Category: Savings

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Financial Savings

How to Become Financially Independent

financially independent

Becoming financially independent is a hot topic these days. The days where earners could expect to work until retirement age then retire with a pension are long gone. Pensions have all but dried up, and now it is often left up to the worker to manage and plan for their own retirement.

But financial independence doesn’t require being of retirement age. More and more people are beginning to take action at a younger age in order to become financially independent. This means becoming financially secure, no matter your employment status, and having the time and resources to do what you want to do.

There are some simple techniques to becoming financially independent. Most of them are easily actionable by most people, however, some will force you to start changing your mindset about money.

Don’t Save, Invest

This is one of the biggest shifts in your financial mentality that you will need to make. In order to become financially independent, your assets will need to appreciate. If you stick all your extra money in savings, inflation will eventually reduce the value of that money, quicker than interest can replace it.

By putting your money into a mix of stocks and bonds, usually at around a 3-to-1 ratio, you will be able to pull out 4% annually. This means you’ll need about 25 times your yearly income to retire comfortably. Talk about financially independence! While this sounds simple enough, if your annual spending is $50k, you will need roughly $1.25m invested.

Start As Early As Possible

Knowing how much you will need to invest over time, it is far easier to begin at a younger age, in your 20s or 30s for example, than to try to catch up in your 40s. Depending on your calculations, starting in your 30s may only require a monthly investment of $800 or so, while trying to reach that same goal at 40 would require nearly two and a half times as much. This way you are closer to becoming financially independent

Pay Yourself First

Here’s another thing that requires a huge shift in willpower but will severely help you to become financially independent. Most people say that after their expenses there isn’t enough left to save. The wealthiest people in the world got there by being disciplined, and not by saving what’s left after spending, but by learning how to live on what’s left after saving.

Set a goal, whether it’s 10%, 20%, or even 5%, and stick to it. Once you’re paid, move that money into your investments. Then you can evaluate what is left, pay bills, and see if there is any discretionary spending money left.

Leverage Tax Benefits

Many people only contribute what they think “they can afford” to their 401(k) or IRA. But these can help you save twice and become financially independent sooner. If you contribute up to, or close to, the limits for your tax-advantaged retirement account you not only save valuable pre-tax dollars, but you reduce your taxable income. This means at worst, you pay fewer taxes, and at best, a bigger refund once you file your return!

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Financial Savings

The Smartest Way to Use Unemployment Benefits

unemployment benefits

This year has not been kind to a lot of people. Many of those people have had to leverage unemployment insurance in order to make ends meet. But even with expanded benefits from the various stimulus packages passed by Congress and signed into law by the President, those benefits can still leave bills unpaid and stress piling up.

There are no universal solutions to the problem of trying to survive on meager unemployment benefits. Even for those experienced with budgeting and juggling bills, there can be some strategies that are being missed. We’re going to talk about a few of the smarter ways you can use unemployment to help you get by.

1.   Don’t Forget Taxes

While unemployment benefits aren’t much, they are still considered by the federal government as taxable income. This means not only do you need to report it, but you also need to pay taxes on it. There are often provisions with your state unemployment office to have estimated taxes withheld. But if not, make sure you put enough aside for the taxman. The unfortunate part is that often you can only choose to have 10% withheld, which may or may not be enough to satisfy your tax obligation.

There are also exceptions to having the estimated tax withheld. If you can have it held back and still pay your bills, then absolutely do it. But on the other hand, if you are in dire circumstances and keeping your benefits untaxed means the difference between having to get a predatory loan or being able to get by on your unemployment, then you may want to deal with the taxes later.

2.   Quickly Adjust

Many people who receive unemployment benefits often fail to make the needed lifestyle changes that are needed to get by on the reduced income. This means that they are still spending money as if they were employed. This is a fast way to get underwater.

By adjusting quickly to your new budget, you can prevent any unexpected shortcomings in your spending, and make sure that you have enough for what you need. Cut out the least important spending habits, and make sure you focus on your most immediate needs.

