Women less prepared for retirement than men

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From Women less prepared for retirement than men, clarionledger.com

PDF: Women retirement men

If you were to ask a person in their middle 20s about their plans for retirement, most would probably shrug their shoulders and tell you they’d given it little thought. Even many people in their 40s (while most would have thought about it) wouldn’t really have a good idea about how they planned to finance their dreams once they leave the workforce. Perhaps unsurprisingly, many of us just aren’t very good at planning for the future.

But we should be. As lifespans increase and people stay in the workforce longer, people will need to have some way to finance their lifestyle in retirement. Most retirement planning experts agree that good planning can help you overcome rising prices, economic uncertainties, and taxes. Women are at special risk for several reasons, not the least of which is because, statistically, they can expect to live longer than the men in their lives.

study this month by Transamerica’s Center for Retirement Studies  points out a number of trends and highlights the need for women to get more involved and proactive about their retirement plans.

“Today’s women are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about,” noted TCRS President Catherine Collinson. “Nevertheless, women continue to encounter challenges including lower pay, time out of the workforce for parenting or caregiving, and longer life expectancies that all contribute to unique challenges in adequately saving for retirement.”

Among the most alarming findings from the study: only about 10 percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle, about half of the rate for men asked the same question. A poorly planned retirement can lead to an inability to deal with the unexpected circumstances — health conditions, sudden unemployment or unforeseen expenses — that could send you into a financial tailspin.

 While about seven in 10 working women say they are participating in some type of retirement savings plan (such as a 401(k) or an employee-sponsored IRA, they probably started saving later than their male counterparts. On average, women who are investing in an employee plan started doing so at 28, compared to 26 for their male coworkers. Two years might not seem like a lot, but it adds up over time, thanks to interest and compounding. Many financial experts with whom I’ve consulted over the years advise young people to start saving for retirement as soon as they enter the workforce.
Another issue: too little savings. On average, women in the survey reported a median household retirement savings of about $34,000, with two-thirds saying they don’t know what they’ll do if they’re forced into retirement sooner than expected. When asked what amount of savings would be adequate, the average respondent said she’d like to have at least $500,000 in the bank. And while many women say they’ll count on Social Security for a portion of their income in retirement, most worry that it won’t be available to them by the time they retire.

“The facts are startling and clear. Women must begin taking greater control and gain an understanding of their true retirement outlook,” Collinson said. “By confronting challenges head-on, women can acquire essential knowledge about how to achieve financial security and create plans that can help mitigate risks and steer them on a course for financial security and a more positive outlook for their retirement ambitions.”

Here are a few of the suggestions contained in the Transamerica report; more suggestions and a report summary may be found at http://bit.ly/2nX3ILo:

  • Start saving on a regular, consistent basis. Even a few dollars can add up over years, thanks to interest and compounding.
  • Participate in any retirement plan offered through your employer. Many offer matching contributions and other benefits, which can significantly increase your investment.
  • Get educated about retirement investing, including learning about how to make your retirement savings last longer, and learn about the best (and worst) times to start drawing Social Security.
  • Get help. Seek the assistance of a qualified financial planner to take a look at your goals and devise a strategy to make it happen. Agingcare.com has some great advice on how to find a good financial adviser at http://bit.ly/2nGYqrb.

Teaching your kids to save

Money, savings, bank.

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via Moak: Teaching your kids to save, clarionledger.com

In our kids’ busy lives, there are a lot of things to distract their attention. Perhaps more so than at any time in history, most children are constantly busy, their lives programmed to the hilt. With their companions now not neighborhood friends, but the ever-present smartphone, TV and computer, few kids today will grow up knowing the simple joy of having carefree summer days, or knowing the peace that comes with finding a quiet place.

This comes at a time when our national financial system is desperately in need of people who know how to save money for future needs, while learning to manage their money in a responsible way. After the major financial upheavals of the past decade, economists point out that many Americans just don’t put money away for the future like they once did.

FITCH: Financial literacy paves road to prosperity

So, how can parents help their kids learn the value of putting away money for a rainy day, or to delay purchases until they can afford to pay for them, rather than relying on credit?

Most experts say it requires a great deal of time and attention, and modeling healthy financial behaviors for our children. One good resource I’ve found is a program called Teach Children to Save (TCTS), a program of the American Bankers’ Association that culminates on April 29. It’s timely, since April is National Financial Capability Month.

MOAK: Are you financially literate?

