Twenty-somethings may not realize it, but every time they enter a new phase of life they are also venturing into a new world of money management. Here are some ways to be prepared.

Save Money Now to Make Your Future Dreams a Reality.

Even at this stage of your adult life, it’s smart to save for long-term goals, perhaps buying a home, owning a business or saving for retirement (even though that may be 40 or 50 years away).

To help you stay focused on saving money and controlling your spending, think about creating a formal or informal budget. “The important thing is to understand how much you earn each month, how much you pay for essentials like rent or transportation, and how much is left over for everything else,” said Janet Kincaid, Chief of the FDIC’s Consumer Response Center. The spending choices you make in the “everything else” category are critical to successful money management.

Also, to make saving easy and painless, consider arranging with your bank or employer to automatically transfer a certain amount each month to a savings or investment account.

Build a Good Credit Record.

As you begin to pay your own debts, you are also building a credit record. Companies called credit bureaus are authorized by law to collect information on each person’s history of paying debts, which is then used to prepare “credit reports” and summary “credit scores.” In general, the better your credit history and credit score, the better your chances are of getting a loan and or credit card, with an attractive interest rate. Credit reports and scores also can be considered when you apply for a job, an insurance policy or an apartment.

One of the best ways to build and maintain a good credit record is to pay your credit card bill and other debts on time — to show you are a reliable money manager.

If You Need to Get a Car, Consider the Best Way to Pay for It.

For many young adults, their first big purchase and ongoing expense is their vehicle. Often, the first question is whether to buy (which may involve taking out a loan) or lease (which is similar to renting a car for a few years).

There are advantages to both leasing or buying a vechile. If you lease, the monthly payments are usually lower, but at the completetion of the lease you do not own the vehicle and may owe a large sum of money. If you choose to buy, your monthly payments may be higher, but you will be able to trade in or sell your vehicle.

If You are Renting a House or Apartment, Consider if It’s Time to Buy.

Once you start earning a good, steady income, you’ll most likely face the decision about when is the right time to own your first home. Home ownership is a big financial commitment, and values can sometimes go down.

First look at the costs of renting versus paying a mortgage. It is important to be realistic in what you can afford, because you will have the added expenses of real estate taxes and insurance, mortgage interest payments and the cost of home maintenance and improvements. There are also advantages to owning your own home, such as tax benefits, the potential for it to appreciate in value and most importantly its a place to call your own.

Other factors to consider include how long you plan to stay in the house, how much money you have for the down payment, and how good your credit record is.

Many Americans have felt uneasy over the last several days since viewing news reports about IndyMac Bank’s assets being seized by federal regulators due to the mortgage lender’s folding under the pressures of tighter credit, tumbling home prices and rising foreclosures. While the large size of the bank may be unsettling, there’s no need to panic. In fact the U.S. banking industry as a whole is actually very safe and sound.

While the IndyMac situation is upsetting, in actuality the majority of the over 200,000 customers who were FDIC insured have not been financially affected. For the small percentage of those whose funds were not completely insured, their insured amounts were fully covered as well as half of their uninsured money. When IndyMac’s assets are sold they may receive further compensation.

Still, even with this reassurance, FDIC insurance can be very confusing in terms of managing your account to make sure you are covered in the event of your bank being forced to close their doors. The following is some useful information that will help you to better understand and to use your FDIC insurance effectively.

First, it is important to know that the basic coverage for FDIC insurance is $100,000 for an individual checking account, $200,000 for a joint account and $250,000 for an Individual Retirement Account (IRA). However there are provisions that would allow a customer to increase their amount of coverage beyond the basic limits, here are some examples based on a family of five.

• A husband and wife both have separate bank accounts in each of their names (each account is covered for $100,000 or $200,000 total).
• The couple also has a joint account which is covered for up to $200,000.
• The husband and wife each have separate IRA Accounts for $250,000 each.

