The Smart Way to Manage a Modest Windfall

Salaam African Bank: The Smart Way to Manage a Windfall

Congratulations! There’s nothing more rare, nor more versatile, than free money. It isn’t likely that wealth will simply fall into your lap overnight, so if you’ve been lucky enough to receive an unexpected financial boost, you’ll want to make the most of your extraordinary lucky. Whether large or small, getting an unexpected windfall can be hugely exciting, and if you manage it well it can be a great boon for you and your family.

That being said, while it certainly sounds like the best possible problem to have, receiving a windfall can actually be a huge source of stress and strain in your life. The pressure of rapid change and even sometimes a sense of guilt can sneak up on you and turn what should be a joyous stroke of luck into a burden. The trick is to keep your head, stay calm, and don’t get carried away. Here are a few worthwhile tips to make sure that your wonderful luck stays that way.

Pay Off Debt First

Before you do anything else, make sure that you are debt free. This will save you money in the long term, even if it leaves you with a little less extra right now. Look out for your future self!

Treat Yourself – Just a Little

The best way to deal with a windfall is to use it to put yourself in a stronger financial position that will last in the long term and improve your life incrementally for years. That means you probably won’t be buying a boat, or a villa in the French countryside. It’s never worth it to go wild and spend your windfall all at once, but you should still take a moment to congratulate yourself. Something wonderful just happened — you’ve earned a little fun! Setting aside time to take yourself and your family to a nice dinner or buy yourself a modest new gadget that you’ve had your eye on will help make this exciting moment more fun, and keep you from feeling deprived when you go on to act responsibly and conservatively with your new money. You deserve a little bit of fun, or else you may be tempted to cheat later on.

Don’t Change Your Lifestyle

The worst thing you can do, however, is to make sudden, drastic changes to your overall lifestyle. Even if you windfall feels like grand riches, you may be shocked how quickly you can run through it and be left in a worse place than when you started. Dramatic changes to quality of life are almost never sustainable. In fact, you’ll find you get much more long term happiness by setting yourself up for year’s worth of a stable, stress-free financial life with careful, modest increases is lifestyle. Choose the areas that you know will make you the most happy. Perhaps you love eating at adventurous new restaurants, or taking a small vacation every year. You know yourself, so find what gives you the most joy and use this new money to give yourself a long term gift.

Help, My Identity! What To Do When Your Identity Has Been Stolen

Salaam African Bank: How to Survive Identity Theft

It’s a nightmare we all share: you wake up one day to realize that someone is draining your accounts and making fraudulent charges to your credit cards. Having your identity stolen can be a stressful experience, and more than likely it isn’t one that you prepared for. It can be difficult  to know what to do, but don’t panic! With a little help, you will get through this with your life and your finances intact.

Act Fast

Time is of the essence here to shut the thief down and limit the damage they are able to do. Act immediately and aggressively to mitigate the problem and protect yourself. The faster you can react, the less painful this process will be.

Assemble Your Team

There are many resources available to help you fight an identity thief, so make sure you utilize them all. That means contacting all of the people and organizations that are there to help you. Your first call should be to your bank to stop the thief from getting away with causing any more destruction to your finances. Once your bank knows the situation, they can work with you to suspend your credit cards, stop all payments on fraudulent checks, and freeze any accounts that you suspect might be compromised. Many banks will have fraud and theft protections in place that will shoulder the loss instead of leaving it to you. Make sure you get a clear picture of all of your options.

Next, call the police and file a full report. Once again, the sooner you report the crime the greater chance they have of catching the criminal. The officer on your case can also help you understand your rights and choices should they apprehend the thief. It’s a good idea to start thinking about whether you will want to sue for damages.

Finally, you’ll also want to be in conversation with the companies that report your credit score. You’ll need to comb through your credit report and contest every fraudulent charge to ensure that this unfortunate incident can fade into memory without impacting your financial health for the rest of your life.

Keep Records

This is crucial. Keep a meticulous list of everything that happens during this process, including the names of service representatives that you spoke to, what they told you, what actions you took, and how long until each action was completed. These records will be invaluable if you end up in court, and they will also help you to remember the millions of important details that you are going to be flooded with and figure out where and when you need to follow up. You should also write down a list of all the fraudulent charges so that you know exactly what you’ll need to contest or have refunded.

So long as you act quickly and follow these steps, your identity theft should soon be a distant memory, and you’ll be able to resume your life without any dire consequences.

Real World, Must-Know Financial Tips for Recent College Grads

Salaam African Bank: Financial Firsts for College Grads

Start Saving, Now

Retirement seems like a long way off, but in fact now is the perfect time to start saving. In fact, the younger you are the more valuable each dollar is, because the earlier you begin contributing regularly to a good retirement fund, the less money you will have to contribute overall during your lifetime. The account will grow exponentially over time, essentially earning you free money. And you wouldn’t want to pass up free money, would you?

