Family always comes first in life – and it’s only natural to want to do everything you can to take care of yours. There are all sorts of positive ways to benefit your family financially, from opening a savings account for your children early on, to putting retirement accounts and life insurance policies in place, and sending money to loved ones when they need it.

Here are some things you can do to look out for your family and ways that Bank of Hope can help:

1. Invest in Your Family’s Future: Open an Individual Retirement Account (IRA)
The number one thing you can do for your family is make sure you have a sound financial plan for today and tomorrow. Part of that focus should include opening an IRA, or Individual Retirement Account. A Traditional or Roth IRA allows you to save now for retirement later and benefit from tax-sheltered investment growth. The math is simple: the earlier you start, the faster your account and financial wealth will grow because of compounded interest. Time is on your side and you’ll thank yourself when you hit retirement age and have a sizable nest egg to access.

How an IRA works:
An IRA is like 401(k), but you choose and manage it versus an employer. See how much you can realistically afford to contribute and review (and increase) each year as your income, budget or financial situation changes. To make it really easy to save, have a portion of your paycheck automatically deposited into your retirement account. Remember, too, that non-working spouses without income can open and contribute to a Spousal IRA, if you file a joint tax return.

Open an IRA with a:

• Bank
• Investment company
• Mutual fund
• Stockbroker

There are two types of IRAs to choose from:

• Traditional IRA – Contributions are tax-deductible and your earnings grow tax-free, but you pay taxes when you withdraw during retirement. Early withdrawals before age 59½ are usually subject to a 10% penalty, plus taxes, though there are exceptions to this rule.
• Roth IRA - Contributions are not tax-deductible and your earnings grow tax-free. Because contributions are made with after-tax money, you can withdraw whenever, for whatever reason, with no tax or penalty.

2023 Roth IRA & IRA Contribution Limits:

• Contribute up to $6,500 or your taxable income, whichever is lower.
• If you are age 50 or older (by the end of 2023), contribute up to $7,500.

Note: If your income is above certain thresholds, you may be ineligible or your contributions to a Roth IRA may be limited. If you rollover a 401(k) from another employer, it doesn’t count toward your annual contribution limit.

2. Send Money Safely to Family Members: Electronic Transfers make it quick and easy
Supporting your parents or grandparents? Someone needs help paying the rent or buying a car? Want to give money as a birthday, wedding or graduation gift? Or just want to help a loved one in need? When you’d like to send money to a family member, your best course of action is to use an electronic money transfer system, via an app or online. It’s fast, safe, easy and quick. Save yourself a trip to the bank or post office or needing to find an envelope and stamp. Sending paper checks via regular mail takes too long and they can get lost, if not stolen out of your mailbox. Sending cash is too risky for the same reasons.

Why electronic transfers are so convenient:

• Easy to use and set up, you just need to open an account with each service (see below) and connect it to your bank savings or checking account or to a credit card.
• All you need to send money is the recipient's email address or U.S. mobile phone number.
  • Before you hit send, double-check for accuracy!
• Funds land directly in the recipient's account within minutes.
  • Sometimes funds are available immediately or in a few days.
• You get a record right away (date, amount, receiver, from what financial institution) that you can store in a digital folder on your desktop or phone.
  • Great for general record keeping or at tax time, if necessary.
• Data encryption is used to protect against unauthorized transactions and your data is stored on servers in secure locations.
  • Use a PIN to access your account when available.
  • Be diligent about checking bank and/or credit card account transactions weekly.

How to send money to family members via electronic transfer:

• Wire Transfers - Transfer funds to individuals in the U.S. and internationally. Make sure you have enough money in your account because the bank will immediately remove funds to process your request. You pay for the transaction at the remitting bank and provide the recipient's name, bank account number, and the amount. Most wire transfers can take up to two business days to process. Using a credit card will cost more due to interest rates and cash advance fees.
  • Bank of Hope provides this service at all our branches. To save time, fill out a request form before visiting. (Link to: Wire Transfer Form (PDF))
• Venmo – Quickly send money person-to-person online or via the app with this digital wallet. You can add a note to indicate what the money's for (business or personal) and send along a message and add emojis and animated stickers. Share your “send” with the world using “friends,” “public,” or “private” settings. Free to send money to a person from your bank account or debit card.
• PayPal – With their Xoom service, send money globally to over 130 countries, even if your family member doesn’t have a PayPal or Xoom account. You can deposit right to their bank account or debit card, or send cash for pick up or have it delivered. Keep track of your transaction with text updates, email notifications, and online access.
• Zelle® – Send, request, or receive money right from mobile banking. Add your recipient’s email address or U.S. mobile number, the amount, review, add a memo, and hit “confirm.” Sender or receiver must have access to Zelle® through their bank or credit union.
  • Mobilize Your Money with Zelle>
    Bank of Hope offers Zelle® through our mobile banking app or online banking.

3. Teach Kids the Value of Money: Open a starter bank account
From an early age, kids begin to learn about the value of money – whether picking up a penny on the sidewalk, getting a small gift from the Tooth Fairy, finding a check in their birthday cards, or earning an allowance. By opening up a savings account for them when they’re young, you can show them why money is important, what it takes to earn it, and smart ways to save and spend it. We all remember our first piggy bank or passbook and the wonder of seeing the dollars add up. Encourage kids to set money aside so they can keep track and watch it grow. Fostering strong financial habits now will help them develop a more confident, healthier relationship with money as they go through life.

Some ways to keep “money talk” fun, simple, real, and a part of daily life:

• Take your child with you into the bank to open an account and meet the teller.
• Make a deposit via the drive-thru and let them interact with the window clerk.
• Discuss how they can spend their “savings”: for fun, a goal, or donate to a local charity or to someone in need.
• Let them pay for things by counting out their cash (versus using a debit or credit card) so they can see where money “goes.”
• Be open to any questions and use financial language to teach them about budgeting, what things cost, what debt is, how they can earn it, how bills get paid, etc.

