retirement http://www.wisebread.com/taxonomy/term/416/all en-US 5 Things Newlyweds Must Know About Investing http://www.wisebread.com/5-things-newlyweds-must-know-about-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-things-newlyweds-must-know-about-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/married_couple_monopoly_000017059049.jpg" alt="Newlyweds learning things they must know about investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's a ton of excitement involved in getting married. There's the big day, which you may have been planning for many months, the honeymoon, and setting up your home together.</p> <p>Before long, though, you have to get down to the business of actually <em>running</em> your household, which includes investing for your future. Here are a few investing essentials every newlywed couple should know.</p> <h2>1. Confidence Is Not the Same as Skill</h2> <p>Men and women tend to come at money from very different perspectives, and that's certainly true when it comes to investing. According to a Merrill Lynch study, 55% of women agreed or strongly agreed with this statement: &quot;I know <a href="https://mlaem.fs.ml.com/content/dam/ML/Articles/pdf/ARTRGVP5.pdf">less than the average investor</a> about financial markets and investing in general.&quot; Just 27% of men agreed or strongly agreed with that statement.</p> <p>This difference in investing confidence leads to notable differences in investing behavior. For example, according to a Barclay's study, men are more likely to attempt the impossible: time the market.</p> <p>While men may have more confidence in their investing abilities, some studies have found women to be more successful investors. The Financial Times reported on a study of hedge funds, finding that those managed by women outperformed those managed by men &mdash; by a large margin.</p> <p>The take-away? Choose which spouse will take the lead with investing based on track record, not confidence.</p> <h2>2. You Probably Have Different Comfort Levels With Risk</h2> <p>One of the most important investing decisions has to do with asset allocation &mdash; that is, how much of your portfolio will you invest in stocks, and how much in bonds?</p> <p>That ratio has to do with your investment time frame and risk tolerance. Each of you should take an <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire">investment temperament quiz</a> and then compare results. If the national studies are reflected in your marriage and he is more comfortable with risk than she is, meet in the middle when making asset allocation decisions.</p> <p>Or, you could take your investment temperaments out of the equation by using target-date funds for your investments. Just make sure you understand <a href="https://www.soundmindinvesting.com/articles/view/how-well-do-target-date-funds-perform-in-a-downturn">how target-date funds work</a>.</p> <h2>3. Your Best First Investment May Have Nothing to Do With the Stock Market</h2> <p>I will always remember a couple that approached me during a break in a financial workshop I was leading for engaged and newly married couples. She had tears in her eyes. He looked irritated.</p> <p>Their wedding was coming up and they couldn't agree on where to live. He was about to graduate from law school, assumed he'd land a job at a large firm, and wanted to buy a nice condo in a trendy part of town. Knowing she was about to marry into six figures' worth of debt, she wanted to rent for a few years in order to aggressively pay off their loans.</p> <p>As diplomatically as I could, I suggested that her plan might be better for their finances and their marriage.</p> <p>You may not have six figures' worth of debt, but if you're like many newlyweds, you likely have debt. One of the best investments you can make is to pay it off as soon as possible.</p> <p>If you're paying 18% on a credit card balance, paying it off would give you a guaranteed 18% return on your money.</p> <p>See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso">When to Do a Balance Transfer to Pay Off Credit Card Debt</a></p> <p>But paying off debt isn't just a good <em>financial </em>investment. A study done by Utah State Assistant Professor Jeffrey Dew, found that &quot;consumer debt fuels a <a href="http://www.stateofourunions.org/2009/bank_on_it.php">sense of financial unease</a> among couples&quot; and increases the likelihood that they will fight more often, and not just about money. On the other hand, Dew found that newly married couples who paid off their debt within the first five years of marriage reported being more satisfied with their marriage than those who did not.</p> <p>So, if you're starting your marriage with debt, pay it all off, with the possible exception of a reasonable mortgage before starting to invest.</p> <h2>4. You Have Some Control</h2> <p>When it comes to investing, there's a lot you can't control. No one knows which way the market will go next, how high inflation will get, or when the next market-moving world crisis will hit. But one factor you <em>can </em>control is how much money you invest.</p> <p>One of the best bits of advice my wife, Jude, and I received before we got married was to base most of our essential living expenses on one income, especially housing costs. So, we bought a condo in what realtors euphemistically described as an &quot;up and coming&quot; neighborhood on Chicago's northwest side. There were no coffee shops nearby, but we could easily afford it on my salary alone. That enabled us to save and invest much of Jude's salary, which gave us a nice head start on our investing by the time our first child arrived four years later and we decided to become a one-income family.</p> <p>As you decide where to live and how much to spend on everything from clothing to vacations, make sure you budget some money to invest.</p> <h2>5. The Future Arrives Faster Than You Can Imagine</h2> <p>Another factor you can control is how soon you start investing. When you're young and newly married, retirement may seem like some vague, distant destination you can worry about later. Besides, you have furniture to buy and trips to take.</p> <p>But consider this. A 30-year-old who invests $400 per month, generates an average annual return of 7%, and stops investing at age 70, will end up with a little over $1 million. If she waits until she's 40 to get started, invests the same $400 per month, and generates that same 7% average annual return, she'll end up with less than $500,000. By waiting 10 years, she will have invested just $48,000 less, but she'll end up with half the money!</p> <p>Compound interest favors the young, so the earlier you start investing the better.</p> <p><em>How are you and your partner managing your investments?</em></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/5-things-newlyweds-must-know-about-investing">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/stabilize-your-portfolio-with-these-5-bond-funds">Stabilize Your Portfolio With These 5 Bond Funds</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-10-biggest-myths-about-investing">The 10 Biggest Myths About Investing</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-reasons-why-life-insurance-isnt-just-for-old-people">5 Reasons Why Life Insurance Isn&#039;t Just for Old People</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-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</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-essential-things-women-should-know-about-investing">5 Essential Things Women Should Know About Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment joint finances marriage newlyweds retirement risk tolerance Thu, 11 Feb 2016 22:00:05 +0000 Matt Bell 1654134 at http://www.wisebread.com Best Money Tips: Cheapest Cities for Retirees http://www.wisebread.com/best-money-tips-cheapest-cities-for-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-cheapest-cities-for-retirees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_city_000084004751.jpg" alt="Married couple finding cheapest cities for retirees" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles on the cheapest cities for retirees, the best time to visit top vacation destinations for big savings, and affordable but romantic Valentine&rsquo;s Day ideas.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/slideshow/retirement/T006-S001-cheapest-places-where-you-ll-want-to-retire/index.html">Cheapest Places Where You'll Want to Retire</a> &mdash; In Hot Springs, Arkansas, housing and health care for retirees are particularly low, at 24.1% and 12.2% below the national average, respectively. [Kiplinger]</p> <p><a href="http://www.cheapism.com/blog/4120/best-time-to-go">When to Hit 10 Top Vacation Destinations for Big Savings</a> &mdash; Vacation rentals in London are cheapest a few weeks before mid-July. [Cheapism]</p> <p><a href="http://parentingsquad.com/13-inexpensive-but-romantic-valentines-day-ideas">13 Inexpensive But Romantic Valentine's Day Ideas</a> &mdash; Hop into your car and take a long drive through a scenic area nearby. [Parenting Squad]</p> <p><a href="http://www.popsugar.com/smart-living/Signs-Hoarding-Tendencies-33911301">11 Signs You Have Hoarding Tendencies</a> &mdash; Do you make piles of things to deal with later&hellip;and let those piles sit for days? [PopSugar Smart Living]</p> <p><a href="http://www.stackthechips.com/7-crazy-things-that-we-do-with-our-money/">7 Crazy Things That We Do With Our Money</a> &mdash; With online rental and streaming services, it doesn't make sense to buy a film that you haven't seen. [Stack The Chips]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.thefrugaltoad.com/household/your-health-how-to-stay-safe-with-medicine">Your Health: Staying Safe with Medicine</a> &mdash; Keep medicine in their original containers and out of reach of children. Make sure they're stored properly! Some meds require refrigeration. [The Frugal Toad]</p> <p><a href="http://adebtfreestressfreelife.com/3-surefire-strategies-to-end-under-earning-and-change-your-financial-circumstances/">3 Surefire Strategies to Value Yourself And Stop Working for Free</a> &mdash; Be honest! Take a hard look at your situation and analyze your justifications, thoughts, and feelings. [A Debt Free Stress Free Life]</p> <p><a href="http://gradmoneymatters.com/money-making-ideas/5-tasks-that-you-can-outsource.html">5 Tasks You Can Outsource</a> &mdash; Spend your time on things that matter. Email management is one of those tasks that you can easily hand off to a virtual assistant. [Grad Money Matters]</p> <p><a href="http://www.biblemoneymatters.com/practice-an-attitude-of-gratitude-to-improve-your-finances/">Practice An Attitude Of Gratitude To Improve Your Finances</a> &mdash; Practicing gratitude allows you to appreciate what you have and stop focusing on what you don't. [Bible Money Matters]</p> <p><a href="http://ptmoney.com/marriage-money/">8 Tips to Secure Your Marriage (and Money) for Years to Come</a> &mdash; Decide ahead of time who will take care of which financial tasks. [PT Money]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-cheapest-cities-for-retirees">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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</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/dont-let-poor-health-kill-your-retirement-fund">Don&#039;t Let Poor Health Kill Your Retirement Fund</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/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</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-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</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-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement Thu, 11 Feb 2016 20:00:06 +0000 Amy Lu 1654680 at http://www.wisebread.com 10 Ways to Increase Your Net Worth This Year http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-ways-to-increase-your-net-worth-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/000038376598.jpg" alt="Finding ways to increase your net worth this year" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you live a paycheck-to-paycheck existence? Or are you focused on escaping that vicious cycle and building your net worth?