Saving Tips

Month 5 Insure The Future

Make sure you and your assets are protected. Insure your future

 

The best financial plan can be ruined if catastrophe strikes. I’m sure you don’t want that after all this hard work you have put in getting on track. You have to protect your income and assets with insurance. You must insure the future at all costs. Here are a few types of insurance you may want to invest in.

Disability

Buy as much disability insurance as you can afford. Be sure the policy provides benefits until you reach the age of 65 or for life. Make sure that it covers you if you can’t work.

Life Insurance

Nothing disturbs me more than to see a go fund me account for burial expenses. I don’t care how old you are, you need life insurance. If you have children, they need it too. The rule of thumb is to have coverage that equals five to seven times your annual income.

A term policy is often best for people in their 30’s who have young children and need a lot of coverage but don’t have a lot of money for premiums. Term insurance will cover you for a set number of years but gets more expensive each time you renew the policy.

Cash-value insurance is ideal for those who can afford coverage for 20 years or longer. Part of cash-value premiums grows tax-deferred.

Homeowners Insurance

This policy should cover what it would cost to replace your home and personal property now. Don’t own your home? No worries, get renters insurance. This will at least cover the contents (your belongings) of the house or apartment you rent.

Automobile Insurance

Liability coverage is key, so make sure you have enough. This is the mandatory coverage set forth by your state. For both comprehensive and collision coverage, take the highest deductible with which you feel comfortable.

Consider dropping comprehensive and collision if your car is more than 5 years old and has lost most of its value.

Estate Planning

If you don’t have a will, a power of attorney and a living trust, see an estate attorney. Preparation costs range from $500 to $2000 or more, depending on the complexity of your estate. If you already have these documents, review them and make any changes needed to bring them up to date.

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Month 2 Set Long Term Goals

Want to make sure your money is working for you? Make sure to set long term goals to stay on your financial trackIf you don’t figure out your long-term financial goals, you will almost always fail to reach them, because short-term needs are always so demanding.

Strategy: Set up a new worksheet with these four headings: Annual Pretax Income, Annual Expenses, Goals and Estimated Cost of those goals in current dollars. Below, I have listed a few goals that some may want to include on their worksheet.

College for your children

The cost of college per child now is roughly * $20,000 + per year academic year at the high end and $12, 000 per academic year on the low end. Multiply the annual cost by the number of years in college, for a range of $80-$36k, and by the number of children. Like everything else, college costs increase with time. The annual increase is about 6-8%.

Worry-free Retirement

Multiply your current annual expenses by 0/8% (if you make $50,000 a year, that’s $40,000). This is about what you will need annually to retire comfortably. Ideally, your investments should be able to provide you with this annual retirement allowance while continuing to grow with inflation.

Homeownership

With a down payment of 20%, the most expensive house you can purchase is about 2.5 times your gross annual income.

Insurance

If you become disabled or die and you have a spouse and children, your family will need 70% of your current income, or 50% if you have just a spouse and no children. If you don’t have insurance, start researching policies now.

Setting long-term goals for your finances helps keep you on the right track. If these goals stay first and foremost on your mind, you are less likely to spend frivolously or live beyond your means. What are some of your long-term financial goals? I’d love to hear from you. Be sure to comment below.

*All price data are reprinted from the U.S. Department of Education’s 2016-2017 IPEDS Survey and reflect reported costs for the 2016-2017 academic year

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Establish A Savings Plan

I love to plan everything, even down to how much i am going to save. Establish your savings plan today

As you can see by now, I am big on planning. I plan everything including how much I want to save and you should too.

If you don’t have any money saved, plan to begin to saving while reducing your debts. This should not mean that you end up paying off your debts more slowly.

Financially, that does not seem to make sense. It’s better to pay off credit card debt at 20% interest than to save money that earns 4% or 5% interest. Psychologically, it’s a real boost to get some savings underway. You don’t want to end up back where you started, with no savings, while paying off debt.

In addition, your savings will be helpful in case you lose your job or become ill. I don’t particularly like to call them emergencies. Things happen, it’s as simple as that. Most personal finance experts call them emergency funds, but I call them capability funds. You must be capable of handling anything that comes your financial way. Hence, the financial capability fund.

