re Part of the Family” Strategy

This strategy hinges on a few things: adult family members must always set a good example when it comes to their own chores, and the chores given to a child must bring them closer to the whole family. Family work days are effective ways of making this strategy work. The downfall of this strategy is that it can often be harder to track what, when and how well a child completes their given tasks.

The “Must Work for Your Pay” Technique

This technique links each separate job with an amount of pay. The benefit of this style is that it can make keeping track of completed tasks much easier. To make this work, very clear expectations must be set both with a timetable and in regards to how to correctly carry out each task. The downside is that since the children link a task to a certain amount of money, they may decide the amount is not worth the work required to complete the task. This can cause friction and frustration with parents and children.

The “Request as Needed” Method

This method involves you allowing your child to make requests to you for the things they want, which can allow you to help your child verbalize why what he or she wants, is important to them. It also builds their ability to negotiate and be persuasive. The downside of this method, however, is that you will constantly be having your child ask for and negotiate for what he or she wants.

Whatever method you use, there are some universal tips for every allowance strategy:

  • Help your child learn to give and save by encouraging them to put 1/3 in a savings jar, 1/3 in a giving jar where they choose where that money will go every so often, and 1/3 in a spending jar that they can use whenever they want.
  • Begin early. Most experts suggest beginning to help children work with their own money around the time they enter Kindergarten.
  • You will need to clearly define that allowance money goes to what your child wants and not what they need.
  • Raises should be given at birthdays and can also be linked to an increase in responsibilities.
  • Keep good track of responsibilities completed so that confusion and arguments do not occur over the job being completed.
  • As a child grows, it is OK to give extra money for larger jobs completed, like bigger seasonal work around the house.

Learning to work with money is an important childhood milestone. Giving an allowance can be a positive event that brings the family together instead of creating arguments.

ATTENTION PARENTS: Please bring your children in to take full advantage of our First Step Kid’s Savings Account* – a unique product that was specifically designed for young people, with a focus on education and fun and it’s a great way to encourage your kids to save every penny! We also offer our Dollar’s for A’s Program** and our annual Summer Reading Contest which additional ways your children can earn money while having fun doing it – for more information, visit our website.

This article written by our friend, Marcia Hall of GoNannies.com.

*A $5 deposit in a base savings account is required for credit union membership prior to opening any account. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location. Parent or guardian will be a joint owner and must also bring their identification. A First Financial membership available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties.

**Available for First Financial members between 1st and 12th grades. Child must be present and a deposit to a First Step Kids Account is required to receive the Dollars for A’s incentive. Offer applies only to report cards for most recent school terms. Qualifying report cards must be submitted within 45 days from the date of issue. No back rewards available for prior semesters or marking periods. Letter grade “A” (or school district’s equivalent) or 90%+. Limit of $10 will be rewarded for A’s per each marking period, not to exceed $40 in Dollars for A’s deposited per school year or calendar year.

Affordable Holiday Gift Ideas

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holiday-shopping-womenWant to buy for everyone on your holiday list, but don’t want to go broke while doing so? Here are some tips to keep your holidays fun yet affordable!

  • Make a list. Many people spend as they go, buying presents when they see them and end up surprised when the bills arrive in January. You can avoid this problem by creating a list in advance of who you plan to buy gifts for, and you should budget for each. Then, check this total against your holiday savings to decide if you need to adjust your spending.
  • Be creative. As you begin your shopping, remember that thoughtfulness really does count. Instead of searching for one expensive present, you may be able to save money, and give the perfect gift, by putting together a number of small items that relate to a loved one’s special interest. Someone who truly loves chocolate, for example, might appreciate a small basket full of treats you’ve chosen for them. Anyone with an interest in sewing or crafts could probably use a gift bag with a fresh stock of supplies for the new year. By putting together a lot of inexpensive items, you may be able to save money and show how much you care.
  • Hit the kitchen. If you are a good cook, or you simply have a foolproof recipe, gifts of food are inexpensive and very popular. Whether you give a mixture of great holiday cookies or your grandmother’s prize-winning banana bread, your friends and family are sure to welcome the effort. In fact, you might not need to cook at all. If you’re fortunate enough to have some great family recipes that have received compliments over the years, write them out on attractive cards and tie them with a festive ribbon. These great gifts will spread the joy of delicious cooking throughout your circle of friends.
  • Good deeds are gifts, too. Many of the people on your list may value a favor done for them more than any expensive present. Couples with young children would probably be delighted if you offer to babysit so they can have some time together. You can surprise a friend with a very busy schedule by promising to do the weekly shopping for a month. Present each recipient with a beautiful card describing the good deed to be performed. Such efforts cost nothing more than a few hours of your time, but they are greatly appreciated.
  • Check your list twice. First, plan and purchase all you need for the lower-cost presents recommended here. Then, when you move on to higher-priced presents, keep an eye out for sales and comparison shop to get the best prices. You may find you can get the items on your list for less.
  • Consult your financial planner. These ideas will help limit your spending during the busy holiday season. Your local financial planner can offer great advice on how to manage your money throughout the year. Be sure to turn to him or her for answers to all your financial questions. Financial planners promote personal and professional financial security all year round. If you would like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your brokerage, investments, and/or savings goals, contact us at 732.312.1500 or stop in to see us!*