</p> <p>Net worth &mdash; the value of all our assets like bank accounts and property minus our liabilities like mortgages and credit card debt &mdash; is a summary of our economic worth, the simplest indicator of our financial well-being.</p> <p>Building your net worth is the path to true financial freedom, and there's a tried-and-true formula to grow it: Boost your income and assets while reducing your liabilities. In other words, save more money, and lower your debt. But doing so is often easier said than done.</p> <p>So, let's examine 10 simple things you can try in order to start building a stronger&nbsp;net worth &mdash; and financial future &mdash; today.</p> <h2>1. Get a Raise</h2> <p>The most straightforward way to increase your net worth is to increase your income. If you've been at a company for some time and feel like you have done good work, there is no harm in asking for a reasonable increase in pay. You can raise the possibility before your annual review, and come armed with evidence of your value to the organization. There's not much downside to asking for more money as long as the request is reasonable and made professionally. (See also:&nbsp;<a href="http://www.wisebread.com/5-times-you-should-demand-a-raise">5 Times You Should Demand a Raise</a>)</p> <h2>2. Find New Sources of Income</h2> <p>Money doesn't have to come from just your day job. You can increase your income by getting a second job, taking on freelance work, selling handmade birdhouses, or selling items on eBay. The opportunities are endless, and limited only by your own energy and time. Think of what a few thousand or even just a few hundred dollars a year might do to your bank account.</p> <h2>3. Buy a House</h2> <p>Renting is not helping your net worth because it's just money out with nothing left to show for it. By purchasing a home, any mortgage payments will go toward building equity, the value of which can increase if your house appreciates in value. And there's the potential to get all that money back &mdash; and more &mdash; if you choose to sell. You may have to take on debt to buy a home, so your net worth may not increase right away. (The more more you put down, the less debt you incur.) And as we all learned from the Great Recession, homes can also decline in value, usually only temporarily. But it will almost surely pay off in the long run, as long as you can make your mortgage payments.</p> <h2>4. Spend Less</h2> <p>Your net worth won't rise if cash is leaving your wallet. This is especially true if you are spending it on items that lose value or have no cash value at all. Decreasing your spending will help you save more, thus leaving additional cash for investments that can truly expand your overall net worth.</p> <h2>5. Get Out of Debt</h2> <p>Increasing your net worth isn't just about accumulating money, but reducing or eliminating what you owe to others. Credit card debt, student loans, car loans, and mortgages all count against you when it comes to calculating net worth. You should work hard to eliminate student loan debt, which can't be discharged in bankruptcy, and focus on paying off debt with the highest interest rates first (such as high APR credit cards).</p> <h2>6. Invest in Stocks</h2> <p>Don't let extra money just sit around fruitlessly. Make it work for you by investing in index funds or blue chip stocks that have a long history of growth. A typical return from the S&amp;P 500 will net you an average of 7% growth annually. There is almost no easier way to boost net worth than through long-term investing of this nature.</p> <h2>7. Hit Your Company's 401K Match</h2> <p>If you work for a company that offers a 401K or similar retirement plan, there's a good chance it will match your contributions up to a certain percentage. In other words, it's free money just for participating. Most companies match somewhere around 3% of contributions, but many match even more. Remember that all money you contribute to a 401K is deducted from your taxable income.</p> <h2>8. Open a Roth IRA</h2> <p>This is another retirement account that works like a 401K, but in reverse. You invest money that has already been taxed into the account and can watch it grow, tax-free, until retirement. Many investment advisers suggest having both a 401K and a Roth IRA so you can take advantage of both tax benefits. You can contribute up to $5,500 annually into a Roth IRA, and $6,500 if you are over 60.</p> <h2>9. Get Married</h2> <p>Marriage has many benefits, including financial ones. For one thing, there are some nice tax advantages. And if you have a dual income household, your overall net worth can increase because you are combining assets, in a sense. In most cases, what's yours is hers and what's hers is yours. This gives you more buying power for investing and for buying a home, which can increase your net worth even further.</p> <h2>10. Buy Insurance</h2> <p>Your net worth could drop precipitously if you have an emergency and aren't protected. Are your house, car, and valuables properly insured? Do you have proper liability coverage? Good insurance may cost you some money in premiums, but you may save thousands of dollars by avoiding major repair expenses or legal bills.</p> <p><em>What are you doing in increase your net worth?</em></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/10-ways-to-increase-your-net-worth-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/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</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-financial-mistakes-to-stop-making-by-age-40">6 Financial Mistakes to Stop Making by Age 40</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/9-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</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-money-mistakes-to-stop-making-by-50">5 Money Mistakes to Stop Making by 50</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-financial-obstacles-that-are-especially-tough-for-women">5 Financial Obstacles That Are Especially Tough for Women</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt investing net worth retirement wealth building Wed, 13 Jan 2016 16:00:03 +0000 Tim Lemke 1634854 at http://www.wisebread.com 8 Financial Decisions You'll Never Regret http://www.wisebread.com/8-financial-decisions-youll-never-regret <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-financial-decisions-youll-never-regret" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggy_bank_000058476892.jpg" alt="Woman making financial decisions she&#039;ll never regret" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>A new year is here. And even if you've already broken the resolutions you made at the end of the holiday season, it's never too late to make new ones, especially when it comes to your finances.</p> <p>Here are eight financial decisions you can make now that you'll never regret. Make the moves on this list soon, and you'll dramatically increase your odds of a happy financial future.</p> <h2>1. Save More for Retirement</h2> <p>How much money will you need each year to enjoy a happy and healthy retirement? That depends on what you want to do after you leave the working world. You'll need more money if you plan to travel the world, and less if you envision days spent reading, binge-watching TV, and playing with your grandchildren.</p> <p>A survey released last April by the Employee Benefits Research Institute suggests that more workers understand they'll need large amounts of money to enjoy their retirement years. The survey found that more than one in 10 workers think they'll need to save at least $1.5 million for their retirements. That's a lot of money. One way to reach such a lofty goal? Put away as much as you can each year now, even if your retirement days seem far away.</p> <p>You'll never regret your decision to maximize your contributions to your 401K plan or your annual deposits to an IRA. Start boosting those savings today.</p> <h2>2. Building an Emergency Fund</h2> <p>What happens if your furnace conks out today? What if your car's transmission needs to be replaced? If you're like too many people, you'll put the cost of replacing these items on your credit card, building your debt.</p> <p>The better option is to draw from an emergency fund of cash that you have already saved, usually in a savings account. Financial experts recommend that you build an emergency fund that can cover at least six months of your daily living expenses. (See also:&nbsp;<a href="http://www.wisebread.com/6-emergency-fund-myths-you-should-stop-believing">6 Emergency Fund Myths You Should Stop Believing</a>)</p> <p>This might seem daunting. But if you deposit what you can each month &mdash; even if it is as small as $100 &mdash; that emergency fund will steadily grow.</p> <h2>3. Pay Off Your Credit Cards</h2> <p>Carrying a balance on your credit cards each month is a terrible financial decision. That's because cards come with such high interest rates &mdash; sometimes 18% or more. This makes your monthly debt grow by too much, even if you don't add any new purchases to your cards.</p> <p>Don't just make the minimum monthly payment on your cards. If you do this, it will take far too long to pay off your credit card debt. Say you have a credit card with a balance of $5,000 and an interest rate of 18.9%. If your minimum monthly payment is 4% of your outstanding balance, it will take you more than 11 years to eliminate this debt, even if you don't make any new purchases with this card.</p> <p>The better move is to always pay more than the monthly minimum. And don't buy items with your cards that you can't afford to pay off at the end of every month.</p> <h2>4. Pay Your Bills on Time Every Month</h2> <p>A single missed payment &mdash; on credit cards, mortgage loans, auto loans, and other debts &mdash; can drop your three-digit FICO credit score by 100 points. That missed payment will also stay on your credit report for seven years.</p> <p>Decide today to never make a late payment again. Having a low credit score makes it difficult to qualify for loans or credit. When you do qualify for these loans, you'll be faced with high interest rates.</p> <h2>5. Buy a Home That You Can Actually Afford</h2> <p>It's tempting when home shopping to stretch your budget to get into a bigger, more expensive home. But buying a home that's out of your budget, even by a bit, can be a big financial mistake. Those monthly mortgage payments can quickly become a burden.</p> <p>Instead, buy a home that you can comfortably afford, even if it's not your dream residence. Mortgage experts recommend that your total monthly housing expenses, including your estimated new mortgage payment, be no more than 30% of your gross monthly income. Follow this guideline if you don't want to feel the strain each time your monthly mortgage payment comes due.</p> <h2>6. Track Your Spending</h2> <p>You might be surprised by how much you spend each month on take-out lunches or morning coffee runs. But if you create a spending book and track those expenses, it might help you make lifestyle changes that can add up to big savings each year.</p> <p>A spending book is just a notebook in which you record all your daily purchases for a set period of time, usually anywhere from two weeks to two months. Once you're done tracking your expenses, add them up. This gives you an idea where you are overspending. (You can also use automated tracking at free sites like Mint.com.) If you're spending too much on those morning coffees, for instance, you might decide to limit your time at Starbucks to twice a week instead of five times.