First, let’s define a financial capability fund. A financial capability fund is cash that you’ve saved for the sole purpose of helping you maintain your normal life through curve balls that life throws at you. Most of the time, you shouldn’t touch the money in this fund. It is supposed to sit there earning a bit of interest and waiting until you actually need it. Times like when you lose your job, an appliance breaks down or your car needs a repair.

Quite often, people who don’t have a capability fund see the idea of having to save up money as some form of punishment.  After all, money put in a savings account and locked away is money that can’t be used to live, right?

Actually, it’s quite the opposite. Having a capability fund means that you do have room to breathe. You don’t have to completely panic if your car breaks down or if you lose your job or if you suddenly need to replace a hot water heater. Instead of having to find some way to squeeze those expenses onto a credit card or beg a friend for some money to help, you can just pay the bill – no worries.

Smarter Saving Strategy

People who systematically put aside a certain amount of money each month over a period of years should remember to increase the amount each year to make up for inflation. $100 a month, which was a fairly significant amount 25 years ago, is not adequate today to build a retirement nest egg. If you assume an inflation rate of 4%, the value of the money you have saved will be cut in half in 18 years. If you accumulate $100,000 it will only be worth $50, 000 after inflation. So make sure you give account for inflation in your savings.

If you have been hanging in there with me for the past 6 days be sure to come back tomorrow when I will give you a bit of investing advice.

As usual, I would like to hear from you, tell me your savings strategy in the comments below.

 

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What Can I Do With My Tax Refund Check?

In this post I share what you can do to flip your tax refund and make it grow
Tax Time Is Here

 

 

We are in full-fledged tax season. I had a reader request a series on how you can invest your tax refund and make it grow. About a year ago, I hosted a webinar called Flip My Refund. To start this series off, you can view that webinar here. Don’t forget, if you have a personal finance question that you would like answered, you can send me an email at tracie@traciebthreadford.com Your question may be answered on the blog, but you will remain anonymous.

If you haven’t already, be sure to subscribe to my you tube channel!

 

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Save For Unexpected Events With A Financial Capability Fund

A financial capability fund consists of a small amount of money, usually in a savings account, that you do not have easy access to. Saving for this fund starts with small, regularly scheduled contributions that build up over time.

Saturday, March 4: Save for Unexpected Events

  • A financial capability fund consists of a small amount of money, usually in a savings account, that you do not have easy access to. Saving for this fund starts with small, regularly scheduled contributions that build up over time.

I don’t particularly like to call them emergencies. Things happen, it’s as simple as that. Most personal finance experts call them emergency funds, but I call them capability funds. You must be capable of handling anything that comes your financial way. Hence, the financial capability fund.

First, let’s define a financial capability fund. A financial capability fund is cash that you’ve saved for the sole purpose of helping you maintain your normal life through curve balls that life throws at you. Most of the time, you shouldn’t touch the money in this fund. It is supposed to sit there earning a bit of interest and waiting until you actually need it. Times like when you lose your job, an appliance breaks down or your car needs a repair.

Quite often, people who don’t have a capability fund see the idea of having to save up money as some form of punishment.  After all, money put in a savings account and locked away is money that can’t be used to live, right?

Actually, it’s quite the opposite. Having a capability fund means that you do have room to breathe. You don’t have to completely panic if your car breaks down or if you lose your job or if you suddenly need to replace a hot water heater. Instead of having to find some way to squeeze those expenses onto a credit card or beg a friend for some money to help, you can just pay the bill – no worries.

Another problem that I often hear about when it comes to capability funds is the temptation that people have to spend the money on things that aren’t considered unplanned events. They see that they’ve built up several hundred dollars in savings and they start thinking about buying a flat screen television or going on a trip – and that’s just what they do.

If you want to have a savings account for big splurges, that’s great – start a “splurge fund,” too, if it makes sense for you. It’s important, though, to just leave the capability fund completely alone until you need it. Deposit money in there and don’t even look at the balance until a real unplanned event occurs.

First Steps with Capability Funds


Set Your Initial Target Low

So, what’s the first step? Many people bite off a gigantic goal for their capability fund right off the bat and then find that it’s very hard to get there. Twelve months of living expenses is an enormous goal, one that will take some time to reach – and along the way, you’re bound to get disheartened.

