retirement savings http://www.wisebread.com/taxonomy/term/8983/all en-US 5 Ways to Make Long-Term Care More Affordable http://www.wisebread.com/5-ways-to-make-long-term-care-more-affordable <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-make-long-term-care-more-affordable" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/nothing_inspires_happiness_like_fresh_air.jpg" alt="Nothing inspires happiness like fresh air" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>A long life can be both a blessing and a financial burden. As our health inevitably declines over time, medical expenses can skyrocket. What follows are several ideas for keeping later-life health care costs under control.</p> <h2>1. Save for health care like you save for retirement</h2> <p>It's common for people to save for their retirement. Far less common is the habit of saving for future health care costs. And yet, a growing number of people have access to a triple tax-advantaged way to do just that &mdash; a health savings account. If you have a high-deductible health insurance policy, that's you. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?Ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <p>Money you contribute to such an account is tax-deductible, and assuming it's ultimately used for health care expenses, earnings and withdrawals are tax-free. If you don't spend all the money you contribute each year, the balance can be carried over from year to year. With some account providers enabling you to invest the money, you could build up quite a balance.</p> <p>That money could be used to help pay health care costs in your later years, including some expenses for long-term care, whether provided in your home or a nursing home. The money also could be used to pay the premiums for Medicare Parts A, B, C, and D, and at least a portion of long-term care insurance (LTCI) premiums.</p> <h2>2. Don't over-save</h2> <p>Headlines about later life health care costs can strike fear into your heart and wallet. According to a recent Fidelity Benefits Consulting study, a 65-year-old couple retiring in 2017 will need $275,000 to cover their health care costs throughout retirement &mdash; up from $260,000 for couples retiring in 2016. And that's just for <em>normal </em>older age health care; it doesn't include the cost of long-term care.</p> <p>But let's take a look past the headlines. Assuming a 20-year retirement, $275,000 works out to $1,146 per month. While people's health care costs vary widely, $1,146 is less than some families pay right now for high-deductible health insurance premiums plus monthly contributions to a health savings account.</p> <p>Instead of relying on headlines about <em>average </em>health care costs, estimate <em>your </em>later-life health care costs to make sure you aren't obsessively over-saving out of fear. You can go a long way toward that by getting some Medicare estimates. Pairing an Original Medicare plan with a Medigap policy or choosing a Medicare Advantage plan can take away a lot of uncertainty regarding out-of-pocket costs for deductibles and copays.</p> <h2>3. Purchase some long-term care coverage</h2> <p>One of the main reasons people end up in nursing homes is dementia, and one of the primary risk factors for getting dementia is a family history. If your parents or grandparents had it, it may be wise for you to pick up at least <em>some </em>long-term care insurance coverage.</p> <p>Just keep in mind that buying a long-term care insurance policy is not an all or nothing proposition. You could opt for enough coverage to take the sting out of long-term care costs, while still keeping your premiums manageable.</p> <p>Choosing a longer <em>elimination period </em>(how many days you have to be in a nursing home before benefits begin) will lower the cost of the policy. Other ways to save include opting for a lower daily benefit, a lower maximum benefit period (compare the costs of one, three, and five years as opposed to lifetime coverage), and doing so without inflation protection. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <h2>4. Buy a deferred annuity</h2> <p>The risk of getting Alzheimer's disease goes up with age. According to the Alzheimer's Association, 3 percent of people between ages 65 and 74 have the disease, whereas 32 percent of those over age 85 have it.</p> <p>One way to manage the financial risk of an age-related disease such as Alzheimer's is to purchase an advanced-life deferred annuity. With this product, you pay a relatively small lump sum premium now in order to secure a guaranteed monthly benefit down the road. For example, a 65-year-old may be able to pay $10,000 now in order to receive $575 per month beginning at age 80. By comparison, if a 65-year-old wanted that much per month right now via an <em>immediate </em>annuity, he or she may have to pay $100,000.</p> <h2>5. Move closer to adult children</h2> <p>One more idea for keeping long-term care costs down is to live near or with your adult children during your retirement, assuming they are in a position (and are willing) to help you. Living close to a caring relative can lessen your dependence on &mdash; and the cost of &mdash; outside help for long-term care.