</p> <h2>7. Create a Household Budget</h2> <p>You might shudder at the thought of drafting a budget for your household. But you can't get control of your finances if you first don't know exactly how much money is coming in and going out of your home each month. Fortunately, creating a budget isn't difficult.</p> <p>First, write down the income you receive each month. Then write down those monthly expenses that never change, everything from your mortgage payment to your auto payment to your student loans. Then, write down those payments you make each month that fluctuate a bit. This would include your utility bills, credit card bills, and transportation costs to and from work. Estimate these. Finally, include estimated amounts for monthly groceries, entertainment, and eating out.</p> <p>Once you have these figures, you can determine how much money you should have left at the end of the month. Armed with this information, you can figure how much money you can save, invest for retirement, or put away for a child's college education.</p> <h2>8. Save First, Then Buy It</h2> <p>You want that new computer or that high-end flat-screen TV. It's tempting to simply use your credit cards, but the better move is to save up for that big-ticket non-necessity, and only buy it when you can pay for it with cash.</p> <p>This takes patience, of course. It might take you several months to save up for that new TV. But you'll enjoy your new electronic treat more if you don't have to dread next month's credit card bill.</p> <p><em>What financial decisions have you never regretted?</em></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/8-financial-decisions-youll-never-regret">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/4-money-resolutions-you-should-skip-this-year">4 Money Resolutions You Should Skip This Year</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/saving-money-is-easy-if-you-set-the-right-goals">Saving Money Is Easy If You Set the Right Goals</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/10-money-saving-new-years-goals-that-you-can-actually-keep">10 Money-Saving New Year&#039;s Goals That You Can Actually Keep</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-savings-tricks-you-havent-tried-yet">5 Savings Tricks You Haven&#039;t Tried Yet</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-ways-good-manners-make-you-wealthier">5 Ways Good Manners Make You Wealthier</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance emergency funds goals Paying Off Debt resolutions retirement saving money Wed, 13 Jan 2016 14:00:03 +0000 Dan Rafter 1634855 at http://www.wisebread.com The 10 Biggest Myths About Investing http://www.wisebread.com/the-10-biggest-myths-about-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-10-biggest-myths-about-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_thinking_newspaper_000053925278_0.jpg" alt="Man learning biggest myths about investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's a lot of information about investing floating around. There are also a lot of bad opinions, misconceptions, and flat-out lies.</p> <p>Knowing the difference between myth and reality is your ticket to hitting your investing goals. Here are 10 of the biggest myths about investing:</p> <h2>1. It's Hard to Get Started</h2> <p>If you've never invested money before, it can seem intimidating &mdash; and you may not even know where to begin. But the reality is that it's never been easier to get started with investing. It's simple to open a brokerage account or Individual Retirement Account (IRA) online, and there's a wealth of great information available to investors for free on the web. If you work for a company that offers a 401K plan, you are usually automatically enrolled. All you have to do is read up on the investment choices and decide how much money you want to put aside.</p> <h2>2. You Need a Lot of Money to Make a Lot of Money</h2> <p>There were days when stock brokers wouldn't even take your calls unless you were willing to invest thousands of dollars. Nowadays, it's possible to open a brokerage account and invest just a share at a time. Granted, transaction fees can make it worthwhile to invest larger sums at a time, and some investment accounts have minimum requirements &mdash; but you generally don't need to be rich to get started. A modest amount of cash set aside at regular intervals can result in a big nest egg upon retirement. Consider that even a person making $30,000 a year and setting aside 5% of their income over 30 years will end up with more than $150,000, based on a 7% annual return.</p> <h2>3. It's Overly Risky</h2> <p>Investing is not without risk, but you are fully in control of how much risk you want to assume. If you're the skittish type, there are plenty of investments, such as bonds and dividend stocks, that will allow you to make money without much risk. And it's important to remember that while stocks can go down in value quickly, they have historically always rebounded. Since the Great Depression, there have been fewer than two dozen down years for stocks.</p> <h2>4. The System Is Rigged</h2> <p>You will often hear this from critics of our financial system. I won't suggest that our system is perfect, but to call something &quot;rigged&quot; is to suggest that the average person can't succeed. The truth is that for the average person, it's easy to buy stocks, bonds, and other investments in a straightforward and transparent way, and make money doing it.</p> <h2>5. Past Performance Indicates Future Returns</h2> <p>It's tempting to buy an investment because it has done well in the past. And it's generally true that if a stock has generated a solid return over a very long period of time, it's a good bet moving forward. But there's absolutely nothing to prevent an investment from tanking even after years of great returns. And it certainly doesn't make sense to invest in something based on the performance of the previous few months.</p> <h2>6. Investment Professionals Know a Lot More Than You</h2> <p>I don't want to disparage fund managers and analysts, but there is a growing body of evidence that no one, not even the most experienced professionals, can consistently beat the performance of the overall stock market. If you put money in an index fund that tracks the overall stock market, there's a good chance you'll do as well or better than the hotshots on Wall Street.</p> <h2>7. You Should Try to Get Stocks During an IPO</h2> <p>Initial public offerings get a lot of headlines, and it may seem desirable to get in at the ground floor. Examples abound, however, of companies that failed to come out of the gate strong. In fact, many companies have seen share prices dip well below IPO levels. (Facebook is the most recent prime example of this.) For most investors, it makes sense to wait after an IPO to see how things go. If you're investing for the long haul, waiting won't hurt you too much. In fact, you may even get a better bargain.</p> <h2>8. You Need to Have [Insert Investment Here] in Your Portfolio</h2> <p>You'll get a lot of advice from people telling you that you need a specific type of investment to optimize your returns. But there is rarely a single investment that should be considered a must-have. There are a million ways to build a collection of investments that will help you get rich; the best advice is to diversify and have a long investment horizon.</p> <h2>9. Gold Is Always Great</h2> <p>You may assume that gold is an amazing investment. I mean, it's <em>gold</em> right? And there has to be some reason there are advertisements for gold on TV all the time. The truth is that gold <em>can</em> be a great investment, but only at certain times. It's worth having some in your portfolio to stay diversified, but gold has taken a beating recently. Shares of the SPDR Gold Trust are down nearly 15% in the last three years.</p> <h2>10. $1 Million Is a Magic Number</h2> <p>One would think that becoming a millionaire means you're set for life. Not these days, however. Thanks to inflation and longer life expectancies, a million bucks may not be enough for most people to live long and retire comfortably. It's a good sum of money, but if you want your money to last 25 to 30 years, you're probably going to want double that &mdash; or even more, if possible. This means saving as much money as you can, as early as you can.</p> <p><em>Do you adhere to these &mdash; or other &mdash; myths about investing?</em></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-10-biggest-myths-about-investing">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-6"> <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-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</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/whats-the-right-percentage-of-cash-for-your-portfolio">What&#039;s the Right Percentage of Cash for Your Portfolio?</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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 401k emergency funds IRA retirement Mon, 07 Dec 2015 10:02:20 +0000 Tim Lemke 1618546 at http://www.wisebread.com Do You Need a Financial Planner? http://www.wisebread.com/do-you-need-a-financial-planner <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-you-need-a-financial-planner" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_meeting_accountant_000016565687.jpg" alt="Couple figuring out if they need a financial planner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have questions regarding your finances, investments, taxes, or retirement, speaking with a financial planner can provide the answers you need. A certified financial planner (CFP) can help you organize your personal finances and establish a retirement plan. They can also help you make sense of financial problems, whenever they may arise.</p> <p>Most respectable planners will advise you if they think you can handle your finances on your own. However, you can't always count on them to turn you away, which is why we've covered some of the top reasons to hire a financial planner, as well as what to expect once you hire them.</p> <h2>1. You Need to Change Your Retirement Plan</h2> <p>Whether you are <a href="http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement">changing your retirement plan</a>, or haven't started planning at all yet, a financial planner can assist. They can help you develop a plan for financial security both now and into retirement. If you need to save more, they can help you develop a solid plan to increase your savings and contributions. That said, many people are comfortable planning for their own retirement, and if you're investment-savvy enough to do so on your own, a financial planner may be unnecessary.</p> <h2>2. You Need Financial or Investment Advice</h2> <p>If you have trouble organizing your finances and payments, a planner can help you get a grip on it. A financial planner can provide you with investment advice and explain the pros and cons of various investments options. They can also help you develop a strategy for down markets to better protect your money before retirement.</p> <p>All forms of investments and retirement accounts have associated management fees and expenses. If you are unsure of what you're paying for your investments, it's time to speak with a financial advisor. They can explain what your funds cost and can determine if you are spending more than necessary.</p> <h2>3. You Receive a Big Tax Refund Every Year</h2> <p>If you consistently receive a tax refund, you should speak with an adviser about what you owe and what you should be paying. While it may be nice to receive a tax refund at the end of the year, you won't gain any interest on the money when it's in Uncle Sam's possession. Instead, it would benefit you more to receive that money throughout the year. Your planner can help you adjust your tax withholdings so that you aren't overpaying throughout the year.