4,844. That’s the number of Federally insured banks in our country. The U.S. has more banks than anywhere on earth; that number is fed by local and regional banking. Small banks have always been a large part of our economy.

Back in March we saw a bank run that caused the collapse of Silicon Valley Bank, the second largest bank failure in U.S. history. Understandably, this brought a lot of fear to anyone banking with a small bank, with the assumption that their bank could fall too. In a short time big banks across the country saw huge deposits as people transferred their money, supposing that these big guys were too big to fail.

What a lot of people may not realize is the major fears that some have are unwarranted. If you have less than $250,00 in the bank your money is covered by FDIC insurance.

Regional and community banks are vital to the U.S. economy. Community banks provide 77% of agricultural loans and over half of the small business loans in our country. Small banks are able to lend to a wider range of people than the big banks. When you bank with a community or regional bank you are supporting a local small business, which means you are supporting your local economy. When you give your money to a big bank, that money goes to support big businesses that may not even know your city or town exists. Small banks are able to tailor their business to the needs of the community. They are also more aware of the needs and the risks within their area, far more than a big bank ever will be. Small banks can perform and provide for their community in ways that big banks simply can’t.

Usually, a local bank is less costly and has lower employee turnover. They may also offer fewer or lower fees and offer more competitive rates. Not only do they offer products and services that are more geared towards your community, but small banks tend to be more interested in meeting the needs of their customers. They recognize that they depend on their customers just as much as their customers rely on them. With a small bank, it’s likely you will work with the same tellers, the same loan officers, and build relationships with the individuals that work at your bank, and they will get to know you.

Wouldn’t you wanna go where everybody knows your name?

Money exchanges hands every day. Whether its paying cash at the store, using a debit or credit card at the gas pump, or paying bills online. How is it that these myriad ways of spending money is consistent and accepted all across our country? What gives our money it’s value?

At one time, our money was backed by the value of gold, this was known as the gold standard. However, in 1971 President Nixon abandoned the gold standard in an effort to curb inflation and prevent foreign nations from depleting the national stores by redeeming their dollars for gold. With the gold standard the government could only print as much money as they had gold.

Because fiat money is not linked to a fixed resource like gold, it’s not scare, so central banks are able to control the supply, giving them more power to manage things like credit supply, interest rates, liquidity, and the velocity of money.

While this system works to stabilize the economy and curb inflation, it is a delicate balance. Behind all the bureaucracy and regulations, if a people lose faith in their government, the currency will no longer hold value. In simple terms, our money has value because of the confidence we place in our government. We trust them to honor the value they have set forth.

This can be problematic; if a government begins making choices that the people do not agree with, the people will lose their confidence in the government and their currency would become worthless, crippling the economy.

There is no perfect system. There are pros and cons with both gold standard and fiat money. The one truth that holds true no matter which money system is used: you can’t spend your way out of debt. Which ever currency you have, you need to manage it well.

Photo by Giorgio Trovato

Who hasn’t sat at their desk and wished for a nap at least once? In today’s world most people run a fast paced life with more things to do than there is time for. It’s exhausting and can lead to a lot of fatigue during working hours. Fortunately, there’s something you can do. Take a nap.

According to the CDC both short and long naps can increase alertness. A short nap is usually 15-30 minutes, whereas a long nap is an hour to 1.5 hours. This period of actual sleep benefits our brains and our bodies, more so than just a quiet rest period.

Research has shown that people who frequently take naps tend to perform better at work, school, and athletics and make them more productive. While not feeling sleepy is its own perk, people who nap and feel well-rested tend to experience less stress and reduced tension, which can lower your blood pressure and reduce your risk of heart disease. Well-rested, nap-taking people also tend to have healthier immune systems, which means fewer sick days. A nap can also directly improve your mood and help you regulate emotions, helping you stay calm during stressful situations without getting as flustered. Do you tend to forget names or faces, or sometimes you can’t remember a specific word? Napping could help with that. According to Johns Hopkins and the Mayo Clinic naps can improve memory and recall.

