Archive for category: Personal Finance

As people seek to file their tax returns this year, cybercriminals will be busy trying to take advantage of this with a variety of scams. Citizens may learn they are victims only after having a legitimate tax return rejected because scammers already fraudulently filed taxes in their name. According to the Internal Revenue Service (IRS), there was a 60% increase in 2018 in phishing scams that tried to steal money or tax data. The IRS identified 9,557 fraudulent tax returns as of only February 24^th, 2018 for the last filing season. As everyone aims to file their returns among all this fraud, the following advice will explain how tax fraud happens and provide recommendations on how to prevent it from happening to you or how to get help if you are unfortunately affected by a tax scam!

How is tax fraud perpetrated?

The most common way for cybercriminals to steal money, financial account information, passwords, or Social Security Numbers is to simply ask for them. Criminals will send phishing messages often impersonating government officials and/or IT departments. They may tell you a new copy of your tax form is available. They may include a link in a very official looking email that goes to a website that uses an official organization’s logo and appears legitimate, yet is fraudulent. If you attempt to login into the false website, or provide any personal information, the criminals will see what you type and try to use it to compromise your other accounts and file a false return in your name.

Additionally, much of your personal information can be gathered online from sources like social media or past data breaches. Criminals know this, so they gather pieces of your personal information from a variety of sources and use the information to file a fake tax refund request! If a criminal files a tax return in your name before you do, you will go through the arduous process of proving that you did not file the return and subsequently correcting the return.

Criminals also impersonate the IRS or other tax officials, demanding tax payments and threatening you with penalties if you do not make an immediate payment. This contact may occur through websites, emails, or threatening calls or text messages that seem official but are not. Sometimes, criminals request their victims to pay “penalties” via strange methods like gift cards or prepaid credit cards. It is important to remember that the IRS lets citizens know it will not do the following:

• Initiate contact by phone, email, text messages, or social media without sending an official letter in the mail first.
• Call to demand immediate payment over the phone using a specific payment method such as a debit/credit card, a prepaid card, a gift card, or a wire transfer.
• Threaten you with jail or lawsuits for non-payment.
• Demand payment without giving you the opportunity to question or appeal the amount they say you owe.
• Request any sensitive information online, including PIN numbers, passwords or similar information for financial accounts.

How can you protect yourself from tax fraud?

• File your taxes as soon as you can…before the scammers do it for you!
• Always be wary of calls, texts, emails, and websites asking for personal or tax data, or payment. Always contact organizations through their publicly-posted customer service line. If they contact you end the call and call the organization on the phone number on their website. As mentioned previously, the IRS will initiate contact on these issues by mail through the postal service.
• Don’t click on unknown links or links from unsolicited messages. Type the verified, real website address into your web browser.
• Don’t open attachments from unsolicited messages, as they may contain malware.
• Only conduct financial business over trusted sites and networks. Don’t use public, guest, free, or insecure Wi-Fi networks.
• Use strong, unique passwords for all your accounts and protect them. Reusing passwords between accounts is a big risk that allows a breach of one account to affect many of them!
• Shred all unneeded or old documents containing confidential and financial information.
• Check your financial account statements and your credit report regularly for unauthorized activity. Consider putting a security freeze on your credit file with the major credit bureaus. This will prevent identity thieves from applying for credit or creating an IRS account in your name.

If you receive a tax-related phishing or suspicious email at work, report it according to your organization’s cybersecurity policy. If you receive a similar email on your personal account, the IRS encourages you to forward the original suspicious email as an attachment to its phishing@irs.gov email account, or to call the IRS at 800-908-4490. More information about tax scams is available on the IRS website and in the IRS Dirty Dozen list of tax scams.

If you suspect you have become a victim of tax fraud or identity theft, the Federal Trade Commission (FTC) Identity Theft website provides a step-by-step recovery plan. It also allows you to report if someone has filed a return fraudulently in your name, if your information was exposed in a major data breach, and many other types of fraud.