</p> <h2>4. You Got Married</h2> <p>Determining which debts to combine, which debts to pay off, and what you need to do to reach your financial goals as a couple can be very difficult (especially for the newly married). Instead, let a financial advisor deal with the finances and help you organize your spending, debts, and assets. They will help you determine which strategy is right for your taxes, investments, benefits, bank accounts, and personal finances. They can even help you determine what your spouse's retirement plan may be able to offer you.</p> <h2>5. You Are Planning a Big Purchase or Making a Big Change</h2> <p>If you are planning on purchasing a home, or making another large purchase, a professional can help you determine how much you can afford to spend. They can then help you develop a plan to meet your financial goals and afford the home or purchase of your dreams. They can also help you prepare for life's big events, such as an upcoming baby, career change, or new car.</p> <h2>6. You Own a Business</h2> <p>Owning and running a business can be very stressful. Having a planner on your side can help you organize your business expenses and taxes, employee benefits, business investments, and any other financial information related to your business. If you will be buying, selling, or passing on a family business, a financial planner can make sure everything progresses smoothly.</p> <h2>What You Can Expect</h2> <p>One thing that a financial planner cannot provide is a guarantee. All they can do is help you get your financial life in order; they can't make miracles happen. What they can do is help you see the big picture and find ways to create more wealth over time, such as by capitalizing on compound interest.</p> <p>After getting to know you and your financial goals, your planner can help you create a written investment plan to reach them. They will assess all your current assets, liabilities, income, and more to develop a comprehensive plan that you can actually stick to. They can also advise you if you are paying too much for something, saving you even more money over time.</p> <h3>Monitoring Your Progress</h3> <p>Over time, your planner will continue to periodically monitor your progress to ensure you are still on track to meet your financial goals today, tomorrow, and into retirement. They will likely be your trusted financial partner for life because they can help you make wise, informed choices before you make any large financial decisions.</p> <h3>Finding an Advisor</h3> <p>If you can get a referral from a colleague, lawyer, or Certified Public Accountant (CPA), this is usually a good place to start your search for a financial planner. You can also search the <a href="http://www.plannersearch.org/Pages/home.aspx">Financial Planning Association (FPA)</a> and the <a href="http://www.napfa.org/">National Association of Personal Financial Advisors (NAPFA)</a> for a list of potential advisors.</p> <p>There are a number of types of financial planners available to you, including the following:</p> <ul> <li>CFP: Certified financial planners can help you with things like insurance, investments, taxes, retirement, employee benefits, and estate planning.<br /> &nbsp;</li> <li>ChFC: Chartered financial consultants specialize in finance and investing.<br /> &nbsp;</li> <li>CLU: Chartered life underwriters specialize in the finance industry.<br /> &nbsp;</li> <li>CFA: Chartered financial analysts specialize in economics, accounting, portfolio management, and security analysis.<br /> &nbsp;</li> <li>CPA: Certified public accountants specialize in tax issues.</li> </ul> <p>In most cases, a CFP is the right professional for the job, unless you have unusual financial or investment needs.</p> <h3>What Do They Charge?</h3> <p>Each advisor is different and will charge according to the following three basic billing structures:</p> <ul> <li>Fee-only planners: They are paid for their advice only.<br /> &nbsp;</li> <li>Fee-based planners: They earn fees for their advice and commission on the products they sell.<br /> &nbsp;</li> <li>Commission-based planners: They make commission on the products they sell.</li> </ul> <p>Some planners will charge a flat fee, hourly rate, or a percentage of what they are managing. According to CNNMoney, the average financial planner will charge anywhere from $100&ndash;$400 per hour. They may also charge a percentage of your assets if they also manage your money, usually between 0.5%&ndash;2%. If you only need a portfolio checkup every once in a while, then you likely only need a few hours, on a fee-only pay structure. It wouldn't make sense to continue paying an ongoing percentage if you don't need ongoing help.</p> <h3>Can You Do It Alone?</h3> <p>You may not need a financial advisor if you feel confident managing your finances, investments, and retirement accounts on your own. If you enjoy researching your investments and feel confident that you are monitoring your retirement plan well enough on your own, then you likely don't need an advisor.</p> <p><em>Do you have a financial planner? How have they helped you? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/do-you-need-a-financial-planner">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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</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-savings-tricks-you-havent-tried-yet">5 Savings Tricks You Haven&#039;t Tried Yet</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/10-ways-to-increase-your-net-worth-this-year">10 Ways to Increase Your Net Worth This Year</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/book-review-cash-rich-retirement">Book review: Cash-Rich 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/6-financial-mistakes-to-stop-making-by-age-40">6 Financial Mistakes to Stop Making by Age 40</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accountants advisors financial planners investments retirement Fri, 20 Nov 2015 14:00:27 +0000 Andrea Cannon 1614966 at http://www.wisebread.com What's the Right Percentage of Cash for Your Portfolio? http://www.wisebread.com/whats-the-right-percentage-of-cash-for-your-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/whats-the-right-percentage-of-cash-for-your-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cash_growing_plants_000046415712.jpg" alt="Learning how much cash you should have in your portfolio" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Cash &mdash; we all love it, and we all want more of it. But when it comes to investing, cash is not necessarily your best friend. Right now, cash will barely generate a 1% return, and actually loses value when there's inflation.</p> <p>Don't get me wrong, cash can provide some stability to a portfolio &mdash; it doesn't lose value quickly like stocks sometimes do &mdash; so it's helpful for older investors who have stopped working or who are close to retirement. And younger investors should have some cash on hand for emergencies and general flexibility.</p> <p>So how much cash should you have in your portfolio?</p> <h2>1. Do You Have an Emergency Fund?</h2> <p>Everyone needs some cash available in their lives to pay for day-to-day expenses, but also to protect themselves against disaster. Your furnace breaks. Your car is totaled. You're laid off. Most financial advisors recommend setting aside at least three months worth of expenses in case these scenarios pop up, and some recommend much more, especially for those with low or unpredictable incomes.</p> <p>This type of cash is not really an &quot;investment,&quot; per se, as it's unlikely to generate much return, especially with interest rates as low as they currently are. But you can still make it work for you by placing cash in flexible CDs, money market accounts, or online savings accounts that offer a yield of 1% or more. And by having this cash available, it will prevent you from dipping into stocks and other higher performing investments just to take care of emergencies.</p> <p><strong>Recommendation</strong>: Keep a minimum of three to six months of living expenses in an easily accessible emergency fund. If you have unstable income or higher financial needs, consider keeping up to 12 months of living expense funds in cash. More than that, and you may risk diminishing returns.</p> <h2>2. How Close Are You to Retirement?</h2> <p>As long as they have an emergency fund, someone who is 30 years from retiring probably doesn't need a mountain of cash. Put that money to work by putting as much as you can in retirement accounts and <a href="http://www.wisebread.com/how-to-build-an-investment-portfolio-for-under-5000">investing in mutual funds</a>, ETFs, and stocks to build that nest egg. If you are within a few years of retirement, it makes sense to move into more conservative investments, and that's when cash can play a role.</p> <p>Discount brokerage Charles Schwab suggests having <a href="http://www.schwab.com/public/schwab/investing/retirement_and_planning/retirement_income/portfolio_allocation">5% of your investment portfolio</a> in cash or cash equivalents like CDs if you are between 60 and 69 years old, ramping that up to 10% for those in their 70s and 30% for those over 80. Generally speaking, advisors suggest using fixed income investments like bonds to bring stability to a portfolio, but a small percentage of cash can also be useful for retirees, especially if interest rates rise.</p> <p><strong>Recommendation</strong>: Aside from your emergency fund, people aged 60-69 should consider keeping up to 5% of their portfolio in cash. If you expect significant portfolio volatility or are otherwise risk-averse, a somewhat higher percentage can make sense.</p> <h2>3. Have You Maxed Out Your Retirement Funds?</h2> <p>Most people can contribute up to $18,000 into a 401K plan annually and $5,500 into a Roth or traditional IRA. And if you're not close to retirement, this money should be placed in growth stocks and investments that will help you build wealth over time.</p> <p>If you're maxing out your contributions, then you are on the right path for a great retirement, and shouldn't stress much about having too much cash on hand. But there are still many tax-advantaged ways to invest, including real estate and college savings accounts. And even if you buy stocks in a taxable brokerage account, your returns will be much higher than cash alone, even after taxes.</p> <h2>4. Are You a Passive or Active Investor?</h2> <p>If you're the type of person who makes steady contributions into your retirement accounts and likes to leave the investments alone and watch them grow, you probably don't need a lot of cash on hand. But for active investors who like to pounce at every good opportunity, it helps to have some money available in your brokerage account.</p> <p>I'm personally not an advocate of trying to &quot;time&quot; the market, but if you see shares of a great company trading at good value and want to take advantage, go for it. The catch is that you'll need money on hand to buy right away. Otherwise, you'll have to sell other securities to make the purchase, or borrow money from your broker. Your ideal cash holdings will vary depending on how often you buy and the number of shares you want, but having at least a few thousand dollars on hand is useful in these cases.</p> <p><strong>Recommendation</strong>: If you invest actively, keep on hand only as much cash as you believe you'll need for exploiting investment opportunities.</p> <p><em>How do you decide how much cash to leave in your portfolio?</em></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/whats-the-right-percentage-of-cash-for-your-portfolio">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/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in Stocks</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-much-can-you-afford-to-risk-in-a-play-money-account">How Much Can You Afford to Risk In a Play Money Account?