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How Does Texas Insurance Regulation Spending Measure Up Nationwide?

The Texas Department of Insurance budget in 2015 was $116 million, the third-largest insurance department budget in the U.S., according to data from the National Association of Insurance Commissioners. That seems like a lot of money at first glance, but a new analysis looks beyond the total dollar amount to provide a different perspective on resources available to the departments.  

These insurance departments are responsible for regulating the rates for auto, health, homeowners and life insurance. The departments also license agents and companies, resolve consumer questions and complaints, enforce insurance laws and investigate fraud allegations. The ability to do all of these things depends on money, staff and legislative support.

According to the data analysis by NerdWallet, the Texas department’s 2015 budget represented 0.10% of total state expenditures, higher than the national average among states of 0.07%. Texas spent $4.22 per resident to regulate insurance, just over the U.S. average of $4.20.

And the department kept 5.24% of its total revenue — the money brought in through fees, taxes and penalties paid by insurers and agents — compared with an average of 5.98% nationally. The analysis was based on data submitted by states to the National Association of Insurance Commissioners and the National Association of State Budget Officers.

Texas insurance department spokesperson Jerry Hagins declined to comment on the specifics of the agency’s financial resources.

“We feel like we do a good job with the resources we have,” he said.

The report also looked at how many staff members were dedicated to consumer services. These are the people answering phones and resolving complaints against insurers. In Texas, 17.11% of insurance department staff worked in consumer affairs, more than the national average of 12.82%.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.

Arizona Spends Below US Average on Insurance Regulation

The Arizona Department of Insurance had a budget of $15.7 million in 2015, according to data from the National Association of Insurance Commissioners. That seems like a lot of money at first glance, but how does it compare with budgets of other state insurance departments around the nation? A new analysis looks beyond the total dollar amount to provide a different perspective on resources available to state insurance departments.

These insurance departments are responsible for regulating the rates for auto, health, homeowners and life insurance. The departments also license agents and companies, resolve consumer questions and complaints, enforce insurance laws and investigate fraud allegations. The ability to do all of these things depends on money, staff and legislative support.

According to the data analysis by NerdWallet, the Arizona Department of Insurance’s budget in 2015 represented 0.05% of total state expenditures, below the national average of 0.07% in that year. To regulate insurance, the state spent $2.31 per capita, less than the U.S. average of $4.20.

The department kept less than 3% of its total revenue — the money brought in through fees, taxes and penalties paid by insurers and agents — compared with an average of 5.98% nationally. The analysis was based on data submitted by states to the National Association of Insurance Commissioners and the National Association of State Budget Officers.

Insurance department spokesperson Stephen Briggs says the agency’s budget is set by lawmakers. “We believe that the department has the necessary funding to fulfill its responsibilities required by law,” he says.

The new report also looked at how many staff members were dedicated to consumer services — such as answering phones and resolving complaints against insurers. In Arizona, 11.87% of insurance department staff worked in consumer affairs, lower than the national average of 12.82%.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.

State Spending on Insurance Regulation Varies Widely Across US, Study Finds

State insurance departments have a big job: regulating a trillion-dollar industry for the protection of consumers. A recent look at state data reveals some of these departments are doing this with budgets that break down to just a few dollars per resident.

The NerdWallet analysis found state departments of insurance were allotted an average of $4.20 per resident to license insurance companies and agents; regulate the insurance market and products including auto, health, homeowners and life insurance; and resolve consumer complaints and questions. However, 10 states worked with less than $3 per person on these tasks, and Pennsylvania and Indiana were allotted $1.78 and $1.35, respectively.

The analysis comes on the heels of a large study ranking the websites of these departments and used data from the National Association of Insurance Commissioners, the National Association of State Budget Officers and the U.S. Census Bureau.

In 2015, the average state insurance department budget was $26.5 million, according to the NAIC. Despite this large number, these budgets made up a relatively small portion of total state spending. That year, states allocated on average less than one-tenth of 1 percent (0.07%) of their spending to insurance department budgets, according to the analysis.

In return, state insurance departments brought in an average of $442.7 million in revenue in 2015, earning money from things such as licensing fees, taxes and fines. But departments kept only an average of 5.98% of this revenue, with the rest most often going to states’ general fund. Seven state insurance departments kept less than 3% of their revenue.