Instead, one great way to start is to set a goal that’s more reasonable. Make it your initial goal to have a capability fund of just $250 or $500. That’s a goal that you can reach in just a few months (or even less if you’re in a good income situation) and yet it’s an amount that can make a huge difference when you have an emergency.

Then, break that goal down into smaller pieces. Perhaps you can save $25 a week. If that’s the case, you can have a $250 emergency fund in just ten weeks, so you can set that as your overall goal. Maybe you can put away $40 a week, which would bring you to the $500 goal in three months.

My advice is don’t set your savings plan too high at first, either in terms of the amount you can save each week or the overall amount. It should challenge you just a bit, but not be a number that’s simply unreachable.

Find Your Breathing Room

“That’s great,” you’re thinking, “but where am I going to come up with $25 a week? I barely make ends meet now.”

That’s a pretty typical sentiment from people who are just beginning to turn their financial situation around. There are a lot of ways to come up with extra money throughout the month.

Ways to Get Your Capability Fund Started


Request a rate reduction on your credit cards

If you’re carrying a credit card balance, getting your interest rate reduced will directly save you money each month. Just flip over your credit card, call the number on the back, ask to speak to a supervisor, and simply request that the rate be reduced. Suggest that you’re considering transferring your balance off of the card.

Shop around for better auto insurance and homeowners insurance

Try Progressive, Geico, American Family, State Farm, and AIG, for starters. Just visit their websites, get some quotes, and make a switch.

Install a programmable thermostat – and program it

Pretty simple, actually – it just takes thirty minutes or so and will cut your cooling and heating bill by 20 or 30 percent. Set it so that the air conditioner and/or furnace don’t run while you’re sleeping or at work so that the energy isn’t wasted when no one is around or awake to enjoy it.

Use a list for grocery shopping

Ten minutes of planning before you go will save you at least ten minutes in the store, plus it will help you stay focused on the stuff you actually need, This will ultimately reduce your grocery bill because you’re putting less unnecessary stuff in the cart.

Transform one splurge a month

Instead of going out for an expensive dinner once a month, turn that dinner into a meal prepared at home. You’ll save quite a bit even if you prepare something very fancy in your own kitchen.

Set up a carpool

Find someone that lives fairly close to you that works where you do and start carpooling together. Even if you can only do it a few days a week, you’ll still drastically cut down on your commute costs, plus it will be a lot harder to stop for those impulse splurges.

Use public transportation

Even better, get in the habit of using public transportation for your commuting needs. Most metropolitan areas have surprisingly good public transportation options – and they’re far cheaper (and not all that much more time consuming) than driving yourself.

Get on the bike

Want to start getting in better shape? Only live a mile or two from your job? That’s a perfect situation to get a bike and start using it for the commute instead of wasting your dollars on gas and car maintenance.

Trim unnecessary monthly bills

Are you subscribing to Netflix but rarely using it? Cut it! Are you paying for premium cable channels that you never watch? Trim them!

Snowflake

Quite often, when people come into a bit of unexpected money, they tend to spend it without thinking about it. They decide not to stop for coffee, but then choose to spend it later, on take out, for example. Instead of spending that “found money,” take some or all of it and immediately put it into your capability fund. If you have online banking, that’s pretty easy – just transfer it out of your checking account.

The key thing here is to actually save this windfall. Instead of just spending the money on something else, put that money away towards your capability fund. If you find that you’re actually saving more than $50 a week with these tactics, then put more into the capability fund or increase the amount you’re putting into your retirement savings.

Make It Automatic

So, you’ve trimmed $50 a week from your spending, but now you have this cash sitting there and it’s tempting to spend it on something more exciting than a capability fund. You’re tempted…

… but you don’t have to be tempted. Instead, you can set up an automatic savings plan to sweep that money straight out of your checking account and into your savings account that you’re using for a capability fund.

If you haven’t already, I recommend setting up an online savings account at a bank separate than the one you normally do business with for your capability fund. Doing this not only lets you shop around for a bank with good service and good savings account rates, but it also causes you to put the money in a place that’s not quite so easy to access. You can’t just run to the ATM or stop by the teller window and withdraw cash from it – you have to go to your computer, order a transfer, and wait for a day or two to access the cash, which is more than enough time for you to think carefully about what you’re doing and not get sucked in by impulse.

