investing http://www.wisebread.com/taxonomy/term/285/all en-US 15 Smart Things You Can Do With Your Finances, Even if You're Broke http://www.wisebread.com/15-smart-things-you-can-do-with-your-finances-even-if-youre-broke <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-smart-things-you-can-do-with-your-finances-even-if-youre-broke" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggybank_in_middle_of_wooden_rectangles.jpg" alt="Piggy bank in middle of wooden rectangles" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you living paycheck to paycheck, unsure if you will have enough money to cover your bills every month? If so, it can seem nearly impossible to get ahead financially.</p> <p>But even if you're broke, you can focus on making small, smart money moves. By changing the way you handle your finances, you'll be able to prepare for an emergency, save for the future, and break the cycle of living paycheck to paycheck. Here are 15 smart things you can do with your finances, even if you're broke.</p> <h2>1. Pay your bills on time</h2> <p>No matter how broke you may be, failure to pay your bills on time is only going to make matters worse. Not only will this result in late fees or overdraft charges, but it also damages your credit score and could even cause your credit card's interest rate to increase.</p> <p>Typically, there are two reasons why people do not pay bills on time. One is that they don't have enough money, and the second reason is that they simply forget.</p> <p>If cash flow is your problem, you will need to figure out how you can lower your expenses while increasing your income. If disorganization causes you to miss bills, it's time to try out systems to better organize your finances. (See also: <a href="http://www.wisebread.com/5-ways-to-automate-your-finances?ref=seealso" target="_blank">5 Ways to Automate Your Finances</a>)</p> <h2>2. Start an emergency fund</h2> <p>An emergency fund can make or break your finances. Though experts say you should ideally have six months' to a year's worth of living expenses saved in an emergency fund, you don't have to let that amount overwhelm you. Even $500 can protect you from many financial emergencies.</p> <p>You can easily start an emergency fund by opening a new savings account that is specifically for emergencies. You can auto draft a few dollars out of your paycheck every pay period. This will automatically build your emergency fund without any additional effort on your part. Don't forget, these funds are only to be used in emergency situations, such as for a medical expense or car repair bill. (See also: <a href="http://www.wisebread.com/11-ways-life-is-amazing-with-an-emergency-fund?ref=seealso" target="_blank">11 Ways Life Is Amazing With an Emergency Fund</a>)</p> <h2>3. Prioritize debt</h2> <p>Debt, especially high-interest debt, can completely derail your finances. And if you're broke, it can feel nearly impossible to make any progress in paying it off. If you're having problems even making the minimum payments, it's vital to speak with your lenders as soon as possible. They may be able to get you on a repayment plan that works for you.</p> <p>The more quickly you pay off debt, the less you will pay. Even if you are struggling financially, try to find small ways to slash your budget and earn more income in order to put more money toward debt. (See also: <a href="http://www.wisebread.com/7-easy-first-steps-to-paying-off-debt?ref=seealso" target="_blank">7 Easy First Steps to Paying Off Debt</a>)</p> <h2>4. Start small with investing</h2> <p>I know, I know; when money is tight, the last thing you think you should do is siphon off money for investments. But investing even a few dollars now can change your financial future for the better. Start small. If your employer offers a match when you contribute to the 401(k) plan, aim to contribute at least enough to receive the full match. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>5. Automate your finances</h2> <p>Automating your finances is an easy way to ensure all your bills are paid and you meet all of your savings goals. You can set up autopay for most bills. Some companies, or even student loan servicers, offer a small discount if you sign up for autopay, so it is certainly worth considering.</p> <p>Keep in mind, it's a good idea to still thoroughly look over every bill even if it is on autopay. You will want to ensure that you're being billed accurately. (See also: <a href="http://www.wisebread.com/the-pros-and-cons-of-autopay?ref=seealso" target="_blank">The Pros and Cons of Autopay</a>)</p> <h2>6. Find a better bank</h2> <p>Most people find a bank and stick with it. But what if you could earn more money simply by switching your financial institution?</p> <p>When searching for a bank, there is a lot to consider. Everyone has different personal preferences, so it's important to find a bank that works for you. For instance, do you prefer to go into a physical branch? If so, you should make sure there are locations convenient for you. Are interest rates important to you? Shop around for the best deals. Do you frequent ATMs? Find a bank that offers plenty of in-network ATMs. (See also: <a href="http://www.wisebread.com/switch-to-a-better-bank-in-5-easy-steps?ref=seealso" target="_blank">Switch to a Better Bank in 5 Easy Steps</a>)</p> <h2>7. Live frugally</h2> <p>Living frugally doesn't mean you have to be cheap. You can practice frugality by simply making a few small lifestyle changes.</p> <p>Cook at home instead of eating out. Turn off the lights when you leave a room. Cut back on expensive hobbies and events. You don't have to cut everything out entirely, but by making a few frugal choices, you can save significant money every single month. (See also: <a href="http://www.wisebread.com/the-only-6-rules-of-frugal-living-you-need-to-know?ref=seealso" target="_blank">The Only 6 Rules of Frugal Living You Need to Know</a>)</p> <h2>8. Track your spending</h2> <p>When you're broke, every cent counts. The most valuable tool at your disposal is a budget. In order to start a budget, you will need to track all of your spending. Where does your money actually go? You might be surprised.</p> <p>Luckily, tracking your spending doesn't have to be an arduous task. There are plenty of apps that will automatically track your spending for you and provide analytics about your budget. (See also: <a href="http://www.wisebread.com/these-5-apps-will-help-you-finally-organize-your-money?ref=seealso" target="_blank">These 5 Apps Will Help You Finally Organize Your Money</a>)</p> <h2>9. Cut out expenses entirely</h2> <p>While you're tracking your spending, you are likely to find expenses that you didn't even know you had. What could you cut out?</p> <p>Things like cable TV, magazine subscriptions, or cleaning services might be nice, but they aren't necessary, especially if you're struggling to make ends meet. Cut these expenses out entirely and you may be able to free up a few hundred dollars in your budget every month. (See also: <a href="http://www.wisebread.com/are-you-spending-too-much-on-normal-expenses?ref=seealso" target="_blank">Are You Spending Too Much on &quot;Normal&quot; Expenses?</a>)</p> <h2>10. Communicate with your family</h2> <p>Communication is key to financial success. You'll find it very difficult, if not impossible, to succeed financially if your family is not on board. Talk to your family and friends about your financial goals. Make goals together, so that everyone is on the same page. (See also: <a href="http://www.wisebread.com/how-to-talk-to-friends-and-family-about-money-without-making-everyone-mad?ref=seealso" target="_blank">How to Talk to Friends and Family About Money (Without Making Everyone Mad)</a>)</p> <h2>11. Get organized</h2> <p>Organization can greatly improve your finances, and it costs almost nothing to be organized.</p> <p>Figure out systems that work for you. How will you track your income? Expenses? Net worth? How will you budget? Make sure all your bills get paid on time? Save money?</p> <p>You can organize your finances by setting aside as little as one hour per week. Use that hour to update your numbers, check in with your financial goals, and communicate with your family. (See also: <a href="http://www.wisebread.com/6-quick-tips-for-organizing-your-finances?ref=seealso" target="_blank">6 Quick Tips for Organizing Your Finances</a>)</p> <h2>12. Prioritize your financial goals</h2> <p>If you're saving for an emergency, socking away retirement funds, paying off credit card debt, sending your kids to college, and plugging away at your mortgage, it can be nearly impossible to hit all of your financial goals at once. Achieving your personal finance goals requires prioritization.</p> <p>Determine what goal is most important to you right now. Maybe your initial goal is to simply organize your finances, and then focus on paying off credit card debt. Once you set a focus, you'll feel less overwhelmed and you'll be better able to make discernible progress (See also: <a href="http://www.wisebread.com/6-simple-money-milestones-anyone-can-hit?ref=seealso" target="_blank">6 Simple Money Milestones Anyone Can Hit</a>)</p> <h2>13. Avoid unnecessary fees</h2> <p>Fees are typically penalties for small financial blunders, but they can add up quickly. For example, say you miss one bill because you didn't have enough money to cover it. That biller could charge you a late payment fee, plus you could receive an overdraft fee from your bank. One late bill could cost you an additional $50 or more in fees.</p> <p>If you have a couple of these a month, you'll find it hard to ever get ahead financially. By budgeting hard for a few months and building enough of a buffer in your checking account, you'll be able to prevent unnecessary fees.</p> <h2>14. Increase your income</h2> <p>Increasing your income is one of the best things you can do for your financial situation. Unfortunately, many people don't think they have control over their income. They might believe that their income is at the sole discretion of the organization they work for.</p> <p>That's not true. While your boss probably has the final say over your pay, you can always work to earn income outside of your 9-to-5. Whether you start freelancing, baby-sitting, or working a part-time job, there's no shortage of ways to earn extra cash. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=seealso" target="_blank">14 Best Side Jobs For Fast Cash</a>)</p> <h2>15. Have fun</h2> <p>Remember, you won't be successful for long if you don't allow yourself to have some fun along the way. Prioritize the things that are important to you, even if they cost money.</p> <p>Of course, you'll have to make many sacrifices, but by treating yourself every once in awhile, you will be better able to sustain your new financial lifestyle for the long haul. (See also: <a href="http://www.wisebread.com/yes-you-need-fun-money-in-your-budget?ref=seealso" target="_blank">Yes, You Need &quot;Fun Money&quot; in Your Budget</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/rachel-slifka">Rachel Slifka</a> of <a href="http://www.wisebread.com/15-smart-things-you-can-do-with-your-finances-even-if-youre-broke">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0">7 Easy Ways to Build an Emergency Fund From $0</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-your-money-is-being-a-jerk-and-how-to-fight-back">5 Ways Your Money Is Being a Jerk (And How to Fight Back)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-you-will-always-be-thankful-for">7 Money Moves You Will Always Be Thankful For</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living automating bills broke emergency funds investing money moves organizing paycheck to paycheck savings Tue, 20 Feb 2018 09:00:06 +0000 Rachel Slifka 2098610 at http://www.wisebread.com 4 Money Lessons We Can Learn From Past Presidents http://www.wisebread.com/4-money-lessons-we-can-learn-from-past-presidents <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-money-lessons-we-can-learn-from-past-presidents" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/lincoln_memorial_in_washington_dc_0.jpg" alt="Lincoln Memorial in Washington, D.C." title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Every February, Americans celebrate the presidencies of George Washington and Abraham Lincoln on the third Monday of the month. Presidents' Day is often nothing more than a day off for children in school, and a prime sale weekend for Americans to engage in their favorite sport of shopping.</p> <p>But rather than spending money on Presidents' Day, why not learn some of the most important money lessons from the lives of former presidents instead?</p> <p>Here are four vital money lessons that past presidents can teach us.</p> <h2>Lesson from George Washington: Diversify your investments</h2> <p>Our first president was both a canny strategist in war, and a very smart investor. In 18th century Virginia, tobacco farming was an extremely profitable business, and George Washington grew the crop on his farmland. Tobacco growers made a great deal of money by shipping their product back to Europe.</p> <p>However, in 1766, Washington decided to stop growing tobacco on his land, because the crop was hard on the soil and was becoming less profitable. Instead, he planted several different crops, including wheat, corn, flax, and hemp &mdash; all of which had a local demand and did not require shipping overseas. This was a very smart move, as it both diversified Washington's crop production, and ensured that he was not vulnerable to loss during the transportation process. Other Virginia farmers who continued to grow tobacco (including Thomas Jefferson) lost their shirts.</p> <p>Modern investors can learn a great deal from Washington's decision. Tobacco was the 18th century's equivalent of a &quot;sure thing,&quot; but it was much smarter to invest farmland in diverse crops that were locally needed. Instead of betting on one &quot;sure thing&quot; investment, modern Americans should plan to put their money in diverse assets so they are not overdependent on any single asset or industry. (See also: <a href="http://www.wisebread.com/first-rule-of-financial-wins-avoid-losses?ref=seealso" target="_blank">First Rule of Financial Wins: Avoid Losses</a>)</p> <h2>Lesson from Thomas Jefferson: Tracking your spending isn't enough</h2> <p>Thomas Jefferson is one of our country's most beloved founding fathers. The red-haired intellectual was responsible for writing the Declaration of Independence and went on to become the third U.S. president. But despite his overwhelming political success, Jefferson's last years were plagued by financial difficulties, and he died completely broke.