Financial Terms People Should Know

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When you’re new to this whole “adulting,” thing, life can seem a bit confusing. All of the sudden interest rates, hard inquiries, and utilities are something you need to worry about … but do you know what they are?

Check out this awesome list of essential financial terms that all young adults should know. The more you know, the better prepared you’ll be to master your finances!

Budgeting – You’ve probably heard this term before, but do you really understand it? Budgeting does not simply mean spending as little money as possible. Budgeting your money means wisely spending your money.

Many people think that budgeting money is practiced only by those who have financial shortages or issues, but this definitely is not the case. Some of the wealthiest people in the world attribute their wealth to their budgeting habits.

Stay organized with your finances so you don’t end up wasting your cash. Set some money aside for living expenses, food, and other necessities so you don’t accidentally overspend your money.

Federal Tax – Each year, a majority of American citizens of the appropriate age are subject to two kinds of taxes: federal tax and state tax. Knowing the difference between these two taxations is important, especially for young adults.

Federal tax is a tax on your income levied by the United States government. A majority of  American citizens who make income must pay federal taxes. Since federal taxes are based on each individual’s personal income, the more money one makes each year, the more they have to pay annually in federal taxes.

There are online resources that can tell you an estimate of how much money you will probably be paying in federal taxes based on your annual income.

Hard Inquiry – A hard inquiry is very much connected to your credit. In order to keep your credit as high as it can be, you want to make the least amount of hard inquiries as possible.

A hard inquiry, also referred to as a “hard pull,” typically occurs when a financial lender or credit card issuer looks into your credit. Hard inquiries happen usually when you are inquiring for a new credit card, loan, or any other type of funding.

Every time a hard inquiry is made, your overall score may be affected—usually in a negative way. This means that the more loans and credit cards you inquire for (regardless if you receive approval or not) the worse off your credit may be.

Sometimes, department stores will offer customers discounts if they apply for a credit card with their store. While this may seem like a great idea, you might want to reconsider. Your credit may be impacted negatively, so it may not ever be worth the minimal store discount.

Interest – Interest is essentially a reoccurring fee for borrowing money, based upon the principle amount of money distributed to you. When you borrow money, the loan provider will most likely charge you an interest fee every month for the duration of your loan period.

You want to chip away at your principle balance as much as you possibly can when you have a loan, so your interest charges become less and less.

It is important to note that interest rates differ depending on the type of loan you are taking out. Typically, short term loans have higher interest rates than long term loans, but it really depends on what kind of loan you are working with. Always ask what your interest rate is going to be before you agree to any kind of loan.

Personal Income/ Personal Revenue – Your personal income is the money you make from working for your employer, running your own business, or any other kinds of jobs you might have. This is also what your state and federal taxes are based upon.

Sometimes, in order to receive a loan, like a car title loan, you might be required to show proof of income.

You definitely want to always keep track of your personal income, so you can budget your money, and not have to deal with a ton of financial stress.

Soft Inquiry – Soft inquiries, or “soft pulls,” are when an individual person or company looks into your credit as part of a background check. For example, your employer might run a soft inquiry before they hire you.

It is important to note that soft inquiries do not usually affect your overall credit. Many people think that any kind of inquiry into one’s credit will impact it in a negative way, but this is not true. In fact, the people who check on their own scores often usually have the highest numbers.

State Tax – State taxes are similar to federal taxes, in that the amount you must pay is based on your personal income. But state taxes differ from federal taxes because state taxes are levied by each state’s individual state government, not the federal government. That means different states can have different rules when it comes to state taxes.

Some states don’t even have a state tax at all—some of these states are: Wyoming, Washington, Texas, Nevada, Florida, and Alaska.

Just like with your federal taxes, many American citizens receive a tax refund from their state taxes as well. So, if you have your state taxes taken out of your personal income automatically, you will most likely receive a return when you file!

Subsidized Loan—These next two terms are particularly important if you are taking out a student loan. Sometimes, when you take out a loan the loan provider will offer you a subsidized, or unsubsidized plan.

Under the conditions of a subsidized plan, you won’t have to make any interest payments as long as you have demonstrated the appropriate financial need. Many college and university students qualify for subsidized student loans.

If you are a student with a subsidized plan, you must be enrolled in school for at least half-time, and you do not have to start making payments on your loan until 6 months after you have graduated.

Unsubsidized Loan—An unsubsidized loan plan requires the borrower to make reoccurring interest payments right away on their loan. Unlike a subsidized loan, you do not need to demonstrate any kind of specific financial need in order to qualify for an unsubsidized loan.

Sometimes, loan providers might offer lower interest rates on unsubsidized loans than they do on subsidized loans. This is to encourage the borrower to pick the plan that will have them giving money to the lender right away. However, if you can afford to make the interest payments, an unsubsidized loan might be the right way to go for you.

Utilities—Utilities are public services like the electricity, natural gas, water, and sewage maintenance that come with your housing.

Living on your own is a huge financial endeavor. If you are looking for a place to live, the cost of rent is obviously going to be very important to you—you need to always be able to afford your rent payments if you want stability in your living situation.

However, don’t get too caught up in how much your rent is and forget to consider your utility payments. Housing advertisements usually display the cost of rent most prominently, trying to get people to look at their property. But it is important to always remember to leave room for both rent and utilities when coming up with your living expenses budget.

Helpful Digital Budgeting Methods

In today’s society, many families and individuals are turning to different digital budgeting methods to help with their finances so they can find where the spending is out of control and where they can cut back. With the use of apps and other free software available to you, finding a digital budgeting method for you has never been easier.

You can budget digitally with:

  • Budgeting Apps
  • Free Excel/Sheets Software Spreadsheets

Popular Digital Budgeting Apps

Since people always tend to have their phones, it makes it easier to budget with different apps and systems. If you have a smart phone, you most likely already monitor your bank account and credit cards with various mobile banking apps. Here are ways you can digitally budget with your phone.

Popular Overall Savings and Budgeting App

Mint has been a leading app for budgeting for quite some time now. It’s free to use and is available for iOS and Android devices. Mint automatically updates and categorizes your transactions and creates a real time picture of your spending habits.

On top of the categories Mint provides, you can add your own. Using the app, you can pay bills, split ATM transactions into purchases made with cash, set budget alerts, and even keep an eye on your credit.

Popular Budgeting App for Hands-On Individuals

You Need a Budget is an app for the committed. It does cost $83.99 a year, or $6.99 per month. The software directly imports transactions from your bank accounts, but they need to be manually categorized. It also has an “envelope-based system” that allocates the exact amount of income available where you need to go.

Popular Simplified App

If you’re looking for a straightforward app, PocketGuard makes it super easy for you. It boils it down to how much you’re spending, and you can view what’s left for the day, week, or month. You can also use it to track spending in different categories.

Popular App for Paying and Tracking Bills

Prism allows you to see your account balance and bills all in one platform. You can pay your bills directly from the app or schedule them to be paid. It will even send you date and confirmation notifications.

Popular Service to Do It All for You

Albert is like a personal assistant for all your finances. He keeps track of all your accounts and provides actionable, easy recommendations to improve your financial health. He will also create a budget for you based on your spending habits, bills, and income. Albert will even set aside portions in your savings to help grow your account.

Free Excel Source for Digital Marketing

Another hands-on approach to help you be more active in your digital budgeting is to use different Excel or similar spreadsheet software to track your budgeting. Many websites and software systems have templates you can use to monitor and budget your finances.

Vertex42 Spreadsheets

At Vertex42, they have over a dozen different spreadsheets that are compatible with Microsoft Excel, Apache OpenOffice Calc, and Google Sheets.

You can find spreadsheets for many different monthly and yearly ways to save:

  • Household and personal budgets
  • Christmas gift budgets
  • Business budgets
  • Wedding budgets
  • Money Manager Spreadsheet for kids

It’s Your Money Spreadsheets

It’s Your Money also lists several different budget sheets like the Cash Flow Budget spreadsheet that’s inspired by the budgeting methods of Dave Ramsey. If you need a budget for the week, you can try the Box Budget spreadsheet which will break down each month into four weeks.

Most of these spreadsheets work with any Microsoft Excel program 2000 or later with macros enabled, and some will work with OpenOffice Calc for free. They have a variety of free and low-cost personal management spreadsheets.

PearBudget Spreadsheets

PearBudget is a free and comprehensive household monthly budget spreadsheet that you can download and use with Microsoft Excel, or any other spreadsheet software that supports .xls files.

The analysis tab allows you to look at your expenses by month and even budget category and shows the difference between your actual spending and budgeted spending.

Google Sheets Spreadsheets

If you don’t want to download a software or take up room on a laptop/computer, you can use Google Drive on any phone, tablet, or computer to access Google Sheets and the preset templates they have. Using the Google Drive template gallery, there are some great options for budgeting that you can use in the sheets option:

  • Best-Personal-Budget-Planner – Comprehensive budget spreadsheet with embedded spending and budget summary graphs
  • Simple Budget Planner – Compact budgeting spreadsheet that lets you budget expenses by percentage of annual and monthly income
  • Yearly Budget Template – Detailed yearly and monthly budget tracking spreadsheet that lets you project income and savings/keep record of actual income and savings

If you prefer Google Drive, you can even find some of the same Vertex24 budget sheets above in amongst the Google Drive templates.

Financial  Freedom: Basic Tips to Get You Started

In this day and age, it is more important than ever to save money and get yourself in a position where you can have the most financial freedom possible. With the economy the way that it is, financial independence can seem like a difficult state to achieve, but it is not impossible by any stretch of the imagination at all.

By making better financial decisions, you too can be put on the road to financial success and live a much more comfortable and freer lifestyle.

Eliminate Your Debt More Efficiently

This might seem obvious to you, but you would be surprised by how much it can help you in the long run, financially, to pay off whatever debts you have.

When talking about debt, there are two different kinds. First, you have expensive debt and then inexpensive debt. The difference between the two is the interest rate.

Though it can seem freeing and incredibly satisfying to pay off your small loans first, they are not the ones you will want to pay off first. The loans you will want to take down first are the ones with the highest interest rates and the most expensive debt. It might take some time, but with a bit of discipline and focus you can get that balance to zero.

Believe it or not, your mortgage (should you have one) is considered an inexpensive debt. Even if you have a mortgage with a higher than average interest rate, it is more than likely still lower than any of the rates you have on your credit cards – which are considered expensive debt.

What you want to do is make minimum payments on all of the expensive debts you have, except for the one that has the smallest balance. On this debt, you should work the hardest at paying off. Once you have managed to pay that debt off, add the amount that you were putting down onto the next minimum payment on your debts, continuing this process until you have managed to eliminate all your expensive debts.

Keep Track of where Your Money Goes

This is another financial tip that seems rather obvious, but again, you would be surprised how much keeping track can actually help you better manage your finances and have a better handle on your financial situation.

Tracking your spending can help you to figure out the areas in your life where you might be spending too much money, so that way you can cut back and reallocate funds as necessary. One of the best ways to track spending is writing out a cash flow sheet. If that is not an option that you feel would work for you, there are a number of budgeting apps that are more than capable of helping you keep track of your cash flow, such as:

  • Mint – This is an app by Intuit, the same people who designed and created TurboTax. With Mint, you can link your credit and debit card reports in order to better track what you are spending.
  • Mvelopes – This handy little app uses the traditional envelope method of budgeting in technology. To use the system though, you will have to link your bank account to the app.
  • GoodBudget – This app is another online budgeting app, but for those who do not wish to link their bank account. Users have the option of either typing in expenses manually, or by uploading a .csv file from the bank.
  • America’s Cheapest Family Budget – This app is for those who would prefer to do their money tracking offline. Money that is budgeted monthly is kept in a bank account, while your expenses are kept track of on individual budget category sheets.

Invest More than You Consume

It can be nice to live a lifestyle that can be considered by many to be lavish, but by doing so you may end up consuming a great deal.

Unnecessary expenses can eat into your pocketbook pretty quickly. Sometimes you might want to take a step back and evaluate the purchases that you are making right now. If it is a product that will not help you in the long run and will be used up in a short span of time, you might want to reconsider dropping your money on it.

Sometimes it is a good idea to tighten your belt a little bit and stick to essential purchases only, rather than purchasing items that you want, but do not actually need. Think about investing that extra money into an IRA, either Roth or traditional. That way you will be better prepared for retirement when the time comes.

What are Financial Quarters? Why Do they Matter?

Quarters are the time frames that a company’s financial world revolves around. There are four quarters in a calendar year, and there are four quarters in a fiscal year.

Companies issue quarterly earnings reports to investors and heads of the company. They will compare reports from years past, to see if the company is performing well or not. These reports can and will determine what the head of a company will do.

The earnings of different industries fluctuate at different times of the year. This is the reason why the fiscal calendar was created to begin with. Every company has to report its quarterly earnings to the U.S. Securities and Exchange Commission (SEC), four different times throughout the year.

What is Quarter on Quarter?

A quarter on quarter is how the difference between one financial quarter and the previous financial quarter is calculated.

Here is an example if you own a very well-known hair salon:

First-quarter earnings: $3.15 per share

Second-quarter earnings: $4.75 per share

$4.75- $3.15= $1.60

$1.60/ $4.75= 0.336

0.336*100= 33.6%

This calculation means that your company has grown its earnings by 33.6% in just a few months. This is a great sign of your business plan coming to fruition, and your investors would be extremely happy with you.

The quarter on quarter calculation may not be as accurate as some would assume. With any math, there are some exceptions to the rule. This calculation is not exempt. For instance, if you have a seasonal company like a lawn mowing company, your quarter on quarter calculation may show your earnings as going downward. It is possible that your earnings are low, due to the fact that the particular quarter is during your down season. This could also apply, if your seasonal company had a quarter where earnings were extremely high. To make up for the financial earnings shifts your business experiences quarter to quarter, you can adjust the figures seasonally.

When to Use a Calendar Year?

If you want to keep it simple, this is the route to go. The calendar year, as you know, lasts 12 consecutive months. The calendar year is what most people and businesses use for business and tax purposes. If you are the sole proprietor of your own business, it will likely not have its own tax identity. You will typically report the earnings from your business on your individual tax return. In order to switch to the fiscal year, you must first get permission from a representative from the Internal Revenue Service (IRS).

When to Use a Fiscal Year Calendar?

Using the fiscal year calendar is a bit more complicated for some people to understand. The fiscal year also lasts 12 consecutive months. However, it doesn’t end the last day of December like the calendar year. The fiscal year can end on the last day of any other month. This calendar is used by businesses that have the most sales during seasonal times. For example, tax preparation businesses and hand car washes. These companies have customer traffic at certain times of the year.

You can choose when you want your company’s fiscal year to start and end. You should not have your fiscal year end on a high-selling season. At least wait 2-3 months after that time so that your reports can be as accurate as possible.

Quarter 1: January 1st– March 31st

Quarter 2: April 1st– June 30th

Quarter 3: July 1st– September 30th

Quarter 4: October 1st– December 31st

The above breakdown is typically used by companies that operate on a calendar year, and not a fiscal year. Companies that operate on a fiscal year have their own quarterly calendars. Generally, businesses that operate on a fiscal year are highly seasonal.

When would a Company Pay their Taxes?

A calendar year company would pay their taxes on or before April 15th like everyone else. While a fiscal year company is given a grace period to file their taxes, fiscal calendar companies have to have their taxes done by the 15th day of the fourth month following their fiscal year end. Keep in mind that the IRS requires a year end date on file for each company.

The Takeaway

The use of quarters is not something the everyday citizen would have to worry about. However, if you are a business owner, or plan to be one in the future, the concept of quarters is something you need to understand.

What is a Certified Check?

Certified checks are generally used for serious money transactions, not that all transactions aren’t serious. However, they are typically used for large and important transactions: a down payment on a car or house for instance. A lot of people are often mix up cashier’s checks and certified checks, but there is a difference.

What are the Differences between Certified Checks and Cashier’s Checks?

The difference is what account the funds are being taken out of. With a certified check:

  • The money will be taken out of your account when your payee cashes it
  • All funds are generally available 1 day after deposit
  • Signed by 2 bank associates and the account holder to show authenticity

However, with a cashier’s check:

  • The money is coming from the bank’s account immediately
  • Will never bounce
  • Works just like cash

How Do You Get a Cashier’s Check?

Getting a cashier’s check basically allows you to give the bank the amount of money you want the check to be worth, and they issue the check on your behalf. The money you give the bank associate goes into “the bank’s account.” He or she will then issue a check to the payee you request. When the check is cashed the money will come out of the bank’s funds and not yours. Cashier’s checks are guaranteed funds, because a bank’s check won’t bounce or be returned.

What is a Certified Check Exactly?

A certified check is a check that has been corroborated by the bank that issues it as good. Meaning that the account it is coming from has sufficient funds and the signature on the check is legitimate. At the time of purchase, the bank associate would verify that the person purchasing the check was indeed the account holder, or an authorized person also on said account. Then the associate would verify if there were enough funds in the account, so that the check would not be returned or bounced.

How Much Are Certified Checks?

Generally, certified checks are free if you have an account with the bank you attempt to purchase one for. Yet some banks do charge a minimal fee depending on the type of account you have with them. The most a bank will likely charge you to issue a certified check is $20.

And unlike money orders, you can only purchase certified checks from financial institutions:

  • Your bank
  • Your credit union
  • Your online banking institution

With any financial transaction, there are risks involved. Certified checks are just one of the ways that scammers will try to get you. Because the funds are certified, a majority percentage of the money gets deposited into the account of the payee. However, once the bank discovers the check is fraudulent, whoever deposited the check will be responsible for the money.

Why Do People Use Certified Checks Over Personal Checks?

The money in a certified check is guaranteed by the financial institution that issues it. The funds are in the bank account of the person who requests the check to be made. Whereas with a personal check there is no real guarantee. Someone can write you a personal check, and not have the funds in their account. That will cause the check to bounce. Most banks will charge a bounce fee, to your account because you are the one who attempted to deposit the check.

How to Make Sure You’re Not Scammed:

  1. Call the bank or go to the issuing bank. Do not call the number on the check, but do a google search and contact them that way. Just like checks, phone numbers can be fake too.
  2. Check for any misspellings or printing errors. This is a dead giveaway that the check is a fake.
  3. If it seems weird, it is. You should trust your gut.
  4. Do not cash a check from someone you don’t know.
  5. Use cash or a money order.
  6. Attempt to cash the check. The bank teller will be able to tell you if something is fishy about the issuing bank or the funds.
  7. Check for the watermark. If the certified check is from a real bank, it’d have their official watermark on it and probably some more identifying features.

Certified checks are not anything to be afraid of. These checks can keep the sender and the receiver safe from fraud and scams, just make sure you know exactly who you are sending money to and who you are receiving money from.

What is a Digital Wallet and Should You Use One?

A digital wallet is simply a digital version of your physical wallet. All of your cards can be stored in a digital wallet app on your smartphone. There is some confusion between mobile wallets and digital wallets. They are often interchangeable, yet some people refer to mobile wallets as the ones created by phone providers, while digital wallets are provided by financial institutions.

There are several different wallets on the market that can serve as your digital wallet. Some are exclusive to the type of phone you have, and others can be used despite the phone you have:

  • Apple Pay
  • Android Pay
  • Samsung Pay
  • Microsoft Wallet
  • Google Wallet
  • PayPal
  • Amazon Pay
  • Square Cash

Credit card companies and banking institutions have their own versions of digital wallets:

  • Chase Pay
  • CapitalOne
  • PNC Wallet
  • VISA Checkout
  • AMEX Express Checkout
  • MasterPass

How Do Digital Wallets Work?

  1. Download the mobile app of your choice, if necessary.
  2. Load the cards you want to onto the app: credit cards, debit cards, membership cards, etc.
  3. Choose the card you wish to use to complete your purchase from the app.
  4. Tap your cellular phone against the NFC chip device, usually located on the credit card machine.

What you choose to use is solely up to you. Your bank and your credit card companies may offer you benefits to having their digital wallets. That is perfectly fine, get all of the benefits you can. Digital wallets have several features like allowing users to shop online from their mobile devices, pay bills, store personal information, make payments from peer to peer, storing information, and much more.

We all know that credit card fraud has been at an all-time high in the last few years. Credit card companies on average spend over $8 billion a year combating credit card fraud. There are about 135 billion credit/debit card transactions every year. If as a result of digital wallet use the number of credit card fraud decreases, then credit card companies would have no choice but to support them. This would help to increase the use of the technology around the world.

Benefits of Having a Digital Wallet:

  1. Convenience. Imagine leaving your wallet at home, and then realizing it’s not even a big deal because everything is on your phone. Checking out at a store, or even online, is now super-fast with using a digital wallet. Just tap or wave your phone in front of the sensor on the payment station, and you’re on your way.
  2. Organization. You can quickly and easily, organize all of your cards in your digital wallets. All of your credit cards in one place, debit cards in another, membership cards in another, and customer loyalty cards in another. Everything can be nice and neat at the click of a button.
  3. Less “junk.” Unlike your physical wallet with all kinds of cards and receipts falling out everywhere, your digital wallet will not have any of that. No more heavy back pockets or purses!
  4. Discounts and bonuses. Companies offer incentives when you sign up for their memberships and loyalty cards. You will never miss a notification for a discount or a bonus, it’ll be right at your fingertips for you to use.
  5. More secure. Getting your wallet stolen is such an invasion of privacy. You have to call all of your financial institutions and put holds on your accounts or cancel them—it is such a hassle. If you lose your phone, or it gets stolen, the person who has it would have to get past your lock screen and the codes you may have on your digital wallet. Also, when you make transactions, your card number is not associated with it. The digital wallet creates an exclusive identifier for you, used in place of your card number. This is a method that prevents companies from having your personal information.

Digital wallets allow you to keep your credit/debit cards and membership cards together and organized. Digital wallets can also help you to keep up with business cards, receipts, insurance card, IDs, train tickets, and even concert tickets.

All of the benefits of digital wallets are great. However, they do present an issue for some consumers and the companies who’ve created them. The issue is that not all businesses are technologically equipped to take payments via digital wallets. There needs to be a major technological update at stores and various retailers so that digital wallet technology isn’t going to waste.

What is the Consumer Financial Protection Bureau (CFPB)?

Nearly 41 million Americans have had had their identities stolen. An estimated 2.32 million Americans have been affected by medical identity theft alone. Approximately, 33 million Americans have been the victims of card related frauds. The losses from identity theft exceeds $50 billion every year.

These statistics are exactly why a consumer protection agency was necessary. In this technological age, there is personal information floating around everywhere. The CFPB offers consumers a way to be informed of their rights.

What Does CFPB Stand For?

CFPB stands for the Consumer Financial Protection Bureau. It was founded on July 21, 2011, under the Obama administration. Originally, there were 7 agencies that were in charge of handling consumer’s financial issues. Now rolled into one, the agency is held to a high standard. They are making sure that companies all follow the same standard practices, and punish them when they chose not to do so.

The agency itself hasn’t been around for that long, but it has surely made a large difference in a short amount of time.

What are the Most Common Types of Identity Theft?

  • Bank fraud
  • Loan or lease fraud
  • Government benefits fraud
  • Credit card fraud
  • Employment or tax-related fraud
  • Utilities fraud

What Does the CFPB Do?

  • Educates consumers of their rights by giving financial information to consumers
  • Enforces the rules…
    • Creates and enforces the rules that protect consumers
    • Does not allow companies to target consumers unfairly
    • Does not allow unfair, abusive, or deceptive practices against consumers
  • Researches how businesses interact with consumers…
    • Monitors all financial markets and institutions
    • Logs and addresses consumer complaints
    • Researches consumer behavior

Why is the CFPB Needed?

The Consumer Financial Protection Bureau is needed because it provides consumers with much needed financial education tools. The agency provides access to these financial tools creating a fair and transparent business practices. It also holds the financial companies accountable for things that they say and do. Because some financial companies had not been previously regulated, they were able to charge ridiculous amounts of interest and other charges to consumers, and were not penalized for it. This fact greatly contributed to the amount of delinquent consumer debt in the millions of dollars.

The CFPB doesn’t just regulate bank financial institutions, they regulate non-bank financial institutions as well. These regulations will cause a reduction or a complete end to unfair and misleading business practices.

What Consumer Tools Does the CFPB Offer?

  1. Auto loans
  2. Payday loans
  3. Student loans
  4. Credit and prepaid cards
  5. Credit reports and scores
  6. Bank accounts and services
  7. Debt collections
  8. Fraud and scam protection
  9. Money transfers
  10. Mortgages

What has the CFPB Accomplished?

  • Fined Wells Fargo $185 million and made them pay consumers $110 million after a discovery that the company’s employees opened a million accounts and filled out credit card applications without client approval.
  • Awarded $12 billion to 29 million American citizens who were victimized by student loans, fake credit card services, etc.
  • A financial consumer database where consumers can look up loan companies

How Can I Submit a Complaint?

If you believe that a certain financial institution is being unfair, abusive, or deceptive, you should immediately file a complaint with the CFPB. You can submit a complaint with the agency at any time of day or night via the agency website. You can also call the customer service line between the hours of 8 a.m. to 8 p.m. at 1-855-411-2372.

What is the Takeaway?

Nearly 1 out of 5 Americans, 65 and older has been the victim of some type of financial scam. This is due to the fact that they are targeted because of their ages, and lack of knowledge on scams and how to avoid them. About 29% of people ages 22 to 29 don’t pursue degrees in higher education because of their various debts. The CFPB is a combination of several different agencies into one to help dissolve statistics such as these. Every day, the agency works to combat deceptive business practices that out consumers in bad situations. Its main purpose is to increase financial literacy across the country.

What is the Definition of a Money Order and what are the Benefits?

The money order, as we know it today, was originally created in the late 18th century in Great Britain. The post office eventually took over the money order system. Money orders have since been revamped to be more practical and cost effective for the consumer. A money order is a pre-paid paper form used to make payments. Money orders may seem a bit dated to some, seeing as we have so much technology at our fingertips, but the use of them makes sense in certain instances.

Where Can I Purchase a Money Order?

Money orders can be purchased from your local post office, your currency exchange, your bank, your credit union, your local supermarket, or even from the comfort of home by using your cellphone or laptop computer.

How Much Does a Money Order Cost?

Because they are a pre-paid form of payment, the cost of it depends on how much you want to purchase. In the United States, the maximum amount that can be purchased is $1,000; however, if you need more, you can purchase more than one money order to fulfill your needs.

In addition to paying the amount you need to purchase, the retail location may also charge a processing fee to create the money order for you. This fee usually depends on the amount you’re purchasing the money order for, which will generally range from $1.10 (at the post office or a general store) to $10 (at your banking institution). Each money order purchased may be charged a processing fee.

How Can I Cash a Money Order?

It is usually completely free to deposit a money order into your own bank account or credit union. However, cashing a money order, may surely cost you. The cashing fee will usually range from $2-$20 depending on how much the money order is worth. Typically, there is a nice conversion chart of fees to amounts originally issued listed on the wall of your local currency exchange and even a small pamphlet sized one in the convenience store.

How Do I Use a Money Order?

Like a check, a money order is of no-value unless it is cashed or deposited into your bank account, otherwise it’s just another sheet of paper in your wallet. Once inside your bank account or made to cash, the money can be used anyway you see fit for it.

What Do I Do After I Purchase a Money Order?

  1. When filling out your money order, be sure to fill it out completely.
  2. Write clearly.
  3. Keep the receipt of your purchase in a safe and handy place.
  4. Deliver the money order in person, if possible, or mail it and request confirmation.

Why Should I Even Bother with Buying a Money Order?

There are some businesses that require payment by money order or certified check. It is not uncommon for apartment rental places to request monthly rental payments by money order. Like personal checks, you can stop the payment of a money order in case of an emergency as well.

Money orders are also good to use when you don’t want the recipient knowing your personal banking account number or routing number. Money orders are also great for those who do not have a personal banking account, and need to send/receive money for personal reasons, or to pay bills.

Drawbacks with Purchasing a Money Order?

The same way that having debit and credit cards can allow someone to commit fraud on your personal bank account, money orders can also land you in a world of trouble. Money orders have recently been in used in several types of scams across the country.

Follow these rules to ensure that you are not part of a money order scam:

  • Never accept a money order from someone that you don’t know.
  • Never give out your bank account number.
  • Only purchase money orders from licensed retailers.
  • Before cashing it, contact the sender to make sure the funds are there and available.
  • Avoid sending money orders to people “in distress,” someone you met online, or even bill collectors.
  • Double check everything.
  • If you’re suspicious, do not cash it. Trust your gut.

What if I Don’t Want to Use a Money Order, What Are My Options?

There are several different ways to get money from one place to the next; however, some of these other options are not as safe as the money order. These other methods include wire transfers, cashier’s checks, personal checks, online bill pay (through your personal bank), and even a prepaid debit card can be useful to those who do not have a personal bank account.

Money orders are nothing to be afraid of, they are one of the safest ways to make payments, because none of your important personal information is used in the purchasing of, or sending of it. Bank accounts have a lot more risks involved, which could result in a freezing of your finances, or someone taking all of your hard-earned money. Money orders do not have those risks.

What to Do If You Don’t Want Your Financial Information Stolen?

More people seem to be safeguarding their financial information more closely than ever before. Retailers have had their systems hacked into and their customers’ personal and financial information stolen. As hackers delve deeper into the online world, they find new ways to get information that does not belong to them.

As informed citizens there are some measures you can take to try to protect yourself from hackers, who steal financial information:

  1. Change your passwords – As simple as it sounds, this is probably one of the most effective ways to keep hackers from stealing your financial information. Change your passwords every 3-6 months. Also make sure that your passwords are not based on things that can easily be put together. For example if your favorite flower is a tulip and your birthday is March 5th, “Tulip05” is not a great password for you. It may be difficult to come up with a password that has nothing to do with you, but it is worth knowing it may essentially protect you from hackers.
  2. Ignore unknown phone calls and emails – If you don’t recognize the phone number or email address contacting you, just ignore it. Send the call to voicemail, and delete the email right away. These are usually phishing scams, where fraudulent people will con you into giving them your personal information pretending to be someone else: from a utility company, or a stranded relative.
  3. Only carry your essentials – Never carry your social security card around with you, unless you really need it. Once a thief gets hold of your social security number, they will have access to your entire life basically.
  4. Pre-treat your garbage – Be sure to shred any and all paperwork that has your name and address on it, before throwing it into the trash. Take special care with sensitive documents that may have account numbers, your Social Security number, etc., on it.
  5. Monitor your credit – There are plenty of ways to monitor your credit. Many banking and credit institutions offer free credit monitoring services to those who do business with them, and checking doesn’t affect your actual credit. You can also get a free credit report, once a year, from any of the big 3 credit agencies: Experian, TransUnion, and Equifax. If you notice there are drastic changes on your report, or see things that should not be on there, report it immediately.
  6. Beware of public Wi-Fi – Having Wi-Fi access while in public is super convenient but be careful. Do not transmit any of your personal information across public Wi-Fi. If you must, use your own personal hotspot for that, if not wait until you’re home under your own secure Wi-Fi network.
  7. Shop on secure sites – On your web browser, by the web address, you may see a “lock” symbol. That will let you know that the website you’re on is secure. If that is not there, all hope is not lost. There is another way. In the web address, if you see “https” it is a secure site. The “s” denotes a secure site. Most large, well known sites will be secure; however, you will be taking some risk ordering things from smaller, unsecure sites.
  8. Secure your electronic devices – Make sure to have passwords on all of your electronic devices. Also, you should install anti-virus and firewall protections onto all of your laptop and desktop computers.
  9. Don’t share too much via social media – The more personal information you post to social media, the easier it is for a hacker to come up with your possible passwords and answers to your security questions.
  10. Watch out for impersonators – Always ask questions to people that reach out to you for your personal information. If it sound fishy, it probably is. Therefore, you should never give any information out over the phone or through email.

While following all of these steps can make it harder for scammers and hackers, nothing is 100% foolproof. In the event that your personal financial information is stolen, there are a few things that you should do:

  • Place a fraud alert on your credit file
  • Freeze your accounts
  • Freeze your credit reports
  • Change all passwords
  • Contact your financial institutions
  • File an identity theft report with the FTC
  • File a police report

Hopefully, it never has to come to this for you. Be vigilant in your credit monitoring, and in your online practices. Always make sure you sign out of your accounts on public computers and never share too much via public Wi-Fi.

What’s the Difference between Gross Income and Net Income?

When it comes to income, it may be a little difficult to understand the different parts that exist. Understanding income is an important part of understanding and organizing finances.

Traditional income can be broken down into two categories: net income and gross income. The difference between gross income and net income is fairly simple to understand but varies when talking about individuals or businesses. Knowing and analyzing gross and net income can be an important financial tool especially for a business, and especially if an individual is a contractor/freelance worker.

The Difference between Gross and Net Income with Individuals

When it comes to gross and net income with a single person, the main difference between the two types of income is that one factors in taxes and deduction while the other does not:

  • Gross income for individuals is the income before any taxes or deductions are taken out.
  • Net income for individuals is the income that a person gets to keep once all of those things are taken out.

So essentially gross pay is the amount that a person can look at on their paystub while net income is the amount that they receive on their paycheck.

At this point many may be wondering what those deductions and taxes that come out of a paycheck are. For most Americans the major taxes that come out of their gross income are state and federal taxes. Federal taxes are the same throughout the nation, while state taxes vary (some states do not even have this tax). Other deductions include garnishments and retirement plans.

The Difference between Gross and Net Income with Businesses

When it comes to businesses, the difference between gross and net income can be a little bit more complicated. This is because with businesses there are service sales and business expenses involved.

Despite the difference, net income and gross income carry similar meanings both in and out of the business world:

  • Gross income for businesses is the amount of income earned from selling their goods/services before taxes or deductions are taken out.
  • Net income for businesses is the amount of income that remains after all deductions and taxes are taken out. Essentially this the profit or loss a business has made at any given period.

In the business world, gross and net income are also known as gross profits and net goods. When it comes to a business, gross and net income are usually calculated with data that is not closely related to each other. The deductions that most business have to deal with are work related expenses such as advertising or paying their employees. The taxes that businesses have to pay ranges from state to state.

How to Calculate Net and Gross Income

Calculating gross and net income can be fairly simple:

  • Let’s say a person makes $50,000 a year – This is Gross Income
  • Their federal and state taxes totaled $10,000
  • Their retirement fund totaled $5,000
  • $50,000-$15,000=$35,000 – This is their Net Income

For those who are traditional employees, this work will be automatically done for them. However, for those who are contract workers or do freelance work the calculations are up to them (they just have to figure out what their state and federal tax rates are for the year). Saving for retirement is optional for these workers.

For businesses, calculations follow the same general formula but have different expenses. Additionally, the bigger the business, the more complicated calculations may get.

Why is Important to Understand the Difference between Gross and Net Income?

For Individual Workers:

For an individual it is important to look at gross and net income because it can help a person better understand how much they are making and where their money goes. For traditional workers/employees, this may be done fairly simply–as it is broken down on a paystub.

However for contract worker things may not be so simple. If a person is a contract worker/freelance worker–and their employer is not taking out taxes out for them–it is up to the employer to take out or calculate how much money needs to be put aside for taxes.

So knowing what gross and net income for an individual is can be helpful for budgeting, and for tax expenses–depending on the work that they do.

For Businesses

Examining gross and net income can be an important asset for businesses. Gross income can give a business a good idea of where most of their profits and losses are coming from–on an annual basis. This can help a business set up improvements or changes for the following year. Knowing and analyzing both of these also show a business where they should be allocating their time, money, and efforts.

The major difference between net and gross income is that gross income is the amount after necessary expenses such as taxes and deductions are taken out while net income is the amount left over after all those expenses have been taken out- the amount an individual gets to keep or the amount of profit/loss a business makes. Both of these types of income can be important for individuals who want to budget, or are contract workers. When it comes to businesses, gross and net income can help an organization improve the way they conduct business and increase their profits.

Low Budget Birthday Ideas

Your birthday is a time to celebrate you, but that isn’t always easy when you’re on a tight budget.

But having a good time on your birthday doesn’t have to cost you a fortune, sometimes it doesn’t have to cost you anything! Check out these tips for how to have a great birthday without spending all your money.

Get Free Stuff on Your Birthday

Your birthday is also a time for presents, but when you’re broke it is hard to treat yourself, even on your big day. Luckily, you don’t need to spend any money on yourself when you go to these places on your birthday:

A&W – Free birthday A&W Root Beer Float when you join the Mug Club.

Applebee’s – Free birthday treat when you join the Eclub.

Au Bon Pain – Free birthday lunch when you join the Eclub.

Auntie Anne’s – Free birthday pretzel when you download the My Pretzel Perks app.

Aveda – Free birthday gift valued at $23 when you create an Aveda account.

Baja Fresh – Free birthday treat when you join Club Baja.

Baskin-Robbins – Free birthday ice cream when you create a Baskin-Robbins account.

Benihana – Free birthday $30 gift certificate when you join the Chef’s Table.

The Cheesecake Factory – Free birthday ice cream when you tell your server!

Chili’s – Free birthday dessert when you sign up for My Chili’s Rewards .

Del Taco – Free birthday Premium Shake or 2 free birthday grilled chicken tacos when you join the Raving Fan Eclub.

Denny’s – Free birthday Grand Slam breakfast when you tell your server!

Dickey’s Barbeque Pit – Free birthday Barbeque Sandwich when you join the Big Yellow Cup Club.

Dippin’ Dots – Free Dippin’ Dots on your birthday when you join the Dot Crazy! ® Email Club.

Dunkin’ Donuts – Free birthday coffee when you sign up for DD Perks.

Firehouse Subs – Free medium birthday sub when you sign up for Firehouse Rewards.

Houlihan’s – Free birthday entrée when you join their email club.

IHOP – Free birthday meal when you sign up for the Pancake Revolution ®.

Jamba Juice – Free small birthday smoothie when you sign up for Jamba Insider Rewards.

Jersey Mike’s – Free regular birthday sub and drink when you join their email club.

Krispy Kreme – Free birthday donut when you sign up for Krispy Kreme Rewards.

Panera Bread – Free birthday pastry when you sign up for MyPanera.

Red Robin – Free birthday burger when you sign up for the Red Robin Royalty program.

Redbox – Free one-night birthday rental when you get a Redbox play pass.

Sonic – Free birthday cream slush, tater tots, or a drink when you create a My Sonic account.

Starbucks – Free birthday drink when you sign up for Starbucks Rewards.

Wendy’s – Free birthday Frosty when you join My Wendy’s.

Most of these places require you to be a part of their loyalty or rewards program to receive a birthday perk, so sign up before your birthday to make sure you can take advantage of these cool offers.

Make Your Own Decorations

Buying party decorations is a drain on your birthday budget. If you purchase all your decorations at a party store, you are going to spend at least a hundred dollars on paper banners, streamers, and confetti that you are going to tear down and throw away at the end of the night. That’s money literally in the garbage.

Save loads of money by making your own decorations. Pinterest is filled with DIY projects that look better than anything you could buy in a store. You can personalize your decorations with your name or pictures of you with friends and family.

Making decorations can also be a fun pre-party event. Invite a few friends over and spend the night making fun crafts to hang up at your birthday bash.

Have a Potluck Birthday

The older we get, the more content we are with a low-key birthday dinner with close friends and family. But even this can get expensive if you go out to a restaurant or even just for drinks. Skip the bill at the end of the meal and invite your loved ones over for a potluck dinner.

Usually in a potluck meal each guest will bring their favorite dish, but it’s your birthday, so everybody should bring your favorite foods! Think about your favorite appetizers, main plates, and desserts. Tell everyone what you want them to bring or have them surprise you. See if your pals and relatives know you well enough to bring your favs on their own.

Host a Birthday Tournament

Okay, so you had your friends and family over for a great meal, now what are you all going to do?

Keep you and your guests entertained by starting a tournament. It doesn’t matter what time of year your birthday is, there are things you can do both inside and outdoors that will keep everybody happily occupied for hours.

If you want to spend time outside, get sporty with a tournament of physical activities. Games like basketball, volleyball, flag football, or frisbee require little equipment. You can split up into teams and play until the sun goes down. Whichever team has the most points by sundown wins.

If you were born in winter, or you’re just not feeling like getting sweaty on your birthday, you can have a tournament of indoor games. Wii-fit games are surprisingly fun when you are with a group of friends. Or, take a break from the screens and play some old-fashioned board games: Twister, Monopoly, or Battleship are some old-school classics that only get better with time.

A little alcohol never hurt the situation either. Take a shot any time another team gets a point, buys a hotel, is sent to jail, or takes down a battleship.

Make Your Birthday about Others

Give back on your birthday by doing some volunteer work with your party group. You can all still get together, talk, and have fun, but you will also be helping out those less fortunate than yourselves. What better present is there?

Feed My Starving Children (FMSC) is an excellent organization to get involved with if you want to volunteer with a larger group of people. FMSC sends life-saving meals to children in the regions of Africa, Asia, the Caribbean, Europe, the Middle East, North America, Central America, and South America. When you volunteer, you hand-package rice, soy, dried vegetables, and a nutritionally complete blend of vitamins and minerals, which are then shipped to children in need around the world. One packing shift is 2 hours. Check the FMSC website for packing times at their various locations.

Habitat for Humanity is another fantastic organization to volunteer for with friends and family. Habitat for Humanity works with 1,400 communities across the United States and in approximately 70 countries around the world. The organization builds and repairs houses for families struggling to do so on their own. Spend the day putting up walls, laying down grass, or painting a bedroom with your birthday group. You and your gang will feel the love, and maybe a little muscle soreness, right away.

The important thing is that you are with your loved ones on your birthday. Ultimately, it doesn’t really matter what you do, it just matters who you are with. But thankfully there are plenty of affordable ways you can get together with the people you love and have the enjoyable birthday you deserve.

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All loans will be serviced by LoanMart. See State Disclosures for additional information. LoanMart is currently not lending in California and does not make loans or credit.

1Loan approval is subject to meeting the lender's credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

2Based on consumers who received a loan from LoanMart from February 2002 to October 2018.

3Application processes could take five (5) minutes to complete. Upon completion, a conditional approval may be given pending review of documentation. Funding time is based on the time from final approval following receipt and review of all required documents and signing, prior to 2PM PST on a business day.

4To exercise the right to rescind, the consumer(s) must notify the lender in writing by midnight on the third calendar day from obtaining the loan. Within one business day from notice of rescission, the consumer(s) must return any monies received and fees paid on behalf of the consumer(s) by certified funds.

5Lenders recommend and encourage consumers to pay early and often and more in order to avoid additional finance charges.

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