Tag Archives: Financial Tips

7 Worthwhile Ways to Use Your Tax Refund

 

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According to the Internal Revenue Service, more than 70 percent of the nation’s taxpayers received a tax refund averaging nearly $3,000 in 2017 and will get a similar amount this year. As Americans receive their refunds along with additional benefits coming from the Tax Cuts and Jobs Act passed in December, we have highlighted seven tips to help them use their money wisely.

To help consumers make the most out of their money, We have provided you with the following tips.

  • Save for emergencies.  More than 60 percent of Americans are not prepared for unexpected expenses. You can prepare by opening or adding 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.
  • 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, your child’s education or future health expenses. Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Your bank can help set up an IRA, while a 401(k) is employer-sponsored. Look into opening a tax-advantaged 529 education savings plan to ensure school expenses will be covered when your child reaches college age. Or save for future health expenses with tax-free dollars by investing in a Health Savings Account.
  • Pay down your mortgage or student loans.  Make an extra payment on your mortgage or student loans each year to save money on interest while reducing the term of your loans. Be sure to inform your lender that your extra payments should be applied to principal, not interest.
  • Invest safely with U.S. savings bonds or municipal bonds. The U.S. Treasury allows for savings bond to be purchased using your tax refund for as little as $50. Savings bonds earn interest for a maximum of 30 years.
  • 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 – and with tax credits (as long as Congress continues to renew the program).
  • Donate to charity.  The benefit is two-fold: Giving to charity will make a difference in your community, and you can also claim the tax deduction, if you itemize.

Resource information provided by the American Bankers Association.

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4 TIPS TO GET FINANCIALLY FIT

The New Year is an ideal time to set new goals, as many vow to become more physically fit or get organized.  The New Year is also a great time to assess your finances, gain control and stick to a new budget or saving plan. Taking control of your personal finances will allow you to save and prepare for unexpected expenses.

Get financially fit this January.  Follow the tips below to get started.

Get Organized Consider treating yourself to a post-holiday gift of a financial organization system.  Alphabetized file folders, or filing systems specifically for financial organization are available in January as people begin to prepare for tax season.  Take advantage and start the New Year with an organizational system.  While you’re getting organized, consider buying a shredder to keep your personal information safe from identity theft.

Create a Budget Track your income and expenses to see how much money you have coming in and how much you spend.  If you have debt, establishing a budget will help you to pay down your debt while saving. Use computer software programs or basic budgeting worksheets to help create your budget.  Include as much information as you can and review your budget regularly.  Print several copies of this budgeting worksheet to help you get started.

  • Identify how you spend your money.
  • Set realistic goals, especially if you plan to cut some of your expenses.
  • Track your spending and review your budget often.
  • Points to consider when cutting debt:

Lower Your Debt Debt from student loans, mortgages and credit cards is nearly unavoidable.  Most families carry about $10,000 in credit card debt.  Spending more money than you bring in can lead to financial stress.  Establish a budget to pay down debts while you save.

  • Pay more than the minimum due and pay on time.
  • Pay off debt with higher interest rates first.
  • Transfer high rate debt to credit cards with a lower interest rate.
  • Use credit cards and loans for purchases that will appreciate in value like a home.

Save for the Unexpected and Beyond Pay yourself first.  Saving is important; it ensures a comfortable future that can endure financial surprises.  No matter how old you are, it’s never too late to begin saving.

  • Save at least 10 percent of your income for retirement.  Enroll in a retirement plan or consider optimizing an established retirement plan.  Contribute at least the maximum amount that your employer will match.  Contributions made to these types of plans are tax deductible.  If your employer does not offer a retirement savings plan, many banks offer Individual Retirement Accounts.  IRAs offer tax-deferred growth, meaning you pay taxes on your investment gains when you make withdrawals.
  • Financial advisors often recommend keeping about three months’ salary in a savings account in case of financial emergencies like hospital bills or loss of job.
  • Increase your contribution as your income increases.
  • If you receive direct deposit at work, ask your employer to send a specific amount to your savings account.  Because the money is put into an account before you have a chance to spend it, automatic savings plans are an easy and convenient way to save.  If your employer doesn’t offer direct deposit, many banks allow for automatic transfers from checking to savings accounts.