The Consumer Federation of America recommends insurance departments keep 10% of their revenue, and Robert Hunter, the federation’s director of insurance and a former Texas insurance commissioner, says this is just one sign that the agencies lack resources. “There’s no doubt that states’ insurance departments are underfunded,” he says.

The analysis also examined how many insurance department staffers were dedicated to consumer affairs — the people responsible for responding to insurance questions, concerns and complaints. These workers made up anywhere from 2.36% to 25.95% of total department employees.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.

4 Student Loan Tips That Might Actually Be Terrible Advice

There’s plenty of advice available for managing student loans, some of it good and some not so good. But you should be wary of a one-size-fits-all approach. Depending on your circumstances, some common tips for handling student debt could backfire.

Before following these four tips, take a closer look to see if they’re really right for you.

1. Consolidate your federal student loans

Federal debt consolidation is often confused with student loan refinancing, but it’s important to know the difference between the two; consolidation can end up costing you more money, but you may lose some benefits if you refinance federal loans.

Consolidation allows you to bundle your federal loans into a single direct consolidation loan. Your interest rate would be the weighted average of your rates, rounded up to the nearest one-eighth of a percent. Depending on how much you owe, you could end up with a loan term that’s up to 20 years longer than your current term. That means you’d pay extra in interest. Plus, you’d lose the option to save money by paying down your higher-interest loans first.

Refinancing your loans, on the other hand, could help you get better loan terms. Essentially, a private lender would buy out your existing loans and issue you a new one with different terms. If you have great credit and a low debt-to-income ratio, you could qualify for a lower interest rate. It’s available for both federal and private loans, but be aware that refinancing federal loans means giving up borrower protections like Public Service Loan Forgiveness.

“If a client has a really good income and they’re not taking a public sector job, then it generally makes sense to refinance [federal loans] and get a lower rate,” says Brett Tushingham, a registered investment advisor in Wilmington, North Carolina. “It’s definitely not one-size-fits-all, but a lot of the time it at least makes sense to consider refinancing.”

2. Switch to income-driven repayment

If you’re struggling with your federal loan payments, income-driven repayment can help. It caps payments at a percentage of your income and extends your loan term to 20 or 25 years. If you have any balance left over after that, it’s forgiven.

An IDR plan adds years of interest payments to your loans, so it won’t save you money long term, especially if you won’t have a balance left over. The main reason to choose one of these plans is to keep your payments manageable so you don’t end up in default.

Two other drawbacks to income-driven plans: You’ll need to reapply each year, and any debt that’s forgiven will be taxed as income.

3. Take your full loan award

It’s best to minimize your student loan debt. Some might argue that taking out more loans can help your credit after graduation, but that isn’t exactly true. Student loans can help you establish a credit history, but the amount you borrow doesn’t factor into your credit profile; overborrowing only increases your payments.

To reduce your student debt, fill out the Free Application for Federal Student Aid, or FAFSA, and take advantage of all free aid. Consider getting a part-time job to pay for extra costs, or ask your family to chip in.

When you get your financial aid award letter, carefully consider the terms of your loan offers and reject any that you don’t need. Unsubsidized loans should be the first to go; they accrue interest while you’re in school, so the cost of borrowing those is higher than it is for subsidized loans.

4. Make student loans your top priority

It’s the classic postgraduate dilemma: You want to pay down your student debt quickly, save for retirement and start an emergency fund, but your entry-level salary can only stretch so far.

“My wife and I had to choose between saving for a home, accelerating the payment of our student debt, or saving for retirement. We ended up saving for a home because we had a child,” says Douglas A. Boneparth, a certified financial planner in New York City. “You’ve got to know what your honest goals are and allocate your savings toward them.”

Once you know what you want to focus on, the key is setting smaller, more realistic goals. So instead of contributing $600 a month to your 401(k) while making your minimum loan payment, for example, you might decide to reduce your retirement savings to $100 a month, put $400 a month into your emergency fund and add $100 a month toward debt with the highest interest rates.

After you have a plan for your finances nailed down, revisit it every few months to make sure it still makes sense for your circumstances.

Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: ddelfino@nerdwallet.com. Twitter: @devondelfino.

5 Ways to Make the 10 Years Before Retirement Count

In an ideal world, retirement savings goals are balanced by the 30 years or more savers have to meet them.

But in the real world, many people find themselves knocking on retirement’s door with little stashed away: Households with members ages 56 to 61 have a median retirement savings of just $17,000, according to an Economic Policy Institute analysis of 2013 Survey of Consumer Finances data.