3.   Make Sure The Basics Are Covered

Firstly, make sure that you and your family have a place to live and food to eat. While evictions have a moratorium placed on them through the end of the first quarter of 2021 when it’s over, landlords will begin requiring back rent or tenants will face eviction. Depending on your state landlord-tenant laws, that back rent may also be accruing fees and interest during the moratorium.

Also, make sure that if you have vehicle payment, that you try to keep up with that. Transportation will be needed to obtain employment once that is available. It is also needed to make sure that you and your family can still run basic errands without incurring additional expenses from rideshares or other hired transportation.

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Financial Savings

Organize Your ‘Paying Your Bills’ Process

organize paying your bills process

Paying bills is a necessary evil, there’s no way around it and it can be painful at times. Despite this, it’s vital to organize your bills and pay them on or before any due dates. Being negligent with paying your bills can lead to fees and penalties, but it can be the beginning of deep debt and bad credit.

Sometimes it can feel like you’re just hanging on, month to month, and keeping up on your bills can be overwhelming. If that describes you sometimes, or if you just need a few ideas on how to organize a little more consistently, here are some guidelines for helping you to organize your bill-paying process.

You’ll want to grab some basic supplies first. Get a nice notebook, envelopes, stamps, a red pen, and a trash can with a paper shredder nearby. Then decide where you will be paying your bills, if it’s a desk in your office, the kitchen table, wherever, and set your supplies up there.

Organize Paper And Online Bills

Most creditors, lenders, and billers have the faculties to accept online billing. If so, take advantage of them. This way you only need to retain confirmation numbers in your records, making for a cleaner and easier notetaking.

If you are still using paper billing for any reason, make sure you open them as soon as they arrive. Using your red pen, mark the amount owed and the due date on the envelope. Note any issues to be addressed later.

Schedule It

Make a point to pick at least 30 minutes per week to review and pay your bills. Schedule it like any other appointment that you should not cancel. While reviewing your bills, make it a point to check your bank accounts for accuracy.

Make It A Routine

You’ll need to be attentive to your weekly bill payment appointment, and be sure you stay accountable for it. By incorporating it as another part of your weekly routine, you make it easier for yourself to stay up to date with your finances.

Pay Your Bills

During your weekly bill-paying appointment, make sure you give proper attention to each of the bill payment types, both online and paper. Be sure to pay your paper bills far enough ahead of time that they do not arrive after their potential due date. Online bills are generally much quicker and will reflect payments made within a business day or two, sometimes they will even post the same day they are paid.

Automate It

If you still feel you need some help, there are a number of personal finance apps, like Mint, or Prism. You connect your bank account, billers, and lenders, and the apps monitor for bill due dates and facilitate payments. They have arrangements for automatic online payments, as well as automatically mailed checks. Apps like these offer you a deeper look into your spending and budgets, often helping you to better your finances and pay down debt.

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Financial Savings

5 Financial Professionals and How They Can Help

financial professionals

1.   Financial Planner

A financial planner will help you create a roadmap for reaching your long-term goals. They often work with you to first discover what your goals are. Once you have figured out what your overall goals are, they will help develop the plan of action that will get you there.

Financial planners are also adept at things like retirement plan diversification, and even financial planning for a growing family. But not all of them run their business, or their billing, the same. You will want a fee-only fiduciary, meaning they are paid by you directly. Bonus if they are trained as a CFP or PFS.

2.   Financial Coach

A financial coach is a must if you struggle with keeping to a budget. They are also great if you need some help decoding some of the short-term financial options available to you. Financial coaching is still somewhat new and was created as a way to fill the short-term market where financial planners often do not operate.

3.   Tax Accountant

This is the person who will help you file your taxes, and depending on their skill set they may also help you build tax-saving behaviors that can benefit you for years to come. These are the people that help you figure out all of your deductions so that you can reduce your taxable income as much as possible.

Popular tax credentialing includes EAs, or Enrolled Agents, and CPAs, or Certified Public Accountants. EAs are licensed by the IRS after taking a test made up of 3 parts. CPAs are professionals that have been licensed by the state they operate in, after taking a 4 part test.

