Category Archives: Money

All You Need Is Love — And Financial Intimacy

It’s the season of love, but before couples taking the next step in their relationship, they should shape their financial plan. Stock Yards Bank & Trust reminds customers that taking the next step is not only a marriage of hearts but also a marriage of finances.

Stock Yards Bank & Trust suggests couples use the following tips to achieve financial intimacy:

1. Be mine, or yours? Will you and your spouse-to-be keep finances separated or combine them? Consider individual money styles, having one joint savings account and then separate accounts that you can use how you’d like. Making these financial decisions together will help you find a system that works for you.

2. Love’s Cost. Couples that tackle money problems together, and take mutual responsibility for solving them, will inevitably find that their overall relationships are better for it, so calculate your monthly costs and discuss how bills will be paid. Both may contribute to the bill payment, but who will physically write the check to pay the bills, monitor the investments and take care of the taxes. Consider setting a date every month to review and discuss finances.

3. Sharing Credit. It’s important that spouses are aware of the others’ credit situation. Marrying a person with bad credit will not drag down your stellar record. However, your other half’s credit will be factored in when applying for joint financing. Knowing ahead of time will help you to plan more strategically.

4. Cupid’s Arrow. Couples should develop a plan to shoot down existing debt, starting with the balances that carry the highest interest rates. Whether or not the pair works as a team or alone, debt must be tackled. Think twice before every purchase and ask yourself if it’s worth not putting that money in your savings. You’ll be able to eliminating frivolous spending this way while keeping your priorities top of mind.

5. Sweet Savings. Saving as a couple fosters teamwork and is essential in times of financial hardship. Decide how much you want to save as a couple and do it automatically from your paychecks. It’s important to be realistic when budgeting your monthly savings goal.
Resource information provided by the American Bankers Association.

First-Time Homebuyers: 6 Tips to Save for the House of Your Dreams

According to a 2015 BMO Harris report, 52 percent of Americans plan to buy a home in the next five years.  Saving for a down payment, typically between 5 to 20 percent of the home’s value, is one of the biggest challenges for those aspiring homebuyers. The American Bankers Association Foundation is highlighting six tips to help consumers cut costs and start saving.

“A down payment is often the largest single payment a consumer makes in their lifetime and saving for it isn’t easy,” said Corey Carlisle, executive director of the ABA Foundation. “However, with a few changes, consumers can put themselves on track to make their homeownership dream a reality.”

The ABA Foundation offers prospective homebuyers these saving strategies:

Develop a budget & timeline. Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

Establish a separate savings account. Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash. If you received a tax refund, consider putting all or a portion into this account.

Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

Celebrate savings milestones. Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

Look into state and local home-buying programs. Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants. Stock Yard’s Mortgage Banking Group can help you determine what types of offers are available in your area.

Information provided by the American Bankers Association.

6 Banking Tips for Millennials

As millennials juggle a multitude of responsibilities – from school, to work, to planning for major life events – the American Bankers Association is highlighting eight banking tips to help them secure a financially sound future.

“Millennials are digital natives who understand the importance of staying connected socially, but staying connected to their bank can help their finances as they encounter life’s many milestones,” said Rob Nichols, ABA president and CEO. “From enhanced mobile resources to free budgeting tools, banks offer a variety of products and services to complement millennials’ unique lifestyles and ease their worries as they prepare to make some of life’s biggest financial decisions.”

With a recent report finding that more than 4 in 10 U.S. millennials say they are “chronically stressed” about money, ABA recommends these six tips to help them secure a strong financial footing:

  • Use bank tech to save without thinking about it. Consider automatic payroll deductions or automatic transfer from checking to savings. Arrange to have a specific amount transferred to your savings account every pay period. For more information on Stock Yard’s savings options, visit https://www.syb.com/personal/banking/savings.
  • Download your bank’s mobile app and make some smooth moves. Manage your finances from the palm of your hand. With the click of a button, you can easily make a deposit or access a record of all your recent transactions. Be sure to download the latest updates when they are available.
  • Use the personal finance tools your bank may offer. Banks offer an array of budgeting tools and resources to help you keep your finances in check. Access these via your bank’s mobile app and website. Check out Stock Yard’s calculator tools to help you organize financial goals.
  • Expect the unexpected – set up a rainy day fund. The last thing you want to be is stressed when life’s unexpected expenditures come knocking on your door. Set up a secondary checking or savings account for emergencies or link an existing account to your main account as an added layer of protection.
  • Get a head start. Banks play a major role in helping customers prepare for major life events such as buying a house and planning for retirement. Ask your banker how you can get a head start on your first major purchase by establishing credit or about starting a retirement account with a 401(k) from a previous employer.
  • Stay connected with social media. Interact with your bank via social media to get the latest news on products and services, ask bank-related questions and find links to exclusive bank content and resources. Visit Stock Yards on Facebook, Twitter and LinkedIn.