</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-10-biggest-myths-about-investing">The 10 Biggest Myths About Investing</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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</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-savings-tricks-you-havent-tried-yet">5 Savings Tricks You Haven&#039;t Tried Yet</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment cash emergency funds retirement savings Fri, 06 Nov 2015 13:15:17 +0000 Tim Lemke 1605799 at http://www.wisebread.com 10 Top Mutual Funds for Income Investors http://www.wisebread.com/10-top-mutual-funds-for-income-investors <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-top-mutual-funds-for-income-investors" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/people_mutual_funds_000020266560.jpg" alt="Learning the top mutual funds for income investors" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're an investor looking to boost income rather than long-term growth, you have a ton of great options. Many well-crafted mutual funds are designed to help income investors meet their objectives, whether it be for retirement or to just have some extra cash on hand.</p> <p>Some of these funds are pure income plays designed for those in or near retirement, while others also offer some nice capital appreciation. Consider these 10 <a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds">mutual funds</a> designed for income investors.</p> <h2>1. Vanguard Retirement Income [<a href="http://www.morningstar.com/funds/XNAS/VTINX/quote.html">VTINX</a>]</h2> <p>This is a good performer with a nice mix of government and corporate bonds, cash, and some stocks. There's also a super-low expense ratio of just 0.16%, so you'll get to keep more of your money.</p> <h2>2. Vanguard Dividend Growth [<a href="http://www.morningstar.com/funds/XNAS/VDIGX/quote.html">VDIGX</a>]</h2> <p>A great, low-cost fund for those looking for dividend income, as well as capital appreciation. This fund invests in mostly large-cap companies like UPS, Coca-Cola, and Lockheed Martin that show a potential for increasing dividends. It's hard to argue with a three-year return of 14%.</p> <h2>3. Fidelity Freedom Index Income Fund [<a href="http://www.morningstar.com/funds/XNAS/FIKFX/quote.html">FIKFX</a>]</h2> <p>There are better performing funds out there, but this one does have some of the lowest fees in the class, so your total return may be on par or better than most competitors. This fund advertises a mix of 7% in domestic equity funds, 7% in international equity funds, 46% in bond funds, and 30% in short-term funds.</p> <h2>4. BlackRock LifePath Index Retirement Portfolio [<a href="http://www.morningstar.com/funds/XNAS/LIRIX/quote.html">LIRIX</a>]</h2> <p>Similar to the Fidelity Freedom Index Income Fund, with a nice and low expense ratio of .16%. This is a little more stock-heavy than some income funds, with about 40% in domestic and international equities. This makes it a riskier fund than some, but most investors will not complain about a three-year return of 6.34%.</p> <h2>5. T. Rowe Price Equity Income Fund <a href="http://www.morningstar.com/funds/XNAS/PRFDX/quote.html">[PRFDX</a>]</h2> <p>This is a great fund for younger investors who want to boost income, but are willing to accept some risk in order to see growth, as well. This fund has most of its holdings in stocks with a history of paying high dividends. (General Electric, Johnson &amp; Johnson, and Exxon Mobil are among its largest holdings.) Those dividends can boost your income, and most investors won't complain about annual returns of about 14% over three and five-year time horizons.</p> <h2>6. TIAA-CREF Lifecycle [<a href="http://www.morningstar.com/funds/XNAS/TLRIX/quote.html">TLRIX</a>]</h2> <p>Expenses are a little higher than Vanguard's, but you can't argue with the performance of this &quot;fund of funds&quot; which is up nearly 4% this year and 8% in five years. About a quarter of this fund is invested in TIAA-CREF's main bond fund.</p> <h2>7. T. Rowe Price Real Estate Fund [<a href="http://www.morningstar.com/funds/XNAS/TRREX/quote.html">TRREX</a>]</h2> <p>It's a good idea to have some real estate in any investment portfolio, and this fund is a good way to get that exposure and some nice income along the way. Real Estate Investment Trusts, or REITs, generally pay higher-than-average dividends, and this fund has seen consistent annual growth in recent years.</p> <h2>8. Fidelity Select Utilities Portfolio [<a href="http://www.morningstar.com/funds/XNAS/FSUTX/quote.html">FSUTX</a>]</h2> <p>Utilities are another industry that belongs in a well-diversified portfolio. This particular fund invests in companies like Exelon and Nexterra that pay solid dividends. There is some stability in having exposure to this industry, as no one is shutting off their air conditioning or lights anytime soon. This fund is free to trade on Fidelity, and though it's had a tough 2015, it's up more than 10% in the last three years.</p> <h2>9. JPMorgan SmartRetirement Income Fund [<a href="http://www.morningstar.com/funds/XNAS/JSRAX/quote.html">JSRAX</a>]</h2> <p>This fund has a mix of about 50% bonds and 35% stocks, so it's not as fixed income-heavy as some other funds. Performance is solid at more than 6% in the last three years and nearly 7% in the last five. Its net expense ratio of .78% is on the low side compared to most mutual funds. Fidelity customers can trade this fund without a commission.</p> <h2>10. Fidelity Income Replacement Funds</h2> <p>These are <a href="https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/our-approach">not your typical mutual funds</a>, but they can be useful for people looking for income up to a target date. These funds offer regular monthly payments, similar to an annuity, that increase with inflation. It's important to note that the investor is left with a zero balance at the end, so these funds may not be ideal for everyone. I am not a usually a big fan of target date funds because fees are often on the high side. But these funds have reasonable expense ratios of between .35% and .68%.</p> <p><em>Which mutual funds do you favor for income?</em></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/10-top-mutual-funds-for-income-investors">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/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your Retirement Savings?</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-things-newlyweds-must-know-about-investing">5 Things Newlyweds Must Know About Investing</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/4-ways-boring-investments-make-life-exciting">4 Ways &quot;Boring&quot; Investments Make Life Exciting</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-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</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-ways-to-invest-in-biotech-without-getting-burned">7 Ways to Invest in Biotech Without Getting Burned</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment income investing mutual funds retirement stock portfolios Thu, 13 Aug 2015 13:00:45 +0000 Tim Lemke 1517140 at http://www.wisebread.com 6 Financial Mistakes to Stop Making by Age 40 http://www.wisebread.com/6-financial-mistakes-to-stop-making-by-age-40 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-financial-mistakes-to-stop-making-by-age-40" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_budgeting_000033505114.jpg" alt="Couple figuring out financial mistakes to stop making by 40" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>It doesn't matter if you're in your 20s, 30s, or 40s &mdash; everyone makes financial mistakes. But, the mistakes we make in our later years are often different from those we made as a young adult. Even if you've gone through some financial growing pains, there's room for improvement.</p> <p>Here's a look at six financial mistakes you need to stop making by age 40.</p> <h2>1. Buying More House Than You Can Afford</h2> <p>Some young adults rush to acquire the same lifestyle as their parents, and they get in over their heads buying homes they can't afford. I've seen it with several of my friends &mdash; they want to look like they ball, but can't maintain the proverbial court. But there's no rule that says we have to constantly move up. If you're living above your means, it's time to downsize and get serious about your money.</p> <p>Being house poor can have a tremendous impact on your personal finances. You might be able to swing the house payment every month, but if you don't have money for anything else, you're less likely to save for retirement &mdash; and there's a good chance that you'll end up with credit card debt. Besides, the cracks will eventually show &mdash; and that will defeat the purpose of why you went into debt in the first place. Not worth it at all.</p> <p><strong>RELATED:</strong> <a href="http://www.wisebread.com/4-steps-to-finding-your-mortgage-lender">How to Land a Mortgage Lender You'll Legitimately Love</a></p> <h2>2. Tapping Into Your 401(k)</h2> <p>Twenty-something adults can afford to tap into their 401(k)s if they endure economic hardships or need cash to buy a house (although it's not recommended by most money experts). Since they're young, there's time to replenish the account. Older adults, however, don't have this luxury. If you're approaching middle-age and hoping to retire in your late 50s or early 60s, this isn't the time to play around with your retirement account. Stop using your 401(k) or IRA as an emergency fund. As an alternative, you need to keep enough cash in your liquid savings to deal with unexpected expenses that pop up. (Which, incidentally, might mean telling your kids &quot;no&quot; sometimes.)</p> <h2>3. Saving Like You're Fresh Out of College</h2> <p>When you're just out of college and starting out, you may not have a lot of cash to put toward saving for retirement. Therefore, you might contribute the bare minimum after opening a 401(k) &mdash; maybe 2% or 3% of your income. This is okay in your younger years. But by the time you hit 40, you need to step it up a notch.</p> <p>Look into increasing your 401(k) contributions to 5% or 6%, especially if you're getting an employer match. This is essentially free money that can take your retirement account to the next level. (Plus, you deserve it!) Also, consider ways to diversify your retirement savings, such as opening an individual retirement account or dabbling in other investments, like stocks or real estate.</p> <h2>4. Putting Your Child's Needs Ahead of Your Retirement</h2> <p>All parents want to give their children the best. This might be the best private schools, extracurricular activities, educational vacations, or college funds. But be careful about putting your kids' needs over your retirement &mdash; after all, you can't afford to help them if your own financial situation isn't secure first.</p> <p>The sooner you start stashing cash away for the future, the more financially stable you'll be when you leave the workforce. If you put the majority of your disposable income into giving your children the best life possible, your retirement could take a backseat to their needs and wants. And if you don't save enough, this can result in working longer than you want later in life, or having to get a job after retiring to make ends meet. Not to mention you might not be able to afford helping your children as much as you'd like.</p> <h2>5. Never Reevaluating Your Life Insurance Needs</h2> <p>Your life insurance needs can change as you get older. A policy purchased in your 20s while you were single without kids or a mortgage probably doesn't offer the coverage you need today. It might be time to upgrade your policy to ensure your family has enough financial support in the event of your death, especially if you're the breadwinner.