Tax accountants can be an important part of your overall financial health. They will help you be more mindful of how your income and other finances affect your taxes and any subsequent refund. This can put you in a better and better position each year.

4.   Credit Counselor

One of the most valuable financial professionals is credit counselors. They can help you if you are dealing with high-interest debt or debt management struggles. Many times you will find that your credit counselor will be a non-profit and will have the specific training needed to help you get the most out of your credit. They can often help with building credit, as well as fixing bad credit.

5.   Investment Advisor

Managing investments can be difficult with all the other things on our plate. An investment advisor will help you understand the process of investing, and will be able to give advice on various investment strategies. This will include things like stocks, bonds, mutual funds, and even cryptocurrency and NFTs.

Before you get to the stage of hiring an investment advisor, you will need to make sure the rest of your financial plan is in order. Investment advisors will often not provide any guidance on anything directly related to your long term financial goals, such as children, home buying, or retirement financials.

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Financial Savings

How Big Should Your Emergency Fund Be?

emergency fund

These days, things can seem a bit more uncertain than we’re used to. Pandemic shutdowns, market volatility, and more are causing millions of Americans to rethink their saving plans. People across the US are starting to save up an emergency fund, just in case. An emergency fund can save the day if you have one when you need it.

At most estimates, the average American should plan to have between 3 and 6 full months of living expenses at the minimum. Depending on your means and the circumstances, you may even want to sock away an entire year’s worth of money. Living expenses in our case means, all of your bills, mortgage or rent, food, discretionary spending, everything.

If this sounds like a lot of money, you’re absolutely right! That doesn’t make it impossible, but it does make it challenging. You may not need that much based on your particular situation, but we are going to help you figure it out.

The 3 To 6 Month Rule Of Thumb

Most experts say that keeping 3 to 6 months of living expenses based on your current pay is enough of an emergency fund. You might be able to get away with less than 6 months of expenses if:

  • You have minimal debt
  • Your cost of living is relatively low
  • Your rent does not fluctuate much, if at all
  • You have reliable transportation
  • Your job is stable
  • You have no kids or pets
  • You enjoy generally good health

While not all of these would have to be true, you can see how they give you an idea of the fluctuations and potential “surprise” expenses that may happen in some cases. This is often considered the best-case scenario for an emergency fund.

You may want to consider saving much closer to 6 months of expenses if:

  • You have some relatively low-interest debt
  • It would be difficult to replace your current job
  • You own a home
  • Live in a high cost of living area
  • You have children
  • You have any medical issues
  • Have dangerous or high-risk activities
  • Have no financial support outside yourself

6 To 12 Months Of Expenses

There are scenarios when you may want to have a much larger financial cushion. This is not just in case something happens to you or your source of income, but also to augment your potential retirement if you are not already retired. Consider saving up to a year’s worth of expenses if:

  • You provide solely for multiple dependents
  • You are approaching or at retirement age
  • Your job is highly specialized, a niche position, or may need you to relocate at some point
  • You are a high-income earner

Once you have decided how much you should save, be sure to set that goal and stick to it. Break it into milestones of one month worth of expenses each, this helps you reach smaller goals on the way to your eventual goal of an emergency fund.

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Financial Savings

20 Ways to Take Control of Your Finances

take control of your finances

Many people struggle with their personal finances and money. Luckily there are many tips and tricks to help you get more in control of your finances. 

Evaluate How Much Money You Have

Before making changes to your finances, you need to evaluate exactly how much money and debt you have. This will give you a baseline of what to expect with your finances, where you need to improve, and where you can go with your finances.  

Track Purchases

When starting to evaluate your finances, you want to see where your money is going. When you do this you’ll be able to make changes about what you spend your money on. This is also something to continue doing once you have set a budget.  

Set a Budget

Once you have evaluated your current finances and seen where your money is going, you can set a budget. There’s a lot of software and apps you can use to set and track your budget. Having a weekly or monthly plan laid out will help you stick with your plan.