</p> <p>What's even more surprising about Jefferson's money trouble is the fact that he obsessively tracked his spending throughout his life. According to the overseer at Monticello, Jefferson's estate, &quot;Mr. Jefferson was very particular in the transaction of all his business. He kept an account of everything. Nothing was too small for him to keep an account of it.&quot;</p> <p>Unfortunately, the daily tracking of Jefferson's finances did not keep him from spending well beyond his means. Jefferson had very fine tastes, and would spend lavishly on wine, furnishings, and updates to his estate at Monticello. Though he dutifully recorded all of his over-the-top purchases (not to mention each and every small purchase), it did not stop him from spending more than he could possibly afford.</p> <p>Modern Americans have a much easier time tracking their spending than Jefferson did, since there are now any number of smartphone apps and online tracking programs that can help you get a handle on your money. However, we need to remember from Jefferson's example that knowing where every penny is going is not enough. We also need to reduce our spending if we want to get out of debt and build wealth. (See also: <a href="http://www.wisebread.com/these-5-apps-will-help-you-finally-organize-your-money?ref=seealso" target="_blank">These 5 Apps Will Help You Finally Organize Your Money</a>)</p> <h2>Lesson from Abraham Lincoln: Embrace frugality</h2> <p>Abraham Lincoln's impoverished childhood in a log cabin not only adds to the heroic patina of his life's story, but it also helps to explain our 16th president's lifelong frugality. In fact, Lincoln saved much of the $25,000 annual salary he made as president. According to author Harry E. Pratt, &quot;[Lincoln's] estate grew from $15,000 in 1861 to more than $85,000 at his death. The increment came principally from his $25,000 yearly salary as president.&quot;</p> <p>Lincoln was also frugal with public money, becoming angry when his wife, Mary Todd Lincoln, blew her budget by almost $7,000 while refurbishing the White House &mdash; after Congress had already allotted $20,000 for her to use. He recognized that it was unseemly for Mrs. Lincoln to spend $20,000, much less $27,000, on furnishings and upgrades when Union soldiers were going without blankets.</p> <p>The importance of being careful with one's money is a timeless lesson, but it's worth noting that Lincoln maintained frugality throughout his lifetime, even after he no longer needed to be cognizant of every penny spent. From Lincoln's example, modern Americans can learn that being frugal, even after one's financial situation improves, is a smart way to handle money. (See also: <a href="http://www.wisebread.com/the-only-6-rules-of-frugal-living-you-need-to-know?ref=seealso" target="_blank">The Only 6 Rules of Frugal Living You Need to Know</a>)</p> <h2>Lesson from Ulysses S. Grant: Only invest in what you understand</h2> <p>Beloved Civil War hero (and the impressively bearded face on our $50 bill), Ulysses S. Grant was a talented Army general and a well-liked president. However, he struggled with money in his personal life from beginning to end. In particular, after the end of his presidency, he decided to settle in New York and try to make a fortune in banking. He partnered with 33-year-old Ferdinand Ward, who at the time was known as the &quot;Young Napoleon of Wall Street,&quot; to create the investment firm of Grant and Ward.</p> <p>Unfortunately, Grant's lack of financial savvy was his downfall. Ferdinand Ward was nothing but a swindler, and Grant and Ward was simply a Ponzi scheme that Ward set up to bilk money out of Grant's famous and rich friends.</p> <p>When the entire scheme blew up, Grant had been diagnosed with cancer and knew he had only a short time to live. The former president was only able to avoid leaving his wife destitute by writing his memoirs and having his friend Mark Twain publish them. The book became a best-seller, but Grant did not live to see it.</p> <p>The sad story of Grant's financial troubles can remind modern Americans of the importance of truly understanding your investments. Grant fell victim to a scam artist because he did not understand the investments he was putting his money (and name) behind. We should all remember Grant's misfortune when we are tempted to jump on something we don't understand that seems to be going gangbusters. (See also: <a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make?ref=seealso" target="_blank">9 Costly Mistakes DIY Investors Make</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/4-money-lessons-we-can-learn-from-past-presidents">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-lessons-we-can-learn-from-beyonc">7 Money Lessons We Can Learn From Beyoncé</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-lessons-i-learned-selling-office-supplies">8 Money Lessons I Learned Selling Office Supplies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/21-things-that-young-adults-absolutely-need-to-know-about-money">21 Things That Young Adults Absolutely Need to Know About Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-lessons-on-how-to-be-a-financial-grownup-from-bobbi-rebell">6 Lessons on How to Be a Financial Grownup From Bobbi Rebell</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-38-money-lessons-we-can-learn-from-celebrities">Flashback Friday: 38 Money Lessons We Can Learn From Celebrities</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance abraham lincoln americans frugal living george washington history investing money lessons president's day thomas jefferson u.s. presidents ulysses s. grant Mon, 19 Feb 2018 10:00:06 +0000 Emily Guy Birken 2104969 at http://www.wisebread.com 8 Ways to Profit Off Your Cabin Fever http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-to-profit-off-your-cabin-fever" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_sitting_near_windows.jpg" alt="Woman sitting near windows" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Winter can be the pits. The weather's cold, and getting outside can be tough. You've got cabin fever, and you can't wait for spring.</p> <p>But perhaps you can use the time stuck inside to your advantage. Now may be the time to get a handle on your finances and perhaps even make a little extra money while you're cooped up.</p> <p>Consider these ways to improve your finances during the long, cold winter.</p> <h2>1. Optimize your investments</h2> <p>You may have spent much of the last year simply watching your investments do their thing, and thankfully they've probably done well. Every portfolio is due for a review now and again, so consider taking a look at your investments to ensure you're set up for maximum returns.</p> <p>This may mean rebalancing your stocks and mutual funds so you aren't disproportionately invested in one area. It may mean selling some investments that have underperformed, or doing the same for stocks that may be due for a sharp fall. Making some good choices now could allow you to enjoy another year of worry-free investing. (See also: <a href="http://www.wisebread.com/how-an-exit-strategy-can-make-you-a-better-investor?ref=seealso" target="_blank">How an Exit Strategy Can Make You a Better Investor</a>)</p> <h2>2. Get your taxes in order</h2> <p>Your tax returns will be due in mid-April. It's always wise to avoid waiting until the last second to file, and you should consider using this winter time to research the best ways to avoid paying too much at tax time.</p> <p>Perhaps there are tax credits and deductions you never knew you could take advantage of. Maybe you have time to make IRA contributions or make other moves to reduce your tax liability. Or maybe you need time to dig up those receipts from charities you donated to in 2017. Doing taxes may not seem like fun, but it can be interesting, especially if you do the work to maximize your savings. (See also: <a href="http://www.wisebread.com/7-surprising-tax-deductions-you-might-miss?ref=seealso" target="_blank">7 Surprising Tax Deductions You Might Miss</a>)</p> <h2>3. Put together a pitch for a raise</h2> <p>Now may be the time of year when you can focus on advancing your career. Maybe you've been seeking a raise or promotion for a while, but haven't had the time to build your case. With a little time on your hands, now you may have the ability to develop a solid pitch to your supervisor. This may mean collecting examples of goals you've achieved, or ways in which you've helped the company. It may mean collecting data on salaries and how yours compares to the industry average. Take the time to find the right tone, make the right arguments, and go for it. (See also: <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise?ref=seealso" target="_blank">5 Times You Should Demand a Raise</a>)</p> <h2>4. Look for a new job</h2> <p>What if you don't want a promotion or raise, because you can't stand your job to begin with? What if you feel like the only way to make more money is to switch companies or careers? Well, use the winter months to look for a new one. If you're stuck inside, take the time to update your resume, get active on LinkedIn, and reach out to your online network.</p> <p>There are many employers that post new jobs at the start of the year, because they may have received the budget approval to hire. The caveat to this is that many people look for new jobs as part of their New Year's resolutions, so you may face some stiff competition. But if you want a new job and know what you're looking for, take advantage of the time to search for a new career in a thoughtful and deliberate way. (See also: <a href="http://www.wisebread.com/8-signs-you-should-quit-your-job?ref=seealso" target="_blank">8 Signs You Should Quit Your Job</a>)</p> <h2>5. Develop a side hustle</h2> <p>Perhaps a raise or a new job isn't yet in the cards. That's OK, you can still boost your income by finding other ways to make money on the side. Maybe now is the time to develop that pottery hobby into something revenue producing. Perhaps all this time inside the house will lead you to start a profitable blog or podcast. Whatever it is, you have the ability to make some extra cash just by leveraging your current talents. And who knows? Maybe the side hustle can eventually become your main hustle. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=seealso" target="_blank">14 Best Side Jobs For Fast Cash</a>)</p> <h2>6. Create budgets</h2> <p>Why not use the start of a new year to get smarter about spending less money than you earn? Now is the time to take a look at your spending and develop real limits on what you're buying and how much you are paying.</p> <p>Ideally, you should have numerous budgets for things like eating out, entertainment, housing costs, automotive expenses, and even gifts. These budgets should be attainable but allow you to save money at the end of each month. Sticking to budgets can be hard, but even if you lose discipline during the year, you may succeed in reducing expenses in some areas and making progress in reducing debt or boosting your savings. (See also: <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=seealso" target="_blank">Build Your First Budget in 5 Easy Steps</a>)</p> <h2>7. Review your insurance policies</h2> <p>Oh yeah, everyone loves looking at insurance policies in their spare time. Exciting stuff, huh? It's true that this does not seem like fun, but a periodic review of your policies related to auto insurance, homeowners insurance, health insurance, and life insurance &mdash; as well as the rates you are paying &mdash; is a good financial move.</p> <p>During this process, you may find that you are underinsured and placing yourself at risk, or that you are paying too much for insurance for someone in your situation. If you do a little rate shopping, you may find you can save significant money by switching providers. (See also: <a href="http://www.wisebread.com/7-times-to-update-your-homeowners-insurance?ref=seealso" target="_blank">7 Times to Update Your Homeowners Insurance</a>)</p> <h2>8. Put on a sweater</h2> <p>When you're inside during the winter, you'll be tempted to crank that thermostat for maximum comfort. Consider instead keeping the house temperature lower and simply wearing more layers. While you may feel like you need the thermostat set to 72, you could probably get used to having it below 68.</p> <p>Last year, my family's main heater broke during a snowstorm, and our house temperature fell into the 50s. Guess what? We threw on some extra sweatshirts, cuddled under some more blankets, and survived fine. Every few degrees of temperature on the thermostat could add up to hundreds of degrees &mdash; and dollars &mdash; annually, so dial it back and save. (See also: <a href="http://www.wisebread.com/5-big-winter-expenses-that-could-freeze-your-budget?ref=seealso" target="_blank">5 Big Winter Expenses That Could Freeze Your Budget</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-the-moment-you-get-a-promotion">8 Money Moves to Make the Moment You Get a Promotion</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-software-tools-worth-the-price">7 Money Software Tools Worth the Price</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-retirement-latte">The Retirement Latte</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-fast-ways-to-restock-an-emergency-fund-after-an-emergency">6 Fast Ways to Restock an Emergency Fund After an Emergency</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance budgeting cabin fever deductions investing job hunting making money promotions raises rebalancing side gigs side hustle taxes Fri, 09 Feb 2018 10:00:05 +0000 Tim Lemke 2100157 at http://www.wisebread.com 5 Signs You're Financially Average — And How to Improve http://www.wisebread.com/5-signs-youre-financially-average-and-how-to-improve <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-signs-youre-financially-average-and-how-to-improve" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/helpless_woman_having_financial_problems.jpg" alt="Helpless woman having financial problems" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are plenty of average statistics that help us identify trends. The average height for women in the U.S. is 5 feet 4 inches. The average American lives to the ripe old age of 78.74 years. The average four-year-old asks 437 questions a day &mdash; OK, that's actually a myth. However, spend an afternoon with a pint-size philosopher, and that myth may be more accurate than we think.</p> <p>When it comes to personal finances, aiming for average is a trend you want to avoid in most cases.</p> <p>Data from the 2014 U.S. Census lists the average American salary at just north of $70,000. But the average American is living close to the edge, financially speaking. The average household debt is $132,000. The average new car loan term is 65 months. The average person between ages 55 and 64 only has around $104,000 put away for retirement. And the average American doesn't have $500 in a savings account to cover emergencies.