</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-ways-to-make-long-term-care-more-affordable">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/a-simple-guide-to-planning-for-a-loved-ones-long-term-care">A Simple Guide to Planning For a Loved One&#039;s Long-Term Care</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-a-family-members-finances-long-distance">How to Manage a Family Member&#039;s Finances Long Distance</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-financial-steps-to-take-when-your-aging-parents-move-in">6 Financial Steps to Take When Your Aging Parents Move 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/6-ways-to-ease-your-parents-into-assisted-living">6 Ways to Ease Your Parents Into Assisted Living</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-money-problems-our-grandparents-never-had">6 Money Problems Our Grandparents Never Had</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance annuities assisted living costs elderly family health care long term care nursing homes retirement savings Wed, 13 Dec 2017 09:30:09 +0000 Matt Bell 2065226 at http://www.wisebread.com The U.S. Savings Rate Has Tanked — Here's Why That Matters http://www.wisebread.com/the-us-savings-rate-has-tanked-heres-why-that-matters <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-us-savings-rate-has-tanked-heres-why-that-matters" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/financial_headache.jpg" alt="Financial Headache" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you stashing away fewer dollars in your retirement or savings accounts? You're not alone.</p> <p>The U.S. Bureau of Economic Analysis reported that Americans are saving less money today than they have at anytime since 2007. The bureau reported that the U.S. savings rate fell to 3.1 percent in September 2017. That's the lowest it's been since this rate fell to 3 percent in December of 2007.</p> <p>If you recall, 2007 wasn't a great economic time for the United States. It was the beginning stages of the housing crash and the Great Recession. This prompts the question: Is the low savings rate a warning sign that the national economy might be in line for a slowdown? And why are people saving less?</p> <h2>A lower savings rate could mean a few things</h2> <p>The lower savings rate might mean that consumers are more confident in the economy. Instead of putting their dollars in traditional savings vehicles, people are investing more in the stock market and other assets. That happens when the economy is strong and investors think they can realize stronger returns.</p> <p>At the same time, consumers were spending more. The same report from the Bureau of Economic Analysis found that consumer spending rose 1 percent in September. That jump is the biggest since 2009.</p> <p>Again, this could be an indicator that consumers are more confident in the national economy. But, it could also be a worrisome trend. The drop in the savings rate at the same time that spending is up might be a sign that Americans aren't necessarily earning more, but are spending more at the expense of their savings. This trend is a dangerous one, as it can put more people in financial trouble down the line.</p> <h2>Keeping your savings up to speed</h2> <p>Of course, you can't worry about what people across the country are doing. You can, though, take a look at your <em>own</em> finances to determine if you are saving enough money. Exactly how much should you be saving? That's a complicated question, but a few rules of thumb can guide you in the right direction.</p> <h3>Emergency fund</h3> <p>You should have an emergency fund in a low-risk savings account that you can use to pay for unexpected repairs or financial emergencies. Financial experts recommend that you have at least six to 12 months' worth of daily living expenses saved in an emergency fund. That figure might sound intimidating, but if you start saving just a bit now, your emergency fund can grow quickly. If you save $100 a month, for instance, you'll have $1,200 saved after a year. Boost that figure to $300 a month, and you'll have a financial cushion with $3,600 in it by the end of a year. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">7 Easy Ways to Build an Emergency Fund From $0</a>)</p> <h3>Retirement savings</h3> <p>How much you need for retirement varies depending on a host of factors; everything from what kind of retirement you want &mdash; one that involves a lot of traveling will cost more than one in which you spend most of your time golfing or fishing &mdash; and how much income you'll be earning each month.</p> <p>As a general rule, financial experts recommend that you save 10 to 15 percent of your income each year for retirement starting in your 20s. If you hit this goal every year, you should be able to build a solid nest egg for your post-work years.</p> <p>The challenge, though, is that this is such a general approach to retirement savings. It doesn't take into account the vagaries of your own financial situation. You might not have to save as much if you have royalty income, you plan to work part-time after leaving your full-time job, or you have inheritance money to rely on.</p> <p>The best advice is to max out contributions to an IRA and/or 401(k) account. Then meet with a certified financial planner who can study your current financial situation to determine if you are on pace to meet your retirement goals. (See also: <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=seealso" target="_blank">10 Signs You Aren't Saving Enough for Retirement</a>)</p> <p>And about that national savings rate? Just because <em>some </em>Americans are spending more and saving less doesn't mean you have to follow the trend. Stick to your savings goals if you want to enjoy a lower-stress financial life.