In addition, revocable Payable on Death (P.O.D.) accounts is another option that allows a customer to expand beyond $100,000 in the same bank. For example, all of the following accounts could be insured for one couple at one community bank

• John Doe, P.O.D. to Jane Doe: $100,000
• Jane Doe, P.O.D. to John Doe: $100,000
• John and Jane Doe, P.O.D. to Baby Doe 1, Baby Doe 2, and Baby Doe 3: $600,000

In this case the family listed above would have coverage totaling $1.7 million.  This is only a simple example.  There are other types of accounts that can further increase your coverage.  For more information on this topic speak with a bank representative or visit the FDIC web site at www.FDIC.gov.

Rest assured, since Congress created the FDIC in 1933, the U.S. banking industry has remained on solid ground through the organization’s guarantee of insurance. The FDIC insures deposits at all of the 8,494 banks and savings associations throughout the United States, while at the same time promoting the safety and soundness of these institutions by identifying, monitoring and addressing risks.

With all the news about the “mortgage crisis,” scam artists are taking advantage of the opportunity to cheat people who are already in a difficult financial situation.

The Office of the Comptroller of the Currency issued an advisory recently that provides advice to help prevent borrowers from becoming victims of foreclosure rescue scams.

            “Foreclosure rescue con artists take advantage of vulnerable people who have fallen behind on their mortgages and may be facing foreclosure,” said Comptroller of the Currency John Dugan. “People facing difficulties with their mortgages should contact their lender—or a legitimate financial counselor—sooner rather than later. Lenders are often in the best position to help by identifying options or modifying the loan, especially if the borrower is current on the loan or not seriously late on payments.”

            Some specific ploys include:

            • Lease-back or repurchase offers. The scheme often involves signing the deed to your home over to the con artist. He or she may promise to sell your home back to you, but this may be very difficult, if not impossible, under the terms of the contract.

            • Refinance fraud. Watch out for people posing as mortgage brokers or lenders and offering to refinance the loan into affordable payments. Con artists may end up tricking the borrower into signing over the ownership of the house.

            • Bankruptcy schemes. Several scams abuse the bankruptcy laws. In one version, the owner is to give a partial interest in the home to other people, who then file bankruptcy. While the court may issue a stay order each time to stop foreclosure temporarily, the owner still is liable for the loan payments.

            The bottom line: beware of anyone you don’t know who claims to have the answer to your mortgage troubles. It’s best to take action before the problem gets bigger, but only with your lender or a financial counselor whose legitimacy you can verify.

            If you’re experiencing difficulty with your mortgage—or know someone who is—you’ll find valuable information in the OCC consumer advisory at http://www.occ.treas.gov/ftp/ADVISORY/2008-1.html.

If you’re seriously considering retirement, you should also be seriously thinking about how to ensure that your financial life is as comfortable and stress-free as possible.  Here are a few tips.

• Make the most of your remaining paychecks to save for retirement. How much money you’ll need to set aside for retirement will depend on a variety of factors: When do you expect to quit working? Will you continue to earn some income part-time? How much money do you have in savings and pensions? And, what kinds of expenses will you incur for housing and health care? Because the future is uncertain, it makes sense, while you’re still working, to put as much money as possible into savings for your golden years. Also make use of employer-sponsored retirement plans, especially if you’ll receive matching contributions and tax-advantaged Individual Retirement Accounts (IRAs).
• Try to reduce or eliminate debt. Another way to save more money now for a more enjoyable retirement later is to cut back on unnecessary expenses, especially if you will need to go into debt to pay for them. Try to pay off most or all of your credit card balances and other loans to save on interest charges and avoid being burdened with repayment during your retirement years.
• Develop a plan to stretch your money through a long retirement. The idea is to determine where your money will come from during retirement, so you won’t have to live in fear of running out of money. For example, consult with the Social Security Administration (www.socialsecurity.gov) or your accountant to learn how much Social Security and pension income you’d get each month if you “retire early” — any time between 62 and your “normal” retirement age — and how much more you would receive if you hold off on retirement. Discuss with a financial advisor how and when to withdraw money from your tax-deferred retirement accounts, such as employer-sponsored retirement plans and traditional IRAs. Also periodically review your retirement portfolio — your mix among stocks, mutual funds, CDs, bonds and so on — to be sure it’s well-diversified.