If that amount feels familiar, here’s how to turn the next decade into a retirement rally.

1. Contribute to a Roth IRA

Contributions to a Roth IRA are made with after-tax dollars, but distributions in retirement are tax-free. This account often gets pitched to young, lower-income workers. Because taxes are paid on the front end, you lock in your current tax rate. That’s a good thing if you expect that rate to go up in retirement.

At a later age, having a Roth in your retirement arsenal tackles a potential issue: Higher earners may pay more for Medicare parts B and D, and Social Security becomes partially taxable if your income is above a set amount.

If some of your retirement income comes as a qualified distribution from a Roth, you could reduce your taxable income, avoid or minimize Social Security taxes and lower Medicare premiums, says Chris Chen, a certified financial planner in Waltham, Massachusetts.

The rub: If you earn too much, you may not be eligible for a Roth. A Roth IRA calculator will tell you if you qualify and how much you can contribute.

2. Consider a health savings account

This may be the only account to one-up the Roth, tax-wise: Contributions to a health savings account are tax-deductible and distributions for medical expenses are tax-free.

An HSA must be linked to a high-deductible health insurance policy, which has higher deductibles, but lower premiums. The idea is that plan holders put their premium savings into an HSA, to be used for medical expenses before meeting that higher deductible.

“If you can build it up and have a nice balance to be able to use tax-free to pay health care expenses, deductibles and copayments in retirement, it’s going to be really helpful,” says Hans Scheil, a certified financial planner in Cary, North Carolina.

Unused funds roll over from year to year, and beginning at age 65, it essentially becomes a retirement account: You can pull money out for nonmedical expenses, although it will be taxed as income.

3. Start wiping out debt

Your income will likely go down in retirement, so you’ll need to whittle expenses down, too. And while some expenses may naturally fall, others will take a little work.

Paying down high-interest debt is one of the best ways to trim your budget. If downsizing your home is in your retirement plans, do it now instead of later. Then, use the funds your smaller footprint frees up to hammer away at debt.

4. Don’t shy away from risk

It’s true you would be wise to dial down the risk in your investment accounts leading up to retirement. But there’s a difference between trimming and eliminating completely — and being too conservative can quickly shrivel your savings.

One happy medium, Chen says, is to divide your assets. “Have a bucket of assets that are more conservative, to use in the early part of retirement, and a bucket that is less conservative to use in the latter part.” That way, money you’ll need in your 80s can continue to grow.

5. Think about stopgap measures

Maybe you’ve paid off your home and you can tap a reverse mortgage. Maybe you want to explore annuities, which — in their most basic form — turn a lump sum of your savings into a stream of income. Or maybe you’re up for a side gig (Uber says a quarter of its drivers are over 50). Whatever you’re thinking, now’s a good time to make a few backup plans.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

This article was written by NerdWallet and was originally published by USA Today.

Mortgage Rates Today, Tuesday, Nov. 29: Down a Notch

In a reverse from yesterday, 30-year and 15-year fixed rates dropped slightly on Tuesday, while 5/1 ARM rates held steady once again, according to a NerdWallet survey of mortgage rates published by national lenders this morning.

Mortgage Rates Today, Tuesday, Nov. 29 (Change from 11/28) 30-year fixed: 4.27% APR (-0.04) 15-year fixed: 3.69% APR (-0.01) 5/1 ARM: 3.78% APR (NC) September housing price gain continues upward trend

Early Tuesday, S&P Dow Jones Indices released the latest results for the S&P CoreLogic Case-Shiller Indices, which measure U.S. home prices. The report revealed a 5.5% annual housing price gain in September, up from 5.1% in August. Housing prices have inched up over the last 12 months, and September’s increase passed a high set in July 2006, before the housing crisis.

Out of a 20-city composite, Seattle; Portland, Oregon; and Denver had the highest year-over-year gains over each of the last eight months. In September, Seattle saw an 11% year-over-year price increase, Portland a 10.9% increase and Denver 8.7%. In total, 12 cities reported higher year-over-year increases last month compared to August.

This new peak “will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms — Miami, Tampa, Phoenix and Las Vegas — remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.”

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published APR with the lowest points for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email: mburge@nerdwallet.com.

5 Frugality Pros Help You Rein In Holiday Spending

The overflowing expectations around the holidays can entice us to spend more than we can afford. Not only do we have bills to face once the decorations are put away, but 43% of respondents to an Experian survey say extra expenses also make the holidays hard to enjoy.