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-us-savings-rate-has-tanked-heres-why-that-matters&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520U.S.%2520Savings%2520Rate%2520Has%2520Tanked%2520%25E2%2580%2594%2520Heres%2520Why%2520That%2520Matters.jpg&amp;description=The%20U.S.%20Savings%20Rate%20Has%20Tanked%20%E2%80%94%20Heres%20Why%20That%20Matters"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20U.S.%20Savings%20Rate%20Has%20Tanked%20%E2%80%94%20Heres%20Why%20That%20Matters.jpg" alt="The U.S. Savings Rate Has Tanked &mdash; Here's Why That Matters" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/the-us-savings-rate-has-tanked-heres-why-that-matters">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/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-world-currencies-that-took-a-hit-in-2016">8 World Currencies That Took a Hit in 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-these-8-things-to-profit-from-the-improving-economy">Do These 8 Things to Profit From the Improving Economy</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-reasons-why-the-us-economy-is-kicking-the-worlds-butt">9 Reasons Why the U.S. Economy Is Kicking the World&#039;s Butt</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/what-i-miss-about-the-recession">What I Miss About the Recession</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Economy emergency fund overspending retirement savings savings rate Tue, 21 Nov 2017 09:30:10 +0000 Dan Rafter 2057711 at http://www.wisebread.com Your Good Credit Doesn't Mean You Have Good Money Habits http://www.wisebread.com/your-good-credit-doesnt-mean-you-have-good-money-habits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-good-credit-doesnt-mean-you-have-good-money-habits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sad_woman_looking_at_wallet_money_dollars_flying_away.jpg" alt="Sad woman looking at wallet money dollars flying away" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score is great. You have no trouble qualifying for auto or mortgage loans. Credit card providers stuff your mailbox with offers for rewards-laden cards. You're obviously practicing good money habits, right?</p> <p>Not necessarily. It is possible to have a high credit score while still struggling with bad financial habits. Don't let your solid score blind you to these key money mistakes that could cause you financial pain.</p> <h2>Carrying a balance on your credit card</h2> <p>If you charge items on your credit cards each month and make at least your minimum required monthly payments, that will boost your credit score. And if you have high enough credit limits, carrying a moderate balance on your credit cards each month won't drag your score down too much.</p> <p>But carrying a balance on a credit card, even if it isn't preventing you from having a high credit score, is a big financial mistake. It's not unusual for cards to come with interest rates of 17 percent, 18 percent, or even 20 percent. If you carry a balance on your cards from month to month, those high rates can cause your credit card debt to soar.</p> <p>The better move? Only charge what you can afford to pay back in full each month. That will help maintain your good credit score without leaving you with an ever-growing pile of credit card debt. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?Ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>You're not saving anything</h2> <p>Maybe you pay all of your bills on time. Maybe you don't have any credit card debt at all. But if you don't have any savings, that's not a good financial sign.</p> <p>How much you've saved, or haven't saved, doesn't impact your credit score. Whether you have $20,000 in a savings account or $100, your credit score won't budge either way. It's important to have a strong credit score <em>and</em> to pay your bills on time, of course. But not having any money leftover to build a savings is a bad money move. (See also: <a href="http://www.wisebread.com/4-easy-to-fix-reasons-your-savings-account-isnt-growing?ref=seealso" target="_blank">4 Easy-to-Fix Reasons Your Savings Account Isn't Growing</a>)</p> <h2>You've never built an emergency fund</h2> <p>An emergency fund is a bit like having savings; only with this kind of fund, you're saving money, usually in a low-risk savings account, specifically to cover unexpected financial emergencies. That way, if you suddenly must shell out thousands of dollars to repair your car, you won't have to resort to charging this expense on a credit card. You can take the funds out of your emergency fund instead.</p> <p>Also like savings, you can have a high credit score and no emergency fund. Having a high credit score is no excuse for not building this financial safety net. (See also: <a href="http://www.wisebread.com/how-to-balance-saving-for-retirement-emergency-fund-and-paying-off-debt?ref=seealso" target="_blank">How to Balance Saving for Retirement, Emergency Fund, and Paying Off Debt</a>)</p> <h2>You're way behind on saving for retirement</h2> <p>It's possible to enter your golden years with a stellar credit score but no money saved for retirement. That's because the amount of money you've socked away in an IRA or 401(k) plan is not factored into your credit score.