A short nap, 15-20 minutes, during the day is recommended. This allows your body to rest and recharge without the groggy feeling upon awakening. Longer naps allow your body to enter a deep sleep stage and can be harder to wake from, leaving you feeling groggy, so should be taken towards the end of the day or on days when you have more time.

So, if you find yourself regularly overcome with fatigue or experiencing high levels of stress in your life, consider adding naps to your daily schedule, perhaps as part of your lunch break!

Imagine a perfect day. The sun is shining, the birds are singing, and everything is going your way…until suddenly it’s not. We’ve all experienced unexpected turns in our lives. Perhaps you lost a job, an auto accident, developed serious health problems, or simply had an appliance break down. Things happen, and it can be costly, especially if you don’t have an emergency fund.

Having a dedicated savings account specifically for emergencies could be the difference between drowning in bills and stress or gracefully working through the difficulty. Having intentionally set money aside will allow you to navigate potential financial hardship and recover quicker.

The amount of money dedicated to an emergency fund will vary from person to person, depending on each unique situation. However, a general rule of thumb is to have enough in your fund to cover 3-6 months of your bills and expenses. Set a goal amount, then break that amount into smaller milestone amounts. Saving towards those smaller amounts is very attainable and will lead to greater savings. As you continue to save it gives you a sense of satisfaction and achievement.

The habit of saving is more important than the amount of saving! For some people, it might be a struggle to put money aside, especially those living paycheck to paycheck, but even little amounts of money set aside will add up and give you a financial cushion. There are many strategies for putting money aside, even ones as simple as putting aside your extra change will help. You could save a percentage of your income each paycheck, something as small as 1 to 3%.

There may be times when you receive a large sum of money, like a tax return, a gift, or inheritance. It may be tempting to spend that money, but this is a wonderful opportunity to grow your emergency fund. By putting a portion of that large sum in your emergency fund you are investing in yourself and your future stability.

Once you have an emergency fund established…when should you use it? Remember that this is an EMERGENCY fund. This is not a back-up fund. This is not a fund that you dip into if you don’t have enough to make a purchase. It is a good practice to establish guidelines; decide beforehand what you consider an emergency. This is important to establish because not all unexpected situations are real emergencies. We often create our own emergencies; we can justify our spending for anything.

When emergencies arise, this reserve fund can help you avoid turning to other sources like credit cards or loans, which will end up costing you more money. If you use your emergency fund remember to replenish it as soon as possible so you can be prepared for the next unexpected situation. Stay prepared and enjoy a Secure Tomorrow.

Image 1 by mosi knife

Image 2 by Simran Sood

Everyday consumers go to the grocery store and purchase eggs. Gross Domestic Product (GDP) tracks that purchase, as well as all the other purchases made by consumers. In our last article we wrote on GDP and how it is used to monitor the current economy by measuring the monetary value of final goods and services purchased by a final consumer. But this leaves out a huge piece of the economic picture. How did the eggs get to the grocery store? What happened, and more importantly, how much was spent, getting them on the store shelf? There is another tool that allows us to see deeper into the economy and gives a clearer picture of what’s really going on called Gross Output (GO).

Gross Output depicts a different narrative. It generates a deeper, more encompassing view of the economy, showing the central role that businesses’ purchasing and spending plays in the national income and economic health. GO not only includes the final sale of an item (GDP), but all the purchasing that takes place in between, meaning you can measure the economy at all stages of production. You can think of it like the difference between an x-ray, which shows the general internal map and structure, and a CT scan, which shows a more detailed picture of not just bones, but organs and tissues as well. GDP shows a basic overview, just like the x-ray, but the GO shows us deeper and more complex systems and functions.