Teach Children to Save, now in its 20th year, helps train local banks across the nation to conduct financial literacy training in their local communities, focusing on teaching kids the benefits of savings. The program is sponsored by Fiserv, which provides technology products to financial institutions, and is administered by the ABA Foundation.

“Bankers see the benefit of a strong financial education first-hand, so it’s critical we do our part in equipping the next generation with the money skills necessary for a financially fit future,” noted Corey Carlisle, executive director of the ABA Foundation. Carlisle reports the program expects to reach about 430,000 students, and more than 245,000 volunteers have reached more than 8.2 million students since it began.

Local banks in more than 33 Mississippi communities will be participating in this year’s program, including several banks which have adopted the program statewide. (A list may be found athttp://www.aba.com/aba/mem/TCTSProgramParticipationList_new.asp#M). Volunteers are given materials and training to equip them to go into local classrooms, youth centers, after-school programs and other venues. Using their real-world knowledge and professional skills, the program encourages young people to start good financial habits.

“We’re proud to work with the ABA Foundation and our nation’s banks to bring financial education to thousands of students,” said Mark Ernst, chief operating officer of Fiserv. “Teach Children to Save and the Book Award Program are foundational programs for helping to promote reading and good financial habits among today’s youth.”

To find out if TCTS is being provided in your community, or to help schedule a presentation to a local group, call your bank branch.

Are you financially literate?

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via Moak: Are you financially literate?, clarionledger.com

PDF: Are you financially literate

Would you consider yourself financially literate? While most of us would probably answer yes,  it’s likely that we would overestimate our own financial prowess. Today’s financial landscape is a complicated one. Most consumers face a bewildering array of choices, ranging from the simple (choosing one brand of soup over another) to complex (deciding how to invest your retirement savings).

While some organizations, such as the Mississippi Council on Economic Education, are doing a great job with getting financial literacy training into our schools, many young people still find themselves graduating high school or college without learning even rudimentary skills like comparing prices, buying insurance or understanding how the Law of Compounding can help or hurt you.

LYNN FITCH: Financial literacy paves road to prosperity

The stakes are high. Even making a simple mistake, such as not paying your credit card bill on time or overdrawing your checking account, can upset your carefully loaded financial apple cart.  Since April is Financial Capability Month, I decided to investigate a tool I had seen previously on the website Wallethub.com. The Wallet Literacy Quiz (https://wallethub.com/wallet-literacy-score/) will take you a few minutes, but IT casts a wide net to gauge just how well you understand the basics. I took the test, which doesn’t require any registration, cost or login.

Before I answered any of the 30 questions, the quiz asked me to assess my Financial Literacy level. I gave myself a B, because I have never really considered math — or money management — my strong point, yet I have gained a good deal of knowledge over the years through my work. It turned out I scored an A-minus, which was actually a little better than I’d thought I’d do.

Here are a few highlights:

Credit Scores. The quiz asks you to rank which of these five things are most important when credit bureaus calculate your credit scores:

  • Credit inquiries and amounts owed.
  • Payment history and amounts owed.
  • Types of credit in use and payment history.
  • Length of credit history and amounts owed.

I correctly answered payment history and amounts owed. When credit bureaus calculate your credit scores, they look at all of these pieces of information, but the largest contributing factor (almost a third of the total score) is how diligent you have been about paying your bills, and how much you owe (measured against your available credit).

MOAK: Credit scores influential, but misunderstood

Interest Rates/Compounding. The question was: “If you put $100 in a savings account with an interest rate of 5 percent per year and left the money in the account for five years, how much would you have in the account at the end of the fifth year?” For a math-challenged person like me, this one took me back to the anxious days of high school pop quizzes (sweaty palms and all). However, I correctly deduced that the answer would be “more than $125,” because of compounding. Basically, if no interest went into the total against which interest was compounded, it would be $125 ($100 principal, plus $25 interest). However, that’s not how it works. The total amount would be more than $125 ($127.63, to be exact), because the interest goes back into the principal, and future interest builds the principal.

Car Insurance. (I got a big red “X” on this one; shhh…please don’t tell my insurance agent). If there is an area that needs more public education, it’s this one. Many people — excluding insurance agents — would be mystified if you asked them the difference between “comprehensive” and “collision” coverage on an auto policy. Here is how it went: Which type of car insurance coverage will pay for damage to your car from an accident that you cause? I incorrectly guessed “liability,” when the answer was “collision.” According to Wallethub, “Collision insurance covers your car if it is damaged or destroyed in an accident. Types of covered accidents typically include hitting another car or hitting a stationary object (like a bridge or a tree). Collision insurance may also cover damage to your car if someone or something else hits it while it is parked.” Liability covers damages to another person (or their property) resulting from an accident you cause. Obviously, I should have read the question more carefully.