</p> <p>Don't let your strong credit score, and your easy access to loans and strong credit cards, blind you to the fact that you're <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement" target="_blank">not saving enough for retirement</a>. It's nice to have a good credit score after you've left the working world, but that score won't mean much if you can't afford to pay your bills. (See also: <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50?ref=seealso" target="_blank">How Much Should You Have Saved for Retirement by 30? 40? 50?</a>)</p> <h2>You're struggling to pay the bills each month</h2> <p>You might never miss a utility bill, mortgage payment, or auto payment. But what if covering these bills each month is a constant financial struggle? What if you never have enough money left over to invest or deposit into an emergency or retirement fund? Your credit score won't suffer, but your financial health is a different story. (See also: <a href="http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle?ref=seealso" target="_blank">How to Escape the Paycheck-to-Paycheck Cycle</a>)</p> <p>Again, it's easy to let a high credit score trick you into thinking you're in solid financial shape. But if paying the bills is a tightrope act each month, your high credit score is merely hiding deeper financial problems. One unexpected financial hiccup &mdash; such as a blown hot water heater or leaking roof &mdash; could suddenly set you back. And then you might not be able to cover every bill when the due dates arrive. (See also: <a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight?ref=seealso" target="_blank">Pay These 6 Bills First When Money Is Tight</a>)</p> <p>The key is to focus on both increasing your savings while continuing to take the steps that have led you to a solid credit score. Cut back on your optional spending to start building savings and an emergency fund. Open a 401(k) plan or an IRA to start saving for retirement. Even saving a little each month is better than doing nothing.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fyour-good-credit-doesnt-mean-you-have-good-money-habits&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FYour%2520Good%2520Credit%2520Doesn%2527t%2520Mean%2520You%2520Have%2520Good%2520Money%2520Habits.jpg&amp;description=Your%20Good%20Credit%20Doesn't%20Mean%20You%20Have%20Good%20Money%20Habits"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Your%20Good%20Credit%20Doesn%27t%20Mean%20You%20Have%20Good%20Money%20Habits.jpg" alt="Your Good Credit Doesn't Mean You Have Good Money Habits" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/your-good-credit-doesnt-mean-you-have-good-money-habits">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/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0">7 Easy Ways to Build an Emergency Fund From $0</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-complacency-is-keeps-you-from-financial-security">How Complacency Keeps You From Financial Security</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-golden-rules-of-personal-finance-everyone-should-know">10 Golden Rules of Personal Finance Everyone Should Know</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt emergency funds financial health good credit score high credit score paycheck to paycheck paying bills retirement savings Thu, 12 Oct 2017 09:00:06 +0000 Dan Rafter 2031776 at http://www.wisebread.com 6 Money Problems Our Grandparents Never Had http://www.wisebread.com/6-money-problems-our-grandparents-never-had <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-money-problems-our-grandparents-never-had" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social_worker_is_visiting_a_senior_woman.jpg" alt="Social worker is visiting a senior woman" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life has changed quite a bit over the past 75 years. Sometimes, it's hard for us to think about what life was like for our grandparents and great-grandparents all those years ago. This can be especially true when it comes to money.</p> <p>Financial problems are not immune to changing times. As the times have changed, so have the issues and challenges we've had to deal with. While our grandparents and great-grandparents surely had their share of financial problems, there are some they simply never had to face.</p> <h2>1. Online identity theft</h2> <p>Identity theft has been around as long as there have been identities to steal. But, since our grandparents didn't have the internet (at least until they were much older), identity theft was not as big of a concern as it is today. Since information wasn't digital, no one could hack into a database to steal credit card numbers, Social Security data, and other personal identification details. Our grandparents didn't have to peruse their credit reports for cards, loans, and other lines of credit that had been fraudulently taken out in their names.</p> <p>Today, we have to be proactive about protecting ourselves from fraud. According to a recent study by Javelin Strategy &amp; Research, 6.5 percent of consumers experienced identity fraud in 2016, a number that continues to rise every year. The same report from the previous year found the average incident cost was $1,585.