</p> <p>There are no hard or fast rules regarding how much life insurance to get, but the policy should be enough to cover your funeral and burial expenses, pay off any existing debt, plus provide your spouse and dependents with ongoing financial support.</p> <h2>6. Getting Comfortable With Credit Card Debt</h2> <p>At this point in your life you probably recognize the danger of using credit cards. But just because you no longer rely on credit cards doesn't mean you should get comfortable or shrug off your existing balances. If you still owe thousands, paying the minimum isn't going to cut it. Like, ever.</p> <p>Develop a plan to <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal">get rid of credit card debt</a> once and for all. Go through your house and sell things you don't need. Instead of spending a work bonus going on vacation, use this cash to erase account balances. You can even temporarily reduce how much you're contributing to your retirement account, and use the savings to pay off credit card debt. Whatever means you need to eliminate this debt (outside of robbing a bank, of course), use it. You'll feel freer and more financially stable once that burden is off your back.</p> <p><em>Are there other financial mistakes we need to stop making by age 40? Let me know some of your suggestions in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-financial-mistakes-to-stop-making-by-age-40">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-3"> <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-mistakes-to-stop-making-by-50">5 Money Mistakes to Stop Making by 50</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/10-ways-to-increase-your-net-worth-this-year">10 Ways to Increase Your Net Worth This Year</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/make-these-7-money-moves-now-or-youll-regret-it-in-20-years">Make These 7 Money Moves Now Or You&#039;ll Regret It in 20 Years</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/use-the-8020-rule-to-maximize-your-financial-opportunities">Use the 80/20 Rule to Maximize Your Financial Opportunities</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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt kids life insurance money mistakes mortgage retirement Mon, 10 Aug 2015 09:00:14 +0000 Mikey Rox 1519218 at http://www.wisebread.com 5 Clever Tax Shelters Anyone Can Use http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-clever-tax-shelters-anyone-can-use" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_gold_piggy_bank_000059335918.jpg" alt="Man finding easy ways to reduce tax burden" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For the middle-class, building wealth for your family can be like constructing a house &mdash; the biggest challenge is setting the foundation. And it starts with keeping your taxes as low as possible. This can sometimes result in relocating to an area where the cost of living and taxes are more affordable, trading high-cost districts in areas like New York City and San Francisco for a more sustainable lifestyle in an area where the job market is strong, like in Houston or Dallas.</p> <p>But there are other smart, easy ways to <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees">reduce your tax burden</a>, too. Read on to familiarize yourself with a few.</p> <h2>1. Avoid Personal and Business Income Tax</h2> <p>You won't have to worry about paying personal state income tax if you live in one of these nine U.S. states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. And you will avoid corporate income tax if you do business in the states of Nevada, South Dakota, Texas, or Wyoming.</p> <h2>2. Take Advantage of Retirement Plans</h2> <p>Most people start saving for retirement once they land their first &quot;real&quot; job by contributing to employer-sponsored plans. Some employers will match as much as 100% of your 401(k) contributions up to 3% of your salary. That's a guaranteed 100% return of your investment! So, let's say you've contributed $3,500 &mdash; your employer will put in another $3,500. There isn't another investment that can guarantee this type of return. Plus, if historical average stock market returns are any indication, your money will likely grow an average 8%&ndash;12% per year tax-free or tax-deferred. Meanwhile, investing in your 401(k) will reduce your annual income and possibly your tax bracket, further reducing your tax burden.</p> <h2>3. Contribute to a 529 College Savings Plan</h2> <p>Qualified Tuition Programs (QTPs), often referred to as 529 Plans, are tax shelters that allow you to save for higher education expenses. In many ways, they resemble retirement plans, offering tax-deferred growth on contributions. Plans vary and have different lifetime contribution limits &mdash; generally around $200,000 &mdash; but there is no federal tax on earnings, and often no state tax if your plan's beneficiary chooses an in-state college.</p> <h2>4. Avoid Estate and Inheritance Tax</h2> <p>The estate and inheritance tax doesn't affect many people, because you're not required to file an estate tax return unless your estate is valued at $5,430,000 or more as of 2015 &mdash; and only six states levy their own inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. And the transfer of property through an estate or inheritance is taxed only in Nebraska and Pennsylvania. Consider yourself lucky &mdash; unless you've got a very sizeable estate, your progeny will probably be spared this tax blow.</p> <h2>5. Buy a Home</h2> <p>When you purchase a home, you can deduct interest paid on your mortgage, a percentage of your real estate taxes and depreciation, and receive credits for certain home improvements. Not a bad deal. But if you're in the business of flipping real estate, it gets even better, because when you sell a property, any profit of under $250,000 (for single tax filers) is tax-free. That amount doubles to $500,000 if you're married and filing jointly. The only requirement the IRS has is that you occupy the home as your principal residence for at least two years before you sell.</p> <p><em>What other easy tax shelters do you employ?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">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-9"> <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/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</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-tax-changes-for-2016">5 Important Tax Changes for 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/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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/avoid-the-tax-season-rush-with-these-early-prep-steps">Avoid the Tax Season Rush With These Early Prep Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes charitable donations deductions mortgage retirement tax credits Wed, 05 Aug 2015 13:00:14 +0000 Qiana Chavaia 1508985 at http://www.wisebread.com Ask the Readers: How Would You Like to Spend Your Retirement? http://www.wisebread.com/ask-the-readers-how-would-you-like-to-spend-your-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/ask-the-readers-how-would-you-like-to-spend-your-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_couple_retirement_000056857238.jpg" alt="Couple deciding how they want to spend their retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p><em>Editor's Note: Congratulations to <a href="http://www.wisebread.com/ask-the-readers-how-would-you-like-to-spend-your-retirement#comment-779902">Monique</a>, Pam, and Lynda for winning this week's contest!</em></p> <p>It can't be stressed enough how important it is to save for your retirement. But how much you need to save really depends on how you want to spend your golden years. Some people want to travel, some want to stay home and spend time with family, and others want to continue working some of the time.</p> <p><strong>How would you like to spend your retirement?</strong> Will you spend it at home or abroad? Are your finances on track for your retirement plans?</p> <p>Tell us how you would like to spend your retirement and we'll enter you in a drawing to win a $20 Amazon Gift Card!</p> <h2>Win 1 of 3 $20 Amazon Gift Cards</h2> <p>We're doing three giveaways &mdash; here's how you can win!</p> <h3>Mandatory Entry:</h3> <ul> <li>Post your answer in the comments below. One commenter will be randomly selected to win a $20 Amazon Gift Card!</li> </ul> <h3>For Extra Entries:</h3> <ul> <li>You can tweet about our giveaway for an extra entry. Also, our Facebook fans can get an extra entry too! Use our Rafflecopter widget for your chance to win one of the other two Amazon Gift Cards:</li> </ul> <p><a id="rcwidget_6ck6148w" data-template="" data-theme="classic" data-raflid="79857dfa199" rel="nofollow" href="http://www.rafflecopter.com/rafl/display/79857dfa199/" class="rcptr">a Rafflecopter giveaway</a> </p> <script src="//widget-prime.rafflecopter.com/launch.js"></script></p> <p>If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.</p> <h4>Giveaway Rules:</h4> <ul> <li>Contest ends Monday, August 10th at 11:59 p.m. Pacific. Winners will be announced after August 10th on the original post. Winners will also be contacted via email.<br /> &nbsp;</li> <li>You can enter all three drawings &mdash; once by leaving a comment, once by liking our Facebook update, and once by tweeting.<br /> &nbsp;</li> <li>This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.<br /> &nbsp;</li> <li>You must be 18 and US resident to enter. Void where prohibited.</li> </ul> <p><strong>Good Luck!</strong>&nbsp;</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Tell us how you would like to spend your retirement and we&#039;ll enter you in a drawing to win a $20 Amazon Gift Card! </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/ask-the-readers-how-would-you-like-to-spend-your-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-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/ask-the-readers-how-did-you-spend-your-first-paycheck">Ask the Readers: How Did You Spend Your First Paycheck?</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/ask-the-readers-is-valentines-day-too-commercial-chance-to-win-20">Ask the Readers: Is Valentine&#039;s Day Too Commercial? (Chance to win $20!)</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/ask-the-readers-what-is-your-new-years-resolution">Ask the Readers: What Is Your New Year&#039;s Resolution?</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/ask-the-readers-whats-the-biggest-item-in-your-budget">Ask the Readers: What&#039;s the Biggest Item in Your Budget?</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/ask-the-readers-how-would-you-balance-americas-budget">Ask the Readers: How Would You Balance America&#039;s Budget?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Giveaways Ask the Readers retirement Tue, 04 Aug 2015 15:00:16 +0000 Ashley Jacobs 1511122 at http://www.wisebread.com 5 Financial Mistakes You Need to Stop Making by 30 http://www.wisebread.com/5-financial-mistakes-you-need-to-stop-making-by-30 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-financial-mistakes-you-need-to-stop-making-by-30" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_thinking_about_money_000059288760.jpg" alt="Man learning about financial mistakes to stop making by 30" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Managing money is tricky, especially when you're in your 20s and just starting your adult life. Between low starting pay, student loan debt, and the pressure to keep up with your friends materially, your finances are usually anything but perfect.</p> <p>As you learn the financial ropes, it's only natural that you'll make some mistakes along the way. I certainly did &mdash; because nobody's perfect, and our 20s are a time of self-discovery where we learn the dos and don'ts of money management. Alas, while you can get away with a few financial screw ups as a young adult, your 30s are the time to get serious about your money. You can no longer afford rookie mistakes.