</p> <p>If you're living from paycheck to paycheck, unable to pay your credit card balances in full each month, or neglecting your retirement savings, chances are you're an average American. Here are a few things to focus on in order to relocate to the land of better-than-average.</p> <h2>1. Pay off debt and keep debt low</h2> <p>Improving your savings rate is difficult when living up to or beyond your income levels is buffered by debt. Continually taking on additional payments can make it very difficult to redirect disposable cash to meet savings goals. Eliminating debt carried month-to-month on credit cards, student loans, or auto loans will free up money, save on interest and late fees, and remove the added stress of managing those bills every month.</p> <p>Planning your spending, saving to pay cash for big ticket items, and building an emergency fund will stave off the need to use debt to support your lifestyle. You may need to work with a financial counselor to help you craft a plan to improve your money management habits and pay off debt quickly. Paying off and staying out of debt will make you an above-average financial rock star in this country. (See also: <a href="http://www.wisebread.com/7-easy-first-steps-to-paying-off-debt?ref=seealso" target="_blank">7 Easy First Steps to Paying Off Debt</a>)</p> <h2>2. Become a savings superstar</h2> <p>You might not be able to save 60 percent of your income, like the blogger behind DistilledDollar.com did, starting tomorrow. Actually, Matt's ability to save evolved over the past three years. &quot;We started out saving just 10 percent of our income,&quot; he says.</p> <p>By looking at ways to cut back on simple expenses like his dry cleaning or making meals at home, Matt was able to make adjustments that added up. Moving to a smaller apartment within walking distance from his job allowed him to cut his overhead and ditch the need for a car. Fewer expenses means Matt keeps more of his hard-earned cash.</p> <p>When you save 10 percent of your income (excluding retirement savings), you're already doing much more for your savings than the average American. (See also: <a href="http://www.wisebread.com/why-your-personal-savings-rate-matters?ref=seealso" target="_blank">Why Your Personal Savings Rate Matters</a>)</p> <h2>3. Learn to invest</h2> <p>Losing money is not on the average person's to-do list. So, I understand why many Americans tread lightly here. But learning to invest your money is a must if you want to break out of the average doldrums of financial life.</p> <p>Hilary Hendershott, certified financial planner and host of <em>The Profit Boss</em> podcast, says that most people do not max out their 401(k) retirement accounts. &quot;Start there. You can save $18,500 a year if you're under 50,&quot; she says.</p> <p>Beyond maximizing the benefits of your tax-deferred investment options, dipping your toe into the world of investing may start with interviewing financial advisers to help you navigate these new waters. Seek out independent advisers who are fiduciaries &mdash; this just means they will advise you based on <em>your </em>best interests.</p> <p>However you decide to begin, Hendershott suggests you steer clear of national financial news television programs. &quot;It's all financial drama. There's always something wrong. It's not their job to help you make prudent choices. It is their job to get your eyes on the screen to sell advertising,&quot; she says. (See also: <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news?ref=seealso" target="_blank">Want Your Investments to Do Better? Stop Watching the News</a>)</p> <h2>4. Practice an attitude of gratitude</h2> <p>When we're living beyond our means using debt to prop up an inflated lifestyle, a lack of contentment may be the issue. A 2016 Harris Poll identified what they called the American Happiness Index to be 31 out of a scale of 100. That number is down slightly, but hovers in the low 30s pretty consistently, year to year.</p> <p>Appreciating what you have until you can save and pay cash for its replacement will help you avoid living financially overextended and being unhappy like so many of your neighbors.</p> <h2>5. Audit your associations</h2> <p>Speaking of those around you, Jim Rohn famously quipped, &quot;You're the average of the five people you spend most of your time with.&quot; Rohn, a motivational speaker and successful businessman, was likely leaning on the law of averages to back up his claim. That is, the outcome in any situation will be the average of all potential outcomes.</p> <p>If the theory is correct, to improve financially, start hanging with other people who are fiscally responsible. Think about it. If your girlfriends are known for planning last-minute getaways and you have a penchant for plastic, these trips can contribute to financial instability. If your family places a premium on material items without regard for the ability to pay, you might be absorbed into that overspending way of life.</p> <p>Should you drop your friends and family like a bag of bricks because they overspend? That's not realistic. Instead, try spending more time with those who may be less financially responsible on <em>your</em> terms. Invite them to events and outings that are budget-friendly. Meanwhile, spend more time with those in your circle who will appreciate and support your journey to financial self-improvement. Seek out groups in the form of investment clubs or money meetups that will expose you to like-minded buds. In this way, you can balance out the negative financial influences. (See also: <a href="http://www.wisebread.com/10-types-of-friends-who-are-costing-you-money?ref=seealso" target="_blank">10 Types of Friends Who Are Costing You Money</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-signs-youre-financially-average-and-how-to-improve&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Signs%2520You%2527re%2520Financially%2520Average%2520%25E2%2580%2594%2520And%2520How%2520to%2520Improve_0.jpg&amp;description=5%20Signs%20You're%20Financially%20Average%20%E2%80%94%20And%20How%20to%20Improve"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Signs%20You%27re%20Financially%20Average%20%E2%80%94%20And%20How%20to%20Improve_0.jpg" alt="5 Signs You're Financially Average &mdash; And How to Improve" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/toni-husbands">Toni Husbands</a> of <a href="http://www.wisebread.com/5-signs-youre-financially-average-and-how-to-improve">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-just-5-a-day-can-improve-your-financial-future">How Just $5 a Day Can Improve Your Financial Future</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-even-millionaires-arent-happy-about-their-finances">Why Even Millionaires Aren&#039;t Happy About Their Finances</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-really-need-to-pay-yourself-first-seriously">7 Reasons You Really Need to Pay Yourself First (Seriously)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt repayment financially average friends gratitude happiness investing personal audit saving money Tue, 30 Jan 2018 09:30:08 +0000 Toni Husbands 2093196 at http://www.wisebread.com How Just $5 a Day Can Improve Your Financial Future http://www.wisebread.com/how-just-5-a-day-can-improve-your-financial-future <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-just-5-a-day-can-improve-your-financial-future" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/five_dollar_bank_note_flying.jpg" alt="Five Dollar bank note flying" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As a penny pincher, I sometimes get into debates with people about whether cutting back on small expenses really makes much difference in the grand scheme of things. For example, if you are trying to put away $1 million, is it worth the effort to save only a few dollars every day?</p> <p>Let&rsquo;s look at what investing $5 per day could do for your financial future. The easiest way to come up with an extra few bucks per day is to simply spend less &mdash; and that can be easy, since there are plenty of mindless ways you're probably wasting money. If your spending is already throttled back as far as you want to take it, you could find a <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=internal" target="_blank">side hustle for fast cash</a>.</p> <h2>Stuffing $5 per day under your mattress</h2> <p>Now that you have identified a way to find $5 per day that you can save, let&rsquo;s look at how your fund would grow if you put your cash under your mattress with no interest or growth:</p> <ul> <li> <p>After 10 years: $18,263.</p> </li> <li> <p>After 20 years: $36,525.</p> </li> <li> <p>After 30 years: $54,788.</p> </li> <li> <p>After 40 years: $73,050.</p> </li> <li> <p>After 50 years: $91,313.</p> </li> <li> <p>After 60 years: $109,575.</p> </li> </ul> <p>As you can see, saving $5 per day does add up to real money over time if you do it long enough. But to really get the benefit of putting money away for the future, you need to put it to work so it can grow.</p> <p>Due to inflation, your stash of cash will eventually lose value if you keep it under your mattress or in a low-interest savings account. Since prices tend to rise over time, your money will have less buying power in the future than it has now. If you invest your money instead, it will grow faster than inflation and your funds will have more buying power as time passes by.</p> <h2>Invest $5 per day</h2> <p>Here&rsquo;s what would happen if you invested your $5 per day. Let's assume a return of 8 percent (instead of the 0 percent you would get by simply stuffing it under your mattress):</p> <ul> <li> <p>After 10 years: $27,843.</p> </li> <li> <p>After 20 years: $89,643.</p> </li> <li> <p>After 30 years: $226,818.</p> </li> <li> <p>After 40 years: $531,296.</p> </li> <li> <p>After 50 years: $1,207,130.</p> </li> <li> <p>After 60 years: $2,707,236.</p> </li> </ul> <p>Investing $5 per day with a return of 8 percent can turn into $1 million after about 48 years. Clearly, this has a huge advantage over simply hoarding the cash. But how can you invest your money so that it grows at around 8 percent? No one knows how future investments will perform, but historical average returns from stock market and real estate investments have been around 8 percent.</p> <h2>How to invest small amounts of money</h2> <p>Can you really invest a small amount of money such as $5 at a time? I faced this situation when I wanted to start contributing $50 per month ($1.67 per day) to a Roth IRA. I found a great mid-cap growth fund with a low expense ratio, but a minimum initial investment of $2,500 was required to open an account. I corresponded with the fund manager, and he agreed to set up the account with automatic deposits of $50 per month from my checking account. The balance of this investment fund from my contributions of $1.67 per day has grown to over $4,000 so far. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <p>A good way to manage investing small amounts is to accumulate your daily savings in your bank account and set up an automatic monthly contribution to an investment account.</p> <p>If you have any high-interest credit card debt, making extra payments on that debt can have a bigger financial impact than investing the money. Set up an automatic payment to your highest interest credit card from your $5 per day funds. After your credit cards are paid off, you can switch to paying down other debts or start contributing to an investment account. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>Benefits of investing $5 per day</h2> <p>The small step of setting aside an extra $5 per day to invest can boost your fund balance down the road, but taking this action has other benefits. Establishing the habit of identifying extra money and investing it is the key to financial success. You don&rsquo;t need to wait until someday when you have more money &mdash; you can start saving and investing today with whatever small amount you can scrape together. Even the process of finding &ldquo;extra&rdquo; money to invest can have benefits. You might find that cutting back spending on things you don&rsquo;t really need makes life less stressful. (See also: <a href="http://www.wisebread.com/18-times-in-life-when-less-is-more?ref=seealso" target="_blank">18 Times in Life When Less Is More</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-just-5-a-day-can-improve-your-financial-future&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Just%25205%2520Dollars%2520a%2520Day%2520Can%2520Improve%2520Your%2520Financial%2520Future.jpg&amp;description=How%20Just%205%20Dollars%20a%20Day%20Can%20Improve%20Your%20Financial%20Future"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Just%205%20Dollars%20a%20Day%20Can%20Improve%20Your%20Financial%20Future.jpg" alt="How Just $5 a Day Can Improve Your Financial Future" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-just-5-a-day-can-improve-your-financial-future">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-financial-moves-you-will-always-regret">9 Financial Moves You Will Always Regret</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-millennials-with-kids-may-become-the-richest-retirees-yet">How Millennials With Kids May Become the Richest Retirees Yet</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money">Don&#039;t Let Outdated Money Advice Endanger Your Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance cash compound interest investing rate of return retirement saving money under your mattress Fri, 19 Jan 2018 10:00:05 +0000 Dr Penny Pincher 2086415 at http://www.wisebread.com 7 Things You Should Know About Your 401(k) Match http://www.wisebread.com/7-things-you-should-know-about-your-401k-match <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-things-you-should-know-about-your-401k-match" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_with_401k_nest_egg.jpg" alt="Piggy bank with 401(k) nest egg" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you are working and have access to a 401(k) plan from your employer, you may have heard references to a &quot;company match&quot; on contributions. What does this mean? It means that your employer is helping you save for retirement by matching the money you contribute, up to a certain amount.</p> <p>These matching funds can be a very powerful way to save money over time, and it's important take advantage of a company's full 401(k) match if you can. Every company has different policies regarding these matching funds, and things can often be confusing for new investors. Here are some key things to know.