Tag Archives: personal finance

Emergency Fund vs. Savings Account: What’s the Difference and Why You Need Both

We’ve all heard the saying, “Save for a rainy day.” But what if that “rainy day” is an unexpected car repair, a medical bill, or even a job loss? That’s where an emergency fund comes in. While a savings account helps you work toward your financial goals, your emergency fund is there to protect you when life throws the unexpected your way.

So, what’s the difference between the two, and how do you know how much to put in each? Let’s break it down in a way that makes sense — without all the confusing financial jargon.

Emergency Fund vs. Savings Account: The Quick Breakdown

  • Emergency Fund = Your financial safety net. This money is reserved for unexpected expenses, like car repairs, medical bills, or sudden job loss. You should be able to access it quickly when needed.
  • Savings Account = Your financial goals fund. This is where you set aside money for planned expenses like a vacation, a down payment on a house, or holiday shopping. You can leave the money here to grow over time while working toward a goal.

While they’re both technically “savings,” they serve very different purposes.

What Is an Emergency Fund?

An emergency fund is exactly what it sounds like: a stash of money set aside for true emergencies. These are unexpected financial hits that you can’t plan for, like:

  • Major car repairs
  • Medical emergencies
  • Sudden job loss
  • Urgent home repairs (like a broken furnace in the middle of winter!)

The key to an emergency fund is that it should be easily accessible — meaning it shouldn’t be locked away in an investment account where you’d face penalties for withdrawing it. A high-yield savings account or a basic savings account with quick access is usually the best place to keep it.

How Much Should You Save? Financial experts recommend keeping at least three to six months’ worth of essential expenses in your emergency fund. If that sounds overwhelming, start small! Even having $500 to $1,000 can make a huge difference in an emergency.

What Is a Savings Account?

A regular savings account is where you keep money for planned expenses or future goals. Unlike an emergency fund, this money isn’t meant for sudden, unexpected bills — it’s for things you know you’ll need or want in the future.

Some common savings goals include:

  • Vacation fund
  • Down payment for a house
  • Holiday shopping
  • College tuition
  • New car

Savings accounts help you stay on track with your goals by keeping money separate from your everyday spending account.

How Much Should You Save? That depends on your goal! If you’re saving for a vacation, set a clear target (like $2,000) and work toward it. For long-term goals, like a house or retirement, it may take years — but every little bit counts!

Key Differences Between an Emergency Fund and a Savings Account

FeatureEmergency FundSavings Account
PurposeCovers unexpected expenses (car repairs, medical bills, job loss)Helps you save for planned purchases and financial goals
AccessShould be easily accessible in a savings or money market accountCan be in a standard savings account, CDs, or even investments
Amount to Save3–6 months’ worth of expenses (start with $500–$1,000)Depends on your savings goal
When to Use ItONLY for emergenciesFor vacations, home down payments, big purchases, etc.

Why You Need Both

Having both an emergency fund and a savings account ensures that you’re financially prepared for anything. Without an emergency fund, you might end up pulling from your savings when unexpected costs arise, setting you back on your goals.

Example: You’ve been saving for a vacation, but then your car breaks down. Without an emergency fund, you’d have to dip into your vacation savings, delaying your trip. But with an emergency fund, you can handle the repair without touching your vacation money.

How to Start Building Both

Not sure where to begin? Here are a few easy steps:

  1. Set Up Separate Accounts – Keep your emergency fund and savings account separate so you’re not tempted to spend your emergency money on non-essentials.
  2. Automate Your Savings – Set up automatic transfers from your checking account to both funds each month — whatever amount you can afford.
  3. Start Small, Then Grow – If saving three months’ worth of expenses feels impossible, start with $500 in your emergency fund and build from there.
  4. Prioritize Your Emergency Fund First – Before focusing on long-term savings, make sure you have a solid emergency cushion.

Final Thoughts

Think of your emergency fund as your financial safety net and your savings account as your future goals fund. By keeping them separate and contributing to both, you’ll be prepared for life’s surprises while still working toward your dreams.

If you’re ready to start saving, Peoples Bank & Trust offers savings accounts that make it easy to build your financial future. Stop by a branch or give us a call today to open an account and start taking control of your money!

Start an Emergency Fund Today

Peoples Bank & Trust Co.
Member FDIC, Equal Housing Lender
NMLS #407724

Using Your Home’s Equity for Renovations: 5 Smart Ways to Fund Your Next Project

Your home is one of your biggest investments, and over time, you’ve probably thought about making some updates — maybe a kitchen remodel, a new roof, or adding a cozy outdoor space. But home improvements can be expensive, and not everyone has the extra cash lying around. That’s where home equity loans and HELOCs (home equity lines of credit) come in.