Content from the Community Institution and Association’s Cyber-Tip Newsletter

When it comes to student financial advice and new graduate money management, plenty of books, articles, and websites have been written about the dos and don’ts of personal finance for the under-30 crowd. But you’re a busy college student–who has the time to read all of the info out there and sort fact from fiction? Trust your local Shenandoah Valley community bank to narrow the scope of advice to the best financial tips for students. We’ve kept this guide short enough to read and specific enough to use. Check it out so you can identify the best financial decisions for college students and recent grads and avoid costly money mistakes.

Ignoring Living Expenses

Do you feel like renting is just throwing your money away? Buying your first home may seem impossible or far off, but it doesn’t have to be. Here in Virginia’s Shenandoah Valley, there are state and federal homebuyer assistance programs, as well as other options to make it easier for you to become a homeowner. Instead of making someone else’s investment pay off, you can invest in yourself. And while rents can only go up, a fixed rate mortgage guarantees you’ll have the same monthly home payment as long as you live in the house. Check out our Mortgage and Home Loans page for more info on home financing in the Shenandoah Valley.

Homebuyer Assistance From The Virginia Housing Development Authority (VHDA)

 First-time homebuyers in Virginia can get help with their down payment and closing costs through VHDA’s two options:

• The Down Payment Assistance Grant provides funds for your down payment as a gift that doesn’t need to be repaid.
• The VHDA Plus Second Mortgage is a 30-year fixed rate loan. Qualified buyers can borrow up to 1.5 percent more than the sales price, effectively reducing or eliminating the need for a down payment and closing costs. It can also make your monthly mortgage payments more affordable.

Federal Homebuyer Programs

 In addition to these state-level programs, several federal agencies administer homebuyer assistance programs.

• FHA Loans: These home loans are insured by the Federal Housing Administration, making it easier for first-time buyers and others to get a mortgage. FHA Loans usually have a lower down payment requirement than conventional home loans, which is helpful for students or recent college grads who want to buy a home but don’t have a lot saved to put down.
• VA Loans: Guaranteed by the U.S. Department of Veterans Affairs, these home loans cover up to one hundred percent of the purchase price, so no down payment is required. Eligibility is limited to U.S. Veterans, Service Members, and certain spouses. If you are a recent grad who served or is currently serving in the military, a VA Loan is a great way to buy your first house.
• USDA Loans: Available as guaranteed or direct loans, from the U.S. Department of Agriculture, these home loans are available to buyers who meet income and rural area requirements.

Family Assistance

 If you can’t get a mortgage loan on your own, perhaps a parent or other family member can help. There are several options for family members who want to assist a college student or recent grad with a home purchase.

• Down Payment Gift: If you can qualify for the loan itself but don’t have down payment money, a family gift might be all you need to make homeownership a reality. The giver simply needs to provide a gift letter. Anything up to $14,000 per recipient per year meets the threshold of the IRS’s gift tax exclusion.
• Family Loan: If a parent or other relative has enough asset liquidity to purchase the house themselves, they can be your mortgage lender. This is mutually beneficial, allowing the lender to earn interest and making it possible for borrowers with non-traditional employment or other excluding factors to purchase a home.
• Mortgage Co-Borrower: Also known as co-signing on the mortgage, this option allows parents to help a child become a homeowner without gifting money.

The Investment Property Approach

 As the cost of tuition and on-campus living expenses increase, many families are looking at alternatives to paying for traditional room-and-board. For example, some parents buy a home or condo near their child’s college as an investment property. The child can live there, rent-free or not, during their student years. Parents can generate income by renting out a room to another student or purchasing a duplex and renting out one of the units. After the child graduates from college, the family can decide what to do next. The child may want to buy the home from their parents or the parents can keep it as an investment property or sell it. Even recent graduates can take this approach to home buying by renting out a room to a housemate.

Ignoring Your Credit Score

If you’re like most college students and recent grads, your credit score is probably the last thing on your mind. However, access to credit becomes more important the further you get into adulthood. With no credit history or a low score, it’s much harder (and sometimes impossible) to get a car loan, credit card, mortgage, and other types of financing. A high credit score also results in lower interest rates, so you pay less for the amount borrowed. And people–landlords and employers, for example–often use your credit score as a way to assess your overall trustworthiness. That’s why now is the time to build your credit score or rehabilitate a damaged one.