</p> <h2>1. The match is free money</h2> <p>A 401(k) match is not a bonus based on your job performance. It's not a payment made in lieu of your salary. It's truly a contribution from your company to help you save for your retirement, which you can use to invest in a variety of mutual funds and other investments.</p> <p>There's only one catch, which is that you need to direct a portion of your own money into the 401(k) plan first. That's why they call it a match. Some employers will automatically sign you up for the 401(k) plan and set aside a certain percentage of your salary as a contribution each pay period. (Don't worry &mdash; you can always adjust that amount.) If you are unclear on how much you should contribute to your 401(k), try to at least put aside enough to get the maximum company match. If you miss out on the full match, you are missing out on free cash that could add up to tens of thousands of dollars or more over time. (See also: <a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one?ref=seealso" target="_blank">How to Tell if Your 401K Is a Good or a Bad One</a>)</p> <h2>2. Companies match differently</h2> <p>There is no standard or required way for employers to match 401(k) contributions. Some companies are very generous and match every dollar you contribute, no matter how much you put in. Others will match only a very small percentage. Matching contributions can change if a company is doing better or worse financially. When searching for a job, learning about a company's matching policy can help you decide whether you want to work there. Think of the 401(k) plan as part of a company's overall benefits package.</p> <p>A company's match may also offer some insight into the overall health of the firm. If a company recently stopped matching contributions, that's a red flag that the company may be in trouble.</p> <h2>3. There is often a &quot;vesting&quot; period</h2> <p>Many employers will begin matching contributions as soon as you begin working there, but you may have to give back those matching funds if you leave the company after a specific time. For example, if you've been setting aside 5 percent of your salary into your 401(k) and your company is matching that, you don't necessarily get to keep the company's contributions right away. You may have to wait one year, three years, or even longer to keep that money permanently. This is called a <em>vesting period</em>.</p> <p>About half of employers offer immediate vesting, according to one Vanguard survey. But others have different vesting schedules. Some will allow you to keep a portion of company contributions after a certain amount of time, and increase that total annually until you are fully vested. (Example: 20 percent vested in year one, 40 percent vested in year two, etc.)</p> <p>Vesting schedules and policies can be confusing and can change, so be sure to read your 401(k) plan documents carefully. And if your company does have a vesting period for its 401(k) match, try to avoid leaving before that time is up, as doing so could result in you forfeiting thousands of dollars plus any future investment gains. (See also: <a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer?ref=seealso" target="_blank">8 Critical 401(k) Questions You Need to Ask Your Employer</a>)</p> <h2>4. Contribute more, get more</h2> <p>Here's a brain teaser for you: If Company A makes a dollar-for-dollar match on all employee contributions up to 4 percent, and Company B matches contributions up to 8 percent at 50 cents on the dollar, which company is contributing more?</p> <p>The answer is that they are both contributing the same amount. The difference, however, is that Company B is using its matching funds to incentivize workers to contribute more of their own money. If you take advantage of Company B's full match, you will have more money in total because your own contribution will be higher. Contributing more yourself will also save you money because those funds are deducted from your taxable income.</p> <h2>5. Matching money doesn't count against contribution limits</h2> <p>The IRS places a limit on the amount of money you can contribute to a 401(k) each year. For 2018, that limit will be $18,500. It's important to note that this limit only applies to money that the <em>individual </em>contributes. Money from the company match does not count against this total. Thus, the total amount of money from all sources going into your 401(k) each year could be much more than the IRS limit. Feel free to contribute as much as you can, take advantage of the full company match, and watch your savings grow. (See also: <a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future?ref=seealso" target="_blank">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a>)</p> <h2>6. Sometimes the match comes as company stock</h2> <p>In some cases, employers will contribute all or part of a 401(k) match in the form of company stock. While free company stock is better than nothing, it's risky to have it comprise too much of your savings. Your employer already pays your salary, so your financial security is already tied to the company's success. Past employees of Enron and other failed companies can attest to the risk of having too much of their savings tied up in company stock.</p> <p>If you receive company stock in your retirement plan, consider adjusting your investment mix so company stock doesn't comprise more than 5 to 10 percent of your portfolio. (See also: <a href="http://www.wisebread.com/7-things-you-need-to-know-about-investing-in-company-stock?ref=seealso" target="_blank">7 Things You Need to Know About Investing in Company Stock</a>)</p> <h2>7. It doesn't pay to front load your contributions</h2> <p>Let's say it's January and you just got a big pay raise, a bonus, or both. You may be tempted to throw as much money as you can into your 401(k) at that point. If your employer matches based on pay period, you may miss out on matching funds if you max out your contributions early.</p> <p>So for example: Let's say you earn $200,000 annually and choose to set aside 30 percent of your income per month in the first few months of the year. And let's say your company matches all contributions up to 5 percent of your salary per pay period. Under this scenario, you will have maxed out your contributions by April and won't be able to contribute any more for the rest of the year. Meanwhile, your employer has only contributed up to the maximum company match for those first few months. In this case, your company will have put in about $3,332 when you would have received $10,000 in matching funds if you had spread the contributions out.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-things-you-should-know-about-your-401k-match&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Things%2520You%2520Should%2520Know%2520About%2520Your%2520401%2528k%2529%2520Match.jpg&amp;description=7%20Things%20You%20Should%20Know%20About%20Your%20401(k)%20Match"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Things%20You%20Should%20Know%20About%20Your%20401%28k%29%20Match.jpg" alt="7 Things You Should Know About Your 401(k) Match" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-401k-in-2017-heres-whats-new-for-you">Your 401K in 2017: Here&#039;s What&#039;s New for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">6 Reasons Every Millennial Needs a Roth IRA</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) contributions employers investing matching stocks vesting periods Wed, 17 Jan 2018 09:30:05 +0000 Tim Lemke 2085770 at http://www.wisebread.com 4 Smartest Ways to Use a Home-Equity Loan http://www.wisebread.com/4-smartest-ways-to-use-a-home-equity-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-smartest-ways-to-use-a-home-equity-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/save_money_for_home_cost.jpg" alt="Save money for home cost" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Building equity that you can tap into for a loan is often touted as one of the main benefits of owning a home. This loan can be used to pay for everything from major home improvements to a child's college education.</p> <p>But the truth is that there are good ways and bad ways to use your home's equity. There's also a big risk in doing so: Home equity loans are secured by your home. If you default on your payments, your lender can, as a last resort, take your home. That can't happen with unsecured debt such as a personal loan or credit card debt. (See also: <a href="http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you?ref=seealso" target="_blank">Home Equity Loan or HELOC: Which Is Right for You?</a>)</p> <p>How should you use a home-equity loan? These are some of the best ways.</p> <h2>1. Fund a major home improvement</h2> <p>Homeowners have long used home equity loans to fund big home improvements such as kitchen remodels or master suite additions. And they can be a smart use of your home equity dollars. Just don't expect a complete return on your investment if you plan on using these improvements to help<em> sell</em> your home.</p> <p>While a newly renovated kitchen or updated master suite can make your home more attractive to potential buyers, and could help you sell your home faster, don't expect a dollar-for-dollar increase in your sales price. If you spent $15,000 on a new kitchen, that renovation likely won't boost your home's final sales price by $15,000. Buyers will still pay what your home is worth in today's market, no matter how much you improve it.</p> <p>But if you are using your renovations either for your own enjoyment or to increase the number of buyers who will be interested in your home, using a home-equity loan makes sense. Remember, though, if you plan to sell your home before you pay off your loan or line of credit, you'll have to use the profits from your home sale to not only pay off your primary mortgage, but also your loan. That will eat into the money you take away from your sale.</p> <h2>2. Pay off high-interest credit card debt</h2> <p>Borrowing from your home equity comes with far lower interest rates than credit card debt. While credit card interest rates can reach 20 percent or more, home equity loans have rates that typically fall somewhere between 4 and 5 percent, depending on the terms. It makes financial sense to take out one of the lower-rate loans and use the money to pay off credit cards.</p> <p>There are caveats, though. Credit card debt is unsecured debt. If you can't afford to make your monthly payments, you won't lose your home because of it. The same isn't true of home equity loans. If you can't afford your monthly payments with these loans, you could lose your home. So only take out a home-equity loan for credit card debt if you're absolutely sure you can afford the monthly payments.</p> <p>Taking out a home-equity loan doesn't make sense, either, if your credit card debt isn't that high. If your credit card debt is manageable, instead of taking out a loan, pay a bit extra each month to reduce that debt over time. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>3. A child's college education</h2> <p>A home-equity loan can help you pay for a child's college education. And it might be a more attractive option for parents than taking out a private loan or a federal PLUS student loan that could come with high interest rates.</p> <p>Be careful, though: You don't want to sacrifice your own retirement to fund your child's college education. If taking out a loan to help your children pay tuition will make it impossible for you to save enough for your own retirement, don't take out any loan, including a home-equity loan. Your children do have options for paying for college, from taking out their own student loans to attending more affordable universities.</p> <p>Your priority should be to save for your retirement. If you're on track for this and can afford to help, a home-equity loan can be a smart way to do that. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>4. Use it to invest</h2> <p>If you've always wanted to invest more in the stock market, a home-equity loan can help. Say you borrow money from your equity at an interest rate of 4.25 percent, and you use these dollars to invest. If your investment yields a conservative return of 8 percent, you'll have made a solid chunk of money.</p> <p>Of course, there are risks. There is never any guarantee that your investment will increase in value, and you could even realize a loss. But if you are willing to take on this risk, and you can afford a possible loss, then investing home equity dollars into the market could make you wealthier.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-smartest-ways-to-use-a-home-equity-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Smartest%2520Ways%2520to%2520Use%2520a%2520Home-Equity%2520Loan.jpg&amp;description=4%20Smartest%20Ways%20to%20Use%20a%20Home-Equity%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Smartest%20Ways%20to%20Use%20a%20Home-Equity%20Loan.jpg" alt="4 Smartest Ways to Use a Home-Equity Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-smartest-ways-to-use-a-home-equity-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-questions-to-ask-before-applying-for-a-heloc">5 Questions to Ask Before Applying for a HELOC</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-benefits-of-carrying-a-mortgage-into-retirement">5 Benefits of Carrying a Mortgage Into Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-tips-to-sell-your-condo-fast">6 Tips to Sell Your Condo Fast</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-home-renovations-that-could-hurt-your-homes-value">5 Home Renovations That Could Hurt Your Home&#039;s Value</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing borrowing college costs high interest debt home equity loans investing lending renovations smart uses tuition Fri, 05 Jan 2018 09:30:10 +0000 Dan Rafter 2077707 at http://www.wisebread.com The Financial Perks of Being in Your 20s http://www.wisebread.com/the-financial-perks-of-being-in-your-20s <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-financial-perks-of-being-in-your-20s" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_cash_840782788.jpg" alt="Woman making it rain with cash" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Being young is supposed to be awful these days. Jobs for new graduates pay a pittance, the cost of housing is high, and you are drowning in a vast ocean of student loan debt. With such daunting financial challenges on your plate, how are young people ever supposed to get ahead?