Review the Budget

Every budget will need to be reviewed, you can set this either weekly or monthly. Your financial needs may change and having a review can help you set those changes.

Make Financial Goals

Having a financial goal can give you something to work towards with your budget. It will be easier to stick to a budget when you’re saving for a house or business. 

Automatic Money Transfers

Having your money transfer automatically every paycheck will help you know how much money you have. It will also be harder to miss that money if it was never in your account to start.

Talk to Others

Talking with people that you admire money-wise will help you find ways to save and spend money you may not have known about previously.

Test Saving Methods

Some budgeting ideas will work better than others. Trying new ways will help ensure that you’re using a financial plan that works best for your situation.

Save Money

Saving money every month is the best way to know that you have enough money. This saved money can be towards a specific goal or a general savings fund. 

Minimize Debt

Debt can break many people’s budgets. Don’t let that happen to you by minimizing how much debt you get into. 

Make a Plan to Get Out of Debt

When you’re in debt, make a plan to get out of debt quickly. The more debt you have, the more interest you will have to pay.

Have an Emergency Fund

Don’t let a financial setback take you too far back. With an emergency fund, you can be prepared for many financial mishaps. 

Invest

Investing money can be a great way to build more financial equity. It can be used for retirement or other long-term goals.

Earn More Money

While saying “just make more money” is often easier said than done, you can get a side job or start a small business that can help you make more money.

Live Within Means

Many people can fall into the trap of trying to keep up with the neighbors. Staying within your financial means will help you stay out of debt and on track with your financial goals.

Shop Smarter

Shop with coupons or with deals to get the most of your purchases.

Direct Deposit

Direct deposit will ensure that your money gets in the back as quickly as possible so you don’t have to worry about it.

AutoPay

AutoPay ensures that you don’t fall behind on bills and incur late payment fees.

Read About Finances

Reading about finances will help you develop new financial and money-saving strategies.

Hire a Financial Planner

A professional financial planner can help you develop financial goals and ways to meet those goals.

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Financial Savings Tech & Media Technology

Saving Money With These Top Apps

Saving Money Apps

Truth is, if saving money were easy, then half of us wouldn’t make financial resolutions each year. However, we’ve got some money saving suggestions that you can pick-up on at anytime. Consider what we deem to be the 4 best money saving and money making apps to date!

Ready, Set, Save Money!

Many mobile applications boast about their ability to help you save money, but which ones are actually worth it? If you’re busy like the rest of society, then you’re probably also looking for something that’s not super time-consuming. Consider these options below:

Trim

A financial assistant in your pocket, Trim has the power to help you automate your financial life. After securely connecting your accounts, Trim will analyze your connected accounts to determine where you can save more money. It’ll specifically look for those recurring subscriptions you have and cancel them upon your request. Maybe you no longer need those weekly newspapers or monthly clothing boxes, huh?

Trim also has a Bill Negotiator, where it helps users save $5-$50/month with Comcast and more! With Trim, you can really make the most of your money without investing a lot of your time.

ShopTracker

Do you often shop at Amazon and want to get paid for it? Then you might want to check out ShopTracker. Sign-up for an account by simply completing an application. You’ll need to provide the following information:

  • Your name
  • Birthday
  • Street Address
  • Zip code
  • Gender

After that, you’ll be asked how often you make purchases on Amazon, the type of account you have on Amazon, and the number of accounts in your household. If you qualify, you’ll need to install the application and sync it with your Amazon account. Following successful installation, ShopTracker will automatically pull data monthly from your account and you’ll get paid for it.

Chime

Looking for a bank with no monthly fees, overdraft fees, or foreign transaction fees? If yes, then meet Chime! Chime comes with a Visa debit card, savings account, and checking accounting; it’s very ideal for those who like to bank on-the-go. By opting in to their ‘Save When You Spend’ feature, every time you spend money, it automatically rounds up transactions to the nearest dollar and transfers it to your savings account. They also automatically transfer 10% of every paycheck directly into your savings account, so you can’t help but save!