Now’s the time to plan so your December spirit doesn’t lead to January bills. We asked five experts on frugality what they do to avoid holiday overspending.

Recognize your triggers

Donna Freedman, author of “Your Playbook for Tough Times,” says you need to recognize your spending triggers. Are you trying to make the holidays more magical for your family? Can you resist anything but a great a deal? Knowing what drives your spending can help you stop. Here’s what she recommends:

  • Carry your list with you even after you’ve finished shopping. When you see a killer deal or a gift that’s “more perfect” than the one you’ve wrapped up, use the list to remind yourself you’re done.
  • Make a game out of spending little or nothing for a gift. Freedman likes things that represent “a stirring tale of thrift.” She uses one such gift, a vase with a hole in it, to keep money she finds — on the ground, in vending machines, wherever — for giving to charity each holiday season.
  • Consider limiting children to four gifts, asking them to choose “something you want, something you need, something to wear, something to read.”  It helps children set realistic expectations.
Work with a list

For Tiffany Aliche, aka “The Budgetnista,” step one is making a list of whom you plan to give to and how much you plan to spend. Make sure your gift budget fits into an overall holiday budget that accounts for shipping, decorations, food, travel and entertainment. Her top tips:

  • Check that list twice. It’s easy to forget thank-you gifts for coaches, teachers, the letter carrier, party hosts. Decide what you want to give each person. Once the list is set, adjust it as you go to keep planned gifts and your budget in sync.
  • Use technology. “Price-check online before you buy or go in a store,” Aliche says. Know your price range for every gift on your list and set up price alerts. One of Aliche’s new favorites is the Chrome extension Wikibuy, which looks for better offers as you shop online and applies the best coupon when you check out.
  • Consider making an experience the gift. If you’re already planning a holiday outing with a group of friends, can you agree it will be a gift to one another?
Match your approach to your values

The blogger who writes under the pseudonym Mrs. Frugalwoods says her family’s frugality is “larger than the holidays.” She notes that while the season is “wonderful and it’s fun, it’s not an excuse to dip into your emergency fund.” Her tips:

  • Decide what’s most important and spend accordingly. For her, it’s a family gathering. She hosts Thanksgiving and cooks from scratch rather than buying pre-made or going to a restaurant.
  • Shop with gift cards or cash-back rewards. She prefers giving an item rather than a gift card but occasionally passes along gift cards that were given to her. It’s regifting at its finest.
  • Let your values be your guide. She favors “small, reasonable gifts” and shopping locally.
Know the difference between cost and value

Mary Hunt, the author of “Debt-Proof Living,” blogs at Everyday Cheapskate. She says it’s important to understand that your credit limit is not a license to spend. Try these instead:

  • Shop with cash only; leave your checkbook and credit and debit cards at home. Need more cash? See if you can cut your grocery bill temporarily by using up items in your freezer or pantry, or track down unused gift cards to fund holiday shopping.
  • Know the difference between a gift’s value and its cost. A $20 toaster that you found on sale for $8 is still a $20 gift. If you budgeted $20 but paid less, that doesn’t mean you owe the recipient $12 more in gifts.
  • Define “gift” more broadly. Can you give your expertise, such as setting up a website for a tech-challenged friend? Do you have a treasured possession to pass on? One of Hunt’s favorite gifts was vintage crystal that belonged to her mother-in-law: “She wrapped it up for me for Christmas and got to see me enjoying it, rather than just leaving it to me in her will.”
Plan for thrift

Having a plan is central to being thrifty, says Gary Foreman, founder of The Dollar Stretcher. “If you don’t have a plan, you’ll overspend,” he says, noting that some people don’t finish paying for Christmas until April or May. His tips:

  • Subscribe to online price alerts so you’ll know about price drops for a specific item or for travel. (And unsubscribe later so continual alerts don’t tempt you to spend.)
  • Regifting is OK, especially when you know someone will love something you can’t or won’t use.
  • The thought really does count, and thoughtful gifts can be inexpensive. One of his favorite gifts came when his daughter tracked down an ethnic bakery to get him some kolaches, Bohemian pastries his grandmother used to make. “Once you have needs met, the gifts that make a difference are the ones that say the giver knows who we are. Those are the best and most memorable gifts,” he says.

Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea.

The 5 Best Ways to Invest $10,000

Your definition of windfall may vary, but there’s little argument that $10,000 is a healthy chunk of cash — certainly enough to give you cold feet when deciding how to invest it.