How To Build Your Credit Score

 Before the age of 18, your credit history is a “tabula rasa” (blank slate). Once you open a credit card account or put a utility bill in your name, you start to build credit history and (hopefully) a good score. Federal law entitles you to a free annual credit report from each of the three major agencies (Equifax, Experian, TransUnion). Take advantage of this service to ensure all information is correct and see what lenders who check your credit will see.

The primary ways to build a high score are to open a variety of accounts (credit as well as utility bills), make on-time payments every month, and maintain a healthy debt-to-credit limit ratio. So, a freshman in college might become an authorized user on a parent’s credit card and put their cell phone bill in their own name, regardless of who is paying it. Once you move to your own apartment, put at least one of the utility bills in your name if you’re sharing with roommates. At age 21 it becomes easier to get your own credit card. The key, of course, is not to charge more than you can repay. You might use the card to make just one purchase a month and pay it back on time–that simple act will help you build a good credit score. And of course, if you have student loans, work with your lender to create a repayment schedule you can afford. On-time student loan payments will also build your credit score.

 How To Rehabilitate a Low Score

 Sometimes youthful follies are harmless, but occasionally they leave lasting repercussions such as a low credit score. If you racked up credit card debt and didn’t pay it, ignored your student loan after graduating, or any number of other credit-destroying acts, you’ll need to devote time and energy to rebuilding your credit score. One good place to start is your local community bank, like F&M. Smaller banks are generally more willing to work with people who don’t have perfect credit. You may be able to open a secured credit card or take out a small personal loan as a first step to filling your credit report with positive records.

You may also need infrastructure to help you budget and pay bills on time. Credit Karma and Credit Sesame are free apps that help you track your credit score–a good motivator when you’re trying to improve it.

Ignoring Your Student Loan

We’ve touched on student loans briefly in the previous section as a way to build or break your credit score. One of the reasons it’s so important to be proactive about student loan debt is that it’s all but impossible to get rid of. Unless you qualify for a federal student loan forgiveness program or find yourself in a rare situation such as the closure of your alma mater, the only way out is through death. Unlike credit accounts, student loan debts are almost never forgiven in bankruptcy proceedings. And even if you qualify for loan forgiveness or cancellation, you’ll need to make payments until then.

The bottom line? Minimize the amount you borrow while in school and take steps to pay down your student loan as soon as possible, even before you graduate. Remember that unless your loan is federally subsidized, it accumulates interest even while you’re still in school. So even making small payments can help to keep the balance down.

Another important action is to use student loan funds ONLY for school expenses. That’s right–you can borrow more than the cost of tuition but you really shouldn’t. Get a part-time job to cover additional living expenses or live at home if possible. Whatever you do, don’t use a student loan “refund” for entertainment expenses or unnecessary purchases.

Finally, take advantage of the Internet to find and apply for scholarships and grants online through tools like Scholly. After you graduate, contact your lender to work out a repayment plan you can afford and don’t go into forbearance. Also, avoid student loan refinancing, which can add to your balance even though it promises a better interest rate.

Ignoring Free Money

One of the best pieces of financial advice for new graduates is to not leave money on the table. When you get your first full-time job after college, be sure to sign up for any retirement accounts your employer offers, like a 401(k). While some money will come out of your paycheck, your employer will also contribute “free money” to your account. The same thing goes for health savings accounts (HSAs) and other employee benefits.

While still in school, take advantage of any student discounts you encounter. Often, all you need is a valid ID. These savings may range from movie tickets and discounts at restaurants and museums, to Amazon Prime free shipping and a lower price on an Apple computer. What they all have in common is free money.

When it comes to personal finance, make sure all of your accounts pay interest or rewards. In other words, put your money to work to make more money. For example, F&M offers cash-back or interest-earning checking account options as well as a rewards credit card.

One last way to ignore free money is to hold onto things you no longer need. Use Craigslist, Facebook Marketplace, and old-fashioned yard sales to exchange furniture, textbooks, and other unused stuff for cash.