These are just three of the questions on the quiz. I’d urge everyone to go and see how well you do. It might help you identify areas in which you might need a little better understanding of some things. Ultimately, if we’re to be better-educated consumers, it’s up to us to make it happen.

Spring clean your finances

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via Moak: Spring clean your finances, clarionledger.com, 3/30/2016

PDF: Spring Clean Your Finances

Now that spring is officially here, homeowners everywhere are buzzing to life after the winter doldrums. Garden and home centers are full of people looking to do household maintenance, performing a thorough cleaning of their homes, and sprucing up the yard. It feels good to dust off the cobwebs, open the windows and let some fresh, cool air waft through the house.

While spring cleaning is an annual ritual, many Americans probably haven’t stopped to think about something else that needs sprucing up — their personal finances. The other day, a release from the American Bankers Association caught my attention, with the unusual title of “Out with the Old, In with the Savings: 6 Tips to Spring Clean Your Finances.”

While your household finances might not need to be pruned and fertilized like your azaleas, or hung up and aired out like your area rug, this is a good time to stop and think about how you can get your financial house in order as you do your springtime chores.

“The arrival of spring motivates people to renew their surroundings, and what better way to focus that momentum than to check off everything on your financial to-do list?” asks Corey Carlisle, executive director of the ABA Foundation. “Taking stock of your finances and planting the seeds of new saving habits today will go a long way toward alleviating pressures on your pocket throughout the year.”

Here are some of ABA’s ideas for straightening up your financial affairs:

Evaluate and pay down debt. Take a look at how much you owe and what you are paying in interest. If there are better rates available now, consider requesting a lower credit card interest rate or refinancing your mortgage. Begin paying off existing debt, whether that’s by chipping away at loans with the highest interest rates or eliminating smaller debt first.

Review your budget. A lot can change in a year. If you’ve been promoted, had a child, or become a new homeowner or renter, be sure to update your budget. Determine what expenses demand the most money and identify areas where you can realistically cut back. Develop a strategy for spending and saving and stick to it.

Check your credit report. Every year, you are guaranteed one free credit report from each of the three bureaus. Take advantage of these free reports and check them for any possible errors. Mistakes can drag down your score and prevent you from getting a loan, or cause you to pay a higher than necessary interest rate. To get yours, visit http://annualcreditreport.com. But beware: some companies say their credit reports are free, but you’ll actually have to pay or give them a credit card to register.

Download your bank’s mobile app. Manage your finances from the palm of your hand. With the click of a button, you can make a deposit or access a record of all your recent transactions. Be sure to download the latest updates when they are available.

Sign up for e-statements, paperless billing and text alerts and automatic bill pay. Converting to paperless billing will help keep your house — physical and financial — more clean and organized, and will help protect you from fraud.

Many experts also add that it’s a good time to evaluate your credit cards. While many of us are brand-loyal to a lovable fault, that loyalty could actually be causing your credit card company to take you for granted, and you could be missing out on some great deals. Shop around; especially if you have above-average credit, you could be taking advantage of special deals, lower interest rates and better terms than what you have.

Bank group announces program to fight senior financial abuse

Via Moak: Bank group fighting senior financial abuse, clarionledger.com, 9/9/2015

PDF: Bank group fighting senior financial abuse

Hardly a week goes by that doesn’t include news of a caregiver who has been accused of stealing from an elderly or otherwise-vulnerable person in their care. Just last week, Attorney General Jim Hood announced the arrest of a Jackson woman who owns a personal care home, on charges that she took more than $12,000 from a patient, and was in the process of attempting to steal an additional $2,900.

A news release from Hood reported that Pebla Jones Wright, 48, was charged with felony exploitation of a vulnerable person and another for attempted exploitation of a vulnerable person. If convicted on the charges, she could face up to 20 years in prison and a $20,000 fine.

Jones is just the latest Mississippian to be accused of taking funds from vulnerable people and converting them to their own personal use. With the retirement of the baby boom generation producing record numbers of elderly people in need of care, there are also likely to be people waiting to take advantage of the money they can provide.