</p> <p>Cheer up! Despite all the negative news, things aren't so bad for people in their 20s. You've got flexibility, perks, and time on your side. Here's why being young isn't so bad from a financial standpoint. (See also: <a href="http://www.wisebread.com/the-6-biggest-financial-decisions-in-your-20s?ref=seealso" target="_blank">The 6 Biggest Financial Decisions in Your 20s</a>)</p> <h2>Your expenses are low</h2> <p>While it's true that young people may be saddled with student loans, and the cost of housing may be high in places where they are seeking work, people in their 20s can generally afford to get by without big budgets. You are less likely to have children at this stage of your life, which means a smaller food budget and no expenses related to child care or schooling. You can be comfortable in a smaller living space, perhaps with roommates who will share the rent burden. If you need a car, you can probably get by with a subcompact with great fuel mileage and low maintenance costs.</p> <h2>Your investments have time to grow</h2> <p>When you invest for retirement, time is your greatest ally. The earlier you start, the more time your investments have to grow. If you are in your 20s, you may have as many as 40 years to contribute to a retirement plan, and you'll see the enormous power of compounding gains. There are undoubtedly people in their 40s and 50s who look back on their life and wish they had saved more money at a younger age. If you are under age 30, relish the opportunity to invest aggressively now and see a huge stockpile of cash later. (See also: <a href="http://www.wisebread.com/7-personal-finance-milestones-every-20-and-30-year-old-should-hit?ref=seealso" target="_blank">7 Personal Finance Milestones Every 20 and 30 Year Old Should Hit</a>)</p> <h2>You can stay on your parents' health insurance</h2> <p>One of the more popular provisions in the Affordable Care Act allows a person to remain on their parents' health care plan until they turn 26. This is a huge benefit to young people who may still be in school or dealing with unsteady employment at first. If you are 25 or under and on your parents' plan, you may be able to save more than $200 in monthly premiums.</p> <h2>If you pay for health insurance, it can be cheap</h2> <p>Even if you don't get insurance through your folks, you may find that insurance is relatively inexpensive for a person your age. People under 30 are generally pretty healthy and don't represent a high risk pool for insurers, so premiums are likely to be manageable at this stage of your life. According to a price index report from eHealth, a private online insurance exchange, people between ages 18 and 24 paid an average $217 in monthly premiums in 2017, and those between 25 and 34 paid $283. Premiums jumped to $361 for those aged 35&ndash;44, and $478 for those aged 45&ndash;54.</p> <p>Additionally, because young people are generally healthier, they can afford to take a calculated risk by purchasing insurance with lower premiums in exchange for a higher deductible.</p> <h2>You can mooch without guilt</h2> <p>Go ahead, sleep on your friends' sofa for a few weeks. Accept that offer for a free lunch. Tell your brother you'll pay him back later for that movie ticket. It's OK, no one will judge you too harshly.</p> <p>I'm not suggesting you have a free pass to bum off your friends and family, but we do have the tendency to give young people a break when they ask for free stuff. If you're under 30, we assume you aren't yet established in your career. We assume you may have student loans. We assume you're driving a beat-up old car. We assume you're still developing personal finance skills. Even if these things aren't true, we're lenient in dishing out small &quot;loans&quot; or offers of free food or places to stay. We tend to be far less sympathetic to people over 30.</p> <h2>Many industries prefer young people</h2> <p>It's a troubling reality that some employers prefer to hire young people, because they assume they will have skills that older people don't possess. This is especially true among startups and in the tech industry. Job site Indeed surveyed 1,011 U.S. tech workers and found that 43 percent of respondents worry about losing their jobs due to being too old. The survey also revealed that millennials make up the bulk (46 percent) of the tech workforce.</p> <p>I hesitate to characterize this as a &quot;perk&quot; for young people, but it's clear that being young can be an advantage when looking for work in certain fields.</p> <h2>You are less likely to be tied down</h2> <p>You are being recruited for your dream job at a hot startup company &mdash; but the catch is that it's 3,000 miles away in California. So? Pack up and go!</p> <p>At this stage of your life, you have very little keeping you from pursuing opportunities. You are less likely to be married with kids, less likely to own a home, and less tied to whatever community you're living in. If a great career opportunity comes along, you can feel free to take it, even if it means uprooting.</p> <h2>You can get discounts</h2> <p>We tend to think discounts are set aside for seniors or little kids, but that's not true. Businesses are happy to offer discounts to young people if it gets them in the door and turns them into repeat customers.</p> <p>Did you know that in New York City, you can get discounts to Broadway shows if you are under 30? Some travel companies offer discounts on package deals for young people. And there are plenty of discounts on everything from restaurants to movie tickets if you are still in college or graduate school. Don't be afraid to exploit your youth for discounted stuff.</p> <h2>Being poor is culturally acceptable</h2> <p>Young people can get away with almost bragging about how poor they are. They wear their &quot;I survive on Chef Boyardee&quot; stories like a badge of courage. No one looks down on them if they get by on cheap food, take on roommates, move frequently to find cheaper rent, or drive a crappy car. Young people can take that low-paying job because it will get them the experience they want. It's all part of being young and alive.</p> <p>As you get older, being broke isn't as cool. You now have a family and responsibilities and bills to pay. You need to wear nicer clothes, pay the mortgage, and shell out cash for your kids' activities. As you age, there's pressure to make money, save money, and actually act like a responsible human.</p> <h2>Some &quot;trends&quot; are just ways to save money in disguise</h2> <p>Have you ever considered that some cultural shifts often result in fewer expenses for young people? When you think about it, young people in recent years have pushed for changes that, either intentionally or unintentionally, result in cost savings.</p> <p>The whole beard trend among young men? Yeah, that's saving them hundreds of dollars in shaving costs each year. Casual dress codes? So long, expensive suits and ties. The desire to work remotely? That's reducing commuting costs. The sharing economy? Young people deciding that it's cheaper to borrow than buy.</p> <p>People in their 20s are the ones establishing and taking advantage of some of these trends. Some of it is due to lifestyle or fashion preference, but make no mistake that saving money is also a big part of it.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-financial-perks-of-being-in-your-20s&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Financial%2520Perks%2520of%2520Being%2520in%2520Your%252020s.jpg&amp;description=The%20Financial%20Perks%20of%20Being%20in%20Your%2020s"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Financial%20Perks%20of%20Being%20in%20Your%2020s.jpg" alt="The Financial Perks of Being in Your 20s" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-financial-perks-of-being-in-your-20s">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-just-5-a-day-can-improve-your-financial-future">How Just $5 a Day Can Improve Your Financial Future</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-lessons-on-how-to-be-a-financial-grownup-from-bobbi-rebell">6 Lessons on How to Be a Financial Grownup From Bobbi Rebell</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-little-ways-to-boost-your-savings-account-every-day">9 Little Ways to Boost Your Savings Account Every Day</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-personal-finance-skills-everyone-should-master">12 Personal Finance Skills Everyone Should Master</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living budgeting compound interest culture discounts investing jobs millennials perks saving money spending young people Wed, 03 Jan 2018 10:00:07 +0000 Tim Lemke 2081069 at http://www.wisebread.com 8 Money Moves for the Newly Independent http://www.wisebread.com/8-money-moves-for-the-newly-independent <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-for-the-newly-independent" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/singing_in_the_living_room.jpg" alt="Singing in the living room" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're done with college. You have a job. Your mom is hinting that she wants to turn your bedroom into a space for scrapbooking. It's time to set out on your own.</p> <p>This is an exciting but scary time: You'll have a rent payment and other bills to pay now, and you need to start saving for the future. Now that you've fled the nest, there are some key money tasks that you should tackle. Do these, and you'll be well on your way to financial independence.</p> <h2>1. Start building that emergency fund</h2> <p>Young people living at home aren't too concerned with emergencies wiping out their savings. But once you are out on your own, you are more vulnerable to events that can throw you for a financial loop. Your car might break down and require thousands of dollars in repairs. You may have a medical emergency that's not entirely covered by insurance. You may even find yourself without a job but with bills to pay. This is why it's hugely important to begin putting money aside to cover unexpected events.</p> <p>Start by working to accumulate three months' worth of living expenses, and then shoot for six. Don't invest this money; you need to be able to access it quickly if there's an emergency. Having this cash on hand could be the difference between continuing to live on your own and crawling back to the Parental Chateau. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">7 Easy Ways to Build an Emergency Fund From $0</a>)</p> <h2>2. Shop around for bank interest rates</h2> <p>Before you went out on your own, you probably didn't think much about banks. You may have put your money in the same place as your parents, or the bank closest to your house. Now it's time to do a little homework to make sure your savings account is doing more than just holding your money.</p> <p>Interest rates are still low these days, but you can bump up your passive income by shopping around for the best rate. If you are willing to have some money tied up for a while, consider putting some money into certificates of deposit, which offer higher rates.</p> <h2>3. Learn to budget</h2> <p>Being on your own means you have to actually pay attention to your income and spending. This is especially true for young people who may have student loans and aren't earning a lot (yet). It's imperative that you spend less than you earn, and this means paying close attention to your expenses.</p> <p>You should begin by tracking your expenses each month so you have a good idea of where your money is going. Then, create small budgets for various key categories like groceries, gas, and rent. Your budgets for entertainment and frivolous expenses should be as small as possible. You may be free from Mom and Dad, but you aren't truly financially independent until you're avoiding debt and saving money at a good clip. (See also: <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=seealso" target="_blank">Build Your First Budget in 5 Easy Steps</a>)</p> <h2>4. Examine your credit card situation</h2> <p>You may have opened a credit card or two when in college, and perhaps you accumulated some debt. You never stressed about it when you were living at home, and Mom and Dad may have even helped you pay the bills. But now you are on your own, so it's time to get a handle on things. Take a look at how many credit cards you have and their interest rates. If you have piled up some debt, assess which cards carry the largest balances.</p> <p>You don't necessarily want to close out cards, since that can hurt your credit score. But stop using ones with high interest rates and little other benefit. Come up with a plan to reduce your debt by tackling the highest interest cards first.</p> <p>Moving forward, you'll want to get in the habit of using credit cards responsibly, avoiding debt, and hopefully earning some rewards along the way. Once you are in the habit of paying off your bill in full every month, examine which cards offer the best benefits, such as cash back or points you can redeem for merchandise retailers or air travel. (See also: <a href="http://www.wisebread.com/avoid-these-6-mistakes-newbies-make-with-their-first-credit-cards?ref=seealso" target="_blank">Avoid These 6 Mistakes Newbies Make With Their First Credit Cards</a>)</p> <h2>5. Make sure you are properly insured</h2> <p>It's common for young people to remain on their parents' health care plans, but at a certain point you need to get insurance of your own. You also need to obtain things like auto insurance, plus renter's or homeowners insurance. If you have a spouse or dependents, you should look into life insurance as well. This requires some research and discipline so you can find plans that are reasonably priced but also provide an appropriate level of coverage.</p> <p>If you are employed, you may be able to get subsidized health insurance from your employer. (Be sure to pay attention to the open enrollment dates.) Those without insurance through their job can get it through the marketplace exchanges set up in accordance with the Affordable Care Act.</p> <p>Choosing to go without health or auto insurance could subject you to penalties from the federal or state government. But more importantly, you place yourself at risk of financial disaster if a bad event takes place. Purchasing proper insurance plans is a key component of sound financial planning.</p> <h2>6. Take advantage of your employer's retirement plan</h2> <p>If you have a full-time job, there's a good chance your company will help you save for retirement by offering a 401(k) or similar plan. These plans allow you to place a portion of your salary into a wide range of mutual funds and other investments, and your employer may match a certain portion of those contributions. Plus, any money you contribute is deducted from your taxable income, so you save money. There is very little downside to opening an account right away, and you should do your best to at least get the full amount of the company match. The earlier you start, the more time your money has to grow.