If you’ve built up equity in your home, you might be able to use it to fund renovations and increase your home’s value. Let’s break down how it works, the best projects to invest in, and whether tapping into your home equity is the right move for you.

What Is Home Equity and How Can You Use It?

Home equity is the difference between what your home is worth and what you still owe on your mortgage. As you pay down your loan and property values rise, your equity grows, giving you a valuable financial resource.

There are two popular ways homeowners use equity to finance home improvements:

  1. Home Equity Loan – A home equity loan works like a traditional loan, giving you a lump sum upfront with predictable monthly payments. Best for one-time projects with a set cost.
  2. HELOC (Home Equity Line of Credit) – A HELOC works more like a credit card, allowing you to borrow money as needed up to a certain limit. Best for ongoing or phased projects where costs might fluctuate.

Both options typically offer lower interest rates compared to personal loans or credit cards, making them a smart choice for financing renovations.

Best Home Improvement Projects to Increase Your Home’s Value

Not all home improvements are created equal. If you’re going to borrow money, it’s smart to invest in projects that boost your home’s value and make life more comfortable. Here are some of the best upgrades to consider:

  • Kitchen Remodels – Even minor updates like new countertops, cabinets, and energy-efficient appliances can add value and modernize your space.
  • Bathroom Upgrades – A refreshed bathroom with updated fixtures, new tile, or even an extra half-bath can be a game changer.
  • Curb Appeal Enhancements – Fresh landscaping, a new front door, or even repainting the exterior can make a big difference when it comes to home value.
  • Energy-Efficient Improvements – Replacing old windows, upgrading insulation, or adding solar panels can save money on utilities and attract future buyers.
  • Adding Living Space – Whether it’s finishing your basement, adding a deck, or building a home office, extra space means extra value.

If you plan to sell in the near future, prioritize projects that increase resale value. If you’re staying long-term, focus on renovations that enhance your lifestyle.

Is Using Home Equity for Home Improvements a Good Idea?

While borrowing against your home’s equity can be a smart financial move, it’s important to make sure it’s the right choice for your situation. Here are some things to consider:

  • Do you have enough equity? Most lenders require homeowners to have at least 15-20% equity before borrowing against it.
  • Can you afford the payments? Even with lower interest rates, make sure your budget can handle the monthly repayment.
  • Will the renovation add value? If the project will improve your home’s value and quality of life, it’s often worth the investment.
  • Do you plan to stay in your home? If you’re selling soon, focus on improvements with a high return on investment.

How to Get Started

If you’re thinking about using your home’s equity to finance renovations, here’s how to begin:

  1. Determine Your Equity – Check how much equity you have in your home to see if borrowing is an option.
  2. Explore Loan Options – Compare home equity loans and HELOCs to find the best fit for your needs.
  3. Set a Budget – Have a clear idea of your renovation costs before applying for a loan.
  4. Talk to a Lending Expert – The team at Peoples Bank & Trust can walk you through the process and help you choose the right financing option. Contact us today for any questions you may have.

Turn Your House into Your Dream Home

Your home is more than just a place to live — it’s an investment in your future. If you’re ready to tackle those long-awaited upgrades, a home equity loan or HELOC could be the key to making it happen.

At Peoples Bank & Trust, we’re here to help you make the most of your home’s value with financing options that fit your needs. Visit us today or give us a call to learn more about how you can turn your home equity into home improvements!

Visit Us Today

Peoples Bank & Trust Co.
Member FDIC, Equal Housing Lender
NMLS #407724

Credit score dial

Understanding Your Credit Limit: What It Means and Why It Matters

Your credit limit is a crucial aspect of your financial health, impacting everything from your credit score to your ability to make large purchases. At Peoples Bank & Trust, we believe in empowering our customers with the knowledge they need to manage their finances effectively. Here’s a comprehensive guide to understanding your credit limit, how it works, and why it matters.

How Credit Limits Work

A credit limit is the maximum amount of money a lender will allow you to borrow on a credit card or line of credit. This limit is determined based on several factors, including your credit score, income, and overall financial health. Here’s a deeper look into how credit limits are set and managed:

  • Creditworthiness: Lenders assess your creditworthiness by reviewing your credit history, including your payment history, credit utilization, and length of credit history.
  • Income: Your income level helps lenders determine your ability to repay borrowed amounts.
  • Debt-to-Income Ratio: This ratio compares your total monthly debt payments to your gross monthly income, helping lenders gauge your financial stability.