</p> <p>To help you advance to the big league, here's a look at five <a href="http://www.wisebread.com/4-financial-mistakes-that-limit-your-freedom">financial mistakes</a> to stop making by age 30.</p> <h2>1. Not Getting Serious About Budgeting</h2> <p>As a 20-something adult, you might live at home with your parents or share household expenses with a roommate. As a result, maybe you're able to spend money frivolously and you don't have to pinch pennies. If you get into any financial messiness, you can easily dig yourself out of a hole, leaving you feeling like a budget is unnecessary. Except there's one little problem: You'll eventually be on your own.</p> <p>By age 30, it's time to put impulse buying and bad habits behind you and get serious about managing your money. A budget is one of the best ways to maintain control of your finances. You're able to assess exactly where your money goes, and allocating a certain amount for different spending categories reduces the risk of overspending and ensures there's enough cash for other financial goals (building an emergency fund, saving up to buy a house, paying off debt, etc). You're an adult now, and you need to treat your money like one.</p> <h2>2. Using a Credit Card to Satisfy Your Wants</h2> <p>It's smart to apply for a credit card in your 20s. A credit card jumpstarts your credit history and provides access to funds during an emergency. Unfortunately, some 20-something adults rely too much on credit and accumulate massive debt. (You're not alone; I did it too.) But by the time you hit 30, it's time to give credit cards a rest and live mostly on cash.</p> <p>Using a credit card to satisfy your wants doesn't end well. The more debt you have, the harder it becomes to save for the future, and high minimum payments make it difficult to afford basic living expenses, like a mortgage or utilities. In your 30s, a credit card should be the exception, not the rule. If you use credit, make sure you're paying off the balance every month.</p> <h2>3. Ignoring Your Retirement Savings</h2> <p>Thinking back to my 20s, saving for retirement was the last thing on my mind. Maybe you feel the same way. In your 30s, you can't afford to put off saving for the future. For every year you delay saving for retirement, that might be an extra year you have to work later in life &mdash; and who the heck wants to do that? Talk to your employer about joining the company's 401(k) plan, and consider diversifying your retirement savings with an individual retirement account.</p> <h2>4. Relying Too Much on Your Parents for Support</h2> <p>I know from experience that making it on your own as a 20-something adult can be brutal. Entry-level salaries don't always keep up with the cost of living, and making ends meet might require some financial assistance from your parents. There's no shame in asking for help, but once you're in your 30s, you need to stand on your own two feet.</p> <p>This doesn't mean you'll never need financial help again, but instead of running to your parents every time you hit a financial roadblock, attempt to solve the problem yourself. What would you do if your parents weren't in a position to help? You could possibly sell items you don't need, ask your employer for overtime work, or downsize if you're living above your means.</p> <h2>5. Skipping Health Insurance and Other Insurance Needs</h2> <p>Some 20-something adults remain on a parent's health insurance plan until age 26. But once they're on their own, some feel they don't need insurance because they're healthy and only visit a doctor once a year for a physical, which is free under the Affordable Care Act. But just because you're healthy today doesn't mean you'll be healthy tomorrow. The older you get, the more likely you'll develop health problems, and it only takes one trip to the emergency room to wipe out your savings account. Even if you can't afford the best health insurance plan, some coverage is better than none.</p> <p>You also need to stop ignoring other insurance needs, such as disability insurance in the event you're unable to work for more than two weeks due to an injury or illness, and renter's insurance, which covers the replacement cost of your belongings in the event of fire, theft, or other damage to the property. Life often throws us curveballs when we're least expecting, so it's best to be as prepared as possible.</p> <p><em>Do you have other financial mistakes to add that we should stop making by age 30? Let me know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-financial-mistakes-you-need-to-stop-making-by-30">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-money-goals-all-30-somethings-should-have">10 Money Goals All 30-Somethings Should Have</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-6-biggest-financial-decisions-in-your-20s">The 6 Biggest Financial Decisions 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/make-these-7-money-moves-now-or-youll-regret-it-in-20-years">Make These 7 Money Moves Now Or You&#039;ll Regret It in 20 Years</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-best-free-financial-learning-tools">9 Best Free Financial Learning Tools</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-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 30s budgeting habits insurance millennials money moves retirement Mon, 03 Aug 2015 13:00:09 +0000 Mikey Rox 1507542 at http://www.wisebread.com Make These 7 Money Moves Now Or You'll Regret It in 20 Years http://www.wisebread.com/make-these-7-money-moves-now-or-youll-regret-it-in-20-years <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/make-these-7-money-moves-now-or-youll-regret-it-in-20-years" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_no_money_000026428621.jpg" alt="Man regretting money moves he didn&#039;t make in 20 years" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Some people always leave stuff for tomorrow.</p> <p>Procrastination is okay when you're talking about cleaning up your bedroom, but when it comes to personal finance, delaying action can be your undoing. There are certain key financial decisions that you need to make <em>today </em>&mdash; otherwise you may have a hard time catching up tomorrow.</p> <p>Don't compromise your financial future &mdash; here are seven&nbsp;<a href="http://www.wisebread.com/8-money-moves-cpas-say-you-must-make">money moves</a> for today that you'll regret you didn't make in 20 years.</p> <h2>1. Buy Life Insurance</h2> <p>If you plan to become a hermit, vow to never have a partner or spouse, or avoid having dependents by any means necessary, then you may skip this section. For all others, please read along.</p> <p>Right now is the youngest that you'll ever be, and the lowest that you'll ever be charged for life insurance. That's a fact. When your entire family depends on your income to survive, you need to plan to provide for them in case of your absence. If you're the sole breadwinner, how do you expect your dependents to cover the remaining balance of the mortgage, for example?</p> <p>If you're planning to have a family or take care of your parents down the road, buying life insurance when you're single and healthy in your 20s or 30s allows you to effectively lock in a low rate. If you wait 20 years to purchase life insurance, the cost can become prohibitively expensive &mdash; if you can qualify for plan coverage at all.</p> <h2>2. Negotiate Your First Salary</h2> <p>According to a report from the National Association of Colleges and Employers, class of 2014 college graduates at the bachelor's degree level have an <a href="http://www.naceweb.org/about-us/press/average-starting-salaries-class-2014.aspx">average starting salary</a> of $48,127. At the lower end of the salary range, liberal arts and humanities majors have an average starting salary of $38,604, and at the higher end, engineering majors have an average starting salary of $64,891.</p> <p>If you're thinking that these salaries sound too low, you're right. It turns out that more than 60% of Millennials don't negotiate salary when receiving their first job offers. Recent graduates are leaving money on the table. A survey of 700 employers reveals that three-quarters of employers typically have room to increase their salary offers by 5% to 10% during negotiations.</p> <p>This means that the average starting salary of a liberal arts and humanities major could potentially be bumped up to between $40,534 and $42,464, if only the job applicant were willing to negotiate. To show you how important that initial salary bump is, let's imagine that you were to take those increases of $1,930 (5% raise) and $3,860 (10% raise) and invest them for 20 years in an investment account with a 5% rate of return compounded annually. At the end of 20 years, you would be approximately $65,532.79 and $131,062.87 richer, respectively.</p> <h2>3. Start a Retirement Account</h2> <p>The same compounding example can be applied to your nest egg. You need to start saving for retirement today, or you'll be kicking yourself for not doing so 20 years from now.</p> <p>More than one third of Americans have less than $1,000 in retirement accounts. This is a scary number that becomes even scarier when you realize that the old target of a $1 million nest egg is no longer enough. According to calculations from the Social Security Administration, 25% of Americans aged 65 or older will <a href="http://www.ssa.gov/planners/lifeexpectancy.html">live past age 90</a>, and 10% will live past age 95. Given the longer U.S. life expectancy, a 4% annual withdrawal would fully deplete a $1 million retirement account in 25 years (age 90, assuming a retirement age of 65).</p> <p>But it's not just a matter of saving for the sake of saving. To maximize your potential nest egg, you need to make these smart money moves:</p> <h2>4. Invest in Stocks</h2> <p>Famous investor Peter Lynch put it best, &quot;Gentlemen who prefer bonds don't know what they are missing.&quot; When you have a long term time frame for investing, stocks will outperform other types of securities.</p> <h2>5. Minimize Investment Fees</h2> <p>By investing in funds with low expense ratios, such as index funds, you get more bang out of your retirement buck.</p> <h2>6. Take Advantage of Employer Matches</h2> <p>The average U.S. worker foregoes $1,336 per year or an extra 2.4% in retirement savings. This is free money that could be in your retirement account, but only if you were meet the matching requirements of your employer's retirement plan. Find out how to qualify for your employer match.</p> <h2>7. Quit Smoking</h2> <p>Smoking is one of the single worst thing that you can do to your body&hellip; and your wallet.</p> <ul> <li>In 2015, the American Cancer Society estimates that you spend <a href="http://www.cancer.org/research/infographicgallery/tobacco-related-healthcare-costs">$35 in health-related costs</a> per pack of cigarettes.<br /> &nbsp;</li> <li>According to a study from Wallethub, smoking costs Americans between $1 and $2 million over a lifetime, depending on your home state.<br /> &nbsp;</li> <li>Under the Affordable Care Act, insurance companies can't charge more for health status. However, they can charge up to 50% more for smoking status. This means that a smoker would pay up to $6,000 for the same annual coverage that would cost just $3,000 to a non-smoker.<br /> &nbsp;</li> <li>Non-smokers receive discounts under most car, renters, and home insurance plans.<br /> &nbsp;</li> <li>Smokers pay about three times as much for life insurance than nonsmokers.<br /> &nbsp;</li> <li>Used cars polluted with secondhand smoke have a resale value about 7% to 9% lower than comparable cars without such pollution.