</p> <h2>7. Open a Roth IRA</h2> <p>Even if you take advantage of your employer's retirement plan, it's a good idea to open a separate individual retirement account that offers different tax advantages. With a Roth IRA, you can invest up to $5,500 annually in just about anything you want, and the gains on those investments can be withdrawn tax-free when you retire. A Roth IRA is available to anyone with earned income, so it's a great way to save for retirement if you are self-employed or don't get an employer-sponsored retirement plan. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <h2>8. Educate yourself about taxes</h2> <p>Guess what? Being financially independent also means you get to do your taxes! The IRS will always get a cut of your money, and it's important to understand how that will impact your take-home pay.</p> <p>If you are employed full-time, you will likely have taxes taken out of your paycheck, but you need to adjust your withholding so that you're not stuck with a large tax bill or refund. If you are self-employed, you will need to plan to pay taxes on your income, and it may require you to pay taxes quarterly. Perhaps most importantly, you must learn all about the various tax deductions and credits that may be available to you.</p> <p>If your taxes get too complicated, you can always pay someone to do them for you. But remember that there's a cost to going that route, and handing off your taxes to a professional doesn't mean you should remain ignorant as to what's going on. (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso" target="_blank">8 Tax Return Mistakes Even Smart People Make</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-money-moves-for-the-newly-independent&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Money%2520Moves%2520for%2520the%2520Newly%2520Independent%2520%25281%2529.jpg&amp;description=8%20Money%20Moves%20for%20the%20Newly%20Independent"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Money%20Moves%20for%20the%20Newly%20Independent%20%281%29.jpg" alt="8 Money Moves for the Newly Independent" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-money-moves-for-the-newly-independent">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-reasons-to-cut-millennials-some-slack-about-their-money">10 Reasons to Cut Millennials Some Slack About Their Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-before-moving-out-on-your-own">5 Money Moves to Make Before Moving Out on Your Own</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-mistakes-you-need-to-stop-making-by-30">5 Financial Mistakes You Need to Stop Making by 30</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-help-your-adult-children-become-financially-independent">How to Help Your Adult Children Become Financially Independent</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance banks budgeting emergency funds financial independence insurance interest rates investing millennials retirement young adults Fri, 15 Dec 2017 10:00:06 +0000 Tim Lemke 2068610 at http://www.wisebread.com 6 Smart Financial Gifts to Give Your Kids This Year http://www.wisebread.com/6-smart-financial-gifts-to-give-your-kids-this-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-smart-financial-gifts-to-give-your-kids-this-year" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mother_and_daughter_with_piggy_bank.jpg" alt="Mother and daughter with piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>American poet Maya Angelou said it best: &quot;When you know better, you do better.&quot; The earlier that your kids develop good financial habits, the brighter their financial future will be.</p> <p>With the holidays right around the corner, now is the perfect time to set your sights on one or more of these financial gifts that will help your kids learn about, respect, and appreciate money.</p> <h2>1. Monopoly</h2> <p>Since 1935, this classic board game has entertained millions of people around the world. Turns out that playing rounds with &quot;Monopoly money&quot; can actually help build real life financial skills, such as negotiation, money management, and diversification. Plus, a round of Monopoly is a good way to practice arithmetic and social skills. (See also: <a href="http://www.wisebread.com/holiday-gifts-6-fun-games-that-teach-money-and-finance?ref=seealso" target="_blank">Holiday Gifts: TK Fun Games That Teach Money and Finance</a>)</p> <h2>2. Custodial investment account</h2> <p>Most brokerage firms offer a custodial account that allows children to get a first taste of investing in the stock market under the supervision of a parent or guardian. With as little as $100, you could open a custodial account and let your kid make decisions about what stocks to hold or sell.</p> <p>In 2017, you can contribute up to $14,000 to a custodial account and still avoid gift taxes. In 2018, the annual federal gift exclusion moves up to $15,000. Your kid's custodial account is under your control until your kid legally becomes an adult, which happens somewhere between age 18 and 21, depending on your state's rules.</p> <p>A custodial investment account is a great way to get your child excited about investing and let them learn from firsthand experience how the stock market works. (See also: <a href="http://www.wisebread.com/5-stocks-your-kids-would-love-to-own?ref=seealso" target="_blank">5 Stocks Your Kids Would Love to Own</a>).</p> <h2>3. Custodial Roth IRA</h2> <p>If your kid is already working a summer job or earning income from their own business, consider setting up a custodial Roth IRA for them. In 2017 and 2018, individuals may contribute up to $5,500 to a custodial Roth IRA. Here are a couple of reasons why this is a good idea:</p> <ul> <li> <p>Your child will have the same contribution limit as an adult, making it a real-life lesson in cultivating a good savings habit.</p> </li> <li> <p>Your child can get close to a decade of extra compounding interest for their nest egg.</p> </li> <li> <p>By taking the tax hit now, your child's retirement savings will grow tax-free forever.</p> </li> <li> <p>Your child will have another &quot;sandbox&quot; in which to make real-life decisions with investments.</p> </li> </ul> <p>Just imagine if <em>you </em>knew how life-changing investing in equities could be at such a young age.</p> <p>That alone may be the best financial gift for your kid this holiday season! (See also: <a href="http://www.wisebread.com/10-investing-lessons-you-must-teach-your-kids?ref=seealso" target="_blank">10 Investing Lessons You Must Teach Your Kids</a>)</p> <h2>4. 529 savings plan</h2> <p>The average class of 2016 graduate left school with $37,172 in student loan debt. If you could do something now to help prevent your kid from having to take out such costly student loans, that would certainly be a gift worth giving. The good news is you <em>can</em> do this by starting a 529 college savings plan. Eligible education expenses under a 529 plan go beyond tuition and academic fees and include expenses for room and board, transportation, equipment, and accommodations for individuals with special needs.</p> <p>Contributions to a 529 plan grow tax-free and the money is not taxed when it's withdrawn to pay for college expenses. In addition to federal tax savings, more than 30 states currently offer a full or partial tax deduction or credit for 529 plan contributions. (See also: <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=seealso" target="_blank">The 9 Best State 529 College Savings Plans</a>)</p> <h2>5. Cash</h2> <p>Yup, cash is still king. Regardless of their age, your kid will always love receiving a few bills as a gift. The main reason to gift cash during the holiday season is that it opens the door to have an ongoing conversation with your kids about budgeting. With a cash gift, you'll have plenty of chances to talk about what they're planning to buy, what they actually purchase, and how much money they have left. From there, you can start making it a habit to sit down with your son or daughter to talk about finances on a weekly or Bi-Weekly basis. It's a good time to catch up about other non-related finance topics as well. (See also: <a href="http://www.wisebread.com/how-to-help-your-kid-build-their-first-budget?ref=seealso" target="_blank">How to Help Your Kid Build Their First Budget</a>)</p> <h2>6. Checking account with debit card and checkbook</h2> <p>Of course, this would be a great place for any cash gifts that your son or daughter receives from relatives and friends during the holidays (and throughout the year).</p> <p>While a checking account may not be as exciting as a new Xbox or bike, you can be sure that this gift is the one that your child will be using for the longest time. It's important that your kids start to build experience managing a checking account so they understand how to pay for everyday expenses, build a monthly budget, and safely use debit cards. By covering the ins and outs of how a checking account works when they're young, your kid will have one less thing to stress about as they get a little older or go off to college.</p> <p>No matter what your child's plans are, anyone can benefit from learning how to use a debit card, write checks, access an online account portal, and read a checking account statement.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-smart-financial-gifts-to-give-your-kids-this-year&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Smart%2520Financial%2520Gifts%2520to%2520Give%2520Your%2520Kids%2520This%2520Year.jpg&amp;description=6%20Smart%20Financial%20Gifts%20to%20Give%20Your%20Kids%20This%20Year"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Smart%20Financial%20Gifts%20to%20Give%20Your%20Kids%20This%20Year.jpg" alt="6 Smart Financial Gifts to Give Your Kids This Year" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/6-smart-financial-gifts-to-give-your-kids-this-year">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-the-holidays-to-teach-kids-about-money">How to Use the Holidays to Teach Kids About Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/teach-your-kids-about-money-with-their-holiday-gift-lists">Teach Your Kids About Money With Their Holiday Gift Lists</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-help-your-adult-children-become-financially-independent">How to Help Your Adult Children Become Financially Independent</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-conversations-parents-should-have-with-their-adult-kids">7 Money Conversations Parents Should Have With Their Adult Kids</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/holiday-gifts-6-fun-games-that-teach-money-and-finance">Holiday Gifts: 6 Fun Games That Teach Money and Finance</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family 529 plans budgeting cash checking accounts children Christmas custodial roth ira financial gifts games Holidays investing kids Fri, 01 Dec 2017 09:00:06 +0000 Damian Davila 2064624 at http://www.wisebread.com 6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_with_retirement_formula.jpg" alt="Piggy Bank with retirement formula" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Starting next year, investors will be allowed to contribute more money into their 401(k)s. In 2018, the limit on annual contributions to a 401(k) plan will rise from $18,000 to $18,500.</p> <p>That additional $500 may not seem like a lot, but you should try and hit the new maximum if you can. Maxing out your 401(k) is often the best way to accumulate a healthy sum for retirement, and there are great tax benefits as well.</p> <p>If you're on the fence about whether you need to direct another $500 into your 401(k), consider these arguments.</p> <h2>1. It could net you tens of thousands of dollars</h2> <p>It's not easy to contribute $18,500 annually into a retirement account. But if you can do it, that extra $500 each year can really pay off. Let's say you're 30 years old and plan to retire at age 65. Assuming a conservative 7 percent return, that extra $500 annually could mean an additional $74,000 overall. If you start contributing that extra $500 starting at age 25, and keep doing it for 40 years, the difference is $106,000 over time &mdash; more than an entire year's worth of living expenses for many people.</p> <h2>2. It's more money for you and less to taxes</h2> <p>If you have $500 in income available, that's money that the IRS will get a share of, unless you place it in a 401(k) plan or traditional IRA. Any money you contribute to these retirement accounts is deducted from your taxable income. If you are in a high tax bracket, that $500 could actually just represent about $300 in your paycheck. If Uncle Sam would take that much anyway, why not invest the whole amount instead?</p> <h2>3. You can find $42 a month</h2> <p>If you are at the maximum contribution now, you can find a way to hit the new ceiling. Eat out less. Ditch the morning coffee. Quit that gym you never go to. If you break down $500 over the course of a year, it comes out to less than $42 a month &mdash; or barely $10 a week. That's the cost of a mediocre lunch out. Even the smallest amount of belt-tightening can help you hit this goal, and it's probably not money you'll notice. But you'll notice it later at retirement time.</p> <h2>4. You may have already maxed out your IRA</h2> <p>If you've been placing money in an individual retirement account (IRA), you may be aware that contribution limits are lower than 401(k) plans. People under age 50 are permitted to contribute only $5,500 each year to an IRA, and it's not uncommon for people to hit that maximum. If your IRA is maxed out, having permission to place an additional $500 in a 401(k) is a huge bonus.</p> <h2>5. The limit might be decreased in the future</h2> <p>We should be thankful that in 2018, the 401(k) contribution limit is rising. That's because some members of Congress have suggested that the limit could be drastically reduced in the future as part of tax reform. Thankfully, it seems like discussion of such changes has been tabled, but there's no guarantee the idea won't be resurrected in the future. In the meantime, it's a good idea to contribute as much as you can.</p> <h2>6. Where else are you going to put your money?</h2> <p>If you have $500 a year to spare, the stock market may be the smartest place to put it. Interest rates are still very low, so placing it into the bank would only result in a few bucks each year. And very few other investments offer the same kinds of consistent returns as stocks. Unless you plan to use the money to purchase a home or start a business, you likely won't do much better on a consistent basis than &mdash; or get the same tax advantages of &mdash; investing in stocks in a 401(k).