It’s important to note that just because you have a high credit limit doesn’t mean you should max it out. Responsible management of your credit limit can positively impact your credit score and financial future.

Credit Utilization Ratio

Your credit utilization ratio is the percentage of your available credit that you’re using. For example, if your credit limit is $1,000 and you have a balance of $300, your utilization ratio is 30%. Here’s why maintaining a low credit utilization ratio is important:

  • Credit Score Impact: A high utilization ratio can negatively affect your credit score. Aim to keep your ratio below 30% to maintain a healthy credit profile.
  • Financial Flexibility: Keeping your utilization low ensures you have available credit for emergencies or unexpected expenses.
  • Lender Perception: Low utilization signals to lenders that you manage your credit responsibly, which can lead to higher credit limits and better loan terms.

Tips for Increasing Your Credit Limit Without Hurting Your Scores

Want to increase your credit limit without jeopardizing your credit scores? Here are some tips that may help:

Maintain a Good Payment History

Consistently paying your bills on time is one of the best ways to improve your credit score and increase your credit limit. Here’s how to ensure timely payments:

  • Set Up Reminders: Use calendar alerts or automatic reminders to keep track of due dates.
  • Automate Payments: Set up automatic payments for at least the minimum amount due to avoid late fees.
  • Prioritize Debts: Focus on paying off high-interest debts first to reduce overall financial strain.

Keep Your Credit Utilization Low

Aim to use less than 30% of your available credit. High utilization can negatively affect your credit score. Here are some strategies to manage your utilization:

  • Spread Out Purchases: Use multiple credit cards to distribute your spending and keep individual utilization rates low.
  • Make Multiple Payments: Pay down your balance multiple times a month to keep your utilization ratio low.
  • Increase Credit Limits: Request higher credit limits on existing cards to increase your total available credit.

Request a Credit Limit Increase

If you’ve been a responsible borrower, you can request a credit limit increase from your lender. Be prepared to provide information about your income and financial situation. Here’s how to approach this:

  • Review Your Credit Report: Ensure your credit report is accurate and free of errors before requesting an increase.
  • Highlight Positive Changes: Inform your lender of any positive changes in your financial situation, such as a salary increase or reduced debt.
  • Be Patient: If your request is denied, wait a few months and continue to demonstrate responsible credit behavior before trying again.

Avoid Opening Too Many New Accounts

Each new credit application can result in a hard inquiry on your credit report, which can temporarily lower your score. Here’s why it’s important to be cautious:

  • Impact on Credit Score: Multiple hard inquiries in a short period can signal financial distress to lenders.
  • Account Age: New accounts can lower the average age of your credit history, which can negatively impact your score.
  • Focus on Quality: Instead of opening multiple accounts, focus on maintaining and improving your existing credit lines.

Monitor Your Credit Report

Regularly check your credit report for errors and dispute any inaccuracies. This can help maintain a healthy credit score. Here’s how to stay on top of your credit report:

  • Annual Credit Report: Obtain a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year.
  • Credit Monitoring Services: Consider using a credit monitoring service to receive alerts about changes to your credit report.
  • Dispute Errors: If you find any inaccuracies, dispute them with the credit bureau to have them corrected.

Common Myths Debunked

Let’s set the record straight on some common myths surrounding credit limits:

Myth #1: Closing a Credit Card Improves Your Credit Score

Reality: Closing a credit card can actually hurt your credit score by reducing your available credit and increasing your credit utilization ratio. It also shortens your credit history, which can negatively impact your score.

Myth #2: Carrying a Balance Improves Your Credit Score

Reality: It’s a common misconception that carrying a balance helps your credit score. In reality, paying off your balance in full each month is better for your score and saves you money on interest.

Myth #3: Checking Your Credit Report Lowers Your Score

Reality: Checking your own credit report is considered a soft inquiry and does not affect your credit score. Regularly reviewing your credit report is a good practice to ensure accuracy and monitor your financial health.

Apply Today for a VISA® Platinum Credit Card from Peoples Bank & Trust

Start your application for your credit card here. After submitting your application, you will be contacted if it is approved. If you have any questions about the VISA® Platinum Credit Card, call or come by your local Peoples Bank & Trust branch today.

See the card application’s Important Disclosures for current terms, rates, and fees. This card is issued by Bankers’ Bank of Kansas. Subject to credit approval.

Understanding your credit limit and responsibly managing it is key to maintaining a healthy financial profile. By following these tips and debunking common myths, you can make informed decisions that benefit your credit score and overall financial well-being.

At Peoples Bank & Trust, we’re here to support you with the right credit card options and financial advice. Contact us today to learn more about how we can help you achieve your financial goals.

Top 5 Reasons You Need a Debit Card

Make Purchases Simple – Top 5 Reasons You Need a Debit Card 

If you don’t have a debit card, don’t worry these top five reasons will convince you to get one! A debit card is a great asset to your wallet and financial freedom. Keep reading to learn the top ways a debit card makes your purchases simple. 

1. Makes Purchases Convenient and Simple 

Ever reached into your wallet and are short on cash? Having a debit card on hand makes it incredibly easy to either withdraw funds from an ATM or simply use the card to make your purchases instantly. A debit card can truly be your only form of payment wherever you are. A debit card allows you the freedom to make everyday purchases conveniently and you can track your spending instantly from your PB&T mobile app.  

2. Budgeting Made Easy 

When you use your debit card, you are withdrawing money directly from your checking account. If you are working towards improving your budget, a debit card is a great tool to help you do so. When you make a purchase with your debit card you can be notified right away and have a mobile receipt to help keep your budget in line.  

3. Safe Form of Payment  

One of the huge benefits of utilizing a debit card are the safety factors. With a debit card you can make secure purchases and not have to worry about carrying cash. With your debit card you can be notified every time your card makes a purchase, that way if it is a fraudulent purchase, it can be reported through Peoples Bank & Trust immediately. If you lose your card, don’t worry you can cancel it immediately and have it replaced at any of our branch locations.  

4. Debit Cards Can Reward You  

Depending on the debit card you get, you can earn rewards simply by using it! To learn more about the specifics of our debit cards, head over to our website.  

5. Makes Paying Bills Effortless  

One of the huge benefits of using a debit card is the ability to set up your bills to be paid automatically. This will help you avoid a late fee or interest. This is a huge benefit to improving your credit score.  

If you are looking to get started on a debit card, we can help! At Peoples Bank & Trust we are focused on making your day-to-day financial goals effortless and with a debit card payment is made easy, safe, and convenient.  

Peoples Bank & Trust Co.    

Member FDIC    

Equal Housing Lender   

How to Budget Rising Food Prices

How to Budget Rising Food Prices  

It is no secret food prices have risen in the past few months. Food is generally at the top of the list for basic human needs, so how do we go about combating these rising food costs? Keep reading for top tips to fight rising food prices this winter.  

1. Eat Out Less 

Dining out is an extremely expensive option if you opt for it too often, especially if you are already budgeting for a full list of groceries as well.  Many meals you purchase out can be made for a fraction of the cost at home. And while fast food can be a cheaper dining out option, it may be a cost to your overall health – high-calorie and low-quality food is not as nutritional as food you can make at home.  

2. Don’t Shop on An Empty Stomach 

We’ve all been grocery shopping on an empty stomach and can agree that shopping while hungry will only fill your cart with unnecessary purchases. When grocery shopping on an empty stomach there is a likelihood of overspending and veering from your list. Stick to your necessities by grabbing a bite to eat or a small snack before you begin your shopping trip.  

3. Stick to Your List  

If shop without creating or sticking to a list, you may experience sticker shock when you check out your next grocery haul. If you fill your cart with everything that catches your eye, be prepared to spend a lot more than you planned. By creating a list in advance, you have the opportunity to plan out your meals and ingredient list to cohesively put together a plan for the week. This also allows you to plan around any sales the store may have or you may choose to shop elsewhere because there may be a better deal. Avoiding impulse buys is key to fighting these rising food costs. If you stick solely to your list, you won’t be tempted to go down every aisle. Many say all the products you need are on the edge of the store, so avoiding a couple of isles is a win! 

4. Fresh Over Prepared 

In a world that is already a fast-paced society, it is easy to opt for prepared items when shopping at the grocery store. Whether it’s convenience or to simply have on hand, these pre-ready meals are at a premium price tag compared to simply buying the fresh ingredients to make yourself. This same concept also goes for frozen items you may be grabbing. Yes, they absolutely are convenient and last longer, but they often are priced significantly higher than buying fresh ingredients to prepare yourself.  

5. Bulk May Be the Best  

Buying in bulk can save you time and money. It is important to pay attention to prices of family-sized options – if the price per unit is lower it is well worth your money to buy more if you have a place to store it and will use it before it expires. If you have items you go through consistently, it may be well worth the cost to purchase those at a big box bulk retailer such as Costco or Sam’s Club.  

6. Bulk Isn’t Always the Best 

If you find you are not utilizing a membership at a big-box retailer as often as you had thought, consider canceling. Chances are you don’t need nearly as much on hand and are paying for the  bulk items along with the membership price. It is very important to pay attention to your spending habits at these stores as well as your overall consumption. The prices at the big boxes aren’t always a bargain compared to discounts at other stores. In addition, the family-size packaging at these stores could mean you buy more than you need, driving up your grocery bill. 

7. Sign Up for Rewards 

If you are visiting the same stores consistently, it is well worth it to sign up for their rewards program. Some stores may raise their prices when they offer rewards so without the card your bill could be higher. Look into the rewards offered, they may have benefits such as a ham on the holidays or a discount on gas. Take advantage of the benefits at places you are already going to! 

8. Prices Are High, Look Low 

They strategically set up grocery stores to tempt you to spend money. As mentioned earlier, stick to the outsides of the stores. You also can avoid higher priced items by not shopping the end caps or checkout areas. The highest-priced items are placed where it is easy for you to look, such as the middle of the shelf at eye level. If you look down, chances are you’ll find generic and cheaper alternatives.  

9. Substitute the Expensive Items  

If you notice an item you use frequently has a price that is consistently climbing, look into finding a lower-priced alternative. For example, you could swap apple sauce for vegetable oil in recipes to cut the cost nearly in half.  

10. Maintain a Well-Stocked Kitchen 

Shopping infrequently or only when you need to is key to not overspending. If you shop when the best deals are available, you have the ability to stock up and put yourself in the position of only shopping when you need to or when the item is back on sale. 

Food is one of those purchases we simply cannot avoid. Be a careful and well-prepared shopper to minimize the amount you spend at the grocery store.  

Peoples Bank & Trust Co.    

Member FDIC    

Equal Housing Lender    

Financial Resolutions in Check

How to Get Your Financial Resolutions in Check for the New Year

If part of your new year’s resolutions was to reshape your finances and consolidate debt, this is the blog for you. Make your resolutions a reality with these top tips for the year 2023!

Preparing Your Financial Resolutions

If you have created new year’s resolutions, you know it can be extremely hard to stick to them if you don’t implement steps to adequately meet them. When you are identifying areas of your finances you want to improve, it is important to identify goals within your goals to help you stay accountable and committed to them throughout the year and on. 

Resolution 1: Analyze Your Financial Situation and Budget

Before you decide what financial resolutions, you may have that will actually improve your financial habits and situation, it is crucial to do a deep dive into your current financial situation and comb through your budget. Doing this may bring up some areas that you didn’t realize may be affecting your finances negatively as well as find areas you can improve. Tracking your current spending and saving habits are incredibly important for everyone to do, let your financial resolutions be clear and concise by identifying your money moves and behaviors. 

Resolution 2: Define Your Debt

Debt is a tool that depending on how you use and are managing it can inherently be a good or a bad thing. If you have found your debt to be more of a financial burden than a tool, chances are your debt need to be addressed and controlled. Here are a few key points to keep in mind as you address your current debt:

  1. Eliminate any debt that you can. Yes, this can be difficult to do – pay off credit card debt and avoid borrowing depreciating assets as it can add up quickly if you carry a balance. 
  2. Keep your total debt amount manageable. Just because you can borrow it, doesn’t mean you should borrow it. The rule of thumb is to keep your monthly costs below 28% of your pre-tax income and your total monthly debt payments. 
  3. Align your payments with your lifestyle and timing. When you are looking into taking out a loan, be honest with yourself about your time horizons, such as if you don’t plan to dig your roots somewhere consider a shorter maturity loan or an adjustable-rate mortgage over a longer-term loan

Resolution 3: Optimize Your Budget Financial Goals

Once you’ve addressed areas that need to be implemented or improved, you can begin re-working and refreshing your budget as well as carefully molding your plan to meet your financial goals. Tracking your spending and saving can be a useful tool with set guidelines to keep you on track, identify areas of improvement, help you safe more, and point out areas where you could cut back. Here are a few things to factor in when crafting your budget:

  • Fixed expenses
  • Rent/mortgage payments
  • Cell phone 
  • Monthly subscriptions
  • Groceries
  • Eating out 
  • Clothing
  • Entertainment
  • Daycare
  • Holidays 
  • Vacation 

Resolution 4: Create Your Financial Goals 

As you build this list here are a few financial resolutions to consider implementing: 

  • Save more money this year than you did last
  • Better your credit score
  • Better your budget – regardless of how you think your budget, this can always be looked over and changed to fit your lifestyle and goals as they evolve
  • Pay your credit card balance in full each month
  • Check your credit score more frequently
  • Implement a financial checkup as often as you see fit 
  • Improve your debt
  • Check your credit report more often
  • Find a way to build your credit that aligns with your goals
  • Start an emergency fund
  • Analyze your retirement savings
  • Open a savings account
  • Consider a Certificate of Deposit
  • Make a meeting with a financial advisor
  • Discuss your financial situation with your bank

Meeting and sticking to your resolutions can be extremely difficult. Building a strong financial foundation will carry you well now and, in the future, so the best time to put in the hard work is as soon as you can and continue to implement new goals and areas to work through as you become more and more financially literate. If you have questions, we are happy to help! Contact us here.

Peoples Bank & Trust Co.  

Member FDIC  

Equal Housing Lender  

Home Equity Loan vs. Home Equity Line of Credit

Home Equity Loan vs. Home Equity Line of Credit 

A Home Equity Loan and Home Equity Line of Credit are both loans that use your home as collateral. Though they are very similar, they are different loans. Keep reading to learn what a Home Equity Loan and Home Equity Line of Credit are, their differences, and their benefits!

What Are They?

A Home Equity Loan and Home Equity Line of Credit, commonly known as a HELOC, are both loans which use your home as collateral. Both are fantastic options for borrowing money if you’ve paid down a significant portion of your mortgage. 

Home Equity Line of Credit: A HELOC is a line of credit in which the lender will agree to lend a maximum amount within an agreed-upon period and variable interest rate. Essentially, a HELOC uses a percentage of your home’s equity to provide a revolving line of credit, much like a credit card. Your monthly payments with a home equity line of credit will change over time. With a HELOC, disbursement of funds is made on an as-needed basis and repayment is interest-only during the draw period; you repay all the principal and any remaining interest afterward. 

Home Equity Loan: A home equity loan is very similar; however, a home equity loan is a lump sum that is disbursed upfront and paid back in fixed installments. Your monthly payments will be the same each month. With a home equity loan, disbursement of funds is an upfront lump sum and repayment starts as soon as the loan is disbursed. 

The Main Difference

HELOC: A home equity line of credit’s interest rate may vary and therefore your monthly payments on a home equity line of credit may change over time. With a HELOC, disbursement of funds is made as you need them, and repayment is interest-only during the draw period; you repay the principal and any remaining interest afterward.

Home Equity Loan: With a home equity loan your interest rate is fixed and therefore your monthly payments will be the same each month. With a home equity loan, disbursement of funds is an upfront lump sum and repayment starts as soon as the loan is disbursed. 

Pros and Cons

Home Equity Line of Credit (HELOC) 

Pros:

  • You only borrow as much money as you need
  • Flexible repayment
  • Tax deduction
  • May come with little to no fees

Cons:

  • Variable interest rates (changes based on market fluctuation)
  • Not a set repayment plan (can be a pro for some)
  • Maybe more debt to repay as it is a long-term credit option
  • Could lose your home if you default on the HELOC

Home Equity Loan

Pros:

  • Fixed interest rate
  • You borrow a lump sum to use for nearly anything
  • Little to no fees
  • Tax deductible
  • Set repayment plan (could be a con for some)

Cons:

  • Best terms go to those with a good credit score
  • Need a lot of home equity 
  • If property values decline, you owe more than your home is worth
  • Could lose your home if you default on the loan

As you can see, a home equity loan and home equity line of credit are fantastic options for homeowners. Now that you know the benefits and main differences, which is best for you? These loans are a great source of value to access cash for renovations, large purchases, home remodel projects, college tuition, a new vehicle, or nearly any other need. Visit our website to learn more or stop in to talk with a lender!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

Why is Financial Literacy So Important

Why is Financial Literacy So Important? 

Lacking financial knowledge can result in bad money habits such as saving and investing. In this blog, we will outline what financial literacy is, why it is so important, as well as some tips to actively become more financially literate. How we spend and manage our money is crucial to our financial stability throughout every stage of our lives! 

What is Financial Literacy and Why is it So Important?

Financial literacy is the ability to understand and effectively use various financial skills to better personal finance, budgeting, and investing. Essentially, financial literacy is a strong foundation you build on your relationship with money and money habits. This is an ongoing process as you continue to learn through different points in your life. The earlier you start betting on your financial education, the better you will be later in life and when you retire. 

Stop waiting to prioritize your finances and start working on better habits to gain knowledge and improve all areas of finance, credit, and debt management to make financially responsible decisions—choices that are integral to our everyday lives. Evaluate your current financial situation, set goals, and learn something to become more financially aware and plan for your retirement. 

Ways to Improve Your Financial Literacy

Take this as a push to gain knowledge and financial growth. How can you improve your financial literacy? Here are some ideas: 

  • Seek financial knowledge
  • Subscribe to a financial newsletter 
  • Listen to financial podcasts
  • Join a financial club (investments, money management, money, financial literacy, etc.)
  • Read a personal finance book or blog
  • Speak with a financial advisor
  • Use social media to learn – join a finance group 
  • Make financial money moves (re-work your budget, open a savings account, open an investment account, put your money towards retirement, start an emergency fund, increase your retirement contribution) 
  • Consolidate high-interest debt
  • Make small changes in your spending habits; acknowledge bad habits and set goals to change them

How To Become Financially Aware of Retirement Planning

Money moves you make now will affect you later in life. Ultimately, saving for your retirement is securing your financial stability later in life. Here are the top tips to incorporate into your financial habits now to best save for your retirement: 

  • Focus on starting ASAP if you haven’t already
  • Contribute to your 401(k) routinely 
  • Open an IRA account
  • If you are 50 or older, take advantage of catch-up contributions
  • Create a spreadsheet to see where you are at and what you need to do to reach your retirement savings goal
  • Rein in your spending
  • Automate your savings

If you are looking to make good financial decisions and better your financial literacy, now is the perfect time to get started. Building a solid financial future is extremely important for where you are currently at in life and when you reach retirement. Take this time to reflect on your finances and educate yourself to make smart financial decisions and money moves – you will be extremely glad you did.

Peoples Bank & Trust Co.

Member FDIC

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Money Mistakes to Avoid Around the Holidays

Money Mistakes to Avoid Around the Holidays

As the holiday season nears, it is important to make changes to efficiently budget for your expenses. Here are some holiday money mistakes to avoid this year, so you don’t have to start 2023 in financial regret!

1. Not Setting a Holiday Budget 

We’ve all been there and unfortunately have learned from our mistakes. Not setting a holiday budget will get you quick and set you back financially if you don’t better your budget. It is important to not only budget for gifts, but family events, holiday activities, supplies, and even décor. A $50 – $100 gift per person adds up fast – some of those people you’re closest to even potentially getting more than one gift. 

To overcome this, create a list of every person you need to get a gift for, as well as any grab bag/secret Santa gifts you know you’ll be partaking in. Next, set the maximum amount you will be spending. This is completely up to you, just be sure to be realistic with your amount accounting for gifts and such. After you set a maximum holiday budget, start allocating amounts to your categories, such as gifts, activities, hosting, supplies, etc. As you do this maybe you need to remove something or adjust your budget for that category. Jot down ideas you plan to get each person as soon as you can, so you have time to shop around for the best deal! 

Here are some common Christmas expense categories to consider: https://bit.ly/3OCxMb0

2. Not Saving Throughout the Year 

Not saving throughout the year will lead to stress, overspending, and a busted budget. To alleviate stress, start saving early by taking your budget and dividing it by the months you have until the holiday season. Doing this will ensure you are taking proper steps to reach that savings amount by the time the holiday expenses start rolling out. 

If you haven’t saved as much as you would like this year, don’t worry! What you can do is see what you have saved, available to add to your holiday fund, and make an automatic draft from your checking account to your designated savings – possibly more than before to reach your savings goal.

3. Splurging too Much on Yourself

As much as you’d like to, don’t splurge too much on yourself leading up to this holiday season. Many people end up buying themselves something for Christmas and that’s completely ok! After spending money on friends and family, we all tend to find items we’d like or would like a little spoiling ourselves. 

If you are thinking of buying yourself a gift this holiday season, here are a few pointers to be positive your budget is on track first. 

  • If you see something you like, don’t make a purchasing decision for at least seven days. In most cases, you’ll find that your desire for that thing has gone away.
  • Make an honest assessment of whether you can afford the item and how it will affect your next purchases and expenses. This purchase should not set you back!
  • Set up savings to save up for this purchase. Wait to get it until you reach your goal. 
  • Wait until after the holidays. Save up gift cards and cash earned to put towards it. 

