Making Good Money Managers Out of Your Kids

One of the most important things we can teach our children is how to successfully manage their money. This, along with good manners, will help them achieve their goals as they become adults.

Sharing good money management techniques with your kids can start as early as elementary school. In fact, we recommend the following tips to teaching your children good habits based on their age.

Elementary/Middle School

  1. Open a Savings Account for each of your children at the age of 5 (or as close to it as possible).
  2. Give the new Savings Account a Nickname, using the respective Child’s Name so you can periodically show them their savings account balance.
  3. Fund the account with around $100 to get them started.
  4. Each time your child receives money as a gift, have them deposit half into their new Savings Account and spend the other half on something fun.
  5. When your child wants to buy something, you can show them the balance on their account, so they can see how much it would cost them to purchase the item. This will give them an idea of how long it takes to save for certain items.
  6. If possible, provide your child with opportunities to make money. You can give them the option to unload the dishwasher, take out the trash, and/or unload groceries for $5 per chore. Then, have them put half into their Savings Account and spend the other half on something fun. They may want to put their “fun money” into a Piggy Bank and save it up for something bigger.

High School

  1. Make sure your child has a Savings Account designated for them at the beginning of high school. If not, open one as they start their freshman year.
  2. Apply the same practice as noted above, encouraging them to put half of the money they receive into their Savings Account, spending the other half on something fun.
  3. Offer your child various opportunities to make money around the house for doing chores such as mowing the lawn, cleaning the family bathroom, taking out the trash, etc.
  4. If your child is interested in having a car at 16, or any other big purchase, they may want to use their Savings Account to save for it. Consider telling them you will match whatever they save, if this fits in your budget.
  5. Show them their statements and screenshots of their Savings Account balance, so they understand how long it takes to save money.
  6. When they turn 16, take them to the Credit Union to open a Checking Account and a Savings Account in their name. When they earn money, they can put half into their Savings Account and the other half into their Checking Account. Help them review their transactions weekly and balance their budget monthly.

College

  1. These young adults should be entering college with some knowledge of how to manage a budget, along with their own Checking and Savings accounts.
  2. Prior to dropping them off at school, go through their monthly expenses. Also review their monthly income, whether it be from a job, their allowance or from a student loan.
  3. Have them calculate how much they need to cover their monthly fixed expenses: tuition, rent, utilities, cell phone, food, followed by how much they have leftover to spend on fun things.
  4. Monthly Income: Work Income + Allowance + Student Loan $
     
    Monthly Expenses: Tuition + Rent + Utilities + Cell Phone + Food
       
      =
    Discretionary Income: Leftover Each Month to Either Save or Spend
  5. After their first year of college, we recommend they apply for their own credit card with limited spending power, maybe $500. This will allow them to start to build credit and further learn how to manage their money.

Last but not least, it is important to remember that setting a good example for our children is always the most effective way to teach them good habits, the same is true for instilling good money management skills. Don’t be afraid to share how much things cost relative to how much you make, let them know how much you have to spend weekly and how you budget to meet your family’s objectives. Talking about money can be fun and should be started early, so the subject is comfortable for all.

 

IRA Contributions Deadline Extended to May 17, 2021!

The Internal Revenue Service recently announced that individuals have until May 17, 2021 to meet certain deadlines that would normally fall on April 15, such as making IRA contributions and filing certain claims for refund. So, it’s not too late to open an IRA and/or make a contribution to help manage your tax exposure.

When it comes to IRAs, you have a couple of options and opportunities, each coming with different tax benefits and intended uses. There are also contribution limits based on age and timing restrictions. To help you decide which type of IRA is right for you, and so you can make an informed decision that may help you reduce your tax burden this year, here is some insight into Traditional and Roth IRAs.

Traditional IRA

A Traditional IRA is a type of retirement account in which individuals can make pre-tax contributions and the investments in the account grow tax-deferred. In retirement, the owner pays income tax on withdrawals from a Traditional IRA. The maximum contribution amount is $6,000 per year for those up to 50 years of age; $7,000 for those over 50 and these contributions can be made up to the age 70 ½. At the age of 72, there is a required minimum distribution on Traditional IRAs, which is determined by an IRS formula.