Don’t Go Wild with Your First “Real Job”

It can be tempting to immediately inflate your lifestyle when you are first making more money on your own that you ever have before. The best course of action, however, is to maintain a lifestyle as close as possible to what you were used to in college, perhaps treating yourself a little bit and allowing for more expenses such as bonding with new colleagues over lunch or building up a daily professional wardrobe. Inflating much more than that, however, is a dangerous game and can easily get out of hand. Plus, you’ll want to make saving a priority, both for long term goals and retirement, and to build up an emergency fund just in case anything should happen or you should find yourself without those new paychecks for a few months.

Keep Perspective

Like as not you and all your friends lived similar lifestyles in college, within relatively similar means. Suddenly after graduation people you know will be earning wildly different starting salaries. It can be a difficult transition, and it’s all too easy to get jealous or throw away your money trying to keep up with the lifestyles of others. Instead, try to remember to keep perspective. Good friends will always be willing to spend time doing a cheap or free activity instead of a pricey one.

Prioritize Your Commitments

If you graduated with student debt, paying it off should be one of your main priorities. The sooner you are truly free of financial obligations, the sooner you can prioritize what is most important when it comes to building your own life, financially and otherwise.

Go Easy on the Credit Cards

Credit cards can be an excellent tool, and you should absolutely make them a part of your overall financial plan. It is important to keep an eye on the larger picture, however, and never use credit cards as an excuse to buy something that you cannot really afford. If the only way for you to buy something nonessential is on credit, then you cannot afford it, period. Slipping up even a few times can really set you back and place you in a weak financial position early in life

Build Your Credit

With that being said, you should make certain that you are making purchase with a credit card regularly — ones that you can afford and which fit comfortably into your budget. This will help you to establish a good line of credit which will be absolutely invaluable to you later down the line. Credit must be earned and built over time, and you likely do not have much established at this early point in your life. Now is the perfect time to start. Making a point to build your credit is an essential part of any plan for financial health.

Top Retirement Mistakes You’ll Want to Avoid

Salaam African Bank: Avoid the Top Retirement Mistakes

Retirement is supposed to be a time of joy and relaxation. Without proper planning and decision making while still being employed, many can end up in challenges that they least expected. Here are the top five retirement mistakes.

Budgeting

Many retirees rush to retirement without  having a plan. Many simply say, “ Oh, I have money in the bank, or I might as well spend it while I’m living,” but this way of thinking leads to problems. The first thing a retiree should do is set up a budgeting plan on a month-to-month basis, but many fail to do so and go on vacation and extravagant dinners instead. Lifestyle adjustments are essential to living a retirement life stress free. Instead of eating out for every meal when retired, you should learn how to cook and plan meals on a daily budget. This goes the same for shopping and spending money on vacations. When you’re retired, your focus should shift from wants to needs. It’s important to create a budgeting plan that includes your daily/monthly costs, as well as having a plan set up in case of emergencies. This will help you avoid cost challenges in your daily life as a retiree.

Cashing Out

Many people rush to cash out their social security benefits as soon as they hit the proper age. Just because you’re retired, doesn’t mean you need to cash out your benefits right away. The problem with this could be that you’ll receive less than you are actually eligible. For example, The Finance World says that if you cash out at age 62, you’ll receive 25% less than if you cash out at age 66. If you can afford to pay your bills, then there is no need to cash out your benefits for a couple years. However, you should cash them out by age 70, because this is the age that you’ll receive maximum benefits.

Home Costs

Paying off your home before retirement is the goal for most people. If you’re retired, you shouldn’t be making monthly payments on a home you don’t already own. But you also shouldn’t be spending a lot of money on the upkeep of your home. If your home is paid off, but you find yourself still paying a lot of costs for the upkeep of your home, it may be time to sell your home and buy a smaller one. This will allow you to downsize your monthly cost and have extra cash on hand for emergencies.

Gifting Money

Holidays and birthday gifts, as well as loans are prime for losing money.  You should not be gifting or loaning money out, because you never know if you’ll actually get it back. By the time you’re retired, your friends and family should know that you are in a part of your life that you cannot financially help them. Many retirees make the mistakes of gifting cash or giving out loans, and they never see this money ever again. This is the money that you’ve worked for all your life and now must live off it, so you can’t afford to hand it away. However, having the proper budgeting plan can allow you to plan on how much you’ll spend on gifts and loans, to help avoid losing your money.

Not Staying Active

Although retirement is for relaxing, many retirees don’t stay social and active. Retirement should be about getting together with old friends and spending time with family. It is also a time that you can do anything for yourself, such as learn a new hobby, try new things, go to new places. One of the many mistakes that retirees make is becoming secluded within their lives, which could lead to depression or higher health risks.  This is terrible for the physical and mental health of humans. This is a time you should continually be feeding the mind and the body with healthy habits such as reading, socializing, and walking. You’ll live a happier and longer retirement if you do so.