The good news is there are a lot of options: $10,000 is enough to more than meet most online broker minimums.

We’ve slimmed things down to five of the best ways to invest $10,000. Feel free to mix and match; there’s no rule that says you have to throw it all into one pot.

How to Invest $10,000 Get your 401(k) match Max out an IRA Get guidance from a robo-advisor Invest in commission-free ETFs and low-cost mutual funds Try your hand at stock trading 1. Get your 401(k) match

A guaranteed investment return is as rare as free money, and a 401(k) match gives you both: When you put dollars into the account, your employer puts dollars in, too. How many dollars depends on your plan’s matching arrangement, but 50% to 100% of your contributions up to a limit of 3% to 6% of your salary is a pretty common range. (If you want to do the math to see how much your match could be worth, try our 401(k) calculator.)

This $10,000 windfall may give your budget the room it needs to finally start meeting that match, if you’re not already. The hitch: You typically can’t just make a lump-sum deposit to a 401(k), so you have to get a little creative if you want to get this cash into your plan and capture matching dollars while you do it. Put the $10,000 into a savings account, then set your 401(k) contribution to the level your employer matches. When that contribution is swiped out of your paycheck, repay yourself from the money in savings.

2. Max out an IRA

An IRA is like a 401(k) you open on your own, which means no match. But it has other benefits, including a wide investment selection, and if you don’t have a 401(k) at work, an IRA is far and away the next best thing.

That $10,000 is more than enough to max out an IRA for the year. The annual contribution limit is $5,500 right now (with an extra $1,000 allowed for those 50 or older). Max out and then select one of these other options for the rest of your cash.

» MORE: How to invest your IRA

3. Get guidance from a robo-advisor

Robo-advisors are what they sound like: robots — or specifically, computer algorithms — that manage your money. A $10,000 investment is enough to open an account at the majority of these companies, including Wealthfront, which manages the first $10,000 for free.

» MORE: The best robo-advisors

At other advisors, you’ll pay a fee of around 0.25% to 0.35% (Wealthfront’s fee on assets above $10,000 is 0.25%). That fee includes the cost of management, but it doesn’t include investment expenses. Robo-advisors typically use exchange-traded funds and index funds, which are fairly low-cost passive investments that track sections of the market, like the S&P 500.

4. Invest in commission-free ETFs and low-cost mutual funds

If you grimaced at the mention of that robo-advisor management fee, you might be the DIY type. You can pretty easily piece together a diversified portfolio of funds yourself with $10,000.

Index funds, a type of mutual fund, typically have an investment minimum, but $10,000 is more than enough to buy into several. ETFs are a kind of index fund that trades like a stock. You buy them for a share price — that’s the minimum investment — and it could be as low as $50.

If you also have a 401(k), you might want to use these individual funds to fill holes in the investment choices offered by the plan — 401(k)s have a scaled-down mutual fund selection, and the ones that make the list can be high-fee.

5. Try your hand at investing in stocks

This is kind of DIY turned up a notch — index funds and ETFs are baskets full of stocks (or bonds, depending on the type of fund you’ve selected). When you use them, you get exposure to stocks without actually having to pick individual stocks.

But maybe you want to invest in stocks. Go for it, with one caveat: For a long-term goal like retirement, it’s best to stick to the options above and limit stock trading to 10% of your portfolio or less. If $10,000 takes a bigger bite, maybe you trade stocks with the portion that overflows your IRA contribution limit or set aside just a small chunk of this money to play the market.

» MORE: How to invest in stocks

Stock buying requires researching stocks — if you’re going to own a piece of a company, you want to know what you’re getting into. So make sure you’re up to the task and choose a broker that has low commissions, so trading fees don’t eat into your investment.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

Here’s Where People Are Off the Banking Grid

Each year, the approximately 9 million U.S. households without bank accounts risk paying fees in the triple digits for money orders, check cashing and prepaid debit cards, while missing opportunities to earn interest on their savings. Although a new federal report shows that the so-called unbanked rate is declining, in seven states over 10% of households store their money off the grid.

In 2015 across the U.S., 7% of households were unbanked, which means no member had a savings or checking account, according to the Federal Deposit Insurance Corp.’s National Survey of Unbanked and Underbanked Households released in October. That percentage is down from 7.7% in 2013 and 8.2% in 2011.