Financial exploitation of seniors has reached near-epidemic proportions in the U.S. According to the National Center on Elder Abuse, one in five Americans will be over the age of 65 by 2050; a 2010 study reported that one in five of those have been victims of financial abuse and fraud. Those numbers, while staggering, may be just the tip of the proverbial iceberg. Seniors may be reluctant to report fraud for a number of reasons including embarrassment, fear of retribution and a complicated reporting process.

While law enforcement does what it can, the banking industry is uniquely positioned to have the greatest potential impact. Often, seniors are coerced into giving or sending money to people through banking transactions, but attentive bank personnel may be able to stop questionable transactions or to alert authorities. I recall one case in which a Mississippi bank teller noticed that an elderly person was about to send a cashier’s check for thousands of dollars to a known scammer, and was able to intervene and stop the transaction. Such intervention isn’t without risk; in the past, bank personnel have done so at great risk of legal repercussions for disclosing such information or even getting involved, but in most states, they are now protected.

In fact, Mississippi’s Vulnerable Persons Act requires any person who believes such a crime may be in progress to report it, and is provided immunity from being sued as long as the report is made “in good faith” – even if an investigation reveals that no fraud or abuse actually exists.

The banking industry is responding to the challenge as well. On Tuesday, the American Bankers Association Foundation announced a new campaign called Safe Banking for Seniors to provide a set of comprehensive tools and resources starting in January. The site will include event materials, lesson plans, media outreach tools and best practices. The site is active now, and contains some basic resources for banks and seniors alike.

“Bankers are often the first line of defense against elder financial fraud from educating and advising customers to spotting the signs of abuse,” said ABA President and CEO Frank Keating. “We take our role seriously, and the more we can work together as citizens, bankers, and government officials, we can protect our seniors from fraud.”

If you are elderly, or care about a senior, it’s crucial that we all do what we can to watch for and stop senior financial abuse. The best defense against exploitation is for somebody to step up and say something when we see it.

Millennials delay milestones due to student loans

via Moak: Millennials delay milestones due to student loans.

If you’re a parent trying to help your college student navigate the choppy waters of financing college, it can be daunting. The Federal Financial Aid form, known as FAFSA, is itself tricky and often infuriating because of the maze of online security you must navigate. And if you happen to be selected for random “verification” of your FAFSA data (as we were this year), that can add even more gray hairs to your head.

Unless your student is among the lofty few who cries when she gets anything lower than an “A” or if you’re either independently wealthy or below the poverty line, you might not be stressing out over it. Scholarships, savings and grants will usually fill the bill in those cases.

Some of us were smart enough to start putting money aside when they got their little bundles of joy home from the hospital. But for most middle-class families, paying for college usually requires an eclectic mix of scholarships, mason-jar funds, largesse from family and friends — and loans. Today’s average college graduate will have barely had time to unpack boxes in their new apartment (or their parents’ house) before they get their first bill from their student loans.

Increasingly, that debt is putting a substantial crimp in their plans. While they may be young and idealistic, they may have to put off saving the world for a while because they have to pay back those loans.

A new study released by Bankrate.com shines some light on this disturbing trend. More than half of millennials with current debt from student loans are reporting they have “delayed major life events” because of that debt. Those milestones include rites of passage such as buying their first home or car, starting a retirement nest egg or even getting married and having children. The trend is not just present among millennials; older Americans are also likely to be carrying student debt well into middle age, where it can potentially crash into retirement.

Economists and policy makers should worry about this, because the longer new graduates wait to enter the economy, the longer it takes them to start contributing, investing in the economy on a larger scale and paying taxes.

“Student debt is often portrayed strictly as a millennial issue, but the truth is that Americans of all ages have put their lives on hold due to student debt,” said Steve Pounds, Bankrate.com analyst. “Delaying major life milestones such as buying a home or saving for retirement doesn’t only affect the individual and his or her family; it also has ill effects on the overall economy.”

A key finding about the study is that many people with student debt never really received good information about the risks and responsibilities of student loans in the first place. As with any credit, responsible borrowing also carries with it the necessity of understanding just what you’re getting into. Deferral, (which allows students to defer making any payments until after graduation) can provide a false sense of security, and is really just kicking the can down the road. But eventually, the bills will come.

More than half of student loan borrowers in the Bankrate.com survey say they didn’t receive enough information or advice about the financial risks of taking on education loans. Sixty-six percent of millennials, more than any other age group, have this complaint.

A lot of people are in this boat, and it is getting a lot of attention. Famously, one man named Lee Siegel decided earlier this year he’d had enough after being hounded by bill collectors trying to collect on 40-year-old student loans. He announced in a New York Times op-ed that he was not going to pay any more, and urged others to do the same.