Resource information provided by the American Bankers Association

The Basics of Creating a Life Plan

by Claudette W. Patton, J.D.

Stock Yards Bank Wealth Management & Trust


Preparing a Life Plan is all about living and making good choices about your legacy. Most people avoid planning because they think it’s morbid to think about death, but a Life Plan – estate planning – isn’t about dying at all. It’s simply providing direction for your legacy and determining how you want to be remembered by your community, family, charities, and personal causes. It is a chronicle of your life’s work with a plan to continue the fruits of your work for the benefit of others.

The most important question remains: “Do you want to control your personal life legacy?” A well written and thought out Life Plan keeps you in control of your life even after you’re gone. The list of those who do not plan is replete with examples of unintended ex- spouses, estranged siblings, children with addictions, and others being granted inheritances by state intestacy law (lawyer lingo for “without a will”). A recent example of a man who did not control his legacy is the music legend, Prince. According to court documents filed in a Minnesota probate court, Prince Roger Nelson left no instructions to divide his belongings. As a result, state law could divide his vast estate equally among 8 siblings. It is reported Prince has one surviving full sister, five surviving half siblings, and two deceased half siblings (with surviving children). Some of these heirs had not spoken with Prince in over twenty years. However, Minnesota state law does not distinguish between full and half siblings, plus any personal relationship to Prince is irrelevant. Would Prince have approved of this distribution? Would you?

The following is a Life Plan “Control Checklist” to assist in protecting and directing your legacy:

Control Who Inherits Your Legacy and Designate The Amount For Each Heir

Many people assume everything in an estate automatically goes to the spouse. Please be aware not every state law automatically passes the entire estate to a spouse! I repeat. A spouse may not automatically inherit everything without a Will. Some states only allow a spouse 1/3 of an estate due to parental inheritance distribution laws. According to Kentucky intestacy law, a spouse may be fourth in the line of distribution. Also, state laws typically divide assets equally to the state designated heirs without consideration of a spendthrift relative, or someone with special medical needs. Children born out of wedlock may not be recognized in some states. Charitable giving may not occur. Additionally, if no living descendants are located the estate may “escheat” (go to) to the state coffers.

Control Who Will Take Care Of Your Minor Children

Preparing a Will and naming a guardian for your children places you in control of the person(s) you desire to meet the needs of your children and reflect your values. Without a Will the court may select a guardian from any family member, regardless if you were estranged during your life. If no family member agrees to guardianship or is deemed appropriate, the court may choose a state appointed guardian such as foster care.

Control Estate Taxes

Controlling taxes is a continuous event during our lifetime. An estate plan continues the control in minimizing estate taxes. A spouse may not take an inheritance tax free. Now is the time to put a plan in place to ensure the maximum of your legacy goes to your heirs rather than for taxes. Let’s revisit the example of music legend Prince. Without a Will or other estate planning, roughly one half of Prince’s estate could go to Federal and state taxes.

Control Probate

Having an estate plan helps speed the probate process, reduces probate costs, or in some circumstances, avoids probate completely.

Control Who Does Not Inherit

Earlier we discussed a plan to choose the exact people who receive your legacy. Now, we draw attention to controlling who will not inherit from your estate. An estate plan is your personal outline and direction of exactly how you want your personal legacy to be distributed. The estate plan allows you to be as detailed as possible and gives you the opportunity to exclude heirs making your intention of distribution clear. For example, perhaps some family members are financially established and you want to distribute assets based upon need, perhaps a family member may be incapable or irresponsible with money management needing small distributions of money over time using a trust, or perhaps a family member participates in lifestyle choices you may not wish to support.

Control Family Feuding

Estate planning may reduce the fighting and conflict among family members. Executing a well drafted estate plan places you in control of potential conflicts. Family members may not view your clear directions of dividing assets in a favorable manner, but your intentions will be clear to the court. Further, some states allow forfeiture/no contest clauses, indicating if an heir contests your estate plan then the heir may forfeit any gift made under the Will.