</p> <p>Though our financial institutions are looking out for us, we have to be wary about where we use our credit cards online, and we have to pull those yearly credit reports, just in case. Every year, we have to deal with the potential for tax fraud, and we must constantly weigh whether it's worthwhile to share our information online in return for whatever goods and services we are getting in exchange. (See also: <a href="http://www.wisebread.com/18-surprising-ways-your-identity-can-be-stolen?ref=seealso" target="_blank">18 Surprising Ways Your Identity Can Be Stolen</a>)</p> <h2>2. Credit cards</h2> <p>Our grandparents and great-grandparents simply didn't have or use credit cards in anywhere near the same capacity as we do today. For the most part, their mentality was this: Either they had the money to buy what they needed, or they didn't. If they didn't, they simply went without. This straightforward approach to money meant they were probably better at budgeting than many of us are today.</p> <p>Now, according to the Federal Reserve, 70 percent of Americans have at least one credit card, with the average being 2.6 cards according to Gallup. In houses that carry credit card debt, a NerdWallet study found the average amount to be a whopping $16,425 as of 2017. As a nation, that's a grand total of $764 billion that we owe on our cards. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <p>Our grandparents didn't have to deal with credit card debt, but they also missed out on many of the benefits of credit cards, like points, miles, and <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal" target="_blank">cash back programs</a>. (See also: <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about?ref=seealso" target="_blank">14 Awesome Credit Card Perks You Didn't Know About</a>)</p> <h2>3. Student loans</h2> <p>The first federal student loans in the United States <a href="http://www.edcentral.org/edcyclopedia/federal-student-loan-programs-history/" target="_blank">were offered in 1958</a>, under the National Defense Act. The institution of student loans simply missed most of our grandparents' generation. Now, according to Student Loan Hero, 44.2 million Americans are dealing with student loan debt, and repayment is so difficult that it is a crisis for many people.</p> <p>In homes that carry student loan debt, NerdWallet found the average amount owed is over $50,000. Since 1985, inflation has seen the cost of college fees and tuition rise by nearly 500 percent. It's no wonder we have to take out loans to pay for school.</p> <p>While our grandparents didn't have to deal with these enormous student loans, there was a trade-off: They also found it much harder to go to college. Loans today make it easier for people to get the education they want or need to pursue their dreams, so we have more educational opportunities than our grandparents did. But, that opportunity comes at a steep price. (See also: <a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt?ref=seealso" target="_blank">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a>)</p> <h2>4. High health care costs</h2> <p>Getting quality medical care didn't always cost as much as it does now. In 1958, the average person spent <a href="https://www.forbes.com/sites/chrisconover/2012/12/22/the-cost-of-health-care-1958-vs-2012/#7c4abff44910" target="_blank">$134 per year</a> on health care costs (and many of our grandparents were born before that, when costs were even lower). Even if you adjust for inflation, that's only around $830 by today's standards. In 2016, the average person spent <a href="http://www.pbs.org/newshour/rundown/new-peak-us-health-care-spending-10345-per-person/" target="_blank">$10,345 dollars on health care</a>. That's a massive leap.</p> <p>It shouldn't be a surprise that health insurance is a huge debate in our country, because most people can't afford this much out of pocket. Health care costs have gone up for many reasons, including the advancement (and expense!) of technology, the high cost of becoming a doctor, and the drain of long hospital stays and drawn out illnesses. Our grandparents and great-grandparents may not have had such high health care costs, but again, there was a trade-off: They also didn't have access to the advanced technology and treatments that we have today. (See also: <a href="http://www.wisebread.com/the-one-question-you-need-to-answer-to-choose-the-best-plan-on-the-health-care-marketplace?ref=seealso" target="_blank">The One Question You Need to Answer to Choose the Best Plan on the Health Care Marketplace</a>)</p> <h2>5. Saving for retirement</h2> <p>In our grandparents' day, many jobs came with pensions. You worked a certain number of years, or until you reached a certain age, and the company let you retire with plenty of money to live out the rest of your life. It wasn't up to you to figure out a 401(k), the various types of IRAs, and more. Instead, you invested in a company, and that company took care of you when you left the working world. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <p>Now, we have to invest for ourselves, because pensions are disappearing. According to the Bureau of Labor Statistics, in 1990, 42 percent of private industry employees who worked full-time had a pension. By 2012, that number was down to 22 percent. And it's still falling. Companies aren't looking out for our retirement anymore, so we have to do it ourselves.