Follow the tips from the American Bankers Association below to get started.

Get Organized
Set up an organized system for filing your receipts and financial information. Consider buying a shredder to eliminate receipts when no longer needed and to avoid identity theft.

Create a Budget
Track your income and expenses to determine how you spend. Establishing a budget will help you pay down debt and save at the same time. Use a computer software program or basic budgeting worksheets to create your budget and review it regularly.

• Identify how you spend your money.
• Set realistic goals, especially if you plan to cut some of your expense.
• Track your spending and review your budget often.

Lower your Debt. Establish a budget to pay down debts while you save.
Points to consider when cutting debt:

• Pay more than the minimum due and pay on time.
• Pay off debt with higher interest rates first.
• Transfer high rate debt to credit cards with a lower interest rate.
• Use credit cards and loans for purchases that will appreciate in value, like a home.

Save for the “Unexpected and Beyond”

• Pay yourself first. Saving ensures a comfortable future that can endure financial surprises. It is never too late to start saving.
• Save at least 10% of your income for retirement.
• Consider keeping 3 months’ salary in a savings account in case of financial emergencies.
• Increase your contribution to retirement as your income increases.
• If your payroll is direct deposited, ask your employer to transfer a certain amount of money into an account the same day as the payroll deposit.

What Is Elder Financial Abuse?

It’s a crime that deprives older adults of their resources and ultimately their independence. Anyone who sees signs of theft, fraud, misuse of a person’s assets or credit, or use of undue influence to gain control of an older person’s money or property should be on the alert. Those are signs of possible exploitation. Older Americans that may have disabilities or rely on others for help can be susceptible to scams and other fraud. Advances in technology can also make it difficult for seniors to know who to trust and what’s safe.

Despite these threats, taking simple steps to safeguard personal information and being aware of warning signs can protect aging men and women from financial abuse.

Tips for Seniors: What should you do to protect yourself?

• Plan ahead to protect your assets and to ensure your wishes are followed. Talk to someone at your financial institution, an attorney, or financial advisor about the best options for you.
• Shred receipts, bank statements and unused credit card offers before throwing them away.
• Carefully choose a trustworthy person to act as your agent in all estate-planning matters.
• Lock up your checkbook, account statements and other sensitive information when others will be in your home.
• Order copies of your credit report once a year to ensure accuracy.
• Never give personal information, including Social Security Number, account number or other financial information to anyone over the phone unless you initiated the call and the other party is trusted.
• Never pay a fee or taxes to collect sweepstakes or lottery “winnings.”
• Never rush into a financial decision. Ask for details in writing and get a second opinion.
• Consult with a financial advisor or attorney before signing any document you don’t understand.
• Get to know your banker and build a relationship with the people who handle your finances. They can look out for any suspicious activity related to your account.
• Check references and credentials before hiring anyone. Don’t allow workers to have access to information about your finances.
• Pay with checks and credit cards instead of cash to keep a paper trail.
• Feel free to say “no.” After all, it’s your money.
• You have the right not to be threatened or intimidated. If you think someone close to you is trying to take control of your finances, call your local Adult Protective Services or tell someone at your bank.
• Trust your instincts. Exploiters and abusers often are very skilled. They can be charming and forceful in their effort to convince you to give up control of your finances. Don’t be fooled—if something doesn’t feel right, it may not be right. If it sounds too good to be true, it probably is.

What should you do if you are a victim of financial abuse?

• Talk to a trusted family member who has your best interests at heart or to your clergy.
• Talk to your attorney, doctor or an officer at your bank.
• Contact Adult Protective Services in your state or your local police for help.

Remember

Never give your Social Security number, account number, or other personal financial information over the phone unless you initiated the call.

Questions? Please contact Consumers@aba.com for more information

• Pay yourself first. Determine in advance how much money you plan to keep on deposit each month. If you receive a raise, increase the amount of money deposited into your savings account.
• Take advantage of bank technology. Arrange to have a specific amount automatically transferred to your savings account every pay period.
• Pay your bills on time-and pay more than the minimum amount. Although 97 percent of Americans pay their bills on time, some consumers find themselves paying late fees. Pay them once a month in plenty of time to reach the creditor.
• Determine needs versus wants. By bringing your lunch to work a couple days a week, you can save hundreds of dollars a year. Look at other ways to save.
• Shop around. There are thousands of options for financial services products. Be selective, and get the best prices, services, convenient locations and lowest fees for credit cards, bank accounts, mortgages and CDs.
• Consider investments. For long-term goals, such as saving for a home or retirement, look into bonds, mutual funds, real estate and stocks.
• Consult your local bank. Ask which package of bank products and services would best suit your needs. Your banker is the best source of information about accounts and interest rates available at your bank.

The following steps outline your process. It’s important to keep accurate records of your spending so you’ll spot places where you can save money and know how much you can reasonably spend.

• What is your current income? The first step in creating a budget is to total all of your income, or money coming. We recommend you do this on a monthly basis. Include only your take home pay.
• What are your monthly expenses? Next, you’ll need to track your expenses, or money going out.
• How much of your income should be spent? Rent or mortgage payments plus your credit obligations – should not exceed 35 to 40 percent of gross monthly income. The amount you owe on credit cards, monthly car payment, student loans and other monthly payments should not exceed 10 to 15 percent of your take-home pay.
• Put it in writing. Document and categorize your expenses. Tally up everything you spend money on. Don’t forget your daily coffee or snacks. Those can add up quickly!
• Do the math. The last step in creating your budget is to total all of your expenses and subtract them from your total income.

Where Do You Stand?

Did you have money left over at the end of the month – or too much month left at the end of the money?

If your income and expenses are EQUAL…

You might be living paycheck to paycheck. Cut expenses and develop a savings plan in case of emergencies or unexpected expenses.

If your income and expenses equal each other, but only because you’re using credit to survive and paying only minimums each month, you may need to talk to a debt counseling service to help you get back on the track to live within your means.

If you have MONEY LEFTOVER at the end of the month…

You’re doing a good job of managing your expenses. Here are some suggestions for the leftover money:

• Open a savings account at a bank.
• If you already have a savings account, consider setting up automatic transfers to your savings account or, if you have direct deposit, ask your employer to put a portion of your paycheck in your savings account automatically.
• Also, investigate whether your employer offers a 401(k) or other employee matching savings plan. The contribution you make to this type of account is taken out of your paycheck before taxes.

If you DON’T HAVE MONEY LEFTOVER at the end of the month…

• You need to make adjustments immediately. Keep in mind that it’s usually easier to cut back on expenses than to increase your income. Analyze your budget to see where you can cut expenses. Extra items for personal care and leisure activities are some of the easiest things to cut from your budget.
• Call your utility, phone, cable, cell phone providers. There may be ways to cut those bills that just take a phone call.
• Consider increasing your income by getting a second part-time job or by working overtime.

Questions? Please contact Consumers@aba.com for more information.

• Request a copy of your credit score report – and make sure it is correct.
  Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for other loans – such as a mortgage. Everyone is entitled to receive a free copy of his or her credit report annually from each of the three credit reporting agencies, but you must go through the Federal Trade Commission’s website at www.annualcreditreport.com, or call 1-877-322-8228.

Note that you may have to pay for the numerical credit score itself.

• Set up automatic bill pay.
  Payment history makes up 32 percent of your VantageScore credit score and 35 percent of your FICO credit score. The longer you pay your bills on time, the better your score. Avoid missed payments by setting as many of your bills to automatic pay as possible.
• Build credit through renting.
  VantageScore’s scoring model, created by the three major credit bureaus, will now weigh rent and utility payment records. This will allow it to score as many as 35 million people who previously couldn’t get a credit score.
• Keep balances low on credit cards and ‘revolving credit.’
  Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your scores by limiting your charges to 30 percent or less of a card’s limit.
• Apply for and open new credit accounts only as needed.
  Keep this in mind the next time a retailer offers you 10 percent off if you open an account. However, if you need a new line of credit, don’t jump at the first appealing offer; compare rates and fees offered through mail solicitation, on the Internet or at your local bank.
• Don’t close old, paid off accounts.
  According to FICO, closing accounts can never help your score and can in fact damage it.
• Talk to credit counselors if you’re in trouble.
  Using legitimate, non-profit credit counseling can help you manage your debt and won’t hurt your credit score.

For more information on debt management, contact the National Foundation for Consumer Credit www.nfcc.org.

The American Bankers Association suggests the following tips to help save for it:

• Develop a budget & timeline.

Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

• Establish a separate savings account.

Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.

• Shop around to reduce major monthly expenses.

It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

• Monitor your spending.

With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

• Look into state and local home-buying programs.

Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.

• Celebrate savings milestones.

Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

• How much money do you have saved up?

Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs.

• How much debt do you have?

Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent.

• What is your credit score?

A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. For tips on improving your credit score, visit aba.com/consumers.

• Have you factored in all the costs?

Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance.

• How long will you stay?

Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.

• Know your own financial situation.
  Before you begin the home loan application process, determine what you can realistically afford. Take into consideration your credit score, how much debt you currently carry and what type of down payment you are prepared to make.
• Have your documents ready.
  While each bank may require different documentation, you may be required to furnish the following information depending on your employment and financial situation:
  • Pay stubs;
  • Tax returns;
  • Financial statements (one that is less than 60 days old);
  • Copies of additional monthly payments such as car loans, credit cards, and student loans; and
  • Any other information (such as proof of additional income) that you think will help your banker to positively evaluate your credit request positively.
• Review the basics.
  Knowing the fundamentals of the home loan process is an excellent way to prepare to choose the right mortgage. Make sure you are familiar with interest rates, loan terms and additional fees associated with buying a home.
• Compare quotes.
  Beyond the interest rates, there are closing fees and points and commissions. You will want to compare these for all the lenders on your list.
• Choose a trusted lender.
  Get references from family and friends and do your research. Call your local Better Business Bureau and ask if it has had complaints about any of the lenders you are considering. Keep in mind, federally insured banks are required to operate under a high level of regulatory supervision. A fully regulated bank may be your best choice.
• Read between the lines.
  Slick TV ads, telemarketers or door-to-door salespeople will often offer fast, easy loans for houses, cars and home repair, but not disclose all of the details. Read the fine print. If it sounds too good to be true, it probably is.
• Ask questions.
  When in doubt, ask for clarification from your lender. Discuss how long the loan process will take, how you will communicate – by phone or email, and who will service your loan.

Learn More

Questions? Please contact Consumers@aba.com for more information.

Coping with Debt

If you are a homeowner experiencing difficulty keeping up with your mortgage payments, it can leave you feeling vulnerable. Being proactive and educating yourself on the different options to prevent foreclosure will make the process less stressful, help you make educated decisions, and get access to the resources you need to keep your home.

Here are a few basic tips that can help you prevent foreclosure:

COMMUNICATE: If you are starting to have financial difficulties and having a hard time paying your mortgage, make sure you contact your lender and respond to any correspondence you may receive from them.

READ: Look for your loan documents and understand what your mortgage rights are if you can’t make payments to your lender.

SPEND LESS: If you want to keep your home you will have to review your finances and figure out what areas of spending need to be cut or reduced and applied to your mortgage. Example of areas you might be able to trim include cable and eating out frequently until you are back on track with your mortgage.

AVOID FOR-PROFIT FORECLOSURE PREVENTION COMPANIES: These for-profit organizations claim to help you keep your home but will charge you huge fees that can be used towards a mortgage payment instead. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Most reputable credit counselors are non-profits and offer services through local offices, online, or on the phone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate non-profit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

But be aware that “non-profit” status doesn’t guarantee that services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which they may hide, or urge their clients to make “voluntary” contributions that can cause more debt.

Learn More