Piggy Banks and Parenting: Teaching Your Children About Money

Salaam African Bank: Teaching Your Children About Money

Teaching Your Children About Money

Financial literacy is one of the most important skills every adult needs to know for a happy, healthy life. Considering how crucial money-smarts are for successfully navigating the world without being burdened with constant stress and worry, there is remarkably little support in place to help us pass this knowledge onto our children. Studies indicate that children’s money habits are established as young as seven years old, so you’ll want to make sure those habits are good ones. Here are a few ways that you can help equip your children with the money management tools they will need for the rest of their lives.

Be Open

One of the most important things you can do to teach your children about money is simply to talk to them, and be open about your financial situation. Many families treat money as an embarrassing secret. You might not want your child to brag or to feel inferior, but in the long run you are not doing them any favors by hiding your financial thoughts. Next time you have a serious conversation about money with your spouse, let the kids stay in the room. When they want an expensive new toy and it’s not in the budget, don’t give a fake reason but simply explain to them that you can’t afford it right now, or that they’ve already spent their toy allowance for the money. These little daily lessons help children to understand that money is a limited resource instead of viewing mom and dad as unlimited atms.

Give Kids a Starter Income

Instead of allowance, try a chores system where kids can earn money by doing work around the house — just like a job in the real world. They will learn that there are great rewards for hard work, and that they have the power to provide for what they want if they’re willing to work for it.

Let Them Make Mistakes

Learning to budget can be a difficult and frustrating process, as many adults know all too well. As when learning any new skill, children will make mistakes, and those are the best learning opportunities. The low-stakes world of allowances and treats is a perfect, safe way to learn about the disappointments and satisfactions of managing your money well. For instance, you might offer an allowance based on how much money you would usually be spending on toys and treats, and explain to kids that they will be able to earn their own money and use it however they want. Then, follow through by not buying them extras. If your child spends all their money right away and has none left over, that is an excellent learning opportunity. If you sweep in and give them more money or buy treats to make up the difference, they will lose out on a valuable opportunity to learn about consequences and budgeting.

Encourage Saving

If you child wants an expensive item, turn it into a teaching opportunity. Sit down together and set out goals, such as earning a the cost of an exciting and costly toy. Then, help you child form a plan to meet that goal. They may set aside half of their allowance money each week, or you may offer them extra chores to increase their earnings. Guide them as they save up their money and watch it grow before their eyes. When they reach their goal, take them to buy their prize and celebrate with them!

Why You Should Be Saving For Retirement NOW

Salaam African Bank: Why You Should Be Saving For Retirement NOW

Why You Should Be Saving For Retirement NOW

Retirement comes last in life, and it can be tempting to put it last in your list of financial priorities as well. It can all too easy to make this mistake and put off saving for retirement when, after all, there are many major expenses in our lives that we are bound to come up against sooner than we will hit retirement. Tempting as it may be to spend money now instead of later, however, waiting too long to begin your retirement fund can be a huge regret. Here’s a few great reasons why you should start saving now, no matter where you might be in life or how long you plan to wait until retirement.

Compound Interest

This is probably the most compelling argument for saving as much as you can as early as you possibly can. Compound interest can essentially earn you the rarest of all things: free money. Any good savings account offers you interest on your contributions, and that interest then becomes part of the balance of your account, so that the next time you receive interest, it is calculated from a larger amount. Because retirement is often years away for many savers, there is a lot of time for that to add up. The interest grows at an exponential rate, meaning that even the difference between starting at age 20 vs age 25 can be a huge amount of money in your pocket a few decades don’t the line. No matter how old you are, saving now instead of next year always means more money for you when it comes time to cash out. If more money isn’t a good argument to start now, we don’t know what is!

Employer Matching

If your employer offers any kind of matching program for your retirement savings, then not saving as much as you can now is equivalent to leaving money on the table. If you have a chance for someone else to be contributing to your fund, you should take advantage of it as much as you feasibly can!

Quality of Life

You work hard to achieve a certain quality of life for you and your family, and you come to expect that your hard work pays off — as you should! It can be very difficult for people who have supported themselves for their whole lives to accept a cutback in standard of living right when they should be celebrating a lifetime of achievement. Your retirement should be a time of relaxation and congratulations, a chance to do all the things that you had to put aside in your working years. But to have the retirement you deserve, you will have to have saved sufficient funds to support yourself after work at the level you are accustomed to.