His stance garnered him near-universal (and justified, in my view) outrage from nearly all quarters, but does point to an increasing frustration with a system that encourages people to finance skyrocketing education costs with loans against their future earning potential. And the aforementioned study details some of the implications of encouraging young people to begin their careers in a financial hole.

The fact is, though, there are alternatives to financing your college education with unmanageable debt:

Make sure you exhaust all alternatives. Many sources of funding, such as grants and scholarships, don’t have to be paid back. You don’t necessarily have to be in the top tier of your class to qualify, and some programs are specifically to help students from a particular geographic area, course of study or other criterion.

A four-year college may not be necessary. Mississippi has one of the best community college systems in the country, many of which offer programs to qualify you for all types of careers — many of them lucrative. And community colleges can be more affordable than four-year institutions, and have exclusive financial aid offerings as well. Consider military programs as well — many of them will finance college for you in exchange for a specified commitment after graduation.

Shop wisely. If you are getting a loan, shop around. Some private lenders have programs that offer excellent interest rates and options.

Mississippians have an excellent program that helps link Mississippi families and students with information and advice about going to college. Get2college.org can be reached at (601) 321-5533, in central Mississippi; (228) 875-4441 in south Mississippi; and (662) 349-2789 in north Mississippi. It’s a must-visit for any family who is trying to navigate the college-financing maze, and is well worth your time.

Money you didn’t know you had awaits

Originally published in the print edition of the Clarion-Ledger, 7/16/2015.

All across the nation, money sits in accounts, waiting to be collected. It’s a nice thought: Somewhere out there is a check waiting for you. Money from a job you left, an old bank account you forgot about, or maybe an insurance policy that paid out, but was sent to the wrong address. Then your attention snaps back to reality. You couldn’t be that lucky.

But one day, you get an email. “Public records indicate that $3,226,519 of unclaimed money has been turned over to the state of Mississippi for distribution. Potentially, an amount of money from this fund belongs to you.” Suddenly, your life has changed; your ship has come in. All you have to do is to send a check to a P.O. box, and the money is yours.

Consumers across the country get messages like this one all the time, but it’s a hoax. Of course, there is not really a windfall awaiting you — at least, not from these guys. But — just there is a grain of truth in most lies — there is indeed such a thing as unclaimed funds. You just have to know where to look. And you won’t have to pay anything to get your money.

Many people are aware that the Mississippi treasurer’s office has an Unclaimed Property division, in which reside millions of dollars in money from those old bank accounts, insurance settlements and the like. Financial institutions and other businesses are required to send funds to the treasurer if they have not been claimed for five years, so there they sit, until someone comes along to claim them.

You can search the database by visiting www.treasurerlynnfitch.com/ and clicking on the Unclaimed Property link. Once you have found potential unclaimed cash, you need to fill out a claim form and send it in. You can also search for names of parents or others who may have left you money; you can file a claim to get it if you’re an heir.

But you may not know there are also other sources as well. All across the nation, money sits in accounts, waiting to be collected. CNN estimated not long ago that unclaimed funds amounted to $58 billion, most of which was held by the states. Some amounts might be just enough to get you a meal at a decent restaurant; others could change your life. Recently, the website usa.gov published a list of resources for finding unclaimed money. Here are a few:

State Treasuries: Every state has a program similar to the one here in Mississippi. To search by state or all at once, visit http://unclaimed.org or http:// missingmoney.com.

Unpaid Wages: The U.S. Department of Labor often assesses employers for violations of wage and hour laws, and recovers back wages on behalf of employees. They try to send the money to the employees, but sometimes can’t find them. To find out if your present or past employer is on the list, and to check if you have money waiting, visit http://webapps.dol.gov/wow/.

Pensions: (http://search.pbgc.gov/mp/) The U.S. Pension Benefit Guaranty Corp. holds unclaimed pensions. You can check by state; I found a great number of Mississippi names on the list.

IRS (http://irs.gov): While most people eagerly await their tax refunds each year, some refund checks go unclaimed because of wrong addresses, or because they have moved. But often, many people who aren’t required to file a tax return will lose the money that was deducted from their paychecks because they didn’t file a return. The IRS must hold this money for three years; at that point, it goes into the U.S. Treasury.

Savings Bonds (www.treasuryhunt.gov/): Remember that savings bond your grandparents gave you when you were a kid? It may take decades, but they do mature. And billions of dollars’ worth have matured, and could be cashed, but go unclaimed. Treasury Hunt lets you search by Social Security number.

