9 Money Principles

Money Insights from a Community Banker

by Anne Songy

Larry Hensgens, senior vice-president at Community First Bank.

It’s true the world seems to be changing at the speed of light, but when it comes to money, there are certain core principles that hold up over time. No matter what new gadget or technology becomes available to consumers, foundational truths seem to prevail.

We asked senior vice president of Community First Bank Larry Hensgens to weigh in on these topics, and this is what the 45-year veteran banker had to say:

What’s the difference between banks?

In community banking, it’s not only about providing the technology, but also the noseto-nose and toe-to-toe service. For a lot of the younger generation, that (person-to-person) experience might not be as important right now, and they’re more interested in the technology of a bank. Even though most community banks have the latest and greatest technology, it’s always good to put a face to your banker in case you have issues and need to talk to somebody. I love community banking because you’re not forced into any (national-bank) matrixes. You can use common sense with the customer.

How much should be in my emergency fund?

My rule of thumb with my customers is to try to keep at least six months worth of expenses in an emergency fund. Twelve months is an even better spot. For non-profit organizations, you should have one or two years of cash available.

Should people use credit cards?

Credit cards have morphed and evolved over the years. Where customers used to come in to borrow a couple of thousand dollars for personal loans, now they get credit cards. They can serve a purpose, but they can be easily abused. As far as affecting your credit score, you don’t want any more than 30% balance on your credit limit, or it will negatively impact your credit score.

When should I think about investing?

If customers are looking for something more than bank deposit products, then the alternative is to go into the investment market and tailor their investments into conservative, aggressive, moderate – whatever the case may be. Some people don’t like the idea of being in the market, but I think that stigma has gone away in recent years. People are a lot more savvy than they used to be and there’s a lot more information available. When they’re educated about investing, they find out it’s a good thing.

Is online bill paying safe?

Ninety percent of the population uses online bill paying services. We have all the bells and whistles for that here and we have protections. On the commercial side there is a product called “Positive Pay” where the customer can send an electronic register to the bank, and if that doesn’t line up, then we know something’s out of whack and we can go back to the customer. For individuals, with the debit cards, we have an app where you can turn off your card whenever you

Continued from page 47

want and set it up to notify you when the card is being used. Your information is protected when you pay through the bank, but when you send a check, it can be intercepted.

Should I consolidate my debt?

The issue with debt consolidation is that people usually will go to a finance company or credit card (to pay off their other debts) and they keep adding debt to try to put the fires out, like a dog chasing its tail. Before long it’s just so big, it’s not manageable and they’re in quicksand. Sometimes people here will come in and we’ll see about opening a home equity loan, but don’t wait until your credit is shot to do that, because then we can’t help. Usually people get stuck, unless they have a fairy godmother or godfather that can help.

Are savings accounts necessary?

It goes back to the credit cards having to be used for personal loans. Everyone should have a savings account. It’s important to have that safety net – to have something off to the side in case of an emergency or if you lose your job or your job is suspended because of COVID. It’s peace of mind.

Is cash is here to stay?

I do not think cash will ever go away because of mistrust of the government. In the last infrastructure bill, they were talking about having banks report any transactions of customers that were $600 or greater. That raised a lot of eyebrows about Big Brother getting in your stuff. That was a hot topic with a lot of my customers.

Should I worry about the economy?

That kind of stuff is easier to explain in the rearview mirror and harder to see in the windshield. It looks like we are entering an inflationary time right now – the cost of goods is exponentially higher, whether it’s COVID-related or not, the prices are going up. But it’s just a market adjustment and not something to think about too much. n

PRESENT

“Party like you used to! Welcome Back!” Thursday, January 20, 2022, 6:30pm 131 E. Main Street • New Iberia

• One of the Most Anticipated Social Events of the Year • Live Auction with Senator Fred Mills • Spectacular Food from Area Restaurants • Open Wine Bar Don’t miss out. Get your tickets now!

For Gala tickets or more information, please call Bayou Teche Museum at (337) 606-5977 or email us at bayoutechemuseum@gmail.com

A DEEPER DIVE Is Cryptocurrency the Future of Money?

Bitcoin, Ethereum, Dogecoin, Tether. Sound like a cast of characters from an otherworldly television series? Nope. These are some of the top cryptocurrencies – “cryptos” if you’re cool – which are digital currencies secured by blockchain technology that can be used to buy goods and services.

There are currently more than 15,000 cryptocurrencies, named as such because of the way they’re secured by cryptography, making it nearly impossible to steal or counterfeit. Sounds great, huh? Hold on, there are some downsides. Most significantly crypto is much more volatile than the dollar and has been known to lose up to half of its value in mere weeks. Secondly, this form of currency is completely virtual – it cannot be seen, touched, stashed in a pillowcase – and it is so secured people have been known to lose their password or credentials for access to their crypto accounts, losing all their funds in the process.

Even though cryptocurrency exchange seems like the Wild West of money, there are supporters for several reasons. Some regard crypto as the future of money and want to buy up as much as they can now, before it becomes more valuable. Others regard the blockchain technology as being far more secure than traditional payment services.

Cryptocurrencies can be purchased by opening an online “wallet” app that will hold your currency, then choosing a reputable exchange to transfer US dollars into cryptocurrencies. Many major retailers accept certain types of crypto, but some people simply sit on their currency or sell and trade it.

Most experts agree that cryptocurrencies are a wildly volatile speculative buy and that stock trading is a much less risky investment. But if you’re considering dipping your toe into the crypto pool, talk to your financial advisor, a banker and friends and family to get advice. It’s a fun venture to think about – unless you lose your password. n