</p> <p>While pensions had many perks, they didn't give workers the flexibility that we have today in planning for retirement. Now, we can choose how to invest our retirement savings, and exactly how much we put into those accounts. Although funding our retirement takes a lot more work these days, we at least have the benefit of more control and flexibility with our savings. (See also: <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=seealso" target="_blank">4 Retirement &quot;Rules of Thumb&quot; That Actually Work</a>)</p> <h2>6. Rising food costs</h2> <p>Things cost more now than they did in our grandparents' day. While we also make more money than they did, it's not enough to keep up with the rising cost of everyday life. Since 2003, food and drink costs have risen by 36 percent. Our earnings, on the other hand, have only gone up 28 percent.</p> <p>A dozen eggs only cost <a href="https://www.bls.gov/opub/uscs/report991.pdf" target="_blank">$0.60 in 1950</a>. By 2010, that cost was $1.79 per dozen, and it's only getting higher. Sure, that's one small item. However, when you multiply that by all of your groceries, that's a significant change between the prices our grandparents paid and the ones we pay now.</p> <p>The silver lining to those rising food costs is that we now have many more options in where and how we purchase groceries, which gives us a chance to find the best deals. Apart from the grocery store, you can do a cost comparison with your local farmers market or wholesale retailer, like Costco. Recent years have also seen a boom in community-supported agriculture (CSA) shares, in which you receive farm-fresh, seasonal produce (and sometimes dairy!) for a fraction of what you'd pay at the store. Today, you can even save money by <a href="http://www.wisebread.com/6-ways-having-your-groceries-delivered-can-save-you-money?ref=internal" target="_blank">having your groceries delivered</a> right to your doorstep. (See also: <a href="http://www.wisebread.com/10-affordable-alternatives-to-the-grocery-store?ref=seealso" target="_blank">10 Affordable Alternatives to the Grocery Store</a>)</p> <p>We also have more ways to find savings on those rising food costs. Apart from good, old-fashioned coupon clipping, there are numerous apps and websites (such as Ibotta, SavingStar, and Checkout 51) that offer stellar deals and cash back on grocery purchases. (See also: <a href="http://www.wisebread.com/the-8-shopping-apps-thatll-actually-save-you-money-in-2016?ref=seealso" target="_blank">The 8 Shopping Apps That'll Actually Save You Money</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-money-problems-our-grandparents-never-had&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Money%2520Problems%2520Our%2520Grandparents%2520Never%2520Had.jpg&amp;description=6%20Money%20Problems%20Our%20Grandparents%20Never%20Had"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Money%20Problems%20Our%20Grandparents%20Never%20Had.jpg" alt="6 Money Problems Our Grandparents Never Had" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-money-problems-our-grandparents-never-had">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/9-signs-your-identity-was-stolen">9 Signs Your Identity Was Stolen</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/its-the-21st-century-why-is-your-money-stuck-in-the-20th">It&#039;s the 21st Century — Why Is Your Money Stuck in the 20th?</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/when-is-it-okay-to-share-your-social-security-number">When Is It Okay to Share Your Social Security Number?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-protect-your-credit-after-the-equifax-breach">How to Protect Your Credit After the Equifax Breach</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/how-to-protect-elderly-loved-ones-from-financial-scams">How to Protect Elderly Loved Ones From Financial Scams</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance family generations great grandparents health care costs identity theft money problems pensions retirement savings Mon, 21 Aug 2017 08:31:10 +0000 Sarah Winfrey 2005634 at http://www.wisebread.com Are You Ruining Your Retirement by Spoiling Your Kids? http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-you-ruining-your-retirement-by-spoiling-your-kids" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cute_surprising_kid_girl_holding_wallet_and_dollars.jpg" alt="Cute surprising kid girl holding wallet and dollars" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's true that most parents would do anything for their kids, and giving them money is no exception. Parents are all too willing to hurt their own financial health to provide a more comfortable life for their children.</p> <p>When parents spend too much on their children, they can easily damage their own chance of enjoying a stable retirement. The best approach is to help your children when they need financial assistance, but be wary of providing so much help that you're hurting your own financial picture. That could, in turn, make you a financial burden on your children in the future.</p> <h2>Nearly half of Americans say they risk their retirement to help their children</h2> <p>Parents aren't shy about extending financial assistance to their children and family members. A 2017 report from Merrill Lynch and Age Wave, <em>Finances in Retirement: New Challenges, New Solutions</em>, found that 48 percent of Americans age 50 years and older are willing to overextend themselves financially to provide their children with a more comfortable life.