GDP ignores business to business activity and supply chains, which is more than half the spending that takes place in our economy. This makes it seem like consumer spending makes up the majority of the economy, but consumers can’t consume unless there are products being made in the first place, and those products can’t be made without spending and

purchasing on a production and manufacturing level. Leaving out the supply chain is a huge omission; this is why the GO is so important to track. Imagine only tracking the purchase of eggs to determine the health of the economy, instead of factoring in the cost of keeping and feeding the chicken, the farm, the packaging plant, and the delivery truck.

Gross domestic product (GDP) showed 2.6% growth in the fourth quarter, but gross output (GO, which measures spending during all stages of production) only grew by 1% or less. GO and GDP don’t always move in the same direction or at the same rate. GO tends to drop more but recover quicker. However, studies have shown that whenever GO grows at a slower pace than GDP, it suggests a slowdown or recession is in the future.

All this isn’t to say that GDP doesn’t have a place or doesn’t have value. As Mark Skousen, PhD. explains, “GO is the ‘top line’ in national income accounting; GDP is the bottom line. GO and GDP are complementary but tell different stories.” Gross Output is another tool in our box that can help us better understand the current economy and help us see where the growth is happening.

In an effort to bring attention to the importance of teaching Americans, especially children, healthy financial habits, the U.S. Senate passed a resolution in 2003 designating April as Financial Literacy Month. The goal is to bring awareness to and teach the significance of financial literacy in our lives and help people understand their relationship with money. Many people grow up without being taught simple things like how to effectively budget, how to save and plan for retirement, the importance of managing debt, or how to invest in the stock market. While these concepts may seem simple, often, if one is not shown the first steps, it is difficult to take action.

Unfortunately, in spite of having endless information at our fingertips, many people, especially those belonging to and after the Millennial generations, are unprepared should they encounter a financial crisis. This month, I’d like to highlight some of the skills and components that help build financial literacy. As with most things, the earlier you start down the path of financial education, the better off you will be.

Budgeting

Budgeting might seem obvious, but knowing how to create and maintain even a simple budget is the first step to understanding your money. It helps you see how much you have and where it’s going. List your expenses, then list your income. Seeing where your money comes from and where it is going is crucial. If your outgoing money is more than your income, you need to make adjustments, otherwise you will become trapped in debt.

Saving

Saving money is a learned skill. It takes self-control, mindfulness, and practice. Understanding the importance of paying yourself first is one of the first steps to developing a good relationship with your money. Having an emergency fund that can cover three months’ expenses will protect you from debt and further money problems should something unexpected or problematic arise.

Investing

When you invest your money, you’re making your money work for you. There are many ways to invest your money. Many employers offer 401k options, but you can invest your money independently as well through mutual funds, ETFs, REITs, money market funds, etc. When investing in the stock market it is helpful to use a professional. However, often many chose to go it alone by using a digital platform. It will take research and a little experience to learn which investments are right for you and what risks your investments are exposed to.

Debt

The best way to handle debt is to never get into debt in the first place. However, that’s not always possible. Some things, usually, require debt, like purchasing a car, a house, or paying for higher education. However, when it comes to the day to day wants and needs, it’s important to set money aside. A good principle is to never go into debt for a liability. If you’re going to use credit, use it to invest in an asset. Student loans are an investment in education, which is something that you carry with you throughout your life; enhancing it and leading to greater opportunities. Therefore, it is an asset. On the other hand things like a vacation or even a box of donuts, (either will be gone within a few days) once the experience is over it no longer serves you. Those things become liabilities if purchased with credit. The goal is to keep your liabilities as close to zero as possible.

Your financial goals should include striving to develop skills and gaining knowledge that will allow you to make informed and effective decisions. This process is a lifelong journey. Education is the key to success when it comes to your money. If there is an area of finance that you don’t understand, embrace it and learn all that you can. Find trusted resources available online or a trusted financial expert to support you in your efforts.

Inflation is high, money is tight; how can one be expected to put money away into savings? Sometimes it takes a little bit of creativity and thinking outside the box. Now is always the right time to build up your cash reserve.