F&M Is Invested In The Success Of Local Students

From James Madison in Harrisonburg to other regional schools like Bridgewater College, Lord Fairfax Community College, Blue Ridge Community College, Eastern Mennonite, Mary Baldwin, American National University, F&M cares about the success of our local students. That’s why we give out annual scholarships to students at Lord Fairfax and Blue Ridge Community Colleges, offer summer internships for students interested in learning more about the banking industry, and employ 22 alumni from area colleges (including former interns). We also engage in on-campus events, such as the Bridgewater College business expo, to familiarize students with local companies who are looking to hire college graduates. For more student financial advice and to learn more about the services we offer, contact us today or visit your nearest branch in Harrisonburg, Staunton, and across the Shenandoah Valley.

As college students head to campus this fall, money management should be on their personal syllabus. It’s important for college students to take control of their financial future by saving wherever and whenever they can. They should treat personal finance like a required college course and avoid unnecessary expenses now to reduce financial burden when they graduate.

Top 10 Money Tips Every College Student Should Know
By Bruce Whitehurst, President & CEO, Virginia Bankers Association

As college students head to campus this fall, money management should be on their personal syllabus. It’s important for college students to take control of their financial future by saving wherever and whenever they can. They should treat personal finance like a required college course and avoid unnecessary expenses now to reduce financial burden when they graduate. Students should consider the following tips to form a strong foundation for money management:

1. Create a budget. You’re an adult now and are responsible for managing your own finances. The first step is to create a realistic budget or plan and stick to it.
2. Watch spending. Keep receipts and track spending through a personal financial management app or through Excel or a similar program. Pace spending and increase saving by cutting unnecessary expenses like eating out or shopping so that your money can last throughout the semester.
3. Use credit wisely. Understand the responsibilities and benefits of credit. How you handle your credit in college could affect you well after graduation. It is important to start using credit now so that when you apply for a car loan, a personal loan, or a mortgage, you will have a credit history, which will help your credit score. Shop around for a credit card that best suits your needs.
4. Take advantage of your bank’s resources. 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 and monitor transaction history.
5. Look out for money. There’s a lot of money available for students – you just have to look for it. Apply for scholarships and look for student discounts or other deals.
6. Buy used. Consider buying used books or ordering them online. Buying books can become expensive and often used books are in just as good of shape as new ones.
7. Entertain on a budget. Limit your “hanging out” fund. There are lots of fun activities to keep you busy in college and many are free for students. Get the most from your student ID. Use your meal plan or cook meals with friends instead of eating out.
8. Avoid ATM fees when possible. Use your bank’s ATM when possible and be aware of fees when using other ATMs. If you must use an ATM that charges a fee, take out larger withdrawals to avoid having to go back multiple times.
9. Expect the unexpected. Things happen, and it’s important that you are financially prepared when your car or computer breaks down or you have to buy an unexpected bus or plane ticket home. You should start putting some money away immediately, no matter how small the amount.
10. Ask. This is a learning experience, so if you need help, ask. Your parents or your bank are a good place to start, and remember – the sooner the better.

 

About the Virginia Bankers Association

Established in 1893, the Virginia Bankers Association is the unified voice for commercial and savings banks in Virginia. The VBA maintains an active legislative advocacy program, provides training to bankers statewide, and provides a variety of products and services to help its member banks best serve their communities.

About the Author

Following a 10-year career in retail and commercial banking with Jefferson National Bank (now Wells Fargo), Bruce Whitehurst joined the Virginia Bankers Association in 1993. He has served as president and chief executive officer of the association since 2007 and was previously executive vice president. Bruce is passionate about financial literacy and works directly with the VBA Education Foundation, whose mission is to improve personal financial literacy and economic education in all public and private schools in the Commonwealth. The Foundation recognizes the importance of economic education and financial literacy in Virginia and supports the banking industry as a key participant in these areas.

 

Explaining money to kids can feel challenging, especially if your own finances aren’t perfect. And it doesn’t help that many of our purchases are made online or with debit and credit cards at the store. Kids don’t see their parents budget and make purchases with cash and checks as much as they used to. However, teaching financial literacy to our kids is more important than ever. Luckily, it doesn’t have to be difficult or boring. F&M has scoured the best sources out there to bring you this comprehensive guide to teaching kids to save money, budget, and develop other positive financial habits. From modeling good habits to playing a fun game or app, these tips will help kids of all ages develop a strong financial foundation. You might even learn a few things yourself along the way.