For more information on millennial bank customers, including ABA’s recent infographic on millennials compiling information from various sources, visit aba.com/Millennials.

Information provided by the American Bankers Association.

Budgeting 101

Rainy-day funds, savings for college, or just making your rent payment can all be made easier with a budget. Although a simple and oftentimes overlooked strategy, budgeting your finances will help make the difference in managing your money. Putting together a household budget requires time and effort. Stock Yards offers the following steps to create a budget:

• Be a Spending Sleuth. Track every penny you spend for a month. Keep receipts and write everything down. This will be an eye-opening experience and will help you see where you can cut back.

• Count Your Money. Determine the total amount of money coming in. Include only your take home pay (your salary minus taxes and deductions). Your income may also include tips, investment income, etc.

• Itemize, Categorize, and Organize. Review the records and receipts you’ve been collecting over the last month. Categorize your spending using a budget sheet. You can utilize the free templates in Microsoft Excel to create a budget sheet that is fit for you and your family.

• Achieve Your Goals. Set a realistic financial goal and develop your budget to achieve that goal. Subtract your monthly expenses from your monthly income. Find ways to cut spending and set limits on things like entertainment expenses.

• Save, Save, Save. Make one of your financial goals to save a certain dollar amount each month. Start an emergency fund if you don’t already have one. You never know when you may need it.

• Stick to it. Keep track of your spending every month. Update your budget as expenses or incomes change. Once you achieve your financial goal, set another.

Resource information provided by American Banker’s Association.

Save or Spend: 5 Ways to Make Your Refund Count This Tax Season

According to the Internal Revenue Service, the nation’s taxpayers received an average tax refund of nearly $3,000 in 2015. This year, with more than 70 percent of taxpayers receiving a refund, the American Bankers Association is highlighting five tips to help them make the most out of their windfall.

“Tax season is a great time for consumers to reassess how they allocate extra cash,” said Corey Carlisle, executive director of the ABA Foundation. “It’s wise to take steps toward securing your financial well-being like storing your refund for rainy days or using it to get a jumpstart on saving for retirement.”

To help consumers make the most out of their money, ABA has highlighted the following tips:

• Save for emergencies. Open or add to a savings account that serves as an “emergency fund.” Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car. Click here for more information regarding Stock Yard’s account options.

• Pay off debt. Pay down existing balances either by chipping away at loans with the highest interest rates or eliminating smaller debt first.

• Save for retirement. Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Where can you get one? Stock Yards can help set up an IRA, while a 401(k) is employer-sponsored.

• Put it toward a down payment. The biggest challenge that most first-time home buyers face is coming up with enough money for a down payment. If you intend to buy a new home in the near future, putting your tax refund toward the down payment is a smart move.

• Invest in your current home. Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home. This can include small, cost-effective upgrades like energy-efficient appliances that will pay off in both the short and long term. If you have more substantial renovations in mind, your bank can help with a home equity line of credit. Click here for more information on how to make the most of your investment.

Resource information provided by American Bankers Association

6 Money Mistakes Newlyweds Should Avoid

With wedding season upon us, many newlyweds will soon be managing their finances as a pair. The American Bankers Association is encouraging couples to waste no time addressing how they will handle money issues as spouses and financial partners.

“Developing a financial plan can often take a backseat to the excitement of a wedding,” said ABA president and CEO. “But it’s important to remember that this is not only a marriage of hearts but also a marriage of finances.”

