First Savings Bank, F.S.B.

Recently the research firm TNS, working with the Harvard Business School and Dartmouth College, surveyed 2148 consumers on their ability to deal with a financial emergency. Nearly half of the respondents said they weren’t confident they could come up with $2,000 within a month to handle a crisis. Their alternatives were not only savings, but from friends, family, credit cards or other sources. You would think that those earning more money would be in a much better position to handle this type of emergency. Not so. Nearly 25% of the income group earning $100,000 to $149,000 a year could not come up with the $2,000 quickly. While 2148 respondents is a very small percentage of the total population, the results of the survey confirm what we all know…many people are just a few dollars away from a serious financial crisis.

There are a number of steps that can be taken to lessen this risk. First, you need to understand the difference between saving and investing. Investing is using your money to make money. Investing takes the form of stocks, real estate, business ventures and any other financial activity where you hope to generate a return on your money. With investing there is always the risk that you will lose a portion, if not all of your investment. Savings on the other hand is money set aside for a specific purpose. Savings could be for your children’s education, vacation, retirement, or that rainy day fund. Savings are funds that shouldn’t be at risk of loss. With investments you should expect a high rate of return for the risk you are taking. For savings, you are trading off that high rate of return for safety. Once you understand this difference, then you will be more comfortable with the next step. Everyone needs to establish a savings account. Have the funds automatically taken from your checking account so you never see the money. Savings accounts won’t earn much, but you can be assured that you money will always be there. Savings accounts and any other bank deposits are protected by FDIC insurance up to $250,000. The third step is to establish credit. Generally this can be in the form of a credit card or an equity line if you own your home. The challenge is not to use the credit unless truly necessary and then to have the discipline to pay the borrowings off in a timely manner. Available credit is another source of liquidity if you quickly need money. If those sources are tapped out because they have been used for other purposes, then your hole will be a lot deeper during those times of financial crisis. As the old saying goes, the best time to get credit is when you don’t need it.

At First Savings Bank we can provide you with a number of savings and credit alternatives to help develop your own personal financial safety net. This idea is not limited to individuals. Businesses also need financial safety nets. Our commercial lending officers can work with you to develop your plan for those unforeseen events that may have you scrambling to get the necessary funds to operate your business. Stop in any of our offices or call to make an appointment to review your alternatives. Remember to “Think First” when seeking help with your financial needs.