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Common Auto Loan Financing Misconceptions

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AutoLoans“Don’t believe everything you hear.” How many times have you heard this when you were a kid? Well, everyone grows up and it’s time to actually listen to that little old saying, especially when it comes to buying a vehicle. There are tons of common myths and misconceptions out there, but what is the truth behind these myths? Find out the true answers to some of the most common car buying myths right here:

Myth #1  Auto dealers will always have the best loan rate & payment.

This isn’t always necessarily true. Credit unions and other financial institutions also offer competitive rates compared to dealerships. Those who are looking into buying a car should shop around and not only compare rates, but also compare restrictions, to find the best deal that fits their wants and needs.

Myth #2 Seeking multiple pre-approvals/loan offers will destroy your credit rating.

An individual’s credit score will not be affected negatively if seeking multiple offers. The analysis will have to be made within a certain time period of 14 days. However, keep in mind while shopping around this may cause multiple creditors to request a consumer’s credit report.

Myth #3  Auto loan refinancing is expensive.

It’s actually the opposite. Refinancing can drastically reduce your monthly payments and is an option you should consider. Have you stopped into your local First Financial branch location to see how much we may be able to save you each month by refinancing your car loan? Or give us a call at 732.312.1500, Option 4.

Myth #4 Refinancing isn’t an option on an auto loan.

Most people know that refinancing an auto loan can provide the same benefits as refinancing a home loan. They both can save you a lot of money by lowering the monthly payment or interest rate. Many may not know that refinancing an auto loan is actually much easier than refinancing a home loan. You might want to consider refinancing if your current car loan interest rate is above 6 percent, doing so could save you hundreds of dollars each year if you are approved!

Myth #5 Consumers think that even though Credit Unions have better rates – that you have to have perfect credit to get them, or be part of a union or work at a certain company to get them.

You do have to be a member of a Credit Union to get the Credit Union’s rates, and the rate you qualify for is based on your credit worthiness. However, most people do not realize just how easy it is to join a Credit Union these days, and that Credit Unions will at least try to work with you and help you get on the right track to a better financial standing if you aren’t currently. The majority of Credit Unions how have community charters – where you simply need to live, work, worship, or attend school in a certain area in order to become a member of that particular Credit Union. That’s certainly the case at First Financial – to join $5 in a Base Savings Account is needed at all times, and you must live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in New Jersey. Plus, once you are a member – your immediate family can join too.

As always, First Financial offers great low rates – and they’re the same whether you plan to purchase a new or used vehicle!  

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14 Tips to Avoid Cyber Monday Scams

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cyber-monday-discountIn the frenzy of limited time offers, last minute sales and one-click shopping, it can be difficult to stay secure while you shop online, particularly on days like Cyber Monday.

Consumers spend about 1.5 billion dollars on Cyber Monday. Coupled with the boom in sales is a predicted increase in the amount and severity of online scamming and data theft.

Will Pelgrin, CEO of The Center for Internet Security (CIS), a non-profit organization focused on improving the cyber-security posture of both the private and public sector, shares a few helpful tips about staying secure online this season.

1. Don’t Click on Pop-up Ads

Though it may seem obvious, malicious pop-up ads still pose one of the largest threats to web shoppers. According to Pelgrin, studies have shown that a large amount of consumers will click on the “ad” regardless of its message. Be mindful of what pop-ups say, it could be evidence of a security threat.

2. Keep Software Up-To-Date

Though many systems automatically update your software as new features become available, it’s important to keep your programs as current as possible. To avoid security holes, update apps and software minimally once a week, as newer versions appear.

3. Use Strong Passwords

An essential part of online security in any sense is using strong passwords. This means no birthdays, dog names or variations of “1234” for any of your accounts. For help making a strong password, check out this guide: How to Create a Secure Password.

4. Install Antivirus and Anti-Spyware software

When shopping, you don’t want others to be able to track what sites you’re visiting and what information you’re entering online. It’s important to make sure you have antivirus software installed on your computer to protect your sensitive financial information.