Reach the Finish Line

Another motivation for many to start saving as soon as possible is that the sooner you build up the retirement account, the sooner you can put it to good use! If you want the option of retiring early to enjoy some much-deserved free time before it’s too late, you’ll have to plan ahead and get smart about your goals. And that means saving now, as soon as you can.

5 Ways You Should to Be Banking on Your Phone

Salaam African Bank: 5 Ways You Should to Be Banking on Your Phone

5 Ways You Should to Be Banking on Your Phone

It’s easy to see that the world is moving rapidly towards the digitization of pretty much everything. Online and mobile services can offer fantastic features and unparalleled convenience to everyone, which is why we here make it a priority to stay on the cutting edge of forward thinking technology. While new advancements can be useful, however, the transition can also be confusing and frustrating. That’s okay! If you’ve ever thought about mobile banking but aren’t sure if it’s right for you, or if you’ve downloaded an app but don’t know how to get the most out of it, take a look at this simple list of ways you can use your mobile phone to make your banking a smooth and easy experience.

  1. …Everything

Most of all, mobile banking should be a way to do get everything you want out of your bank, and get it more easily. No matter what your banking priorities are, you should be able to have instant access in your pocket anytime, anywhere. After all, it’s your money. You deserve to know all the information and have full control over what happens to it! That’s just common sense.

  1. Say Goodbye to Late Fees

Never forget to pay your bills again! It’s easy when you can pull out your mobile phone and make a payment whenever you happen to remember, even if you aren’t near your bank. We know you’re busy, and it can be difficult to make it into the branch every time you want to bank. For many of us, even taking the time to stuff an envelope and find a stamp can be a barrier to good financial habits. And frankly, that’s time you shouldn’t have to spend! Luckily, you don’t have to.

  1. Stay Safe

One of the best services mobile banking can offer is peace of mind. When you statement lives in your pocket, you can pull it out at any time to do a quick review and make sure everything looks the way it should. If you ever face any fraudulent charges or unfair fees, it’s super easy to catch them early and contact your bank. Staying on top of your finances on not just a monthly but a weekly or even daily basis is a great way to keep your accounts safe and make sure you are always aware of any activity.

  1. Watch Your Budget

The other advantage of staying informed with updated access to all activity in your account is that it’s easier than ever to monitor your budget! You’ll never have to wonder how much money you have left for the month, or track down lost receipts to double check your spending. Keep yourself on track with all the information available.

  1. Transfer with Ease

Getting access to your money and making transfers money shouldn’t require a trip to the bank. This way, if you ever face an overdraft fee you can quickly and easily make transfers.

Ultimately, mobile banking empowers you to have greater control over your finances and allows you access and information when and where you need it, for all the times it matters most.

How to Pay Off your Mortgage Early

Salaam African Bank: How to Pay Off Your Mortgage Early

How to Pay Off Your Mortgage Early

Most home owners still do not own their homes outright. While mortgages are fantastic tools that can put owning your dream home within reach, it is natural to want to be free of financial obligation as soon as possible. If you are interested in paying off your mortgage early, the first question to ask yourself is whether that is really the most advantageous move. If you have a retirement fund with higher returns than the interest on your mortgage, or if you have an employer who matches your retirement contributions, it may actually make more financial sense to invest your extra money rather than put it towards your mortgage.

If, however, you want to make it your first priority to be mortgage free, the first thing you’ll want to do is speak to your bank and let them know that you want to begin paying your mortgage aggressively. They should have good advice about the best way to reach your goals, and you can also ensure that your extra payments are being credited as you intend them to be, rather than towards the next month’s payment, for instance. Once you’ve worked out a plan with your bank, here are some of the best strategies to own your house as soon as possible.

Add Extra Payments

Divide your monthly payment by 12% and add that amount to each payment. This will effectively mean you are making 13 payments each year, which can shave years off your mortgage and save you lots of money in interest. Some people choose to reach the same goal by making a payment every two weeks. You can also try adding an extra payment each quarter to move a little faster still.

Round Up

If you want to make movement but can’t afford a full extra payment, you can also try simply rounding up each month’s payment to the nearest round number. This puts a little extra towards your mortgage each month without ever saddling you with the full cost of another payment all at once.

Throw in the Extra

Every time you find yourself with some extra money like a bonus at work, an unexpected windfall, or a tax return, send it straight over to your mortgage. This method has the advantage of never dipping into your primary income or shrinking your everyday budget. However, it is very difficult to say how much time you are saving as it is impossible to predict when you will have extra money to contribute.

Refinance

The most straightforward way to pay off your mortgage early is to refinance. Often you can even get a lower interest rate by doing this. There are usually fees and costs associated with refinancing, however, so unless the interest rates are significantly better, you may choose to simply act as if you refinanced and commit yourself to paying off your mortgage in 15 years even though your paperwork says 30.

 

You can use this handy mortgage payoff calculator to help you plan for your future using any of these methods.