These are just a few of the many agencies holding unclaimed funds. There are many others, including getting money back from bank or credit union failures; bad investments that were the subject of actions by federal regulators; and refunds owed by the Federal Housing Administration (FHA).

For a list and more info, visit https://www.usa.gov/unclaimed-money#item-37222.

Your windfall may be waiting.

No, really.

Disabled face big financial hurdles

Originally published in the Clarion-Ledger on 5/16/2015.

PDF: Disabled face big financial hurdles

If you have a disability, many things which most of us take for granted can be difficult or even hazardous.  While some of these are well-known – such as stairs for people in wheelchairs, or crossing the street for the visually-impaired – many people don’t think about how difficult it might be for people with disabilities to access financial services at a bank or other financial institution.

While most of us would just get in our car, drive up to the bank and make our deposit, withdraw money or take out a loan, it’s just not that simple if you have a disability. Even checking your account balance online constitutes an insurmountable challenge for some people with disabilities.

You’d think that the growth of smartphones and other newer technologies could alleviate the problem, but it appears that many disabled Mississippians are on the outside looking in when it comes to accessing financial services. People with disabilities may face all sorts of financial challenges, including lower income, higher expenses, lack of experience managing their money, being victims of scams and crime and accumulation of debt.

A recent study by the National Disability Institute (NDI) looked at data from the Federal Deposit Insurance Corporation’s (FDIC) 2013 report on “unbanked” or “underbanked” households in the U.S. The study found that approximately 68 million adults and 25 million children (disabled or not) live in households with either no relationship with a financial institution or get by with a hodgepodge of financial strategies which can be expensive and risky.

The report found that Mississippi has the nation’s fourth-highest rates of disabled citizens without adequate access to financial services. One reason is that we have a higher percentage of citizens with disabilities in the first place. “According to the U.S. Census Bureau’s American Fact Finder, in the state of Mississippi, 14.9 percent of working-age residents between the ages of 18 and 64 years old are disabled, compared to the national average of 10.1 percent,” noted Mercedes Garcia, Vice President of Global Community Relations at MasterCard. “Of these disabled residents, 68.7 percent are unbanked or underbanked… This means they have little or no access to traditional banking services and are instead, often rely on payday lenders, check-cashing centers and other alternative financial services, which can be costly.”

In other words, nearly 7 out of 10 Mississippians with disabilities have little or no access to the financial services most of us use on a daily basis. So I asked Garcia what are the implications of that for the everyday lives of disabled Mississippians without adequate access to traditional financial services.

“The costs of being financially underserved include higher vulnerability to crime, time and money spent cashing checks and making payments, and limited access to goods and services outside of one’s immediate neighborhood,” she noted, adding that a 2014 U.S. Postal Service study found that households that are financially underserved spend disproportionate amounts on fees and interest. “The average financially underserved household spends nearly 10 percent of their income on fees and interest to access their money.”

And having a disability might make you more vulnerable to being preyed upon as well. “NDI notes that people with disabilities face significant economic challenges, including lower employment rates and income, compared to those without disabilities,” Garcia said. “As a result, people with disabilities may be more vulnerable to predatory lending strategies that accelerate debt and financial instability.”

But the problem doesn’t have to be permanent. Newer technologies might provide an answer to at least part of the problem. “Electronic payment technology provides an effective solution that can empower them to access their money in ways that are more convenient and safer for them,” Garcia explains. “Tools like municipal cards, payroll cards and prepaid cards can offer them a convenient way to pay bills, make purchases and conduct a host of other transactions. To be clear, we are not selling cards. We simply want people to understand that the disabled unbanked and underbanked can have the same access and convenience of electronic payment technology that most people use daily without a second thought.”

And getting financial services to people in underserved communities can happen with collaboration from all sectors, as well as education, she noted. One such program is Master Your Card, which Garcia described as a community empowerment program. “MYC works with the unbanked and underbanked to help them understand how to choose and use electronic payment technology to their benefit” she explains.

“We seek input, work collaboratively on innovative solutions and provide education about how people can get the most from their money through the smart use of electronic payments. We encourage communities to provide information to disabled residents on how they can use technologies like prepaid or municipal cards (where available) to their advantage.”

To download the complete NDI study, visit http://www.realeconomicimpact.org/data/files/reports/NDI_banking_status_financial_behaviors_report_2015.pdf.