5. Enable ‘Timeouts’ on Mobile

According to Pelgrin, more and more consumers are doing the bulk of their holiday shopping on mobile phones. If you’re one of those consumers, make sure to enable a lock screen password, in case your device is lost or stolen. “If your phone isn’t timed out, you’re leaving the keys to your kingdom to whoever picks it up,” says Pelgrin.

6. Use a Secure Connection

Pelgrin recommends that any and all online financial transactions take place through a secure, private Wi-Fi connection, as opposed to using the more vulnerable free Wi-Fi in a coffee shop or library.

7. Avoid Email Advertisements

Your inbox is likely swarming with holiday promotions from all of your favorite (and likely least favorite) brands. To avoid being hacked, the CIS recommends you always enter the shop’s URL in your browser, rather than following the links contained in an email.

8. Shop at Companies You Know

Before you buy from a merchant on Amazon, Etsy or Ebay, check their rating and number of sales. Make sure they have good return policies and clearly posted contact information. If worried, you can always check on a businesses legitimacy through the Better Business Bureau.

9. Use Credit, Not Debit

“There are more security protections on your credit card that may not exist while using your debit card, should your info be taken,” says Pelgrin.

10. Ensure Your Site Is Secure

If you are entering your financial information on a webpage, make sure the URL begins with “https” as opposed to “http” or has a lock in your browser’s search bar.

11. Be Wary of Charity Sites

Though the holidays are frequently the most popular time to make donations to charity, Pelgrin urges consumers to check the legitimacy of your charity’s website.

“Fraudulent sites pop up during disasters and holidays like clockwork. Be alert,” he says.

12. Check Your Location and Privacy Settings

Many apps and websites will automatically share your GPS location by default. Sometimes, apps will change your settings once downloaded. Check what services your downloads have access to in your phone’s privacy settings.

13. Check Your Statements Frequently

According to Pelgrin, some hackers will do very low level theft once obtaining your information, charging small amounts to your credit card to avoid detection. Stay on top of your account statements and keep a record of how much you spend and where.

14. Add Browser Extensions and Security Apps

Pop-up blockers and malware detection extensions will add an extra layer to your security this season.

Happy Safe Shopping!

Click here to view the article source by Max Knoblauch of Mashable.

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5 Big Budgeting Mistakes Most People Make

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Top-10-Big-Budgeting-Mistakes-in-Travel-2Some people take budgeting very seriously. They budget their money down to the very last cent. Others ignore the subject completely and don’t even bother to look at the big picture every now and then.

Regardless of the situation you’re in, there are five budgeting boo-boos that most people make — and they are big. Let’s review these pitfalls so you don’t fall into any of them.

1. Not Tracking Your Actual Expenses

Budgeting is great, but without tracking it against your actual expenses it’s a useless endeavor. The ultimate purpose of budgeting is to determine if your spending behavior is getting you closer to — or further away from — your life goals. A budget is a dream. Actuals are reality. The dream is nice, but it won’t change your life.  Your actual spending, if you track it and make critical decisions around it, can propel you forward in ways you could never imagine. It’s important to track your actual spending every month.

2. Neglecting Emergency Planning

There are two kinds of emergencies. The first kind are involuntary, as in, “Oh my gosh, my car needs a new transmission!”  The second kind are voluntary, as in, “Oh my gosh, I just have to go to Vegas this weekend!”

These are both examples of unplanned expenses that throw most people off track. But they don’t have to. Here’s why. If you look back over your records for prior years, you’ll probably notice that these kinds of emergencies (voluntary and involuntary) pop up about once or twice a year.  If it’s not one thing, it will be another. You don’t know what it will be or what the price tag will be exactly, but people get smacked with “unexpected” expenses in a fairly predictable manner if they view it on an annual basis.  That’s another reason why it really pays to keep good records.

Look at your past “emergencies” to get a sense of how much goes out more or less each year and divide that number by 12 and set that amount aside every month to cover these costs.

3. Forgetting to Allow for Non-Recurring Expenses

Of the people who do track what they spend each month, few put aside the bills that come in infrequently like property taxes and insurance. That’s why, when people are asked what they think they spend on average each month, they usually undershoot it by 30% or more. And that kind of miscalculation poses a huge danger.

If you retire thinking you spend “X” but actually spend 130% of “X” you’ll be back to work before you can say, “Flippy Burger.” Track everything that goes out. It doesn’t matter how you do it. It just matters that you know what it costs you to live on average each month including everything – even non-recurring expenses.