Set Reasonable Milestones Along the Way

In a few months, you’ll hit that first milestone – and it’ll feel good. That account will have enough money in it that it’ll start earning a bit of interest on its own and you’ll start to feel in control of the situation.

Now’s the time to keep going. Set another goal. Maybe a fund of $1,000. Keep that automatic savings plan in place.

Once you reach that goal, aim for a single month’s worth of living expenses. Then two months. Then three. And just keep watching that financial capability fund grow.


Obviously, when you do have an unexpected event tap that fund. Don’t put your car repair bill on the credit card. Don’t start living on plastic while you’re between jobs. Instead, keep living a financially stable life thanks to your planning ahead.

You might just find this is a lot of fun – so you might start seeking out more ways to save. Just keep setting goals for yourself and keep pushing yourself just a little to make it there.

Before you know it, life won’t be disrupted by these kinds of events. You’ll sleep a lot better at night knowing that.

You can find more way’s to overcome unexpected expenses that thwart efforts to save here.

Do you have any tips or tricks you can share to save money and build a finanical capability fund? If so drop them in the comments below, I’d love to hear from you!

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Pay Off High Interest Debt

With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth. Find places to cut your spending so that you can pay down your debts faster and find places to trim your expenses. Pay off high interest debt today

Friday, March 3: Pay Off High-Interest Debt

  • With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth. Find places to cut your spending so that you can pay down your debts faster and find places to trim your expenses.

 

Debts that accrue interest over time can deal a major blow to your savings. But with planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.

Although we’re coming to the end of America Saves Week, there are still actions you can take this week to improve your financial picture. Find places to cut your spending so that you can pay down your debts faster and find places to trim your expenses.  About a month ago, I conducted a private masterclass called DEATH TO DEBT. In this class, I showed the participants the most effective way to pay off their high-interest debt and begin building wealth. You can view that class here.  For now, here are five effective way’s you can begin paying off high-interest debt.

 

Create a budget

Establish a budget that includes your monthly income and expenses. Then take a look at those categories and see where you can cut costs.

Stop your credit card spending

If you really want to stop accumulating debt, then stop your credit card spending. Take those credit cards out of your wallet and leave them at home. Better still, cut them to pieces. I know that’s drastic, but sometimes we have to take drastic measures to obtain financial freedom. Stop spending with those credit cards until you have your finances under control.

Put work bonuses toward your debt

Do you receive a bonus from your job? If so, throw it at your debt instead of using it as an opportunity to splurge. It is more important to fix your finances than to own the latest whatever.

 

Change your habits

I’m willing to bet, if you look at how you spend your money each day, week or month, you will see that your daily routines and habits got you into this mess. Spend a little time reflecting on those purchases and see what you can either cut back on or do without. Instead of that hight priced latte every day, make your own at home. How about brown bagging your lunch instead if eating out each day. Watch how much money you will save and how much you can throw toward that debt.

Earn extra income

Turn that side hustle into a lucrative business. What skills do you have that you can turn into some extra cash? My side hustle is selling and doing makeup. I also do graphics for a few of my friends. You would be surprised how much your talents can earn you.

What other tips can you give for paying off debt? Comment below and let me know. I’m always looking for more tips and trick to add to my arsenal.

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Save At Tax Time

Saving a portion of your tax refund can be a big step toward meeting your savings goals. This tax season, get ahead of your financial goals by splitting a portion your tax refund into savings. Here are 5 way's to take that tax refund and build wealth. Save at tax time, instead of blowing your money

Thursday, March 2: Saving at Tax Time

  • Saving a portion of your tax refund can be a big step toward meeting your savings goals. This tax season, get ahead of your financial goals by splitting a portion your tax refund into savings.

 

“Of life’s two certainties, the only one for which you can get an automatic extension.” Anonymous

The quote is funny, but it is so true. Nothing is certain but death and taxes. Lately, I’ve been scrolling my newsfeed on Facebook, and I see such a hot trending topic. People are talking about balling out with their taxes. Now certainly, that is your prerogative, do with it as you choose.  If you have a refund check coming your way, consider using it to bolster your personal balance sheet.  Many people view tax refunds as unplanned bonuses. They see the money as a gift from the government, to use for splurges or treats. A tax refund provides the opportunity to improve your financial situation. The average refund has been around $3,000 for the past two years. That’s a nice chunk of change. Here are five good things you could do with the money.