Study: Financial uncertainty ahead

A generation ago, people could pretty much expect that their children would be at least as well-off financially as they were. The Greatest Generation had lived through the Great Depression, which had a major impact on how they spent and saved. Their children — the Baby Boomers — indeed profited from their parents’ frugality, financial smarts and the booming postwar economy. But a new study has cast doubt on whether the Boomers’ children and grandchildren can expect to have as rosy a financial future, while at the same time pointing out that our kids may be better at managing their financial futures than we were.

Financial Finesse, a company that studies trends how Americans spend and save and provides workplace programs to help employees maximize their “financial fitness”, on Wednesday released its 2014 Generational Research Study. The study (www.financialfinesse.com) has pointed to what many consider a “major turning point in the future financial well-being of Americans.” Financial Fitness’ founder Liz Davidson notes out that this could turn out to be one of those historical junctures where a generation made decisions that had big implications for the future.

Buffeted by the lingering effects of the Great Recession, the study noted, the newest generation of adults today (Millennials) appear to be focused on meeting short-term needs, rather than planning for the future, or focusing on “not losing money, rather than growing their wealth for the long term.”  One example is in retirement plan participation for this group, which has the “lowest 401(k) participation rate of all generations at 83 percent in 2014,” the company noted in a press release.

The increased needs have led to a response from the business community, in the form of a growing “financial wellness” industry. “Financial wellness is becoming the next ‘green’ movement,’ says Davidson.

The study also pointed out that the parents of Millennials (Generation X, born from the early 1960s through the early ‘80s) are “in the most danger and the least likely to achieve financial security.” Gen-Xers may be putting their children first, at the expense of their own financial security. While few would fault parents investing in their kids’ education, it could prove costly down the road. Only 17 percent are on track to retire comfortably, yet 23 percent are contributing to a 529 college savings plan.

Even Boomers are vulnerable to financial instability as they face the challenges of living longer. As retirement looms on the horizon for Boomers, they are likely to feel the pain of having set aside too little to support their lifestyles. One key “pain point” is long-term care insurance, held by only 16 percent of Boomers, despite the fact that around 70 percent will need long-term care services at some point during retirement.

Despite the bleak statistics, however, there is reason for hope. The study points out that Millennials are actually doing a “relatively good job with day-to-day money management.”  That’s partly because of increased awareness of the need to develop healthy financial habits.

Here in Mississippi, while we’re certainly not immune to the pitfalls of poor money management, we can also be proud of the efforts being done to equip Mississippians with the tools to become better-educated financially.

That includes bringing public and private agencies together to “move the needle” on economic education, and those efforts are already bearing fruit. In August, Treasurer Lynn Fitch announced TEAM (Treasurer’s Education About Money) to bring businesses and government together to address the issue of financial literacy.

Among the organizations involved in TEAM is the Mississippi Council on Economic Education (MCEE), which has become a national role model for getting financial literacy curriculum into the classroom.  The MCEE was ranked in the Top 10 nationally by the New York-based Council for Economic Education, so I asked MCEE President Selena Swartzfager to give her thoughts on the study and how her organization might have changed the future potential.

“We have been working to meet this mission since 2002 by teaching teachers who then teach students,” Swartzfager noted. “We are teaching students to make the best choices as it relates to financial decisions.  While the mechanics are essential, they are nothing without the ability to make good choices.”

Swartzfager points to the efforts MCEE has made in helping train Mississippi teachers in economics, personal finance and/or entrepreneurship. Teachers can then take that knowledge to the classroom, reaching thousands of students. One key feature of that education is teaching students to understand the power of compounding to either enhance wealth (through investment) or take it away (through debt).

The organization has enrolled thousands of students in financial literacy challenges and the “Stock Market Game”, helping teach practical skills to help them understand everything from balancing a checkbook to making wise investments. Underlying it all is helping empower Millennials to make the right choices.

“When MCEE teaches financial literacy we do so using the ‘Economic Way of Thinking,’ Swartzfager added. “Ultimately this method of teaching educates students to understand that people’s choices have consequences for the future.”

She pointed out that while Generation X’s focus on getting their kids educated amounts to an investment in the next generation, the equation must be balanced so they can plan for the needs they’ll have in retirement. “Society tells parents that college graduation is most important for their children; what we need are adults thinking about the opportunity cost of saving for their children’s college education versus saving for their own retirement,” she noted. “Perhaps the ratio of saving for both needs to be considered so that both goals are addressed.”