</li> </ul> <p>If you quit smoking now:</p> <ul> <li>In 10 years your <a href="http://www.cancer.org/healthy/stayawayfromtobacco/guidetoquittingsmoking/guide-to-quitting-smoking-benefits">risk of dying</a> from lung cancer would be about 50% less than if you were to continue smoking, and<br /> &nbsp;</li> <li>In 15 years, your risk of coronary heart disease would be the same as a non-smoker.</li> </ul> <p>Make these four money moves and you'll thank yourself 20 years from now.</p> <p><em>What are other money moves you'll regret you didn't make in 20 years? </em></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/make-these-7-money-moves-now-or-youll-regret-it-in-20-years">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-3"> <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-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-financial-mistakes-to-stop-making-by-age-40">6 Financial Mistakes to Stop Making by Age 40</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/8-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</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-savings-tricks-you-havent-tried-yet">5 Savings Tricks You Haven&#039;t Tried Yet</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/10-year-end-financial-moves-you-must-make-now">10 Year-End Financial Moves You Must Make Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance life insurance money moves negotiating procrastinating retirement smoking Thu, 30 Jul 2015 13:00:14 +0000 Damian Davila 1501966 at http://www.wisebread.com 5 Money Mistakes to Stop Making by 50 http://www.wisebread.com/5-money-mistakes-to-stop-making-by-50 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-money-mistakes-to-stop-making-by-50" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_reviewing_finances_000024989276.jpg" alt="Couple learning which money mistakes to avoid by 50" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're in your 50s, it's time to fasten your seatbelt and begin making your final descent towards your financial goals. And if you stop making these five <a href="http://www.wisebread.com/8-savings-mistakes-even-smart-people-make">money mistakes</a> now, soon you should be able to put your finances on autopilot.</p> <h2>1. Not Maxing Out Retirement Accounts or Making Catch-Up Contributions</h2> <p>Your retirement accounts offer the biggest tax incentive for your money. Hopefully, you're not only making the maximum allowable contributions, but are also taking advantage of catch-up contributions. In 2015, persons age 50 and older are eligible for yearly catch-up contributions in the amounts of $6,000 for 401(k) accounts and $1,000 for IRAs.</p> <h2>2. Not Paying Off Large Purchase Items</h2> <p>It's time to pay off those big-ticket items. Your mortgage and automobile titles need to be free and clear of encumbrances. Typically, these will be a household's two biggest expenses, and they can easily become burdensome for anyone living on a fixed-income.</p> <h2>3. Not Getting Insurance Policies</h2> <p>Failing to adequately insulate your family from life events will dramatically impact your finances. Make sure your family has enough life insurance, proper health coverage, property insurance, and disability insurance. Also, consider adding long-term care to your insurance policy. Long-term care coverage is expensive, but will save you money in the long run should you or your spouse ever need assisted care. All or a portion of the costs for these services would be covered.</p> <h2>4. Taking on New Debt</h2> <p>By now, I hope you've begun enjoying the peace of mind and freedom that stems from being virtually debt free, because your major debts should be almost paid off. And being a few short years away from retirement is not a good a time to start assuming new debts &mdash; lines of credit, student loans, second mortgages, car loans, etc. One of the biggest debt challenges facing middle-aged Americans today is helping children with student loan debt. The best solution for this is to put as much of the loans in your child's name, assuming only the portion that they can not reasonably afford to pay. When that's not an option, consolidate and pay them off as soon as possible.</p> <h2>5. Not Rebalancing Assets</h2> <p>One of the most important things you can do to help your <a href="http://www.wisebread.com/the-most-important-thing-youre-probably-not-doing-with-your-portfolio">investment portfolio is rebalance</a> it. As you near your target retirement age, you should start shifting your assets towards more conservative investments. Based on your age, and depending on your financial goals, a good asset allocation strategy might look something like, stocks 51%, bonds 13%, and cash 36%.</p> <p>As retirement draws nearer, it's important to get your financial house in order to maximize your remaining working years. Stop making these money mistakes now so that 60 looks even brighter than today.</p> <p><em>Are you making any of these financial mistakes? What are you doing to correct them?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-money-mistakes-to-stop-making-by-50">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-5"> <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-5-best-pieces-of-financial-wisdom-from-warren-buffett">The 5 Best Pieces of Financial Wisdom From Warren Buffett</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-financial-mistakes-to-stop-making-by-age-40">6 Financial Mistakes to Stop Making by Age 40</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-savings-tricks-you-havent-tried-yet">5 Savings Tricks You Haven&#039;t Tried 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/10-ways-to-increase-your-net-worth-this-year">10 Ways to Increase Your Net Worth This Year</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/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance advice debt money mistakes retirement savings Wed, 01 Jul 2015 13:00:19 +0000 Qiana Chavaia 1469493 at http://www.wisebread.com The 6 Biggest Financial Decisions in Your 20s http://www.wisebread.com/the-6-biggest-financial-decisions-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-6-biggest-financial-decisions-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/three_friends_coffee_000051230160.jpg" alt="Three friends making big financial decisions in their 20s" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Back in my early 20s, I didn't have a strong interest in personal finance; as long as I had enough money for the bar, I was good to go. Of course I knew the importance of paying my bills on time (and I did), but planning for the future and learning about credit management were the last things on my mind. I wasn't alone, either. Most of my friends were the same way a decade ago, and if you're in your 20s now, you may not give your personal finances much thought.</p> <p>Although you're young and have the rest of your life to be responsible with money, there are reasons to get a head start on positive <a href="http://www.wisebread.com/10-financial-decisions-you-cant-keep-putting-off">personal finance practices</a>. Don't wait until your 30s or 40s to get serious about your money.</p> <h2>1. Start Saving for Retirement</h2> <p>If you're dealing with low wages and high student debt, you may feel you can't afford to save for retirement. However, starting a retirement savings plan while young can have a tremendous impact on your future financial health because you'll maximize your retirement income thanks to the magic of compound interest. No one's saying you have to contribute the maximum each year to your IRA or a 401(k). Do what you can afford. As long as you're contributing something, you're on the right path and doing better than a lot of 20-something adults.</p> <h2>2. Live Within Your Means</h2> <p>After graduating college and getting a job, you might be in a mad rush to achieve the lifestyle you were accustomed to growing up. But realize it took your parents years to acquire what they have, so don't expect the same lifestyle in your first couple of years out of school.</p> <p>If you learn how to live within your means in your 20s, you can carry this good habit throughout your entire adulthood. You're less likely to get into deep credit card debt. And living beneath your means makes it's easier to save for retirement and enjoy other things in life, such as the occasional vacation.</p> <h2>3. Avoid Credit Card Debt</h2> <p>The debt you accumulate in your 20s can haunt you for decades. So before you buy houses, cars, or start a family, tackle your debt. The older we get, the more responsibilities we take on. Lingering debt means additional interest rates, and it becomes harder to wipe out these balances. You might be ready to move out and exert your independence after graduating college. But if you can, stay home for a little while longer and use this time to pay off student loan debt and credit card debt.</p> <h2>4. Get Insured</h2> <p>Just because you're young doesn't mean you're invincible. You can get sick, injured, or die unexpectedly, just like older folks. No one likes to think about bad situations, but you need to prepare for the worst. The best time to buy insurance is while you're young and healthy. This includes health, life, and disability insurance. It's not only a responsible way to protect your finances, but you also might qualify for a better rate because of your age. If you live on your own, make sure you get a renter's insurance policy to cover the replacement cost of personal belongings in the event of a natural disaster, theft, or fire.</p> <h2>5. Build an Emergency Fund</h2> <p>Your 20s is also one of the best times to start building an emergency fund. Talk to any adult in their 30s or 40s with a mortgage or kids and they'll tell you it's harder to save when there's so many financial responsibilities. If you're still living at home, try living off half your income and save the other half until you build a nest egg of at least three to six months' living expenses.</p> <h2>6. Establish Your Credit History</h2> <p>You can't rely on your parents forever. Now's the time to establish credit if you plan to buy a house and be financially independent in the future. Applying for a student loan is a good start, but diversifying your credit can build an even stronger credit score. You can apply for another installment loan, such as an auto loan, or you can apply for one or two credit cards. It isn't enough to apply for credit, you have to use credit responsibly. Don't get in over your head. Only charge what you can afford, and make every effort to pay off your credit card bills in full every month, and on time. Credit building is a slow, gradual process. And regularly monitor your credit report to check for inaccuracies or identity theft, which can drive down your credit rating.</p> <p><em>What other smart decisions should you make in your 20s? Let me know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/the-6-biggest-financial-decisions-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-4"> <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-personal-finance-milestones-every-20-and-30-year-old-should-hit">7 Personal Finance Milestones Every 20 and 30 Year Old Should Hit</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-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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/conspicuous-spending-fading-to-black">Conspicuous Spending: Fading to Black</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-money-mistakes-to-stop-making-by-50">5 Money Mistakes to Stop Making by 50</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/saving-money-is-easy-if-you-set-the-right-goals">Saving Money Is Easy If You Set the Right Goals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 20s credit millennials retirement savings Tue, 16 Jun 2015 21:00:09 +0000 Mikey Rox 1454417 at http://www.wisebread.com