Build or rebuild your financial capability fund

Many people have raided their financial capability fund over the past several years and have had little extra money to restore it. You could use your refund to start rebuilding that fund, which can help you avoid landing in credit-card debt if you have an emergency. Keep the money easily accessible in a money-market account or savings account that earns interest.

Boost Retirement Savings

You can contribute an IRA — and withdraw the money tax-free in retirement. Isn’t that ironic? Taking your tax refund from Uncle Sam and placing it in an IRA then take it out in retirement and not have to pay taxes on it.

Build Your College Savings

It’s always hard to juggle saving for college and retirement. Here’s an opportunity to use your extra money to contribute to a college fund. You’ll be able to use the money tax-free for college bills, and you could get a state income-tax deduction for your contribution.

Help Your Child/ren Save

You can use the extra money to contribute to a Roth IRA for your child. Your child is eligible as long as he or she has earned income — from mowing yards or babysitting, for example. This is my favorite tip.

Purchase Tax Time Savings Bonds

Tax Time is a great time to kickstart or grow your savings for the future! U.S. Savings Bonds are one safe and easy way to do it. What are tax time bonds? Tax Time Savings Bonds are Series I U.S. Savings Bonds. Issued and guaranteed by the U.S. Treasury Department, Tax Time Savings Bonds can be purchased directly on your tax form. You can cash in your bond after one year at most banks or credit unions, but the longer your keep it the more it will grow in value. Your bond will earn interest for up to 30 years. If you cash your bond within 5 years, you’ll lose the last three months of interest.

Growth on your bonds is guaranteed! Bonds make saving safe, simple and secure.

What other way’s can you think of to save at tax time? Comment below and let me know.

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Save For Retirement

Retirement can be a scary time for some. If you are not prepared, you may not be able to retire. These tip's show you just how you can save for retirement at any age.

Wednesday, March 1: Save for Retirement

  • Saving now for retirement will ensure you have enough money to have a comfortable standard of living when you stop working or reduce the number of hours you work. Participate in a work-related retirement program, open up an Individual Retirement Account (or IRA), or open a free and easy myRA account. Already saving for retirement? Increase the amount you save toward retirement by 1 percent in 2017.

“The best time to start thinking about your retirement is before the boss does.” Anonymous

That quote above is one of my favorite retirement quotes. However, retirement is less than funny, especially if you are not prepared to do so. In fact, most people worry about having enough money in retirement. But you can roll up a substantial nest egg — even if you don’t make a lot of money during your working years. The keys include learning to budget early in life, sticking with it, saving aggressively during your peak earning years and investing your money wisely and diversely. Saving aggressively for retirement doesn’t mean you have to live on canned beans and ramen noodles.

One thing you must realize is that saving for retirement is a marathon and not a sprint. Some people are overwhelmed by the idea of trying to save because they have so many expenses. I can’t tell you how many times people have told me they can’t afford to save. My response, you can’t afford not to save.

Advice for 20-somethings

• Develop healthy financial habits. That means learning how to budget and how to spend less than you earn. These healthy habits will put you on the road to saving for retirement later and help you financially throughout your life.

Get out of credit card and/or college debt. Once you have a little bit of free money, you should start investing in a 401(k) or other retirement plans, and start a Roth IRA as soon as humanly possible.

In an ideal world, I’d like to see 20-somethings contribute to retirement plans. The earlier you start, the better. Don’t beat yourself up if you haven’t started.  Just know there are several reasons you should start saving for retirement at your first job. You can read about them here.

• Encourage parents to give their young-adult children a leg up. I often find that between living expenses, college debt and saving for a home it can be extremely difficult to save for their retirement. I will often talk to my client’s parents, to see if for a few years they will fund a Roth IRA for their children — even if it is only $1,000 a year.

The combination of tax-free investing and compound interest can have a real impact on their savings.

For 30-somethings

Do a budget.  I recommend that people try to allocate 50% of their income to living expenses; 30% to taxes and 20% to savings. That savings rate may seem high, but couples who save that amount think of it as normal. If you can’t save 20%, then at least save 10% and try to work up to 20%.

Make sure you are contributing to your 401(k) or other retirement plans by this age.

Avoid taking on too much debt so you can save. Often people in this age group are getting married, buying a house and having children so it’s tempting to take on too much debt.