4. Not Expecting the Really Bad Stuff

Do you budget for the really terrible “what if” scenarios? Part of that includes a family continuation plan and that usually includes a discussion about life insurance. According to JD Power and Associates, 40% of the adult population in the United States has no life insurance at all. And according to that same study, 25% of all widows and widowers (35 to 50 years old) feel their deceased spouses didn’t have enough life insurance.

Make sure you know how much coverage you need, carve out a spot in your budget and then put the policy in place. Term life is very affordable. And don’t let health issues stand in your way.  Each insurance company views your health history differently.  Even if your doctor’s chart is really ugly, don’t despair.  You may be eligible for a guaranteed issue policy.  You have nothing to lose and your family to protect, so put the latte down and take care of this.

5. Not Budgeting Your Top Resource: Time

Regardless of how much money you have or don’t have – time is your most precious resource.  Are you budgeting and tracking it?  Don’t feel bad, most people don’t. Something you can try is to make a daily list of three things you need to get done. Only jot down three things because you want to set yourself up for success rather than failure. Keep that list by your side all day long and don’t unplug your computer until you cross each item off the list. Sticking to your list and plowing through it before doing anything else will yield powerful results. You’ll be more effective and feel less stress — it’s a win-win.

Take a look at the way you spend your time and money. Are you satisfied? If not, which of these budgeting tips offer the greatest potential for you? When are you going to start? Why or why not?

Click here to check out our free financial calculators that are conveniently located on our website. We also offer a number of services that can be helpful organizing your finances and getting yourself back on track. If you’d like to sit down and review your current finances with a First Financial expert, contact us to make your complimentary annual financial check-up today by calling 732.312.1500, email info@firstffcu.com, or stop into any branch and ask to speak with a representative.

The article source was written by Neal Frankl for FOXBusiness.

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9 Ways You May Be Sabotaging Your Own Financial Stability

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As human beings, our brains contain psychological barriers that can stand between making smart financial decisions and poor ones. The good news is that once you realize your own mental weaknesses, it’s not impossible to overcome them. Here are nine of the biggest barriers…and some good strategies for fighting them:

Scenario 1: You’re about to buy an engagement ring so you do some research on prices. Most people say three months’ salary is the general budget, so you freak out and request a credit line increase.

What’s really going on: Anchoring.

Anchoring happens when we rely too heavily on the first piece of information offered when making decisions. After encountering the “three month” rule, you find it hard to make a logical decision based your own financial reality or your relationship. You may not have three months’ worth of salary to splurge on a diamond, but you decide to spend within that range because you are anchored to that idea.

Scenario 2: You’re 27 years old, in excellent health and just got promoted. You’re so high on life that you can’t fathom a time when you’ll no longer be young, fit, and financially stable.

What’s really happening: Myopia.

Because you are unable to picture yourself in old age, bad health, or cash-strapped, you’re less likely to save for unexpected events or your retirement. Myopia can be blamed for many depleted retirement savings accounts in the U.S. “Seduced by temporal myopia in their younger years, many people get around to saving seriously for their retirement far too late in their career, in their forties and fifties in many cases, which greatly reduces the amount of money they will have available for their retirement,” says Shlomo Benartzi, a behavioral finance economist and author of “Save More Tomorrow.”

If you’re lacking motivation, try this handy experiment: Use Merrill Edge’s Face Retirement generator, which will take a photo of you as you are today and generate an image of what you’ll look like in retirement. Benartzi’s own research has shown that this kind of reminder can actually give people the jumpstart they need to start saving for retirement.

Scenario 3: You’re watching the market closely and see that a certain stock has been tanking over the last few months. You give it another month, watch it drop again and decide to sell it off before history repeats itself.

What’s really going on: Gambler’s fallacy.

When investors rely on past events to predict the future, they’re shooting themselves in the foot. If a stock is flying or floundering for a year, that doesn’t mean it will continue to do so in the next year, or even in a few months to come. The same thing happens when you buy a lotto ticket because your buddy next door just won $10,000 in a drawing. Just because he won doesn’t change the odds of you winning at all.

Keep your decision-making grounded in the real facts. Analyze your investments before making any sudden moves or following trends.

Scenario 4: It’s open enrollment season for your company’s health care plan and the list of plans is so confusing that you put it off for days until, finally, the deadline rolls around. You give up, re-enrolling in whatever plan you already have.

What’s really going on: Avoidance.

This is a form of procrastination that could really cost you. There are a lot of meaty topics in finance, most of which are about as fun to research as it is to get a root canal. But if you miss a dentist appointment, you can easily reschedule. Mess up your health care election and you could be stuck with the wrong plan for an entire year and pay dearly for it.