We’ve all heard the go-to “how to save more money” ideas. Things like, pay off your credit cards, pay with cash, minimize spending, limit or cut down on your subscriptions, use coupons, etc. Those are all really good ideas, but how do you make all that happen? Some of the best advice is to be mindful of what you’re spending and pay more attention to what you’re putting in your shopping cart. Think about what you really need.

One idea is to schedule “no spend days” each month. These are days that, barring an emergency, you don’t spend any money. To make this work you need to be mindful of when you pay your bills. Start with 8-10 no spend days, and as you become more mindful of your spending, try increasing those to 15-20. Eventually you might want to go as far as having a “no spend month” (with the exception of regular bills).

Create a “spending board (or file).” This is where you drop pictures or links to things you want to buy. If you find yourself browsing on a no spend day, put it on your spending board for later. By tapping the breaks on spending, it gives you time to think about the purchase. As you revisit your board you may find yourself deleting things you don’t actually need or want. That’s money saved!

Try the $5 dollar saving trick. Every time you receive a five dollar bill put it into a savings envelope. This could be change from a purchase or money given to you. You’ll be amazed how quickly it all adds up. This trick can also be done with change. All those loose coins can go into a jar to be cashed out at a later time. Another version of this idea is to pull cash out when using your debit card at the store. Whatever you pull out can be put directly into your saving envelope.

Clearly, one of the best ways to have more money is to simply limit how much you’re spending. Our last idea is to start a money-saving hobby or skill. This could be learning to cook your favorite restaurant meals instead of paying to eat out or learning to sew in order to repair and maintain some of your favorite outfits. Learning how to build or fix things around the house means you don’t have to hire someone to do it for you.

As you become more mindful of your spending (and saving) you’ll find bits of money here and there, more than you may have thought.

Photo by Kenny Eliason

It’s a pretty common practice nowadays, when searching for information, to turn to the internet for answers. Thrown into the mix of every internet search is a slurry of social media platforms, each coming with their own influencers.

There was a huge rise in the number of financial influencers during the 2020 lockdown. During this time people were stuck at home and worried about their finances. They turned to YouTube and other social media sources to learn more about how they could be financially stable during a very unstable time. Now, being called “finfluencers,” these social media influencers offer advice on investments, retirement, and many other aspects of personal finance.

It's becoming more and more common for influencers to take up the financial position, offering advice on the best ways to save money, plan your retirement, and which stocks to invest in. On the surface, the added voices of information and help seem like a good thing, many of them are truly giving beneficial advice. However, this is becoming a problematic situation.

One reason finfluencers are such a controversial topic is because the financial industry is one that is highly regulated for the safety and protection of clients and their money and interests. Online, it’s a different story. There are influencers all over the world and few global precedents to regulate finfluencers. Many popular finfluencers are not officially registered advisors, which has led to illicit practices.

On December 14, 2022 the Securities and Exchange Commission announced charges against eight people in a $100 million securities fraud in which the accused used social media platforms to manipulate exchange-traded stocks in a “pump and dump” scheme.

The North American Securities Administrators Association (NASAA) released an advisory statement August of 2022 stating, “Investors should keep in mind that finfluencers are not subject to the same regulations as licensed financial professionals and may have undisclosed conflicts of interest. Before you consider investing or acting on advice from a social media personality, make sure you understand all the ins and outs of the investment including all potential risks.”

This is not to say that all finfluencers are out to scam and steal your money. Some are licensed financial advisors providing valuable information using social media to better connect with clients and a greater population. But it is essential to remember that just because someone has a large following, multiple likes or shares, or even a verified check mark does not make them a properly licensed professional. They may not have the level of knowledge or ethical standards as a licensed financial advisor.

The final thing to remember is that finfluencers are speaking to a broad range of followers, they are not catering to your individual needs. They don’t know you personally nor have a relationship with you. To them, you’re just a follower. Finances are personal. If you want the best results, they should be handled in a way that reflects your own personal interests.

Photo by: Adem AY