Mutual Credit Union Receives M.A.C. Awards

Press Release

Friday, June 14, 2019

Mutual Credit Union Receives M.A.C. Awards

(Vicksburg, MS): On Friday, May 31, 2019 the Marketing Team of Mutual Credit Union comprised of Susan Mandarino and Lurline Simmons, were recognized as recipients of two awards during the 2019 Annual Marketing Association of Credit Unions Conference in New Orleans, LA. They received the following awards within the Credit Union Asset Size category of $500 million or less:

  • Bronze – Social Media Engagement for their Youth Savings Month Bulletin Board Contest
  • Bronze – Community Engagement for their partnership with the United Way of West Central MS & the Alexander Literacy Program

The Marketing Association of Credit Unions (M.A.C.) was established over 30 years ago by leading marketing professionals within the Credit Union Marketing Industry.  M.A.C. offers opportunities for workshops, professional development and free exchange of ideas across the Marketing industry. The M.A.C. awards program was established in 1986 to celebrate the great work of marketers across the United States. Judges for the M.A.C. awards are experts in the financial industry covering marketing, advertising, media and social media areas.

DSC_0765

(Pictured Left to Right: V.P. of Marketing, Susan Mandarino; Marketing & Communications Specialist, Lurline Simmons; and V. P. of Compliance, Katie Ferrell)

For more information about Mutual Credit Union please follow this link to our webpage. For additional questions, please contact the marketing department at marketing@mutualcu.org or by calling (601) 636-7523 ext. 1226.

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Press Release M.A.C. Conference Awards

11 Steps To Improving Your Credit Score

BullsEye

 

Your credit score plays an important role in many aspects of your life, from the rate you get on a loan to passing a background check for your dream job. Having bad credit scoring can keep you from achieving your goals. Luckily, improving your credit score isn’t a mystery; it is a simple process that you just need to follow consistently.

Step 1: Check Your Credit Score

Your credit score is determined based on your credit history. Actions like your payment history, types of credit, and amount of credit are reported and recorded. Positive behavior, like making on-time payments, improves your credit score. Negative information, like late payments or bankruptcies, hurt your credit.

Your credit score is a number between 300 and 850 and is built looking at the last seven years of history. The lower the number, the poorer the credit.

The first step to fixing your credit is to know exactly where you stand. Too many people know they have “bad credit,” but don’t know exactly what their credit score is or what negative marks are on their credit report. Every American is entitled to a free copy of their credit report from all three major credit bureaus.

You can request your free credit reports here.

Step 2: Clear Any Mistakes

Now that you have your credit report, look through it to see what is negatively impacting your credit score (also called a derogatory mark). They could be things like late payments, an account in collections, or defaulting on a loan. Some of these might be legitimate, and we will discuss how to deal with those in a moment, but right now we are looking for anything that might be a mistake.

If you find an error, you will need to send a letter to the creditor letting them know of the mistake. The FTC provides a free letter template for filing this dispute.

There are other companies that provide digital tools to help you identify and dispute errors on your report.

Step 3: Settle What You Can

Once we have cleared all the errors from your report, you should focus on resolving what you can. There is a technique called “pay for delete.” Essentially, you call the collection agency holding the debt and ask them to remove the derogatory mark once you settle the debt. Not all agencies will do this as the legality of doing so is somewhat questionable.

Regardless of if you choose to try and negotiate a “pay for delete” deal, you should try and settle whatever debts you can, as that will always help your credit score.

Step 4: Prioritize Card Repayment For Utilization

One of the factors considered in your credit score is something called “credit utilization.” It is the amount of credit you have used in relation to your total combined credit limit. For the sake of simple math, pretend you have a credit line of $1,000. You spend $500 of it. You have utilized 50% of your credit ($500/$1000).

A general rule of thumb is to try to keep your credit utilization under 30%. The lower, the better, as it is a proxy of how well you are handling your debt.

To help improve your credit score, look for the credit card with the highest utilization score and pay that down. That will be a card that is maxed out. A card with a $100 limit and $99 spent will have a credit utilization of 99%. A card with a $1,000 limit and $99 spend will have a credit utilization of 9%. In this step, we’re looking for cheap and quick fix. This is different from a strategy to get out of debt; if that is your goal target the credit account with the highest interest rate.

Step 5: Automate Bill Payment

The single best thing you can do for your credit is to consistently pay bills on time and in full. Sometimes we fail to pay on time, even when we could, simply because we’re human and we forget. Remove the option to forget and enroll in automatic payments.

Bill pay is so valuable, that many institutions will provide a discount just for enrolling. Check your insurance provider, cell carrier, and financial institution to see what discounts might be available.

Step 6: Keep Accounts Open

Another heavily weighted variable in your credit score is the length of an account. Some people will advise cancelling your credit card when it gets paid of in order to remove temptation. If you feel like you need that, then certainly do it, however you will be removing an old line of credit. Consider cutting up the card but keeping the account open.

Step 7: Automate Credit Building

Remember, credit is built by successfully paying off debts on time. A simple way to ensure that it happens is to put small, recurring payments on a card and then have it automatically paid off in full each month. For example, put your water bill on automatic pay. Have that be the only bill on this credit card and set the card up to be paid in full every month.

Step 8: Become An Authorized User

Your score can benefit by becoming an authorized user on an account of someone who already has a great credit score. Since the time an account has been open is a factor, you might want to look to your parents or grandparents. Do not get a physical card or use this line of credit for purchases — you don’t need it. You just want your name on the account so that you can benefit from their good behavior.

Step 9: Get Rent Payments Counted

Not all bills are reported. For example, your rent payments don’t help you build credit, even though that is likely your most expensive monthly bill. There are some services out there that will help make sure you rent helps to build your credit.

These services work by either contacting your landlord, or by serving as a middle-man in making your rent payments (you cut them a check, then they pay your landlord). You’ll probably have to pay a monthly fee for this service, but it could be worth it for the boost in your credit score.

Step 10: Consider New Products

Another product you might want to consider enrolling in is Experian’s “Boost.” This feature helps you to get credit for your phone and utility bills.

Step 11: Don’t Open New Accounts

There are two issues to be aware of when it comes to opening new accounts.

First, applying for the account usually requires a credit inquiry. There are two types of checks (or pulls); hard and soft. Soft pulls are often done for things like a background check and don’t impact your credit score. Hard pulls are done when you apply for a line of credit (like a car loan) and they do lower your credit score anywhere from 5 to 20 points.

Second, opening several new accounts rapidly shows that you are looking to get a lot of credit, which can be interpreted as having financial difficulties.

Conclusion

Fixing your credit score isn’t hard, but it does require you to consistently follow some basic rules: know your scores, pay on time and in full, get credit for everything, and then continue credit monitoring. Repeating these steps raise your credit.

 

SOURCES:

https://blog.kasasa.com/2019/06/11-steps-to-improving-your-credit-score/

https://blog.kasasa.com/2018/07/how-does-my-credit-score-affect-my-car-loan/

https://www.annualcreditreport.com/index.action

https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report

https://www.nerdwallet.com/blog/finance/credit-report-rent-payments-incorporated/

https://www.experian.com/consumer-products/credit-score-boost-a.html

 

Word of the Month: Debit Card

Teacher and student

Brandon was super-excited. His mom was taking him to Chuck E. Cheese’s today!

“Am I going to get a lot of tokens?” he asked his mom as they drove together. “I need a whole bunch so I can get a ton of tickets and win the best prize!”

Mom just smiled. “You’ll have enough,” she said.

They pulled up in front of Chuck E. Cheese’s and made their way inside. While Brandon’s mom got busy in front of the token machine, Brandon checked out a few of the games and tried to find the best ones to start with.

“Brandon,” mom called. She had finished paying and was holding out a card.

Brandon took it from her, puzzled. “What’s this?” he asked. “Don’t I need tokens to play?”

“Nope—you use this card,” mom explained. “You just scan it in front of the game you want, and it lets you play.”

Mom showed Brandon how to use the card, and he was soon off trying to win the most tickets he possibly could.

Brandon had a great time playing arcade games—until his card stopped working.

“Hey, mom!” he called, running towards where she sat, working on her laptop. “My card’s broken! I need a new one!”

Brandon’s mom quickly snapped her laptop closed. “There’s nothing wrong with your card, Brandon,” she said.

“So why isn’t it working?” he asked.

“Because you used up all the money I put on it!”

“What do you mean?” Brandon was confused.

Mom stood up and motioned for Brandon to follow her. She walked toward the machine she’d used earlier and started punching in numbers.

“I need to put money into the card in order for it to work,” she said. “It’s like a debit card.”

“A what?”

Mom reached into her purse and pulled out a plastic card. “This is a debit card,” she said. “I have a checking account at the credit union. I put money into that account, and when I use this card, money comes out of my account. Do you understand?”

Brandon nodded slowly.

“And that’s sort of how this machine works, too,” mom continued. “In order for you to use the card, I need to put money onto it.”

“And when I finish that money,” Brandon said, “I can’t use the card anymore, right?”

Mom smiled. “Exactly. Then we need to put more money into the ‘account.’”

Mom stuck her debit card into the card machine and punched a few numbers again. Then she took Brandon’s playing card and put it into the machine, too. A minute later, the machine beeped and both cards came sliding out.

“Here you go, Brandon,” mom said. “Your debit card is ready to use!”

Talking Points:

  • How is the card at Chuck E. Cheese’s like a regular debit card? How is it different?
  • Why do people use cards instead of cash (or tokens)?
  • Do you think people spend more or less money when they use a debit card instead of cash? Explain your answer.

What Features Should I Look for in a New Car

Keys to a new car

Q: How do I decide which features to look for in a new car, and which to skip? 

A: Shopping for a car doesn’t have to be complicated. To help you out, we’ve created a list of key features to consider in your new car, and a list of features you can skip. 

Must-have safety features 

  • 360-degree camera: This camera gives drivers a bird’s-eye view of the area around the car.
  • Evasive steering: This feature provides additional steering support when you’re in danger of colliding with another vehicle, and your own steering efforts are insufficient.
  • Forward collision warning: Drivers get a visual and/or audible alert when their vehicle is heading toward a forward collision.
  • Blind spot alert: This feature alerts the driver when there is an object or pedestrian in direct line of their blind spot.
  • Automatic emergency braking: Stay safe with this feature, which automatically applies the brakes when it senses a vehicle in your car’s way. Some systems include pedestrian detection as well.

Convenient features 

  • Automatic key-less entry: This feature automatically unlocks a car’s doors when it senses a nearby fob.
  • Power tailgate: This feature for pickup trucks and SUVs lets you lower and raise your tailgate with the push of a button.
  • Multi-zone climate system: Family road trips are peaceful again with this feature, which allows for different climate controls throughout the car.
  • Speedy USB-charging outlets: No more unbearable waits for your gadgets to power up with this super-speedy USB port.  
  • Heated steering wheel and driver’s seat: This one is for those frosty mornings when your car can’t get warm fast enough.
  • Wireless charging pad: Just place your phone on one of these pads and it will start powering up.

Fun-to-have features 

  • Home assist device connectivity: Some new cars allow you to use remote voice control with home assist technologies, like Alexa, for your car.
  • Rear entertainment systems: This feature gives the rear seat of your car a completely separate entertainment system.
  • Android Auto and Apple CarPlay: These features sync your smartphone’s interface with your car’s infotainment system for easier phone control.

Features you can skip 

  • Bigger wheels and thinner tires: The ride will be less comfortable and your wheels will be more prone to damage from potholes.
  • Built-in navigation systems: You know you’re going to use Waze or another Maps app on your phone most of the time anyway. Also, most built-in navigation systems require constant updates.
  • Lane keeping assist: This feature automatically steers or brakes your car when you cross a lane marking without turning on a blinker. In real life, though, it can be annoying as you’ll often need to cross a lane marker for good reason, like moving over for an emergency vehicle.

Before you start shopping, call, click, or stop by Mutual Credit Union to hear all about our new auto loans.

Mutual Auto Loans

Your Turn: Did you buy a new car recently? Tell us about the features you chose in the comments below.

 

SOURCES:

https://www.consumerreports.org/automotive-technology/must-have-features-to-get-in-next-new-car/

https://www.hotcars.com/must-have-car-features-for-2019/

https://cars.usnews.com/cars-trucks/cars-with-the-most-high-tech-features-for-the-money

Mutual Credit Union Director, Billy Bridges Inducted Into the 2019 MS Credit Union Hall of Fame

PRESS RELEASE

Friday, May 17, 2019

Billy Bridges Hall of Fame

Biloxi, Miss. (5/16/19) – – Mutual Credit Union Director, Billy Bridges has been inducted into the Mississippi Credit Union Hall of Fame. Created in 1993, the Mississippi Credit Union Hall of Fame is the state’s highest credit union honor, recognizing individuals that have devoted their life to the philosophy and success of credit unions at the local, state or national level.

Billy Bridges began his service on Mutual Credit Union’s Board of Directors in 1988, and he is still serving today. He held the position of vice-chairman for three years, and in 1993 was elected chairman, a position he held for almost 20 years.

At Mutual Credit Union, Billy was instrumental in his credit union’s expansion throughout Vicksburg and surrounding communities, including Raymond and Yazoo City. He is committed to improving all members’ financial quality of life and providing the quality services, facilities, and convenience that has resulted in Mutual Credit Union’s growth from $39 million to $215 million in assets.

Billy was elected to the Mississippi Credit Union Association Board of Directors in 1996 and is still serving today. He has served as chairman, and he is the longest serving vice-chairman in the board’s history. He is also the long-time chairman of the Personnel & Salary Committee.

An active supporter of the credit union movement, Billy has been a faithful participant in the annual Credit Union National Association Governmental Affairs Conference, and he played a significant role in rallying support in Congress for H.R.1151, the Credit Union Membership Access Act, which was signed into law in August 1998.

Billy’s 31 years of service to Mutual Credit Union and his more than 20 years of service to Mississippi’s credit unions on the MSCUA Board of Directors are characterized by his genuinely outstanding performance and countless hours of selfless service. He serves with honor and distinction and is an extraordinary ambassador for the credit union movement.

For more information about Mutual Credit Union please follow this link to our webpage. For additional questions, please contact the marketing department at marketing@mutualcu.org or by calling (601) 636-7523 ext. 1226.

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Press Release Billy Bridges Inducted into the MS Credit Union Hall of Fame

Steps 1 thru 12 to Living a Debt Free Life

working on her accounts

Step One: Take Stock of Your Debt

You’re determined that this will be the year you finally pay down (or pay off) that debt. Get ready, because every month, our Do It Today plan will have you taking another step on your journey toward living a debt-free life. 

First, sit down and take stock of all your debts. Don’t let the numbers scare you; you need to do this to move forward. Get out every single credit card bill, personal loan, student loan, and any other debt you’re carrying (except your car and mortgage payments). Tally up the numbers to give yourself an idea of what you’re dealing with. 

Next, organize your debt into different categories, such as credit card debt, student debt, personal loans etc. Use a spreadsheet to list your debt, the remaining term of each loan (if applicable), the minimum payment and the interest rate.   

Finally, designate one hour each week for working on your finances. 

Step Two: Don’t dig yourself deeper

When you’ve dug yourself deep into a pit, the only way to get out is to stop digging. This month, focus on not racking up more debt. Stop using your credit cards. Skip your weekly trips that usually have you buying too many non-essentials.

Instead, start brown-bagging your work lunch and brewing your own coffee. Get into the habit of spending only on essentials so you can make real progress toward paying down that debt.

Don’t forget to make the minimum payments on every line of credit and loan you have open. Neglecting your debt will only pull you deeper into the pit.

Step Three: Negotiate a lower APR

If the majority of your outstanding debit is credit card debt, you may be spending hundreds of dollars just on interest alone. Aside from wasting money, this keeps you from moving forward and paying down your debt.

Most people don’t know you can call up a credit card company and negotiate for a lower APR. Take the time this month to do that. Explain that you are working on paying down your debt and that the interest payments are impeding your progress. You can even research competing cards and cite their interest rates in a bid for a lower APR from your current credit card company.

Lowering your interest rates will allow you to make another real step toward getting rid of debt.

Step Four: Create an emergency fund

You may be feeling impatient to start more aggressively paying down debt, but it’s important important to first create an emergency fund. If you don’t have money socked away for unexpected expenses, you’ll be tempted to use the money that’s already earmarked for your debt payments to fund this expense.

Experts recommend keeping three months’ worth of living expenses in an emergency fund, but you can start with a modest $1,000. Set up an automatic monthly or weekly transfer from your [credit union] Checking Account to your Savings Account until you have a fully padded emergency fund. This may take several months, but no worries, you can continue following the next few steps towards a debt-free life as your emergency fund grows.

Step Five: Create a budget

This month, you’re going to organize your finances. Hold onto every receipt, bill, paystub and invoice you produce throughout the month. Sometime during the last week of May, sit down with all of your paperwork and start crunching the numbers.

When you’re through, you should have all of these questions answered:

  • How much is my net monthly income?
  • How much are my monthly fixed expenses?
  • How much are my monthly non-fixed expenses?

Now that you have the numbers in front of you, work on creating a budget. Designate the necessary funds for your fixed expenses. Then, with the remaining money, determine how much you will spend in each non-fixed expense category; like groceries, clothing, entertainment, etc.

Put your minimum debt payments in the fixed-expenses category, with another category for extra debt payments in your column of non-fixed expenses.

Step Six to be continued in June ……………………………

 

 

6 Ways to Save On Summer Vacation

Family packing for vacation

 

  1. Time it right. Experts say the sweet spot for cheapest flight booking is 54 days before your travel date.
  2. Clear your cache before every new flight searchThis way, airlines can’t access your browser history and inflate the prices they offer you.
  3. Sweet-talk your way to savings. Ask for an upgrade at the check-in counter. About 78% of hotel guests who request an upgrade at the front desk actually get one.
  4. Never pay full priceCheck sites like coupondivas.com, entertainment.com and Groupon.com for deep discounts at local eateries and entertainment centers.
  5. Freebie fun. Search local sites and blogs for write-ups about free things to do near your destination.
  6. Save your mega event for the last day. Finish your vacation on a high note by saving your most exciting event for the last day of your trip.

Your Turn: How do you save big while getting the most out of your summer vacation? Share your best hacks with us in the comments!

2019 Mutual CU Scholarship Recipients Announced

Press Release

May 14, 2019

 

2019 Mutual Credit Union Scholarship Recipients Announced

(Vicksburg, MS): The Mutual Credit Union Scholarship Committee is pleased to announce the following High School Seniors as selected recipients in the 2019 Mutual Credit Union Scholarship Program.

Alyshia Moore – Vicksburg High School – $3,000

Alexis Lomax – Central Hinds Academy – $2,000

Jonathan Shelton – Mississippi School for Math & Science – $1,500

Emily Vandennieuwboer – Warren Central High School – $1,500

Abigail Wallace – Warren Central High School – $1,000

Reann Ponder – Warren Central High School – $1,000

2019 Mutual CU Scholarship winners collage

Each year, Mutual Credit Union offers graduating high school seniors the opportunity earn one of six scholarships to pursue higher education. Mutual has a firmly held belief that the education of our community’s youth is a solid investment in our community’s future. This year we were proud to award a total of $10,000 in scholarships to six selected recipients. We congratulate all 2019 graduating high school seniors and offer encouragement to you in all your future endeavors.

For information on the Mutual Credit Union Scholarship program, please follow this link to our web page. For questions, please contact the marketing department at marketing@mutualcu.org or call (601) 636-7523 ext. 1226.

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2019 Mutual Credit Union Scholarship Press Release

Paperless Statements – Pros and Cons

Paperless Statements – Pros and Cons

Woman organizing papers

Switching from paper bills to paperless billing might save time, but is it worth it?  Below we will review the Pros and Cons of signing up to receive paperless statements, bills and notices.

•••Tetra Images / Getty Images

How Paperless Billing Works

When you sign up for paperless billing statements, you won’t get a credit card statement in the mail anymore. Instead, your statement will be available online, often as a PDF file that you can download, save, and print. Your credit card issuer will send an email each month you when your statement is ready.

For your convenience, some credit card issuers also include your minimum payment due and the due date in the body of the email. If you’re thinking about ditching traditional paper statements, consider the pros and cons before you make the change.

Pro: Saving the Trees

Paperless statements are good for the environment. According to the U.S. Environmental Protection Agency, the average American uses about one 100-foot-tall Douglas fir tree in paper each year. If credit card issuers send out fewer billing statements, there will be less demand for paper, which means less air pollution from paper production. Some credit card issuers have even promised to make their own contributions to environmental causes when you sign up for paperless billing.

Con: Easier to Miss Payments

One of the downsides to paperless statements is that it’s easier to forget to send your payment when you don’t have that physical bill as a reminder.

If you need a due date reminder, you can print the statement from the internet and post it where you normally put your bills. Paper is still being saved since you’re skipping the envelope and billing statement inserts.

You could also miss your due date if the credit card issuer’s emails are caught by your spam filter and never delivered in your inbox.

Make sure you add your credit card issuer’s email address to your “safe list” to prevent the emails from being automatically quarantined.

Pro: Less Mail and Paper in Your Home

The elimination of billing statements means there is less paper and clutter in your home. You’ll save time sorting through bills and figuring how what you should keep, what can be thrown in the trash, and what must be shredded.

If you download your billing statements, you can save them to your computer or external drive and access later when you need them. Most credit card issuers make several months of billing statements available online, so it’s may not be necessary to save your most recent statements.

Con: More Passwords to Remember

When you sign up for online billing, that means you’ll have yet another username and password to remember. Even if you try to use the same ones for all your sites – which generally isn’t a good idea – there are always a few sites with slightly different restrictions that will require you to come up with something different from what you normally use, something that you’re more likely to forget. And if you can’t remember your password, you’ll have to use the password recovery process to check your statement every time you forget your password.

Pro: Perks for Online Billing Statements

Some credit card issuers offer incentives to cardholders who sign up for paperless statements. For example, you may be entered into sweepstakes when you switch to paperless billing statements. Some card issuers charge a fee to send a paper statement and waive this fee when you sign up to receive your billing statement online.

Con: Less Access to Previous Statements

Credit card issuers typically only make a certain number of statements available online. If you need more than that, e.g., for tax purposes, you may have to go through a few extra steps (and could even have to pay a fee) to access older statements. You could get around this by printing your billing statement each month and filing it away so you can access it if you need to.

Pro: Identity Theft Prevention

Switching to paperless statements could help prevent identity theft resulting from stolen mail.

Since statements aren’t mailed to your home, mail thieves won’t get access to your credit card number if they intercept your mail. Even hacking your email account wouldn’t give a thief access to your credit card information since you have to log in to your credit card issuer’s website to view your statement. Emails from your credit card issuer should never contain your full account number.

Con: Delay in Catching Credit Card Fraud and Credit Card Changes

If you’ve set up an automatic payment for your account, you could easily forget to review your statements each month, a step that’s critical to catching credit card fraud. You have 60 days to report billing errors, beyond that the credit card issuer could make you pay for purchases you never made.

There’s another downside to paying without reading your statement – no alert to changes in your minimum payment. If your minimum payment increases beyond the payment you’ve set, you’ll be hit with a late fee even if the payment is made on time. After 60 days, your interest rate will increase, and the late payment status will hit your credit report.

Con: Email Address Change Notification

Just like you have to notify your credit card issuer when you change your mailing address, you should also update them with a new email address. Otherwise, you’ll miss the monthly notification that your billing statement is ready. You could also miss an email letting you know about suspected fraud on your account (but beware of phishing scams) or to alerting you to other changes to your account, e.g., a credit limit increase.

Pay Online Without Paperless Billing

Even if you choose not to sign up for paperless billing, you can pay your account online either through your bank if they offer online bill payment services or directly to the credit card issuer through their website.

 

Source Information:  https://www.thebalance.com/pros-and-cons-of-paperless-billing-statements-960230

Go paperless and save

WORD OF THE MONTH: BUDGET

Teacher working with student

David’s friend, Mikey, had the most awesome basement ever. It had a ping-pong table, a foosball table and an air hockey table. That’s why David loved going over to Mikey’s house to play.

But David wanted an air-hockey table of his own.

“Can we get one, Mom? Please?” he asked his mom one day after coming home from Mikey’s.

Mom shook her head. “Not now, David. Air  hockey tables are fun, but they’re also expensive.”

“So what?” David cried. “Why can’t we buy something expensive, just this once?”

Mom pushed back her chair and stood up. She walked over to a kitchen drawer and pulled it open. She took a bunch of papers and checks out of the drawer and motioned for David to come join her at the table.

“Let me show you something,” she said. Mom started dividing the papers into two separate piles.

“These are our bills,” she said, patting the larger pile. “And these are our paychecks.”

Mom took out a piece paper and drew a line down the middle.

“Look, David,” she said. “On this side, I’m going to write all of our expenses and on the other side I’m going to write our income.”

“You mean like how much money you and Dad get paid?”

“That’s right,” said Mom. “I’m not going to tell you the actual numbers, just an estimate so you get an idea.”

“Why won’t you tell me the real numbers?” David was curious.

Mom smiled. “Because there are some things you don’t need to know about just yet. You’ll have to do all this when you’re older, but for now, you can learn about it without knowing the actual amounts.”

Mom started listing items:

  • Mortgage payment
  • Credit card bills
  • Phone and internet bill
  • Electric bill
  • Gas bill
  • Insurance payments
  • Car payments
  • Cable
  • Gym membership
  • Groceries

There were so many expenses! Next to each item, she put a small number.

Then she wrote a few larger numbers on the other column.

“You see this, David?” she said, holding up the paper. “This is called a budget.”

She pointed at the longer column. “This is the amount of money we need to spend on certain expenses each month.”

Then, she pointed at the shorter column. “And this is the money we have to work with each month.”

“But how do you figure out how much money you need for everything?” David asked.

“That’s where the budget comes in,” mom explained. “I set aside the amount we need for our fixed expenses—that’s stuff that costs the same amount each month—and then I set a little bit aside for the expenses that cost a different amount each month.”

“But how do you know how much to set aside if it always changes?”

“I take an average of a few months and use that number.” Mom pointed to Groceries: $350.

“But you see,” she continued, “I only have a little bit for extra expenses we don’t have all the time, like new shoes or winter coats, or household repairs.”

“And air hockey tables,” David added.

“And air hockey tables,” mom grinned. “That’s not on our budget.”

David was thinking. “But what would happen if we bought one anyway?” he asked.

“That would really mess us up this month,” Mom said. “It’s not planned, and we don’t have enough money in our budget to cover it. We might not be able to pay the electric bill this month, or make a payment on the car if we spent that money on the air hockey table. Do you understand?”

David nodded. “Does that mean there’s no way I can get an air hockey table?”

Mom laughed. “You can—just not right now! We can save up for one together. How about we build a save-up-for-air-hockey-table plan into our budget together? We can think of ways to cut back on our budget and use that extra money to put into an air hockey fund.”

“Sounds good!” David smiled.

He bent over mom’s paper and after 15 minutes of discussion and writing, they had a plan in place. It would take a few months for it to happen, but they had a plan to make it work.

David was happy that mom had taken the time to explain how budgets work. He knew he would have his air hockey table soon. After all, it was part of the budget!

Talking points:

  • Why is it so important to stick to a budget?
  • What would happen if David’s mom bought the air hockey table without a plan?
  • How long do you think it will take David and his mom to save up for an air hockey table?