Despite the convenience and popularity of debit cards, there is a risk of fraud or theft.

In fact, it’s just as important to protefct your debit card as you would protect cash, credit cards and checks.  Debit cards are subject to a unique threat called “skimming.”  Skimming occurs when thieves set up a device that captures the magnetic stripe and keypad information from ATM machines and gas pumps.

To avoid becoming a victim of debit card fraud, consider these tips:

• Check you bank statements immediately.  Make sure all payments are yours.
• Periodically check your account balance and transactions by utilizing online banking, by telephone or by printing interim statements at the ATM.
• Contact your bank immediately if your card is lost, stolen or subject to fraudulent use.
• Keep a record (but not in your wallet or purse) of card numbers, PINs, expiration dates and 1-800 numbers for banks so you can contact the issuing bank easily in cases of theft.
• Memorize you PIN number.  Do not use your birth date, address, phone number or Social Security number.
• Never store your PIN with your card, and do not make it available to others.
• Keep your receipts.  You’ll need them to check your statement.  If they have your account number on them, tear up or shred receipts before throwing them away.
• Mark through any black spaces on debit slips, including the tip line at restaurants, so the total amount cannot be changed.
• Know your limits.  Many issuers limit daily purchases and withdrawals for your protection.
• Do not use an ATM if it looks suspicious – it could be a skimming device.
• Be wary of those trying to help you, especially if an ATM “eats” your card.  Such people may be trying to steal your card number and PIN.
• Do not give your PIN number to anyone over the phone.  Thieves often steal the cards and then call the victim for their PIN, sometimes claiming to be law enforcement or the issuing bank.

For more tips and information, visit the Federal Trade Commission’s web site at www.ftc.gov.

It sounds odd, but paying a higher interest rate on a car and taking advantage of the manufacturer’s rebate can save you money on both your monthly payment and the overall cost of an auto loan.

Here’s how it works.  New car dealers regularly offer a variety of incentive programs to entice you to purchase a new car.  The two most common incentives are the cash rebate and low interest rates when financed through the manufacturer.  The lower interest rate sounds like a great deal, but when compared to taking the cash rebate, that low rate can cost you thousands over the life of the loan.

Here is an example:
A dealership offers you the choice of a $2,000 cash allowance (rebate) or 3.9% interest for 60 months when financing through the manufacturer on a car that cost $25,000.  The loan offer sounds great compared to a bank offering 5.75% interest for 60 months, but if you break down both of the offers, here are the results.  The car company loan would make for monthly payments of $464.71 for 5 years, for a total of $27,882.32.  If you were to take the cash allowance and finance at the bank’s higher interest rate of 5.75% , your payments would be only $447.65 per month for 5 years, with total payments equaling $26,859.31.  That means your monthly payments are almost $20 less per month, and over a 5-year period you have saved yourself more than $1,000.  This is only one example; depending on the type of vehicle you purchase, your savings could be even more.

If you are in the market for a new car or truck, it pays to take your time and go over all of your options before making a decision.  Before signing any papers, have your salesperson print out all of the options and take them to your bank.  Your banker will be happy to look at the offer and help you decide what is in your best interest.

A personal savings account is like an umbrella on a rainy day, and for consumers like you, there are three common savings habits to weather unexpected financial storms.

Americans are not putting their best foot forward when it comes to saving. Only 28 percent put away the suggested 10 percent of their income, as reported by a 2008 America Saves survey. Saving is not only important for emergencies, but can help you feel financially secure, finance your big-ticket purchases and keep you afloat during retirement. However, the study also revealed that while some Americans save with a goal in mind, only 57 percent are saving enough for retirement.

Here are three easy habits to form for successful saving:

•     Save with a goal in mind. Your goal can be to have money for surprises (good or bad) or for something more specific you want or need in the future. Consider short and long-term as well as big and small goals.

•    Save with technology. Consider automatic payroll deductions or an automatic transfer from checking to savings accounts. Arrange to have a specific amount transferred to your savings account every pay period, before you have a chance to spend that hard-earned cash.