Another area prime for avoidance: 401(k) plans. You know you’ve got to enroll so you just skip around until a decent plan name “speaks to you.” Not only could you have signed up for a plan with high fees or the wrong allocations for your risk tolerance, but you will only wind up paying more fees when you finally realize your mistake and have to switch plans.

In addition to a wealth of helpful tools and articles online, many retirement plan providers offer free advisors who are on call to help navigate you through the elections process. If they don’t, it could be worth it to book a one-time consult with a fee-only financial advisor.

Scenario 5: A tech company you love just went public and you’re dying to buy in. You decide to do your homework, but you skirt over the negative headlines, instead clicking on posts singing the company’s praises.

What’s really going on: Confirmation bias.

Investors aren’t machines. They’ve got feelings and like any normal human being, they can’t help but selectively filter out opinions that don’t mirror their own. In doing so, they create a false sense of security that can lead to some pretty boneheaded decisions.

If you want the full picture, you’ve got to seek out information that contradicts everything you thought you knew about a company before you can hope to form a balanced opinion.

Scenario 6: The stock market has just hit rock bottom, taking half of your retirement savings down with it. Shell-shocked and devastated by the loss, you demand that your financial advisor pulls every last investment out of the market immediately.

What’s really going on: Loss aversion.

Loss aversion plagues even the most experienced investors, making them avoid potential gains because they’re too afraid to take a risk.

Anyone who ditched the stock market for fear of further losses after the 2008 crash can blame loss aversion. The average pre-retiree 401(k) balance actually doubled since the recession. People who fled the stock market and never rebalanced their portfolios only rebounded by 25%.

Loss aversion can also have the opposite effect, causing investors to cling too tightly to losing investments. Because it hurts to admit that they picked a losing investment, they focus on selling off winners and hope they’ll rebound over time. If they aren’t careful, they wind up with a portfolio full of flops.

Scenario 7: You’re a savvy investor and you know you’ve got the goods to beat the market. So you jump in and start trading like a madman, trusting your gut and your own due diligence not to lead you astray.

What’s really happening: Overconfident investing.

It takes seriously overconfident investors to kid themselves into thinking they can beat the market when even the people whose full-time job is to beat the market fail so frequently.

Terrence Odean’s oft-mentioned study, “Trading is Hazardous to Your Wealth,” isn’t just a cute bedtime story for investors looking to stroke their egos. It actually shows that frequent trading caused by overconfidence can kill your returns.

Of more than 66,000 households using a large discount broker in the mid-1990s, those who traded most often (48 or more times a year) saw annual gains of 11.4 percent, while the market saw 17.9 percent gains, Odean found.

Scenario 8: You’re still working on building up your emergency fund and you just got a birthday check for $100. Instead of adding it to your savings account, you treat yourself to a new coat or a haircut.

What’s really going on: Mental accounting.

Mental accounting takes place when we assign different values to money depending on where we get it from. If you had earned that $100 by working overtime one week, chances are you’d treat it more like regular income and save it.

Mental accounting is a big reason why we spend more money with credit cards than using hard cash. It just feels “less” like money to us and therefore it’s much easier to spend.

Instead, repeat this mantra: “Money is money, no matter how I get it.” And the next time you use your credit card, ask yourself if you’d be spending that money if you were using cash instead. If the answer is no, hold off.

Scenario 9: A housing development in your county just went belly up and you’ve heard investors are snapping up cheap plots for a steal. You’ve got no experience flipping houses but you’re not about to miss out on a hot ticket like that.

What’s really going on: Herd mentality.

You’ve spotted a hot trend and you don’t want to be the only one out there who didn’t book a seat on the bandwagon. As human beings, it can be very uncomfortable standing still while the rest of our peers head the other way looking like they’re having a ball. It’s in our nature to want to join the party.

This causes a lot of problems when it comes to investing. If you’re willing to change course every time the herd moves, you’ll end up trading a lot more frequently and seeing your returns nibbled to bits by transaction costs alone, not to mention what will happen if the herd leads you astray.

Cotton on to a trend too late and you’ll just lose out when the herd moves on to hotter territory later on and your stock plummets. It’s just a vicious cycle that will only lead to selling low and buying high. The only way to profit from a trend is to get there before anyone else and the odds aren’t in your favor.

To set up a no-cost consultation with our Investment & Retirement Center located at First Financial to discuss your insurance and financial questions, call us at 732.312.1500 today!*

Article by Mandy Woodruff of Daily Finance.

*A First Financial membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties. Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are: