Lessons in Money

A bank can be your partner in some of life's biggest milestones: graduation, first job, first car or home, kids, investments, retirement. So wherever you are in life, we're looking out for you and your finances every step of the way.

• Your first savings account
• Your first checking account
• Your first car loan
• Your first credit card
• Your first home loan
• Your first Individual Retirement Account (IRA)
• Your first Certificate of Deposit (CD)

Your first savings account

A savings account is a safe place for your money when you don't want to spend it right away. You can get in the habit of bringing money, perhaps part of your allowance, to the bank each week. With your regular deposits, and the interest you'll earn, it doesn't take long for savings to grow. Account statements let you track how much you have in the account and how much interest you've earned.

Why should you save your money? Savings accounts allow you to make big purchases-- like a computer, a car, or even a house someday-- without going into debt. It's also important to save money just in case you need it for an emergency.

Your first checking account

A checking account lets you pay for things with a check so you don't have to carry around lots of cash. Think of it like this: a check is a note that says, "If you or your bank goes to my bank, my bank has my permission to give you this much money out of my bank account." Only the person who the check is made out to can cash a check. Many checking accounts let you pay for purchases with a debit card, which works just like a check.

Every month, the bank sends you an account statement telling you what checks you have written and how much money is left in your account. You can then "balance your checkbook" by comparing the bank's records to yours to make sure everything is correct. If you write checks for more money than you have in your checking account, the bank will not pay them. This is called "bouncing a check," because your bank will "bounce" your check back to the person you wrote it to instead of giving them money.

Your first car loan

You're ready to own your own set of wheels. Selecting the model, color and features are the fun parts, but there is more to buying your first car than choosing one and driving off. You need to consider how you plan to pay for it. Maybe you've saved some money, or maybe you haven't. Either way, you will probably need to look into a car loan.

When you borrow money for a purchase such as a car, you can usually choose from different rates and terms. Depending on how much you want to borrow and the amount of income you earn, you may want to finance your loan for anywhere between one and five years. An important factor is the interest rate that is tied to the loan. The interest rate is additional money that you are required to pay back, on top of the amount that you borrow. The higher the interest rate, the more you end up paying.

Don't forget about insurance. Different types of cars typically cost more to insure than others. For example, insurance on a sports car might be considerably higher than a sedan. A local insurance representative can provide more information.

Your first credit card

With credit, you have two choices: use it or abuse it. It's likely that you will receive multiple pre-approval credit card letters each week in your mailbox. The idea of spending money freely might sound fun, but it pays to carefully consider which card you open and how you use it. Be sure you read the fine print on any credit application that you intend to fill out.

Here are the biggest things to watch out for:

• What is the interest rate?
• Do you have to pay an annual fee?
• Are there any hidden charges or fees?
• What is the credit limit on the card?
• How many days are in the grace period?
• How much is a late fee?

Credit cards are an advantage when used wisely. They can help you build up your credit score, which will help you when you want to borrow money for a big purchase. Just know how important it is to make sure that you are responsible with your credit cards… they can damage your credit score just as quickly as they can help it.

Your first home loan

Whether you need more space or simply want the freedom to paint the walls whatever color you choose, the purchase of your first home is a major milestone. When you decide you are ready to make the move into a home of your very own, start by visiting with a mortgage loan officer to "pre-qualify" and establish how much the bank can lend. Often, the biggest challenge for a first time home buyer is the cash available for a down payment, but lenders can work with you to offer financing that works for you.

While the interest rate for a home loan is very important, it's not the only factor. Look at different mortgage products like shorter-term fixed-rate loans or adjustable rate loans to see the full picture.

Your first Individual Retirement Account (IRA)

Individual Retirement Accounts (IRAs) are one of the most effective ways to accumulate retirement savings. Depending on which IRA you choose, it can also be an asset in saving for a first home or your child's education. IRAs offer two distinct tax advantages: potential deductibility of contributions and tax deferral on investment earnings.

A Traditional IRA allows your investment earnings to grow tax deferred until withdrawn, typically at retirement. Generally, if you have earned income or receive alimony, you can establish as many IRA accounts as you want prior to the tax year in which you reach age 70 1/2. You may also have an IRA even if you participate in a qualified pension, profit-sharing or other retirement plan. Your entire contribution may not be deductible on your income tax return, depending on your income.

A Roth IRA may be one of the best ways for individuals to save for retirement, for one simple reason: the earnings on your investment are potentially tax-free as long as certain conditions are met. You should consider a Roth IRA if you are already saving for retirement with an employer-sponsored plan, your income does not exceed $160,000 for married taxpayers or $95,000 for single taxpayers, and you want to invest for retirement but may need to access your savings.

Your first Certificate of Deposit (CD)

A Certificate of Deposit (CD) is a deposit account that provides a fixed rate of return for a specific period of time. Typically, CDs offer higher interest rates than standard savings accounts, so if you do not need to access your money for an extended period of time, this could be a wise investment for you.

CDs offer a number of options, with a wide variety of available terms and even CDs that you can "add-to" during the term or ones that allow you to "jump-up" your rate to a higher yield. And because they are FDIC-insured, CDs offer you peace of mind and great earnings potential, without risking what you have worked hard to save.

*The information provided on this page should not be considered financial advice, as we cannot provide this advice, please consult a financial advisor for more information.