The two big benefit of a Traditional IRA are:

  1. Since Traditional IRAs provide an opportunity for tax-deferred earnings (earnings are taxed when withdrawn), they can be particularly helpful to those who anticipate being in a lower tax rate in retirement.
  2. Traditional IRA contributions may be tax deductible, reducing tax burdens for contributors.

Roth IRA

A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. Roth IRA rules dictate that as long as you have owned your account for 5 years and you’re age 59 ½ or older, you can withdraw your money when you want to and won’t owe any federal taxes. One thing to consider is that with Roth IRAs, you are contributing post-tax money, which impacts your current income. The maximum contribution amount is $6,000 per year for those up to 50 years of age; $7,000 for those over 50.

The benefits of a Roth IRA are:

  1. Roth IRAs offer tax-free earnings and withdrawals.
  2. Regular contributions can be withdrawn anytime, tax-free and penalty free.
  3. Unlike the Traditional IRAs, there are no mandatory withdrawals at age 72.

Wheelhouse Credit Union offers both types of IRAs, each with the option to be opened as a Daily Savings Account, a Certificate or both. There is no monthly service charge for either type and they are federally insured by NCUA up to $250,000. We recommend checking with your professional tax advisor for direction and answers to questions specific to your personal financial situation.

Note: Although a normal/qualified distribution may not have an IRS penalty, if an IRA is set up as a Certificate and a distribution is taken during the Certificate term, then an early withdrawal penalty will apply.

 

Happy International Women’s Day: Top Tips for Women in Business

In honor of International Women’s Day, we’ve gathered the top tips from the women who serve on our leadership team. Together, they draw from their experiences to share their advice for fellow working women who strive to one day be in their own position of leadership. Here’s what they said:

Becky R.-A, VP, Human Resources

Becky said that although it may sound cheesy, this reminder has helped her to continually push past barriers and achieve success in her endeavors:

“Problems are simply opportunities to succeed, so don’t let a problem prevent you from rising to a challenge.”

Gay P., VP, Sales & Service

Gay reflected on her journey up the corporate ladder at shared her thoughts on becoming a strong female leader in the working world:

“Respect is something you earn; it doesn’t come with the title or position. Be honest, direct, humble and a good listener. It’s OK to say, ‘I don’t know.’”

Jill F., VP, Marketing

Jill said that in her career, she has found that holding these principles in the highest regard have been to her personal and professional benefit:

  1. Take care of the people around you because it’s the right thing to do.
  2. Be the person that you most admire.
  3. Be an expert in your field, contribute to your team and share the success with others.

Lisa C., VP / CFO

Lisa shares that these attributes have helped her to become the leader she is today and believes they are key to being a positive and effective leader:

  • Be innovative; always think outside the box to reach for the impossible.
  • Be grateful to your team; appreciation them for their efforts and contributions.
  • Be humble and selfless; foster your team’s wellbeing and unlock the individual potential.
  • Be empathic and supportive; build an emotional connection with your team.
  • Be assertive; it is acceptable to show your position with a firm and objective conviction.
  • Be a fair leader; people don’t need to be managed, they need someone taking the initiative and leading by example.

Lisa P.-H, President & CEO

On her journey to becoming the President & CEO of Wheelhouse Credit Union, Lisa has learned a lot about what it takes to be a female leader in business. She said, “if I were to give young women a tip or some advice, I would say believe in yourself, be kind and persevere. I have always been a believer in working hard, surrounding yourself with good people and learning all that you can.”

Lisa adds:

  • Find a mentor(s) and help to mentor others.
  • Honesty, integrity and empathy should be your guiding principles. It will create a culture of trust.
  • Be humbly confident, but not afraid to show your strength.
  • Don’t lead so far in front that you forget the people you need most and that need you.
  • Walk alongside and get involved in your community.
  • To help you ground yourself in a purpose, find and support a cause you are passionate about.
  • Bring your passion to work to inspire passion in others.
  • Always be willing to fail upwards by taking ownership of your mistakes. There will be times things don’t work out as planned; make sure to find the wisdom in each lesson.

“At the end of the day, you should be able to reflect back and be proud of your work and interactions with others. I believe your work is your signature. It says a lot about who you are as a person…oh, and don’t forget to have fun and enjoy the moments, both big and small.”

All in all, our key takeaways for women who strive to be leaders in their field are be true to yourself, be honest, humble, and gracious, know your field, rise to the challenge, and don’t be afraid to fail.

To all our fellow women, Happy International Women’s Day.

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