•    Increase savings as your pay increases. If you receive a raise or other windfalls like tax refunds, gifts or bonuses, increase the amount of money deposited into your savings account.

Bankers understand the importance of a financially educated customer. On April 29, volunteer bankers from across the country will take the lead and provide financial education to thousands of students, in connection with the American Bankers Association Education Foundation’s “Teach Children to Save” Day.

No one wants to get caught in the rain without an umbrella, just as no one wants to deal with a financial emergency without the proper funds. Putting money away is the only way to prepare for these circumstances.

Headlines can be misleading, and in a time of financial crisis, that can make matters worse.

Pick up a paper, or listen to the quick bursts of news on TV or radio, and what you get are reports of a subprime crisis, a “banking” crisis and market turmoil.

Let’s set the record straight: There is no banking crisis. The banking industry is traditionally composed of federally insured and regulated depository institutions. Your local commercial and savings bank is safe and sound. There is no crisis there.

The challenge we are facing is that words matter. And when one word is used to mean several different things, it inevitably creates confusion. For example, we know what a bank is—or at least we think we do. Sometimes a business that wants to add status to its name will call itself a bank even though it is not an insured depository institution.

Bear Stearns was not a commercial bank. It was not an insured depository institution. It was an investment “bank.”

The word bank is also applied to mortgage firms. Their function, purpose and regulation differ from federally insured depository institutions. And in this time of market turmoil, it is worthwhile remembering that commercial banks, thrifts and savings banks carry FDIC insurance. So if there was a problem, it wouldn’t matter to depositors who are protected up to $100,000 for an account, with additional protection for joint accounts, and $250,000 for a retirement account.

Yes, there are challenges in today’s market economy. But having a safe and sound banking system to rely on shows the importance of the role banks play in our local communities and in our nation’s economy. They are a source of stability and growth. That is true regardless of their asset size, charter or business plan. And the vast majority of banks today hold more capital than the law requires.

Meanwhile, those headlines and news reports that keep repeating the word “crisis”  overlook the fact that the subprime lending crisis was caused by unregulated brokers and Wall Street institutions themselves, sometimes using the title “bank,” and not by regulated, insured banks.

Our banking system is strong. This crisis will pass, as have all the others, and the result will be a stronger financial system with fewer unregulated players.

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Studies show that many Americans are spending more than they save. This habit could put a person at a financial disadvantage when times get tough.

By building savings, consumers are better positioned to handle economic uncertainty. A personal savings stash is not just for someone who makes a lot of money, but it’s something that all Americans can work toward.          

No matter what age you are or what job you hold, there is no time better than the present to begin saving. You never know what financial situations may come your way, so savings can help ensure your ability to handle these surprises.

Here are a few tips to help you establish solid saving habits:

• Pay yourself first. Have a set dollar amount transferred from your checking to your savings account every payday, even if it’s just a few dollars.
• Increase the amount you save when your pay increases.
• Pay bills on time. And, pay more than the minimum amount due on credit cards and loans to lower debt faster.
• Shop around for the best prices, rates and services for credit cards, bank accounts, mortgages and CD’s.
• Consider investments for long-term goals, such as saving for a home or retirement.

Bankers understand the importance of a financially educated customer. On April 29, volunteer bankers from across the country will take the lead and provide financial education to thousands of students, in connection with the American Bankers Association Education Foundation’s “Teach Children to Save” Day.

For several years, bankers have participated in the Foundation’s Teach Children to Save program by going into classrooms and giving America’s youth lessons on the value and importance of saving. If kids learn the importance of saving, they’ll be more savvy savers as adults.

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• Make a shopping list before you leave home and stick to it.
• Before you go shopping, set a spending limit (say, $5 or $10) for “impulse buys”—items you didn’t plan to buy but that got your attention anyway. If you are tempted to spend more than your limit, wait a few hours or a few days and think it over.
• Limit the amount of cash you take with you. The less cash you carry, the less you can spend and the less you lose if you misplace your wallet.