</p> <p>The survey also found that 60 percent of these respondents would delay their retirement, and 40 percent would return to the working world after retiring, if they needed to provide extra financial support to family members. In fact, the majority of respondents had provided financial support in the past year, for an average amount of $6,500.</p> <p>There's nothing wrong with helping a family member in need, of course. The problems begin when parents give so much to their children and other relatives that they run the risk of not having enough for their own retirement.</p> <h2>It starts with college tuition</h2> <p>Many parents really begin to hurt themselves financially when their children are ready to attend college. They do this by spending too much of their own money to help pay for their children's education, often dipping into their retirement savings or putting off saving completely.</p> <p>This isn't surprising, given the high tuition rates at colleges across the country. The College Board reported that the average cost of tuition and fees for the 2016&ndash;2017 school year was $9,650 for state residents at public colleges, and $33,480 for private colleges &mdash; not including the cost of room and board.</p> <p>It's easy for parents to overextend themselves to help their children pay for their college education, but doing so can only hurt parents in the long run. It's important for parents to continue saving for retirement, even if that means they can't give as much money as they'd like to help their children through college. There are loans for college, but not for retirement. (See also: <a href="http://www.wisebread.com/3-reasons-not-to-save-for-your-childs-college-fund?ref=seealso" target="_blank">3 Reasons Not to Save for Your Child's College Fund</a>)</p> <h2>Restraint is key</h2> <p>This is important: Parents <em>can</em> help their children financially, but they are under no obligation to ruin their own finances doing so. It's difficult for parents to do, but sometimes the best answer to an adult child asking for extra money is to say, &quot;No.&quot;</p> <p>If you're wondering if you are giving your children or other family members too much money, take a close look at your own finances. Are you on track to meet your retirement goals? Are you struggling to make all your monthly payments on time? Are you running up credit card debt too quickly?</p> <p>If so, you might need to be less generous with your family members. The Merrill Lynch study said that adults should work with their children and family members to provide them with a financial education that will help them make better money decisions. They should also encourage their children to attend more affordable state schools rather than private colleges.</p> <p>Keep in mind how much money you can afford to give or loan to family members without compromising your own retirement. After all, you don't want to become a financial burden to your children in the future by spending too much today.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fare-you-ruining-your-retirement-by-spoiling-your-kids&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FAre%2520You%2520Ruining%2520Your%2520Retirement%2520by%2520Spoiling%2520Your%2520Kids-.jpg&amp;description=Are%20You%20Ruining%20Your%20Retirement%20by%20Spoiling%20Your%20Kids%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Are%20You%20Ruining%20Your%20Retirement%20by%20Spoiling%20Your%20Kids-.jpg" alt="Are You Ruining Your Retirement by Spoiling Your Kids?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids">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/6-smart-financial-gifts-to-give-your-kids-this-year">6 Smart Financial Gifts to Give Your Kids 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/teach-your-kids-about-money-with-their-holiday-gift-lists">Teach Your Kids About Money With Their Holiday Gift Lists</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-the-holidays-to-teach-kids-about-money">How to Use the Holidays to Teach Kids About Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-questions-to-answer-before-giving-your-kid-a-credit-card">4 Questions to Answer Before Giving Your Kid a Credit Card</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/how-your-bad-credit-can-impact-your-kids">How Your Bad Credit Can Impact Your Kids</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family children college costs giving money kids loaning money retirement savings tuition Tue, 15 Aug 2017 08:00:06 +0000 Dan Rafter 1999857 at http://www.wisebread.com It's Never Too Late to Fix These 5 Money Mistakes From Your Past http://www.wisebread.com/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-637362030.jpg" alt="Fixing money mistakes from his past" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Making mistakes is part of life, and this is particularly true when it comes to finance. Since money is such a taboo topic in our culture, we often have to learn good money behavior through trial and error.</p> <p>The problem is that our culture also considers errors as something to regret, rather than opportunities to learn. This can land us in a shame-filled cycle of inaction.