Among states, the percentage of households without bank accounts range from well below to above the national rate. Vermont had the lowest percentage (1.5%) of households without bank accounts in 2015, while Louisiana had the highest rate (14%).

Metro area data

The FDIC survey includes data for 68 large metro areas. Here are the 10 places with the highest number of unbanked households in 2015 and the percentage that didn’t have accounts:

  1. New Orleans-Metairie (17.4%)

2. Memphis, Tennessee (17.2%)

3. Baton Rouge, Louisiana (14.3%)

4. Oklahoma City (13.3%)

5. Jackson, Mississippi (12.5%)

5. Wichita, Kansas (12.5%)

7. Birmingham-Hoover, Alabama (12.3%)

8. San Antonio-New Braunfels (11.3%)

8. Tulsa, Oklahoma (11.3%)

10. Little Rock-North Little Rock-Conway, Arkansas (11.2%)

Key takeaways

More metro areas saw a decrease in unbanked rates than an increase. From 2013 to 2015, the percentage of households without bank accounts decreased in 35 metro areas, increased in 25 places and remained the same in one location, according to an FDIC data set of 61 metro areas. Some places saw significant drops. For example, the Phoenix-Mesa-Scottsdale metro area was home to the second-highest percentage of unbanked households (16.3%) in 2013. In two years, that rate fell to 10.6%. The Orlando-Kissimmee-Sanford, Florida, metro area also saw a drop in the percentage of unbanked residents — from 9.9% of households in 2013 to 4.3% in 2015.

Some cities bucked the trend and saw increases. In some places, the percentage of unbanked households significantly increased. The Austin-Round Rock, Texas, metro area went from having one of the lowest percentages of unbanked households in 2013 (1.3%) to an above-average rate of 8.6% in 2015. And while the Birmingham-Hoover, Alabama, metro area had one of the highest rates of unbanked households in 2015 at 12.3%, just two years ago, it had a below-average 5.7%. Statewide, the percentage of households in Alabama without bank accounts increased from 9.2% in 2013 to 12.5% in 2015.

Unbanked rates are highest in the South. In 2015, the states with the highest percentage of unbanked households were in the South. As well, nine of the 10 metro areas with the highest 2015 unbanked rates were in the South.

Costs of not having bank accounts

Unbanked households in the South and elsewhere must rely on bank alternatives, such as payday lending stores and retailers to cash checks and buy money orders. A recent NerdWallet study found that households dealing only in cash pay average annual costs of $198.83 for check cashing and money orders. Unbanked households with prepaid debit cards that allow direct deposit pay an annual average of $196.50 in fees, the analysis determined, while those with prepaid debit cards without direct deposit pay $497.33.

For those who use banks, the average checking account costs about $150 a year, the study found. This estimate includes monthly maintenance charges and two overdraft fees. Some accounts, which have lower overdraft fees and no monthly charges, cost customers about $30 annually.

Families that don’t use financial institutions also miss out on savings accounts, a useful way to build emergency funds, and credit cards that can help build credit. They also don’t benefit from the full range of fraud protections that federally insured banks and credit unions offer, and they can’t access online and mobile banking tools that help save time and money.

Laura McMullen is a staff writer at NerdWallet, a personal finance website. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen. Sreekar Jasthi is a data analyst at NerdWallet. Email: sreekar@nerdwallet.com.

5 Top Parenting Bloggers Share Frugal Tips for New Moms and Dads

Becoming a parent is exciting, perhaps a little terrifying, and includes a lengthy list of important decisions and preparations. But while planning the nursery, visiting the doctor and choosing a name for your new arrival, you can’t afford to put your finances on the back burner.

Your spending will obviously change when you add a new member to your family, and your household income may, too. You might have to shift some of your long-term financial goals, as college savings, life insurance and estate planning become new considerations. Managing finances as a parent requires planning — but where to begin?

We spoke with five top parenting bloggers known for sharing heartwarming stories, humorous anecdotes and helpful financial advice for parents. We asked them to pass along their wisdom, and here’s what they had to say.

Set (or re-evaluate) your budget

Setting a budget is the one thing mom blogger Tracie Fobes of Penny Pinchin’ Mom wishes she would have done at the start of her parenting adventure.

“We didn’t have one,” said Fobes, a wife and now mother of three. “It was a list of the people we had to pay each month.” And when she decided to quit her job to be a stay-at-home mom, they still didn’t budget. “As a result, we often struggled to make ends meet, even though my husband makes good money.” Once they started a budget, Fobes and her husband say they eliminated more than $37,000 of debt in just over two years.