How To Teach Kids About Money By Modeling Positive Habits

Where do children learn about money? It probably won’t surprise you that parents are the most important influence. After all, children learn most things from their parents. Money is one thing you shouldn’t wait to talk about–research shows that kids’ financial behavior may already be shaped by the time they start first grade. Here are five things you can do now to model healthy financial behavior for your kids and help them develop a positive attitude toward saving and spending money.

• Let them see you save money. It doesn’t take a lot of parenting experience to realize “Do as I say, not as I do” is rarely if ever an effective teaching strategy. Your kids are watching and listening more than you realize and they will parrot your habits and behaviors back to you. So if you want to encourage children to save money you need to let them see you save. While most of your savings might be tied up in a 401k or other online accounts, you can establish a simple savings jar in a prominent place in your house. Drop your spare change in when your child is watching or let them throw the coins in. You don’t have to make a big deal of it each time, but now and then let the jar inspire a conversation about why you are saving, what it’s for, and how it can help you in the future.

For example, “When we put away our spare change every day it eventually adds up. By the time we go to the beach next summer we’ll have enough saved to pay for a special experience like dinner in our favorite restaurant.” Or, “Do you remember when our car got a flat tire last month? Car repairs can be expensive, and we don’t know when something will break. I’m saving my change in this jar so I’ll be prepared the next time something breaks.”

• Turn everyday errands into teachable moments. Whenever your kids are with you at the grocery store, gas station, and other routine errands, explain the choices you’re making and how you pay for purchases. Many people use debit and credit cards instead of checks or cash, but you can still explain that a debit card is a method of paying with the money in your bank account, whereas a credit card is a way to temporarily borrow money and pay it back at the end of the month.

Do you use a certain credit card to accrue points or cash back? You can explain that, too; even young children can grasp the idea of rewards. You can also work in little lessons like, “I use my credit card to get rewards, but I always pay the balance at the end of the month.” Or perhaps you don’t use credit cards at all after finally getting out of debt, in which case you could say something like “Mommy and Daddy always pay with our bank account because we don’t want to spend more than we have.” Keep it simple, but don’t be afraid to talk about all aspects of money management when it comes up.

• Let your kids watch you write a check. Preschool-age children are very interested in letters, numbers, and writing. Although most people don’t write as many checks as they used to, there are still occasions for it. Have your kids watch as you point out the different parts of a check–”Here’s the date, here we write the name of the person we’re giving the money to…this is the memo space where we can write what the check is for. Do you know what this is for? We’re paying your piano teacher for one month of lessons.”
• Have your child press the buttons at the ATM. It’s a universal truth that kids love to push buttons. Ask your child to help you at the ATM and explain each step of the process. “First we insert our debit card. Then we type our password. Here are the different amounts of money we can take out. I’m getting money for our trip to the zoo. What do you think we’ll need to pay for there?”
• Help your child differentiate between needs and wants. It’s natural to feel frustrated when your child begs for something at a store. Of course, that doesn’t mean you should give in. But a little empathy can go a long way and help your kids recognize the difference between things they need and things they want. After all, adults aren’t immune to wanting things. At the grocery store you can say things like, “We need to buy food so we can take care of our bodies with healthy meals and snacks. Mommy likes ice cream, too, but that is something we want, not something we need. We can choose to spend our extra money on something we want like ice cream, or save it for something bigger.” Or, “We came to Target because you outgrew your sneakers and need a new pair. There are extra things Daddy would love to buy at Target, too, but today we are just going to buy what we need.”
• Be honest. Kids can usually tell when you’re trying to brush them off. If you try to get away with a vague or untruthful answer, you’ll probably just be met with a string of “why?” Instead of saying “we don’t have enough money to buy that toy,” if the truth is that you simply don’t want another toy in your house, frame your answers as a choice. Choices empower people of all ages. “I’m choosing not to buy that toy today because I’d rather spend the money on a fun experience like going to the movies with you.”

DIY Activities For Teaching Kids And Students About Money

Parents and teachers can help kids learn about money management while also sneaking in a few Math lessons with these fun and easy-to-do activities.

• Turn a few envelopes into a fun budgeting lesson. You’ve probably heard of the envelope budgeting system for adults, in which you divide your money in cash into envelopes earmarked for specific expenses as well as fun. Add a few crayons and you’ve got a fun activity for kids that helps them understand budgeting and saving in a concrete, tactile way.