Davidson noted that the problems are not insurmountable, but will require an unprecedented focus. “Is this solvable? Absolutely, but it will require a herculean effort,” she said. “Will it be solved? I believe eventually it will, but the question is this: how many generations will have to face these financial challenges before we make the necessary changes in our society to help people improve their financial security? The actions employers, employees, the public sector and financial industry take over the next three to five years will be pivotal to the level of financial security each generation is able to attain.”

Whatever the outlook, the impact of helping our kids make better decisions with money will reverberate well into the future; investments in young minds today is certain to pay off down the road. And that can only be good for Mississippi. “The education we provide for teachers and students,” Swartzfager noted, “has been proven to be effective.  With support from the business community in Mississippi, we will continue preparing students for a better economic future for our state.”

Talk about finance with your college-bound student

via Talk about finance with your college-bound student, clarionledger.com, 8/26/2014.

Things are about to change around the Moak household. No. 1 son is getting ready to head off to college, and we are facing what all first-timers face when sending a child off to school. Along with the bewildering array of choices about meal plans, residence halls, class choices and activities — not to mention how to pay for all those choices — we are trying to help him navigate the waters of financial independence. He has his own bank account we set up a couple of years ago. It’s linked to ours, so we can keep an eye on expenses and send cash if he needs it. But like most young adults, he’s eager to write his own story.

And it’s a good idea that he does so. Establishing a personal financial history is a keystone in learning good financial habits. Any college freshman should by now be able to write checks, make deposits and withdrawals, and — if he or she had a job in high school — discover the thrills and chills associated with making decisions about spending his or her own money. According to the Consumer Financial Protection Bureau (CFPB), more than half of high school graduating seniors already have a bank account, anyway.

Let’s face it: having your own money for the first time is exciting, and some students go overboard. So it would be a good time to have a conversation with your student about the wise use of money. (Of course, most parents know that advice to 18-year-olds is likely to be met with rolling eyes and protests, but try anyway; it will be some years before they realize you actually may know a thing or two, but something may sink in.) The CFPB has some good advice about this topic.

So, here are a few things to discuss:

• A first step: establishing a bank account. Experts advise setting up an account before school starts. Keep in mind that you don’t have to use a bank suggested by your school. Contact your school’s bursar’s or finance office and find out how to set up direct deposits. Whether money comes from financial aid, college savings such as a 529 Plan or other sources, having direct deposit capability is much quicker, safer and convenient than relying on the school to generate a paper check.

• When selecting an account, be wary of words like “free” or “easy”. Although there are some generous offers by banks to help entice students, check the fine print carefully to make sure you know the limits, and what happens when he bounces a check or she uses her ATM card too much. An on the subject of ATM fees, look for deals. Many banks will waive or reimburse ATM fees, even those from other institutions.

• For students, convenience is the key. Thanks to ATM networks, Internet banking and remote deposits, it is entirely possible to have a relationship with a bank in which you never see a teller or drive to a branch (if they have branches at all). Some banks are totally on the web, so don’t overlook them in your research. Still, there is something solid about doing business with a bank which has a presence in the community, and people you can talk to. It all depends on your student’s preferences.

• Don’t overlook credit unions. Often, credit unions are set up at or near the college campus. Credit unions can have competitive rates and a good choice of services.

• The banking industry really, really wants their business. In recent years, a lot of new services have arisen to attract young people. An example is Kasasa Tunes, which reimburses music download purchases (up to a minimal amount). Keep in mind that, although the initial lure of such perks might loom large in the eyes of your download-crazy student, it could be a teachable moment to talk about marketing tactics, and how it’s important to compare financial products on the basis of the day-to-day services, not how cool they may look.

• Talk about credit. When I was a student, credit card companies would often have tables set up on campus, offering T-shirts and other freebies, and direct mail from credit card companies was highly effective. Thanks to the CARD Act of 2009, those activities are curtailed (especially if they’re under 21), but students are still in danger of making bad decisions about credit. So don’t overlook talking to your student about responsible credit use. Good habits can start now. (Click here for a good list of topics.)

• Trust is a two-way street. Our college students are adults, and we parents must treat them as such. That means trusting them with money. Now, you may not believe your student is capable of making good decisions, but he may just prove you wrong if you give him a chance. On the other hand, you’ve probably earned his trust; after all, you have changed his diapers, sat up late nights working on science fair projects and spent untold hours worrying, praying and being his biggest fan. Trust is often easier said than done, but it has to start somewhere. So, intrepid fellow parents of the college-bound: I salute you. And remember, we’re all in this together.