To help couples start their journey on strong financial footing, ABA warns consumers of these post-wedding money mistakes:

  1. Avoiding the money talk. Discussing your finances can be a bit uncomfortable for many couples, but those who tackle it head on will be better for it. Understand your partner’s financial goals and spending habits. While you may have different answers, this conversation can help you develop an approach to money management that works for both of you.
  2. Not setting a budget. A mistake many couples make is not establishing a budget early on. After assessing your finances as a pair, determine how you’ll spend your money each month. Are there certain expenses that you should be cutting back on and others you should be saving up for? Coming to an agreement on these things and setting a budget will be beneficial for the health of your bank accounts and your relationship.
  3. Not having a plan for your accounts. There is no ‘right’ way to manage your accounts. Couples can choose to have exclusively joint accounts, a joint account as well as separate accounts for saving or personal spending, or keep things entirely divided. Discuss your preferences together and decide what makes you both the most comfortable.
  4. Failing to set up an emergency fund. Life is full of surprises and unfortunately, some of these surprises can be expensive. Having an emergency fund will help you avoid precarious financial situations should something come up. It’s important that you decide together how you’ll set aside the money.
  5. Not establishing a minimum cost for discussing big expenses. While not all purchases demand a conversation, more expensive ones that impact the family budget should. Determine what that threshold is as a couple. For any expenses above that cost, you both should be in agreement on whether it’s a necessary purchase.
  6. Forgetting to update your beneficiaries. Now that you’ve officially tied the knot, you should likely identify your spouse as the person who will receive the benefits of your will, life insurance policy and financial accounts like your 401(k), checking and savings. Don’t make the mistake of waiting for an emergency to arise to handle this.

    Resource Information Provided by the American Bankers Association

Global Market Update

An Update on Recent Events in the Global Market

Global stock markets are continuing to decline with the S&P 500 down .74% yesterday morning , -3.33% year-to-date (YTD), and the MSCI World Index ex USA down 1.11% and -3.86% YTD.  Volatility measures for financial assets are also rising significantly.  There are several causes for the decline:

Oil Prices:  Oil prices continue to decline, which negatively impacts energy stocks.  The decline in commodity prices is also an early warning sign of decreased manufacturing activity.  Energy and commodity price weakness can impact a number of business sectors from steel to heavy equipment and all sectors are feeling the negative impact of lower prices and demand.

Geopolitics:  The North Korean nuclear test, ISIS, the dispute between Saudi Arabia and Iran, and the European immigration problem are all negatively impacting stock prices.  In addition, cyber terrorism continues to become a real threat.

Slowing Global Economic Growth:  The recession in Japan and continued slow growth in the Eurozone are instilling fears that global growth will fall and spillover into the US economy.

China:  China devalued the Yuan for a second time this week as growth slows as a result of its transition from a manufacturing to a consumer-driven economy.  The Chinese stock market declined 7% yesterday before the government implemented a trading suspension for the day and the Shanghai Composite is down roughly 15% from its December high.

Uncertainty:  Markets hate uncertainty, and there is a lot of it right now.  How much, how long, and when will the Federal Reserve increase interest rates again?  What will happen with US elections this year?  Will the United States experience another recession? Markets move on uncertainty in the short-term, but they focus on fundamentals in the long-term.

Fortunately, however, there are some positives!

US Economy:  We do not believe the United States will fall into a recession in 2016.  Recent economic activity continues to be positive on the services and employment front.  This is fueling an increase in consumer spending which is up 3.2% year over year.  Consumer goods and services represent the majority of our economy and are a good indicator of future economic growth.

Capital:  Capital continues to flow into the United States because of the stability of our economy and political system.  This should provide support for stock prices.  The low level of global interest rates makes the United States markets one of the more attractive investment alternatives.

Stock Prices:  Stock prices, while expensive, are still trading within a normal valuation range.  The forward PE ratio on the S&P 500 is at 23 times earnings as of Dec. 31st and the norm is something close to 17.5 times earnings.  The higher multiple can, at least partially, be justified by our very low interest rates.

Portfolio Diversification:  Diversification provides a safety net to portfolios during periods of uncertainty and increased stock market volatility.  Nearly all of our clients’ accounts are committed to fixed income in order to provide a cushion to portfolios during these periods of stock market volatility.

Security Selection: Our security selection process continues to concentrate on high quality, dividend-paying stocks, with conservative financials.  These companies provide protection in volatile stock markets because of their consistently strong sales and earnings and stable dividend yield.

If you have any questions or would like additional insight on any of the above points or would like more information about the Wealth Management Group at Stock Yards Bank & Trust Company, please call us at (502) 625-1605.