</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520Meeting%2520the%25202018%2520401%2528k%2529%2520Contribution%2520Limits%2520Will%2520Brighten%2520Your%2520Future.jpg&amp;description=6%20Ways%20Meeting%20the%202018%20401(k)%20Contribution%20Limits%20Will%20Brighten%20Your%20Future"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20Meeting%20the%202018%20401%28k%29%20Contribution%20Limits%20Will%20Brighten%20Your%20Future.jpg" alt="6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-8-rules-of-investing-you-need-to-know">The Only 8 Rules of Investing You Need to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-common-retirement-regrets-you-can-avoid">3 Common Retirement Regrets You Can Avoid</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-you-must-open-a-roth-ira-before-april-15">4 Reasons Why You Must Open a Roth IRA Before April 15</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) limits government investing IRA mutual funds stocks taxes Wed, 29 Nov 2017 09:00:07 +0000 Tim Lemke 2058941 at http://www.wisebread.com First Rule of Financial Wins: Avoid Losses http://www.wisebread.com/first-rule-of-financial-wins-avoid-losses <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/first-rule-of-financial-wins-avoid-losses" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/business_financial_opportunity.jpg" alt="Business Financial Opportunity" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The task of accumulating wealth and ensuring long-term financial security is often discussed alongside the idea of winning. And while it's fine to think of financial planning this way, it may be just as important to simply <em>avoid losing</em>. Smart investing involves looking for gains over time, but also escaping costly losses when the market goes down. Let's take a look at some ways we can &quot;win&quot; financially simply by avoiding losses.</p> <h2>1. Avoid overpriced stocks</h2> <p>The last thing you want is to buy a stock and immediately see it take a dive. If you are a young investor with a long time horizon, you can usually get away with putting your money in the market at any time. But it is important for anyone to avoid buying stocks when they are overvalued and perhaps due for a correction.</p> <p>It's tempting to buy a stock if shares have been moving upward, because we all like to invest in companies that are doing well. At a certain point, however, share prices can be too high based on the company's earnings. It's important to learn the basics of how to tell if a stock is fairly valued.</p> <p>A price-to-earnings ratio is an important consideration in valuing a stock. A P/E ratio is the share price divided by earnings-per-share (EPS). A P/E of more than 25 is on the high side, though P/Es vary by industry. Take time to learn what typical P/E ratios are for the sector you're looking to invest in.</p> <p>Another rule of thumb to keep in mind: If a stock has been consistently setting new 52-week highs, it may be due for a pullback.</p> <p>If a company's share prices seem overvalued, it's wise to practice patience or look elsewhere for better value. This will decrease your likelihood of losing money on the investment.</p> <h2>2. Know when to cut your losses</h2> <p>One common piece of investing advice is to stay the course and avoid panicking when shares of stock fall. This is sensible, but it should be balanced with an awareness of when to cut your losses.</p> <p>There's a fine line between being patient and sticking with a dud investment for too long. It's OK to stick with an investment if the company's underlying financials are still strong, but if the company is seeing shrinking profit margins and revenues, or has completely lost its competitive advantage, it may be time to cut and run. In particular, hanging onto investments during major market downturns can result in massive losses that will take years to recover from. Some financial advisers suggest selling an investment if it drops more than 10 percent in a short amount of time. (See also: <a href="http://www.wisebread.com/10-signs-a-stock-is-about-to-tank?ref=seealso" target="_blank">10 Signs a Stock Is About to Tank</a>)</p> <h2>3. Be truly diversified</h2> <p>Most investors know to avoid investing in too much of one thing. Diversification of investments is a key way to avoid a big loss. But sometimes, it's possible to think you are diversified when you aren't. For example, you may think you are diversifying your portfolio by investing in both U.S. based and international stocks. But have you considered that many U.S. companies already have a huge presence internationally? And even if you think you are diversified with various investments and asset classes, many investments still perform similarly, meaning that you're not as diversified as you think.</p> <p>Financial advisers have varying thoughts on the ideal way to diversify. Of course, everyone's portfolio will differ depending on their age, risk tolerance, and projected retirement year. But the basic tenet applies: Don't be too invested in one area.</p> <h2>4. Watch out for investment fees</h2> <p>When you buy and sell stocks and other investments, you'll likely be stuck paying a variety of fees. There are transaction costs for every trade, and maintenance fees and other costs for mutual funds and ETFs. These are costs that are taken out of money you invest, so you not only lose money immediately, but lose out on its potential gains. This can add up to thousands of dollars in the long run.</p> <p>Savvy investors know how to invest well while avoiding high costs. Discount brokerages such as Fidelity and Scottrade allow you to buy and sell stocks for as little as $4.95 per trade. Mutual fund companies including Vanguard, T. Rowe Price, and others have become more cognizant of fees, and are increasingly offering funds with super-low expense ratios. (Generally speaking, it's best look for funds that charge less than 1 percent for expenses.)</p> <p>Keep your costs low when you invest, and you'll find that avoiding these &quot;losses&quot; can boost your gains.</p> <h2>5. Understand when the markets may be due for a dip</h2> <p>It's very difficult to time the stock market, and for young investors, it's a good idea to just invest as soon as you can. But it's also possible to avoid big losses by recognizing when the markets may be due for a correction. If it seems like stocks are priced too high based on their earnings, that's one bad sign. A slowdown in economic growth is another, and you should be wary of a spike in inflation and interest rates, too. It's also worth noting if companies are downgrading their earnings predictions for the upcoming quarter, as that could be a sign that business executives are pessimistic. If you recognize any or all of these signs, it may be worth waiting a while before investing too heavily.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Ffirst-rule-of-financial-wins-avoid-losses&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FFirst%2520Rule%2520of%2520Financial%2520Wins_%2520Avoid%2520Losses.jpg&amp;description=First%20Rule%20of%20Financial%20Wins%3A%20Avoid%20Losses"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/First%20Rule%20of%20Financial%20Wins_%20Avoid%20Losses.jpg" alt="First Rule of Financial Wins: Avoid Losses" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/first-rule-of-financial-wins-avoid-losses">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-rules-you-should-be-breaking">15 Personal Finance Rules You Should Be Breaking</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-meditation-can-make-you-a-money-master">6 Ways Meditation Can Make You a Money Master</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-putting-off-these-9-adult-money-moves">Are You Putting Off These 9 Adult Money Moves?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance apps budgeting cutting expenses energy efficient fees insurance investing losing saving spending stocks winning Tue, 14 Nov 2017 09:31:09 +0000 Tim Lemke 2053314 at http://www.wisebread.com 3 Common Retirement Regrets You Can Avoid http://www.wisebread.com/3-common-retirement-regrets-you-can-avoid <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-common-retirement-regrets-you-can-avoid" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_plan_concept.jpg" alt="Retirement plan concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the best ways to set your life on a positive course &mdash; financially and otherwise &mdash; is to find out what older people wish they had done when they were younger. Along these lines, Vanguard <a href="https://vanguardblog.com/2017/04/18/the-coulda-shoulda-woulda-behind-every-retirement-story/" target="_blank">recently asked readers</a> of its blog, &quot;If you had a do-over, what would you do differently to prepare for retirement?&quot;</p> <p>That question generated a treasure trove of advice. They covered a lot of ground, but many pertained to the following three regrets.</p> <h2>Getting started with an investing plan too late</h2> <p>This is a common lament among older people, and it's easy to see why. Numerous studies show that too many people have too little saved for their later years. According to the 2017 Retirement Confidence Survey by the Employee Benefit Research Institute, only 56 percent of American workers are saving for retirement at all. Of those with no formal retirement plan, 67 percent have less than $1,000 in savings and investments. That can spell hardship later in life.</p> <p>In the words of Vanguard readers:</p> <p>&quot;I wish someone would have taught me about the power of compounding when I was 10 instead of learning about it when I was in my early 30s.&quot;</p> <p>&quot;If I had a 'do-over,' I would have taken my financial future more seriously much sooner. I eventually learned the right lessons, but I long-courted the deadly twins &mdash; ignorance and immediate self-gratification. Thus, I forfeited my best financial friend &mdash; time. Now time is my unforgiving and fleet-footed competitor, and it is only by doing considerably more of my late-learned lessons that I am able to maintain a winded, yet hopeful, pace.&quot;</p> <h3>What to do?</h3> <p>Start investing! If that seems far easier said than done, a couple of practical steps you could take include:</p> <ol style="margin-left: 40px;"> <li> <p><a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps" target="_blank">Create a budget</a> so you can proactively plan how to best allocate your income in a way that makes room for investing, and;</p> </li> <li> <p>Set up an automatic monthly transfer from your paycheck to your workplace retirement plan or from your checking account to an IRA. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> </li> </ol> <h2>Not thinking carefully about the tax implications of different retirement savings options</h2> <p>Several Vanguard readers regretted using tax-<em>deferred </em>investment vehicles such as a traditional 401(k) or IRA instead of a tax-<em>free </em>vehicle such as a Roth IRA.</p> <p>Respondents noted:</p> <p>&quot;In addition to being diversified in asset classes, I should have also been diversified in tax types &mdash; i.e., most of my funds are in a 401(k) &hellip; so now everything I withdraw is taxable.&quot;</p> <p>&quot;The mistake I made was not converting my IRA to a Roth IRA in the 1990s. I thought the taxes for the conversion were too high. The result is that we are paying a higher tax rate now because the RMD (required minimum distribution) has raised our tax bracket and has increased our Medicare premium considerably each month. It has been an expensive lesson.&quot;</p> <h3>What to do?</h3> <p>Consider a Roth IRA or 401(k). Generally speaking, a Roth works best for younger people who are in a relatively low tax bracket. However, even for older, better-paid people, consider splitting your retirement contributions between a Roth and a traditional 401(k) or IRA. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401K or IRA? You Need Both</a>)</p> <h2>Not developing a compelling vision for retirement</h2> <p>Several readers said their retirement planning was mostly about money. They wish they had spent more time thinking about how to use their time in their later years.</p> <p>Some examples:</p> <p>&quot;The financial aspects of retirement have worked out OK. I had been planning that aspect of retirement for many, many years. What I did not anticipate or prepare for was the lack of identity in retirement. When I walked out the door on my last day of work, that was the last I saw or heard from coworkers. I had a job where I mattered and all of a sudden that stopped. Yes, the financial aspects of retirement are important, but you cannot neglect the psychological aspects of retirement.&quot;</p> <p>&quot;Don't just assume you'll enjoy relaxing after working for many years. Your job was a large part of your identity and you need to have a plan to fill that in with something else!&quot;</p> <h3>What to do?</h3> <p>Think about an issue you care about and how you might be part of the solution, whether through volunteer work or maybe even a business you start.</p> <p>In her book, <em>Life Reimagined</em>, Barbara Bradley Hagerty summarizes countless studies about how to move effectively from midlife onward. She said the research is clear: Being part of a cause that matters to you increases happiness and even extends life.</p> <p>Being intentional about avoiding these three common retiree regrets should give you greater confidence and peace of mind that you're on track toward a financially comfortable, meaningful retirement. And <em>that </em>could go a long way toward helping you dodge one other very common regret among the elderly: having spent too much time worrying.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-common-retirement-regrets-you-can-avoid&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Common%2520Retirement%2520Regrets%2520You%2520Can%2520Avoid.jpg&amp;description=Goal%20Setting%3A%20Getting%20Out%20of%20Debt%20Once%20and%20For%20All"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/3%20Common%20Retirement%20Regrets%20You%20Can%20Avoid.jpg" alt="3 Common Retirement Regrets You Can Avoid" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/3-common-retirement-regrets-you-can-avoid">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-of-these-9-retirement-accounts-is-right-for-you">Which of These 9 Retirement Accounts Is Right for You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) identity crisis investing IRA late starts midlife regrets taxes Wed, 01 Nov 2017 09:00:06 +0000 Matt Bell 2040659 at http://www.wisebread.com It's So Simple: 6 Steps to a Stable Retirement http://www.wisebread.com/its-so-simple-6-steps-to-a-stable-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/its-so-simple-6-steps-to-a-stable-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_couple_dancing.jpg" alt="Senior couple dancing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you are new to personal finance, you might find yourself thinking that reaching retirement is sort of like reaching a mythical place like Hogwarts. In both cases, the process required for entry is never adequately explained &mdash; and getting there yourself feels more like fantasy than reality.