You Need A Budget

An application that can be used on your computer, phone, tablet, Apple Watch, and Alexa is ‘You Need A Budget’. After connecting your bank accounts, you can set-up some goals and start easily tracking them. Individuals who love visuals will love seeing their progress in graph and pie chart form. Need some extra assistance setting up a budget? Check out their live workshops or send them an email!

Digit

Want to save money without thinking about it? Then download ‘Digit’! Once you’ve securely added your bank accounts, Digit will calculate how much you can comfortably save everyday and automatically set it aside for you. The money is added to your Digit savings account and can be retrieved by simply sending Digit a text message. You’ll be able to access the money in your checking account on the next business day free of charge. Guess what else? There’s no account minimums!

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Financial Savings

Basic Budgeting Tips Everyone Should Know

Budgeting

Whether you are a million-dollar earner or one of the tens of millions of Americans living paycheck to paycheck, the foundation of every successful financial strategy is budgeting. You need to know where every penny you earn is going if you are going to become the master of your own financial future.

Despite what you may think, budgeting does not rely on strict spending control and eliminating all fun and enjoyment from your life. The biggest benefit to having a budget is to understand your own spending habits and being familiar with your unique financial situation.

The best decisions come from a place of education, so it is essential that you understand how you are spending and allocating your money. Let’s take a look at some of the most vital budgeting tips that everyone should be utilizing.

1.   Use A Worksheet

This isn’t the 1970s, so why create your budget as if it was? Use a spreadsheet that you can constantly keep updated, this will make it easy to stay current. There are also a number of resources for using premade budget templates that can be used with Excel or Google Sheets. These can have a number of categories, expense types, and more, to help you track your money with more detail than ever before.

2.   Understand Overspending

One of the many reasons that you may want to create a budget is to identify areas or categories where you may be overspending. Overspending can throw off your budget since it takes allowances from other categories. Once you know where your overspending tends to happen, you can understand your overspending habits, and begin to put a stop to them.

3.   Keep Your Goals In Sight

Budgeting can be hard without a goal to work on saving toward. This reward can be crucial to your success in budgeting and saving. Start with small goals, and work up from there. Maybe set a small reward for when you’ve managed to save your first $100, then another reward at $250, or even $500. Make sure you keep a mix of short-term and long-term goals so that you can budget for several things at once. Make sure you record your goals and maintain accountability.

4.   Automate Your Savings

This is another way that you can leverage technology to help you reign in your finances. One of the more challenging things about budgeting is saving, but now there are apps that can make this an effortless step. There are ways to not only automate savings deposits from your paycheck but also to deposit smaller amounts automatically.

For example, you can have $20 automatically sent to savings when your check is direct deposited. There are also apps that will round up a debit card purchase to the next dollar and put the rounded change in a savings account for you. This may not seem significant, but if you round up a dollar a day, that’s roughly $30 per month that can be saved without effort.

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Financial Savings

Saving Money: A Complete Beginner’s Guide

Saving Money

Volumes can be written about the psychology behind saving money, but if you’re just starting out trying to save you want real actionable steps to getting some savings built up. Each of these steps can be taken easily, quickly, and can also be expanded to larger scale savings.

1.   Every Little Bit Helps

People often get discouraged when they cannot seem to save money rapidly enough. If it were a race, slow and steady wins. Save a dollar here and there, even a few cents, just don’t touch it unless you absolutely have to. There are even apps that can help you save by rounding up purchases automatically and either saving or investing the spare change. This can be incredibly powerful for people who use their debit cards constantly.

2.   Know What You Should Be Saving

You know that you need to save, but do you know how much? Figuring out what you want to save for, and saving in small incremental goals, can boost your saving success. Save up for something small first, then add on to that, increasing until you have the savings and emergency funds you need for any rainy day.

3.   Make Saving Easy

Saving money shouldn’t be hard. It shouldn’t require you to live like a pauper. One of the easiest ways to save is to gamify it. When you set goals and reach those goals, be sure to reward yourself.

If you like ordering pizza but spend way too much on it, keep track of the times you’d order, and instead of ordering save that money. Once you’ve saved through 4 pizza delivery cravings, treat yourself to a pizza on the 5th. That way you’ve got a nice pile of savings, and a small reward.