Have your retirement savings taken automatically from your paycheck. You can do this at your local bank or credit union

Save the max in your plan Don’t worry about market volatility.

For 40-somethings

Save aggressively. Many people in their 40s are headed toward the peak period for earning and saving. This is the all-business time. You should be thinking about accumulation.

See a financial planner.  This professional can make sure you are on track and tweak your allocation mix.

Coordinate your retirement savings with your spouse or significant other.

Put raises and bonuses toward your savings. Part of my yearly bonus goes toward my retirement.

Focus on smart investing. Make sure you own both U.S. and international stocks in a diversified low-cost manner. You want to be heavily weighted toward stocks as opposed to bonds.

Figure out how much you’ll need to maintain your lifestyle in your golden years. This can be “a very powerful motivator” for saving.

Save up to the max in your workplace retirement plan.

Turbocharge your saving in other ways. This may include getting Roth IRAs and mutual fund accounts. You should have (after-tax) money in accounts that you can use when you are retired and not pay taxes on the money.

For those who are 50 and older

Save even more than 20% of your net income. This will make up for the years when you weren’t able to save enough.

Start thinking about when you’re going to take Social Security. The later, the better.

Consider reducing your expenses. You might consider downgrading your lifestyle, perhaps selling your house and moving to something smaller or moving to a less expensive part of the country. You can even do a trial run, renting an apartment in the area where you plan to move, to see if you like the lifestyle.

Get into the habit of living on a fixed income. Save the extra money. This helps you get ready for managing your spending in retirement.

If all goes well and you’ve saved enough, you may be able to retire comfortably in your 60s. If not, you’ve got to continue to play catch-up on savings and come up with ways to earn an income.

Achieving full financial independence so you don’t have to work isn’t easy. However, armed with enough knowledge and time, it is possible.

It’s easy to make small changes that will make a big difference in your retirement savings. Recent statistics highlight the need for some changes: Middle-class people in the USA have a median of $20,000 saved for retirement, far short of the $250,000 they think they’ll need during that time of their lives, according to a new Wells Fargo survey of 1,001 adults, ages 25 to 75, with a median household income of $63,000. (Median means half earn more, half less.)

More tips for saving

• Create a budget. Most people think creating a budget means they’ll be in a “financial straitjacket. They think a budget means deprivation. Instead of thinking of a budget as a list of what you can’t buy, you should look at it as a spending plan of action.

Cut spending without feeling deprived. Eliminate the things you won’t really miss so you don’t feel like you’re going into “severe restriction mode.” You might stop eating lunch out daily or cancel some cable TV channels that you don’t watch.

If you make one change in how you spend your money today, however small it may seem, you can make a difference in your retirement savings. When you combine several seemingly small changes, they can add up to make a big difference in your retirement savings over time.

• Don’t make minimum payments on credit card debt. It’s a complete financial trap. Minimum payments in the short run mean maximum payments in the long run. It means so much more money in interest. Instead, double and triple the minimum payments.

• Negotiate better interest rates on your credit cards. Don’t be afraid to call your credit card company. It’s a competitive market, which means you have leverage.

• Don’t dig yourself deeper into debt. Change whatever financial behavior got you into debt in the first place. This is something to keep in mind.

Many people end up in debt through no fault of their own. They may have been hit by what’s called “the dreaded D’s — downsizing, divorce, death of the main breadwinner, disability and disease. These are five personal pitfalls that can throw people into debt and limit their ability to save money. In this case, it may take time and patience to dig out of debt.

• Turbocharge your savings. Contribute to your 401(k) plan or other type of employer-sponsored savings plan, especially if you are getting a match, which is essentially free money. You are getting Uncle Sam’s help, too, because you’re not getting taxed on those contributions.

• Consider another turbocharged option. Look into getting an Individual Development Account. This program is available to low- to moderate-income people who want to save toward a specific goal, such as a down payment on a home, college costs or job training. These accounts are supported by non-profit groups, companies and government agencies and provide matching funds. The savings may be matched 2-to-1, 3-to-1 or even more.

America Saves Week
America Saves, I save, You save!

• Sell things you aren’t using. Take a look in your basement, attic, garage and drawers and get rid of things you’re not using. Sell them on websites or have a yard sale. This money should be earmarked for savings.