Control Charitable Legacy

An estate plan allows your legacy to live on by personally choosing charitable giving reflective of your values, interests, and social concerns.

Control Financial and Medical Care

Through estate planning with a Durable Power of Attorney, you control your financial and medical care in the event of a disability.

You can take control of your Life Plan now by engaging an experienced estate planning attorney to assist with the personal legacy you want to create. An estate plan expresses your values and outlines how you desire your assets to be preserved and protected. Who is in control of your legacy?

For more information about Life Plans, please contact our Wealth Management and Trust department.

4 Tips to Avoid the Grandparent Scam

The next time you receive a frantic call from someone saying they are your grandchild and asking for money, make sure it’s actually your grandchild who’s calling.

According to the Federal Trade Commission, in 2016, impersonation scams ranked second as the most common consumer complaint, with more than 400,000 reported. The “grandparent scam,” is a form of financial abuse that deliberately targets older Americans using impersonation tactics.

To commit this crime, fraudsters call claiming to be a family member in serious trouble and in need of money immediately. The scammer might say he’s stranded or has been mugged, and call in the middle of the night to add to the urgency and confusion. Once the money is wired, the victim later finds out that it wasn’t their grandchild they were helping, it was a criminal.

In recognition of May as Older Americans Month, Stock Yards Bank & Trust offers older Americans these tips to help them prevent impersonation fraud:

  • Confirm the caller. Fraudsters are using social networking sites to gain the personal information of friends and relatives to carry out their crimes. Verify the caller by calling them back on a known number or consult a trusted family member before acting on any request.
  • Don’t be afraid to ask questions. Fraudsters want to execute their crimes quickly. The more questions you ask the more inclined they will be to ditch the scam if they suspect you’re on to them.
  • Never give personal information to anyone over the phone unless you initiated the call and the other party is trusted.
  • Never rush into a financial decision and trust your instincts. Don’t be fooled – if something doesn’t feel right, it may not be right. Feel free to say no and get more information before you send money to someone.

Resource Information Provided by the American Bankers Association

6 Financial Traps New College Graduates Should Avoid

This spring, college seniors across the nation will graduate and start their careers. Financial lifestyle should be top of mind, says the American Bankers Association. ABA has highlighted six traps new college graduates should avoid to fortify their finances as they transition from the dorm to the office.

“Now is the time for college grads to get their financial life started on the right foot,” said Corey Carlisle, executive director of the ABA Foundation. “When it comes to managing your finances in the real world, pulling an all-nighter isn’t the best strategy.  Forming positive financial habits today will set you up for lifelong success.”

According to ABA, new college graduates should avoid the following financial traps:

Not having a budget.  Don’t spend more than you make. Calculate the amount of money you’re taking home after taxes, then figure out how much money you can afford to spend each month while contributing to your savings. Be sure to factor in recurring expenses such as student loans, monthly rent, utilities, groceries, transportation expenses and car loans.

Forgoing an emergency fund.  Make it a priority to set aside the equivalent of three to six months’ worth of living expenses. Start putting some money away immediately, no matter how small the amount. A bank savings account is a smart place to stash your cash for a rainy day. Use your tax refund for this instead of an impulse buy.

Paying bills late – or not at all. Each missed payment can hurt your credit history for up to seven years, and can affect your ability to get loans, the interest rates you pay and your ability to get a job or rent an apartment. Consider setting up automatic payments for regular expenses like student loans, car payments and phone bills.

Racking up debt. Understand the responsibilities and benefits of credit.  Shop around for a card that best suits your needs, and spend only what you can afford to pay back. Credit is a great tool, but only if you use it responsibly.

Not thinking about the future.  It may seem odd since you’re just beginning your career, but now is the best time to start planning for your retirement. Contribute to your employer’s 401(k) or similar account, especially if there is a company match. Invest enough to qualify for your company’s full match – it’s free money that adds up to a significant chunk of change over the years.

Ignoring help from your bank. Most banks offer online, mobile and text banking tools to manage your account night and day.  Use these tools to check balances, pay bills, deposit checks, monitor transaction history and track budgets. To learn about the tools Stock Yards has to offer, visit our website at www.syb.com.

Resource information provided by the American Bankers Association