4. Don’t Spend on Every “Good Deal”

Sales are all over during the holiday season, but it’s important to not jump at every sale you see. Even though you see a deal it is still costing you money. Before you are sold on a sale item, ask yourself these questions: 

  1. If this item wasn’t on sale, would you still want it?
  2. What will you be using it for? 
  3. How will you pay for it? Does it fit in your budget?
  4. Is there a better item to get or better use for your money? 

5.    Not Remembering Your Long-Term Financial Goals 

Remember, the holidays are not meant to be all about money. Focus on spending time with friends and family, creating core memories. No gift is worth derailing your long-term financial goals. It is important to remember your long-term goals outside of the holidays as well as what is to come in the upcoming months. Though you may feel it is ok to splurge here and there, it is important you keep your financial stability and goals in mind with each and every purchase. 

Stick to your budget this holiday season by not making any of these mistakes! If you haven’t worked through your holiday budget and started saving, here is your push to start now. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Don't Overspend this Holiday Season - Steps to a Better Budget

Don’t Overspend This Holiday Season- Steps a Better Budget  

Summer has flown by and that means the holidays will be here before we know it. Setting a budget is crucial for not overspending during a very expensive time of year. Start saving and setting your budget now so that when the holidays arrive you aren’t scrounging to stay within your budget. Here are the top steps for creating a budget for the holidays, as well as some savings tips. 

Step 1: List Out Your Known Holiday Expenses 

Your best strategy to avoid overspending is to set and stick to a holiday budget. It is very important to list out early your known holiday expenses and remember the spending doesn’t stop with gifts. Plan for hosting, food, entertainment, holiday activities, decorations, travel, donations, cards, wrappings, stocking stuffers, work Christmas parties, or anything you typically spend money on during your holiday season. 

The process of creating your holiday budget is similar to your household budget – list all expenses and add them up. Seeing this total, you can evaluate if it is within reach or if you need to tighten up your budget. As you shop this is a list to refer to and decipher how much to spend on each item as you check off your list. 

Step 2: Set Your Spending Limit

The most important step is to identify how much you can afford to spend and set your spending limit. This amount should come out of cash or savings to avoid relying on debt. Look at your list of holiday expenses and remove items if at all possible, compare what you’ve totaled up to the money you have set aside for holiday spending. If your total is within reach, this is a time to be creative with how to save a little extra over the next few months to continuously set aside money for your holiday budget. Here are some ways to save extra:

  • Buy gifts early and on-sale
  • Shop Black Friday
  • Sell some things
  • Pick up a side hustle
  • Cut back on buying wants 
  • Reduce social spending
  • Tighten your budget up and send additional savings to your holiday fund
  • Take a holiday job

Step 3: Number Your Priorities

The holidays can be overwhelming if you don’t plan in advance, set your spending limits, and save, save, SAVE! To relieve some holiday anxiety, set your priorities and do not feel bad doing so. If your expense list seems to be long, it’s ok if you can’t afford every single item that’s where your priorities come in. Go through your list and assign each item a number based on its importance. Rework your list, putting your high-priority items at the top. Your high-priority items should be the first you save for and purchase. 

For example, suppose you decide that purchasing gifts is your top priority, while new holiday clothes for yourself are a low priority. As you work out your budget, you would allot more items to your gift fund than your clothing fund, possibly even waiting to purchase clothing until gifts are all purchased, and you have room in your budget. 

Step 4: Re-Work Your Budget; Allocate Funds

Allocating your funds is figuring out how much money to put towards each item on your list. Examine your list to roughly estimate how much each item costs and how much you plan to spend. Keeping this list realistic and projecting costs to be higher will keep you within your spending limit. If you have 20 gifts to buy, budget for each of these gifts at a doable cost. 

Step 5: Check in On Your Holiday Savings and Budget

When you have added up the amounts you’ve allotted for your items be sure this equals the total you set as your spending limit. If it doesn’t match up, this is the time to rework your savings plan or lower a budget for one of your priorities. Consider scaling back on activities or even how elaborate your holiday party may cost. This is where you can reference your numbered priorities list and see what can be rearranged to keep you within your budget. 

As you begin to shop and plans change, KEEP TRACK. Keep notes of expenses and receipts to know where you stand on purchases and stay within your desired spending limit. Don’t risk blowing through your budget by simply being unorganized or overspending. If it makes it easier, open an account specific to holiday spending to help you keep track of how much you’ve spent and to reference the cost of items as you shop. You also could create cash envelopes to keep priorities separate. 

There are several ways you can get ahead on holiday spending this year! The best thing you can do is start planning and saving now – you’ll thank yourself for a great financial start in the new year!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724