• Take advantage of pretax savings accounts through your employer. These may include flexible savings accounts, health savings accounts, dependent day care flex savings accounts and transportation flexible spending accounts. If you’re going to pay for those things, anyway, you might as well use pretax dollars.

• Plan for the unexpected. Have a financial capability account so that if you have an unexpected house or car repair or medical expense, you don’t have to stop saving for retirement or dip into your retirement savings.

• Learn to cook. One of my favorite non-traditional savings tips for people is to learn to cook. The savings come in many ways: less eating out, buying fewer packaged (more expensive) groceries and possibly eating a healthier diet, which could lead to lower long-term health care costs.

I’m looking forward to my retirement, and I hope you are too! What are some other tips you can give in order to save for retirement? Comment below and let me know.
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Teaching Your Children To Save

 Good savings habits start at home. Whether you’re budgeting, saving, making retirement decisions, or assessing work-place benefits, share the choices you make with your children, no matter their age. Teaching Your Children To Save is not hard, it's rather fun. It sets the foundation for future wealth building habits.

Tuesday, February 28: Family Savings Day

  • Good savings habits start at home. Whether you’re budgeting, saving, making retirement decisions, or assessing work-place benefits, share the choices you make with your children, no matter their age.

Saving money is one of the most important aspects of building wealth and having a secure financial foundation.  Yet many of us have learned the importance of saving money through trial and error, and more importantly, experience. In school, we aren’t really taught about the importance of saving and many of us find that as adults, we have to fend for ourselves. But there are ways to empower the next generation, and that starts by teaching children the importance of saving from a young age.  If you are a parent, in keeping with the America Saves Week theme of the day, family savings day, here are a few ways to teach your children about saving money.

START WITH A PIGGY BANK

A piggy bank can be a great way to teach your kids the importance of saving while giving them an easy way to do it.  Tell your kids that the goal is to fill up the piggy bank with dollars and coins until there is no room.  Illustrate that the piggy bank is for saving money for the future and that the more they save, the more their money will grow.

OPEN  A BANK ACCOUNT

Once the piggy bank is full, take your child to the bank to open a savings account for them.  Have them count how much money is going to be deposited, so they can have a physical understanding of how much money they have.  Show them the final number and reinforce the idea of interest.

It can provide a great source of motivation for your kids if they understand that their money will grow over time as long as they don’t touch it.  A great example of compound interest is to show how doubling a penny once every day for 30 days will eventually generate $10 million dollars!

USE SAVINGS JARS

When your kids really want the latest and greatest toy or a new action figure, let them know they will have to save for it.  Give them a jar for each of their desired purchases and offer them a small allowance each week in a denomination that encourages savings.

For example, if you give your child five dollars a week, give it to them in one dollar bills.  They can save all their cash for one purchase, or they can contribute to different “jars” for various savings goals.

To encourage saving for their short-term goals, put a picture of their desired toy or item on the jar, so they have a visual reminder of what they are working towards.

CREATE A TIMELINE

As a child, the concepts of money and time can be hard to grasp. Research has shown that the impact of a one-hour financial lesson wears off after about five months. In order to make the message stick, money education should be timely and ongoing.  If you know your child receives a $50 check for their birthday each year, the moment to talk about budgeting is right before receiving that check.

One way to keep money lessons ongoing is to create a timeline so that your child can visualize when they will reach their goal.

Let’s say you give them five dollars a week and they want to save fifty dollars.  If they saved one hundred percent of their allowance, they’d reach their goal in ten weeks, or roughly three months.

Start by getting a long piece of paper and a marker.  Have $0 on one side and $50 (or whatever goal amount) on the other side.  Create checkpoints on the paper for when they reach 25%, 50% and 75% of their goal.

Every time an amount is saved, draw a line illustrating how much was saved.  Let your kids know that they will get small rewards at each checkpoint. Small rewards can encourage kids to keep going.  Visuals are also helpful in illustrating their savings goals and how their money is growing.

LEAD BY EXAMPLE

Children learn by example, so the best way to teach your child about saving money is to save money yourself.  Have your own jar of money that you put funds in regularly.  When you’re out shopping, show your children how to discern between various prices and explain why buying one item makes better sense than another.

Reiterate the message that every time you get paid, you save a portion of your check to help prepare for the future.