Your child doesn’t need to have as many envelopes as an adult would. Let kids think of a few items they’d like to save up to buy. On each envelope, they draw a picture of the desired object or experience. You can even differentiate between short-term and long-term goals. For example, an expensive Lego set will take longer to save for than a trip to the ice cream parlor. As they receive money they can decide how to allocate it between their savings goals. That also teaches prioritizing and weighing instant gratification against long-term goals.

• Make a money chart. Another way to visualize saving is to create a chart. With a piece of posterboard, a few markers, and a sheet of star stickers–all available at the drug store–you can help your child figure out how long it will take to reach various savings goals based on the cost of the item and the amount of money they can expect to receive over the next few months, whether from an allowance or holiday gifts. Each time your child saves a certain amount of money toward their goal, they get to put a sticker in the box, a tracking method that never fails to satisfy. Seeing the chain of stickers will only encourage them to keep going.
• Role play with a toy cash register. This is a classic toy that comes in many different models. Find one with coins and cash in a drawer that opens and shut. That way, aside from the fun of pressing the buttons, kids can learn about money through play. As the adult, you can guide the role play from transactions at the grocery store to the bank. Kids will grasp the idea of handing over money in exchange for an item or service, getting change, and figuring out how much they have left to spend.

Games Make It Fun To Explain Money To Kids

When your kids grow out of the imaginative play stage, you can still make learning fun with board games and online activities.

Online Games

• The Rich Kid Smart Kid online games are free, fun, and help to teach basic financial skills such as saving, making money, and dealing with debt.
• Make Change Game is a free online game that teaches basic Math as well as the concept of making a purchase and receiving change.
• Education.com offers several free Math games involving money.
• ABCYA.com also has a free counting money game for different ability levels.

Board Games

• Payday is a classic budgeting board game for ages eight and up.
• Lakeshore Allowance Board Game teaches kids how to make good decisions with the money they receive.
• The Money Bags board game comes with realistic-looking bills and coins.
• Loose Change teaches kids about different combinations of coins that add up to a dollar.

Money Apps For Kids

In addition to online games, here are some educational money apps for kids and teens that make learning good financial habits fun.

• Green$treets: Unleash the Loot is a free money management app for ages five to ten.
• Savings Spree ($5.99) is a financial literacy app for kids seven and older.
• Celebrity Calamity is a free app that takes a playful approach to budgeting.
• Kids who have their own savings account can download their bank’s mobile app to keep track of their money in real time. F&M Bank also offers a special app just for kids as part of our Treehouse Savings Club. They can access their savings account, play games, and learn important financial concepts. Download the free app for iOS or Android.

Books That Teach Kids About Money

Reading to your child is a great opportunity to bond…and teach them essential money management skills. Here are our favorite selections for readers of all ages featuring beloved characters as well as new ones.

• The Berenstain Bears’ Trouble With Money by Stan Berenstain
• Just Saving My Money by Mercer Mayer
• Amelia Bedelia Means Business by Herman Parish
• Alexander, Who Used To Be Rich Last Sunday by Judith Viorst
• Curious George Saves His Pennies by Margaret Rey
• Those Shoes by Maribeth Boelts
• One Cent, Two Cents, Old Cent, New Cent by Bonnie Worth
• A Chair For My Mother by Vera B. Williams
• Bunny Money by Rosemary Wells
• The Money Savvy Student by Adam Carroll
• Not Your Parents’ Money Book by Jean Chatzky
• What All Kids Should Know About Saving and Investing by Rob Pivnick

Practice And Reward

At the end of the day, one of the best ways to learn is through practice. Help your child open their own savings account so they can put money away and develop a relationship with a local bank. You can even offer to match a certain percentage of your child’s deposits, much like an employer matches an employee’s 401(k) contributions.

As a community bank, F&M cares about teaching financial literacy to the next generation. Our Treehouse Savings Club gives school-age kids the opportunity to have their own bank account with no minimum balance or maintenance fees. They even earn interest on their savings. The program also comes with a piggy bank, monthly prizes, and other fun extras. Visit your nearest F&M Bank location to learn more and sign up for the Treehouse Savings Club today.