</p> <p>While it's unlikely that an owl will ever arrive to welcome you to a magical school, retirement is actually attainable for each and every muggle. In fact, the rules for reaching a stable retirement are relatively simple and require absolutely no financial wizardry on your part,</p> <p>Here are the only six things you need to do to achieve a stable retirement &mdash; no magic wands required.</p> <h2>1. Always spend less than you earn</h2> <p>No matter how much you make, you need to live on less than you earn. This is the kind of so-simple-it-feels-obvious advice that many personal finance experts take for granted, but keeping your expenses below your income is the cornerstone of saving for a stable retirement. Many people assume that they need to make a certain level of income before they can afford to start saving for retirement, but that's not true. As long as you always spend less than you earn, you can always save toward your retirement.</p> <p>If you're not sure how to go about reducing your expenses so that you're no longer spending everything that comes in, start by tracking your spending. This will help you better understand where your money is going so you can cut back on unnecessary spending. (See also: <a href="http://www.wisebread.com/save-more-and-spend-less-by-increasing-your-mental-transaction-costs?ref=seealso" target="_blank">Save More and Spend Less by Increasing Your &quot;Mental Transaction Costs&quot;</a>)</p> <h2>2. Max out your retirement contributions</h2> <p>Both your employer-sponsored 401(k) and your individual retirement account (IRA) have yearly contribution limits that you should strive to meet every year. The 2017 contribution limits are $18,000 for 401(k) plans (plus an additional $6,000 in catch-up contributions if over age 50), and $5,500 for IRAs ($6,500 if over age 50). The traditional versions of these investment vehicles are tax-deferred, which means you are funding your accounts with pretax dollars. Roth 401(k) plans and IRAs are funded with money you have paid taxes on, but they, like the traditional vehicles, grow tax-free.</p> <p>Many people can't afford to meet the full contribution limit for their 401(k) plan, plus maxing out an IRA as well. However, getting as close to the maximum contribution as you can for both of these vehicles will put you well on your way to retirement stability. In addition, many employers offer a 401(k) contribution match &mdash; and not maxing out this kind of matching program is akin to leaving free money on the table. (See also: <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50?ref=seealso" target="_blank">How Much Should You Have Saved for Retirement by 30? 40? 50?</a>)</p> <h2>3. Work at least 35 years</h2> <p>While retiring early is a common dream among many workers, leaving the workforce before putting in 35 full years of employment could damage your bottom line in retirement. That's because your Social Security benefits are calculated using the 35 highest earning years in your career. If you have less than 35 years of work experience, the Social Security Administration uses zeros to create your benefit calculation, lowering your average earnings and your payout. If you don't have 35 years of employment history, it's a good idea to keep working to get those zeros replaced in your Social Security calculation.</p> <p>Doing whatever you can to increase your monthly benefit will make a big difference in your bottom line once you retire. The most important increase you can make is to work at least 35 years total &mdash; although waiting as long as you can to take Social Security benefits is also an important strategy for increasing your monthly Social Security check. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?Ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>4. Avoid debt</h2> <p>We live in a society that tells us we can have it all right now and pay for it later. The problem is that we <em>will</em> indeed pay for it later &mdash; with an impoverished retirement. While it may be possible to finance the lifestyle you want with debt, you will have no money available to save for retirement or otherwise invest. In addition, the added interest expense of borrowing money to pay for your lifestyle just makes it that much more expensive and unsustainable. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>5. Invest for the long-term with index funds</h2> <p>While the movies show investing as a kind of game that you win by figuring out when to buy low and sell high, the best way to make sure your money grows is to follow a long-term buy-and-hold strategy.</p> <p>A 2016 DALBAR study on investment behavior revealed that investors routinely underperform the market despite solid annualized returns. For example, at the end of 2015, the S&amp;P 500 was averaging a return of 8.19 percent. That same year, investors saw returns top out at a measly average 4.67 percent &mdash; and this pattern is not new. Why such a discrepancy? Simple; rather than employing a buy-and-hold strategy, investors routinely try (and fail) to time the market. Year after year, their returns suffer as a result.</p> <p>You can use statistics and a long investment term to your advantage by investing in index funds. These funds aim to replicate the movement of specific securities in a target index, which means an index fund is going to do about as well as the target securities will do. (See also: <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news?ref=seealso" target="_blank">Want Your Investments to Do Better? Stop Watching the News</a>)</p> <h2>6. Take care of your health</h2> <p>Your health can have an enormous impact on your financial stability in retirement. That's because health care costs are a major concern in your older years, especially since this is one aspect of your retirement budget that you may not have control over. According to a 2016 Fidelity study, a 65-year-old couple retiring in 2016 will need about $260,000 to cover their medical and health care costs for the rest of their lives.</p> <p>While kale smoothies and daily kettlebell workouts cannot ensure your good health in retirement, taking good care of yourself throughout your life does improve the odds that you'll stay healthier as you age. You can consider each jog and healthy meal as an investment in your future. (See also: <a href="http://www.wisebread.com/dont-let-poor-health-kill-your-retirement-fund?ref=seealso" target="_blank">Don't Let Poor Health Kill Your Retirement Fund</a>)</p> <h2>Reaching retirement, one step at a time</h2> <p>Achieving a stable retirement doesn't require any magic. Instead, it's a matter of following some simple rules that will ensure you have the money you need to retire comfortably.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fits-so-simple-6-steps-to-a-stable-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIt%2527s%2520So%2520Simple_%25206%2520Steps%2520to%2520a%2520Stable%2520Retirement.jpg&amp;description=It's%20So%20Simple%3A%206%20Steps%20to%20a%20Stable%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/It%27s%20So%20Simple_%206%20Steps%20to%20a%20Stable%20Retirement.jpg" alt="It's So Simple: 6 Steps to a Stable Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/its-so-simple-6-steps-to-a-stable-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-youre-making-all-the-right-moves-for-retirement">8 Signs You&#039;re Making All the Right Moves for Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-youre-financially-ready-to-start-a-family">7 Signs You&#039;re Financially Ready to Start a Family</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-reasons-an-hsa-is-actually-worth-having">10 Reasons an HSA Is Actually Worth Having</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-benefits-of-carrying-a-mortgage-into-retirement">5 Benefits of Carrying a Mortgage Into Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement buy and hold contributions debt health care index funds investing returns social security benefits stable retirement Tue, 31 Oct 2017 09:00:06 +0000 Emily Guy Birken 2041362 at http://www.wisebread.com 5 Benefits of Carrying a Mortgage Into Retirement http://www.wisebread.com/5-benefits-of-carrying-a-mortgage-into-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-benefits-of-carrying-a-mortgage-into-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_black_couple_standing_outside_a_large_suburban_house.jpg" alt="Senior black couple standing outside a large suburban house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The goal is a simple one: You want to enter your retirement years without monthly mortgage payments. Unfortunately, not everyone meets this goal. According to Voya Financial, 26 percent of current retirees still have an outstanding mortgage balance.</p> <p>If you're one of these retirees, don't despair. It's not ideal, but leaving the working world with monthly mortgage payments doesn't have to be a financial disaster. There are some benefits of carrying a mortgage into your retirement years. (See also: <a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world?ref=seealso" target="_blank">Why Retiring With Debt Isn't the End of the World</a>)</p> <h2>1. It's better than credit card debt</h2> <p>Mortgage debt comes with low interest rates. That makes it much less painful than credit card debt, for example. While your mortgage loan might come with an interest rate of 4 percent or even lower, you'd be lucky if the interest rate on your credit card was only 15 percent.</p> <p>So if you are nearing retirement and you have both mortgage and credit card debt, it makes more sense to devote any extra dollars to <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal" target="_blank">paying off your credit cards</a> first. You can start worrying about your mortgage after you've eliminated your debt with the highest interest.</p> <p>Of course, it's best to enter retirement with neither mortgage nor credit card debt. If this isn't possible for you, do the smart thing and tackle those cards first. (See also: <a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt?ref=seealso" target="_blank">What to Do If You're Retiring With Debt</a>)</p> <h2>2. Sometimes it's better to invest</h2> <p>You might be able to pay off that mortgage loan before retirement if you sink enough of your extra dollars into it. But it might make more sense to place those same dollars into the stock market or other investment vehicle.</p> <p>The average annual return for the S&amp;P 500 since it was first launched in 1928 has been about 10 percent. And that's factoring in both great years and terrible years. So instead of pouring more money into your mortgage, you might do better financially by investing your extra dollars and enjoying the higher returns. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <p>This only holds true, of course, if you can actually afford your mortgage payment once you move into retirement. If you're worried that you won't have enough monthly cash flow to make these payments on time, do everything you can to pay off that mortgage first. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>3. Paying rent can be risky</h2> <p>Your retirement plan might involve selling your home, paying off your mortgage, and downsizing to an apartment. But be careful: Renting comes with plenty of risk.</p> <p>If you have a fixed-rate mortgage, your payment will remain mostly constant until you pay it off. If you're renting, though, your landlord can raise your monthly payment every time your current lease agreement comes to an end.</p> <p>When living on a fixed income, certainty is good. The life of a renter doesn't have as much certainty. Again, if you can afford your monthly mortgage payment, you might want to keep it and avoid the uncertainty of rent that could fluctuate from year to year.</p> <h2>4. You won't lose the tax deduction</h2> <p>Homeowners with mortgage payments do receive a tax deduction every year. Each year, they can deduct the amount of interest they pay on their home loans. If you pay off your mortgage loan, you'll lose this deduction. (See also: <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement?ref=seealso" target="_blank">Is it Safe to Re-Finance Your Home Close to Retirement?</a>)</p> <p>It's important to note, though, that this deduction might not be particularly large by the time you're nearing retirement. That's because you pay far more interest each year during the earliest days of your mortgage. By retirement age, you'll probably be paying far less in interest with each monthly payment.</p> <p>Again, though, if having a mortgage payment fits comfortably in your budget, you might want to keep that deduction. (See also: <a href="http://www.wisebread.com/10-surprising-ways-real-estate-cuts-your-taxes?ref=seealso" target="_blank">10 Surprising Ways Real Estate Cuts Your Taxes</a>)</p> <h2>5. You keep your dream home</h2> <p>Most retirees who need to pay off a mortgage do so by selling their homes. But what if you love your home? What if it's located in the ideal location near family members and friends? You might not want to sell.</p> <p>And what if selling your home won't generate enough income to allow you to move into an assisted-living facility, downtown condo, or smaller suburban home? There's no guarantee that you'll fetch the dollars you need in a home sale.</p> <p>Keeping the mortgage &mdash; if you can afford the payments &mdash; could allow you to stay in a home that already fits your needs.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-benefits-of-carrying-a-mortgage-into-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Benefits%2520of%2520Carrying%2520a%2520Mortgage%2520Into%2520Retirement.jpg&amp;description=5%20Benefits%20of%20Carrying%20a%20Mortgage%20Into%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Benefits%20of%20Carrying%20a%20Mortgage%20Into%20Retirement.jpg" alt="5 Benefits of Carrying a Mortgage Into Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-benefits-of-carrying-a-mortgage-into-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application">5 Money Moves That Will Ruin Your Mortgage Application</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-pay-your-mortgage-off-early">Should You Pay Your Mortgage Off Early?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-whats-included-in-a-homes-closing-costs">Here&#039;s What&#039;s Included in a Home&#039;s Closing Costs</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement benefits debt homeownership investing loans low interest rates monthly payments mortgages tax deductions Wed, 25 Oct 2017 08:30:06 +0000 Dan Rafter 2039415 at http://www.wisebread.com