START A CONVERSATION

One of the most important things you can do is to start a conversation about money and the importance of saving. Money doesn’t have to be scary or a taboo subject. Use financial discussions as teachable moments. An innocent question such as “Are we rich?” can be answered in a way that emphasizes family values, such as hard work and responsible spending.

Let your children know they can have an allowance, but it’s up to them to save up for things they really want.  In addition, illustrate how much their money can grow over time if they save.

Also, discuss the difference between needs and wants and tell your children you are always open to talking about money and new ways to save.  Ask them about what they want to save for.  Ask them what they want their future to look like.

Asking good questions can get them to think long-term and have a positive relationship with money.  Letting them know you’re always open to having a conversation about money can encourage them to ask questions of their own to keep learning.  You can find an age appropriate guide here, for teaching your children about money.

Teaching kids how to save money may seem like a tough task.  It has even been said that parents are more likely to talk to their children about sex than about money.  But using these tips, you can make your child’s understanding of money fun and accessible.  It’s an investment in knowledge which truly pays the best interest.

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How to Create an Automatic Savings Plan

Do you have a savings account, yet find it difficult to find money to deposit into it? Do you have the best of intentions every month, but find you don't have enough left over after you pay your bills to pay yourself in the form of savings? In the word's of Michael Jackson, "You are not alone." Here are a few tips to help you make savings automatci

 

 

Today is the first day if America Saves Week. Today’s theme is: Save automatically.  Do you have a savings account, yet find it difficult to find money to deposit into it? Do you have the best of intentions every month, but find you don’t have enough left over after you pay your bills to pay yourself in the form of savings? In the word’s of Michael Jackson, “You are not alone.”

This isn’t an uncommon problem — most people find it hard to save. Generally, when you receive income it is either deposited directly into your checking account, or you make the deposit yourself, either at the bank, through an ATM, or via your phone.

And then your money heads straight to your checking account, so it’s available to pay the seemingly endless stream of bills.

It’s a vicious cycle, and one that’s hard to break. But fortunately, there is a way to break it: an automatic savings plan.

America Saves Week
America Saves, I save, You save!

Why Saving Money is Hard

You may not realize this (and may not feel that this is the case for you), but most people save money as an afterthought.

When they receive income (whether it’s a paycheck, freelance work, investments or other sources), their money is allocated to bills, groceries, rent or a mortgage. After paying for these expensive items, there may or may not be much left over to use for savings (or for fun). In this scenario, the only time someone adds money to a savings account is when there’s money left over from paying the bills at the end of the month.

Unfortunately, with this mindset, there is almost never any money left over to save. By the way, if you need to change your mindset regarding money, I have a FREE e-course which you can sign up for here.

So how do you break out of this pattern? Well, I’m glad you asked, because you know I have a plan for you!

The Answer: Automatic Savings

When you make deposits into a savings account automatically and regularly, you don’t have to think about it — the money is deposited before you have time to worry about expenses or how much money will be left over. Once you get used to it, you might not even miss the money.

Thanks to modern technology, it is very easy to set up an automatic savings plan.

First, you need a savings account. Open one at the bank where you have your checking account if you don’t already have one set up, and make certain your checking and savings accounts are linked.

If you currently have direct deposit through your employer, you will find the easiest (and most effective) way to establish your automatic savings program is to have part of your paycheck directly deposited into your savings account (the rest, as usual, will flow to your checking account to cover your bills). It doesn’t matter if it is $10 or $500 — simply setting this up automatically will ensure you save money every time you are paid.

If you don’t have direct deposit, there is still an easy option available: set up an automatic transfer from your checking account to your savings account every time you’re paid. For example, if you’re paid every other Friday, you could establish an automatic transfer of a set amount of money from checking to savings to coincide with this deposit.

 Just make sure you’re aware of when the money will be deducted each month, or you may find yourself overdrawn.

Don’t Touch the Money (Unless You Need It)

This last point could be the hardest: you’ll need to learn to leave your savings in your savings account unless you need it for an emergency. The idea is for you to get used to doing without that cash to cover regular, monthly expenses. If you tap into it every time you run a little short, there won’t be anything left when you really need it. Set up your automatic savings plan and then leave the money alone to grow.

You can see more way’s to make saving automatic here

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