The first step to budgeting is knowing where your money goes, says Matt Becker, father of two, financial planner and blogger at Mom and Dad Money. When you track your spending, you can “make purposeful, informed decisions about how you want to direct your money going forward,” and use this information to track progress toward your financial goals, Becker says.

During pregnancy and through the first year, your budget will need to be flexible. Not only will you have diapers, food and new baby clothes to pay for, but also medical bills and child care costs. Estimate these costs upfront, to the best of your ability, and plan to re-evaluate each month or so. You can build your budget from scratch or use one of the many apps online, such as Mint, to help you get started.

» MORE: Estimate your medical bills from pregnancy to delivery

Don’t forget to allocate some of your income to savings. It can be tempting to put the brakes on saving when money gets tight, but blogger Jessi Fearon of The Budget Mama says you’re not doing yourself any favors, and she would know. A mother of three, Fearon and her husband said they paid off $55,000 of debt in less than two years.  “Saving money is the only assurance that you have that if and when something doesn’t go according to plan, you’ll have a plan B in place,” she says.

Prioritize needs over wants

“Babies don’t need a whole lot more than food, clean pants, naps and hugs,” says Emma Johnson, mother of two, finance journalist and blogger at Wealthy Single Mommy.

New parents may err on the side of buying “all of the things” for their new bundle of joy. After all, you never know what you’ll wish you had on hand. But our parenting bloggers say keeping it simple is best, and your child won’t realize you didn’t buy the top-shelf baby soap.

“I wish I had known that I didn’t need special laundry detergent or special wipes to wipe boogers and pacis with,” says Fearon. “Everything looked like a ‘must-have’ when I was a first-time mom, so I was overwhelmed with options.”

Kim Anderson, mother of three and founder of Thrifty Little Mom, recommends thinking practically and early, even when registering for a baby shower. “When I had my twins three months ago, I registered for tons of diapers and baby formula. These are the most costly expenses for new parents.”

As your children grow — and they will, quickly — consider selling their outgrown clothes on consignment. Stores such as Once Upon a Child and Plato’s Closet will allow you to both sell and purchase gently used clothes — a great option for parents who don’t want to buy brand-new outfits for every growth spurt.

“Many of my mom friends rarely spend any money out of pocket to keep their kids clothed,” using consignment stores and sales like this, Anderson says.

Safeguard against the unthinkable

“No one likes to think about their own demise,” says Fobes. “However, it becomes even more important once [your children] arrive.” Fobes says life insurance for parents is not optional, and other bloggers agree.

“Life insurance isn’t to cheer up your sad dependents in the event you kick off early,” says Johnson. “It’s to give your survivors a measure of security.”

Get enough life insurance to not only account for bills, funeral costs and any wages you bring into the household, but also the child care and house cleaning and maintenance that may have to be outsourced if you’re gone, Johnson suggests.

» MORE: NerdWallet’s life insurance comparison tool

Also, write a will and look at other estate planning measures. You’ll want to make sure your child is cared for if you’re no longer able to do it yourself.

“These are the kinds of things you hope you’ll never need, but will be invaluable if you do,” Becker says.

Plan for your child’s future

If you want to help your child pay for college down the road, now is the time to prepare. Higher education is increasingly expensive, and while there’s a chance your little genius will receive scholarships, you can’t bank on it.

“The sooner you start to save for college, the less it will cost you on a monthly basis” when your child is enrolled, says Fobes. Depending on where you put it — a 529 college savings plan, for example — the interest on your money will compound tax-free, giving you larger gains the earlier you start, she says.

» MORE: College savings options for new parents

Keep your own long-term needs a priority

When you become a parent, it’s easy to put every ounce of effort into your child’s well-being. But when it comes to staying financially sound, and sane, you can’t forget about yourself.

“There are no loans to finance old age,” says Johnson, who recommends you keep retirement and personal long-term goals a priority, even over saving for your children’s college. After all, “you don’t want to one day be a burden on your children.”

“Being a parent is a lesson in constantly being uncomfortable,” which goes for the financial aspects of parenting, too, cautions Becker. “There will regularly be new expenses in your budget, expenses that are no longer relevant, and your income will likely change, too.”

Learning to roll with these punches, adjust accordingly and meet your financial challenges with long-term goals in mind won’t just save you some headaches. It will also model good financial health for the little ones you’re raising.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.

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