4.   Clear Your Debt

Debt is frequently one of the more challenging things to overcome before you can begin saving. It can wipe out any progress that your savings and interest give you. If you have high-interest debt like credit cards, focus on paying that down quickly. While you do this, try to save a small amount, even $20-$30 per month, to help you break the cycle of credit card use.

5.   Pay Yourself First

This is one of the older methods for saving, but it’s one of the easier ones to implement and it helps change your saving behavior. It’s simple, establish a percentage of your pay that you will save and not touch. Many people set this at 10%. So for every hundred dollars you earn, stick ten in savings, and watch that pile up quickly.

6.   Generate Cash

Generating cash might sound crazy, but it’s a legitimate technique for saving. At the simplest, this can look like a credit card with a cash back bonus, where the cashback is dropped into a savings account and left there. More aggressive generation methods are running side hustles, getting a part-time job, or even selling extra stuff to make a few bucks that you don’t need for bills.

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Financial Savings

Earn Money With A Checking Account

Checking Account

We have been conditioned to think that even though bank accounts are necessary that they are a drain on our resources. For example, most bank accounts come with high monthly fees, unless a user maintains a significant minimum monthly balance or meets other restrictions. Users may also be hit with heavy fees if they overdraw their accounts. Many banks charge overdraft fees in excess of $30. 

But, not all bank accounts are costly. In fact, some checking accounts may actually earn users money. This primarily happens via bonuses that customers receive when they open checking accounts.

Checking Accounts With Bonuses

Not all banks offer bonuses for customers to open new checking accounts, and not all bonuses are created equally. This means that it is important for a customer to shop around. Comparison shopping also means looking at more than just the upfront bonus. Customers should also consider how they will likely be using the account and what the long-term associated fees will be.

The bonuses that are offered generally range from $100 to $250. However, some banks may offer even more attractive bonuses, particularly to high net worth customers. For example, HSBC Bank currently offers a $750 bonus for its premier checking account. However, customers need to be aware that they will be charged a $50 monthly fee unless they maintain a $100,000 minimum account balance. This minimum is outside the means for most customers.

The Best Bonus for You

When opening a checking account, particularly one with good bonuses attached, they may want to check your credit score up front. If they use a hard pull on your credit, this will make your score dip lower temporarily. If your score was already not the best and you were planning on using it soon, like if you were considering buying a car or renting an apartment, then you may want to check with other banks first or hold off on the checking account until things are settled.

Banks aren’t known for giving money away for free, so don’t expect this to come without other types of attachments. For instance, there’ll be fees on the account like monthly maintenance charges which might take up the whole bonus, if not more. Not to mention that the bonus is technically considered interest, so the government will want to take out taxes on this so-called free money. Lastly, consider interest rates at various banks. Some banks that offer no bonuses but has competitive rates may earn you more money than vice versa.

Other Caveats For A Checking Account

Minimum monthly balances are only one issue that consumers need to take into account when they are shopping for a new checking account with a sign-on bonus. Banks often put other requirements or caveats on these accounts, some of which are more stringent or restrictive than others. Many of these accounts will require that customers have at least one direct deposit enter their account each month. Since most employers now pay via direct deposit, this is not a difficult requirement to meet.

Another requirement that customers need to take note of is the minimum amount of time that an account needs to be open. Many banks require customers cashing in on these sign-on bonuses to keep an account for six months or more, while some banks set the minimum to one year. Customers who close their accounts before then may be required to pay back their initial bonus.

These aren’t reasons turn away an account with a sign-on bonus. They are simply buyer-beware caveats. Make sure to read the fine print about any account before opening one.

In the End

Customers should treat shopping for a new bank just like they treat any other shopping experience. They should work to collect as much information as possible and weigh this information against their own unique needs. What works for one customer may not be the appropriate answer for another. Consumers have the opportunity to pick the bank account that best meets their long-term needs, ideally one that offers an attractive account opening bonus for new customers.