4. Boost Your Child’s Savings: Gift them a Certificate of Deposit (CD)
A CD for a child? Why not? It’s just another great way to show them how saving now can really pay-off later. It’s never too early to learn about all the financial tools and products that exist to help people manage and grow their money. Savings accounts are great, but so are CDs, known as a safe investment, guaranteed both by the bank and federally insured by the government up to certain amounts.

You can open a custodial account (at a bank or online) for a child (who will be the sole beneficiary and you cannot transfer it to anyone else) and choose a CD to add to it. As the parent or custodian, you control it on behalf of them, or anyone under 18 or 21 years old (check with your state), until they become adults. You approve and make all transactions, and your child receives the assets. You can explain the merits of compounding interest to them, regularly review financial statements, and decide what the accrued money will be used for upon maturity (savings, charity, a special purchase). As with any CD account, you have term options to choose from (3, 6, 8, 12, 24, 36, 48 or 60 months) that help show your child how putting money “away” for longer periods of time is a good thing all around. 

Gift Your Child a Bank of Hope CD >
We have a variety of CDs to match your needs, offering a higher rate of return on savings.


5. Get a Jumpstart on College Tuition: Open a 529 Plan now, not later
When you have that first baby, college seems so far away – and it is! But those first 18 years are prime time to be putting away money to cover future tuition costs, which will only continue to rise. Help reduce the stress of paying for college by setting up a 529 plan, also known as a “Qualified Tuition Plan.”

How a 529 Plan works:
As with a Roth 401(k) or Roth IRA, your after-tax contributions are invested in ETFs, mutual funds, stocks and other similar investments. The sooner you start, the earlier your money can grow and compound over time. You or your designated beneficiary can use the money tax-free for qualified higher education expenses like tuition, room and board, books, supplies, computers, printers, laptops and internet service.

Various versions of this investment plan are offered by almost every state, with different details and benefits. You don’t have to be a resident to open an account and can do so at any time, but you do need to be a U.S. citizen or resident alien.

There are two types of 529 Plans:

• College Savings Plan: Similar to a Roth 401(k) or Roth IRA, these plans invest your after-tax contributions in mutual funds or similar investments and your plan’s value will fluctuate based on performance.
• Prepaid Tuition Plans: Anyone can prepay tuition at today's rates at eligible public and private colleges or universities to help defray the costs later on when kids head off to school.

A great feature is that anyone can contribute to a 529 Plan. So grandparents, other family members, and friends can add to it. To drive home its importance and their role in helping to pay for their own education, have your children deposit a portion of birthday and holiday cash gifts or job earnings into their account. Note: You don’t have to wait for college and can use these funds for K-12 tuition and apprenticeship programs, as well as to help repay student loans.

6. Protect Your Family’s Financial Needs: Get life insurance
Of all the insurance we sign up for – health, dental, auto, home – sometimes life insurance is left off the list. What could be more important than ensuring your family's future should something happen to you or your spouse? It’s one of the best things you can do for your partner, children, and aging parents if you support them. It’s an especially good idea if you have a high-risk job or love extreme hobbies. If you run your own business or support a family one, it’s added financial stability for those you leave behind. Life has a way of changing with children, marriage, divorce, illness and you want to be fully protected no matter what comes your way. Securing a policy when you’re young and healthy will keep premiums lower and the ultimate payout higher. Don’t let another day go by without doing so.

Whether you get it through your workplace or on your own, you want a policy that can cover:

• Your financial responsibilities now
• Your plans for the future
  • Pay off mortgage, fund child’s education, maintain a business
• Medical bills
• Funeral costs

The goal is to reduce your family's financial burden and the stress of losing your income. It will give great peace of mind -– to you and them – knowing there is a policy in place (and make sure they know how to access it or who to call). To figure out how much coverage you need and to make the most of life insurance benefits, speak to a financial advisor, your accountant, estate attorney, or life insurance broker. You can also research policies online.

Bank of Hope_Wealth Management

You can choose from the following types of life insurance:

• Group Life Insurance – Many companies offer group life insurance that can cover one-to-two times your annual salary, and this is usually included as part of your benefits package. Premiums are based on the group as a whole rather than each individual. You might need additional coverage depending on your personal situation.
• Term Life Insurance – Typically the most affordable, this simple policy, in essence, covers your income when you die. If you're the major breadwinner, your loss of income can be devastating for your family members. You can purchase a policy for a set term ranging from 1, 5, 15, 20 years and more – whatever works best to cover your prime working years – to help your survivors meet financial needs. Note: If you do outlive your policy, there is no payout.
• Whole life Insurance – Like its name, this coverage covers you for life. The premiums (typically higher than a term policy) don’t change and neither does the death benefit amount. You get a guaranteed rate of return on the policy’s cash value.
• Universal Life Insurance - This type of policy has a cash value component that’s tied to market interest rates. It offers up more flexibility as you can adjust your premiums based on changing life needs. However, premiums can rise over the years and the death benefit and cash value growth are not guaranteed.
• Variable Life Insurance - Here you get more control over your cash, as the policy is linked to your investment accounts including bonds, mutual funds, etc. Premiums are usually fixed and you are guaranteed the death benefit no matter how the market performs. But you need to be diligent about managing your account and adjust accordingly.

 
Bank of Hope: Helping You Take Care of Your Family, Every Day.
Whatever your financial goals and plans are, our team members are ready to help you find the right financial course of action for you and your family. Schedule an appointment to speak with one of our banking specialists or visit a branch today to start building a brighter future for your family.

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