</p> <p>Forgiving yourself for financial mistakes is not the same as condoning or ignoring them. It's simply giving yourself the opportunity to move on from the past. Stop beating yourself up over these common youthful money mistakes and take action to fix them instead.</p> <h2>1. Taking on too much student debt</h2> <p>Taking out a student loan has become the default method for the majority of college students to pay for their education. According to a 2016 Market Watch report, &quot;about <a href="http://www.marketwatch.com/story/americas-growing-student-loan-debt-crisis-2016-01-15" target="_blank">40 million Americans</a> hold student loans and about 70 percent of bachelor's degree recipients graduate with debt.&quot;</p> <p>With the near ubiquity of student loans, however, comes the problem of students taking on more debt than they need or can comfortably pay off once they graduate. Student loans can feel like an easy way to pay for more school than you can afford, or even a way to fund things you don't <em>really </em>need, like your own apartment or spring break vacations.</p> <p>This can be exacerbated by the fact that college students and their parents don't always completely understand the differences between types of student loans, which can leave them all the more susceptible to overwhelming debt.</p> <h3>How to fix it</h3> <p>If you are kicking yourself for running up a student loan tab that you can't afford, start your journey to self-forgiveness by investigating your repayment options. The first step is to call your lender and explain the situation. If you have federal student loans, you may be eligible for a <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most?ref=internal" target="_blank">modification of your repayment plan</a> based on your income. Even if you have private loans, talking with your lender can let you know what <a href="http://www.wisebread.com/3-things-you-must-know-about-repaying-your-private-student-loans?ref=internal" target="_blank">options are available</a> that will give you more breathing room.</p> <p>Once you have made whatever changes you can to your repayment plan, then take the time to write down everything you got for the money you borrowed. For instance, in addition to your education, you might list the friends and connections you made at college, the experiences you had, the insights you gained about yourself and your area of study, and the way the loans allowed you to focus on college instead of tuition.</p> <p>This exercise will give you a chance to feel gratitude for the loans. You are now the beneficiary of your younger self's choices &mdash; both the good and the bad. Recognizing all of the benefits you got from your student loans will help you move from being angry at yourself, to looking at your current loan payments as a gift to your younger self.</p> <h2>2. Not budgeting or building an emergency fund</h2> <p>I don't know a single person who did not immediately begin spending money hand over fist after landing their first well-paid job. That means anything from immediately purchasing an expensive car to relying on restaurants for meals rather than cooking. Even people who carefully budget their money when working for low salaries have a tendency to start making it rain as soon as their paychecks get bigger.</p> <p>This can cause problems in two ways. Sometimes, the good salary doesn't last forever because of a layoff or other change in your financial circumstances. And sometimes, you keep making good money, but your lifestyle continues to inflate &mdash; which means you can never seem to get ahead.</p> <p>In either case, the lack of a budget and an <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=internal" target="_blank">emergency fund</a> means that a financial blow can turn into a crisis, leaving you cursing yourself for every unnecessary purchase you made when the money was good.</p> <h3>How to fix it</h3> <p>Budgeting may be the last thing on your mind when the lack of money hits the fan, but <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=internal" target="_blank">creating a budget</a> is exactly what you need to do in an emergency. Don't waste your time beating yourself up for the spending choices you made before the financial crisis &mdash; just sit down with your bank statements, credit card accounts, and bills, and figure out your income and outflow. Learning to budget in the middle of a crisis might be painful, but it will ultimately help you feel in control of your money.</p> <p>Once you have a budget system in place, it's time to start looking back on your spending habits. What did you buy that you now regret? Why do you regret it? Do you feel regret now only because an emergency came up and you didn't have the funds, or do you actually feel the purchase itself added nothing to your life? If you truly regret the purchase, why did you make it?</p> <p>It can hurt to ask yourself these questions, which is why it is important to regard your past purchases with curiosity and compassion, rather than guilt or anger at yourself. But once you have answered these questions, you will have a better understanding of why you made those unnecessary purchases &mdash; which will help you avoid the same spending traps in the future. Understanding the reasons behind your bad money habits can help you develop financial mindfulness to make better choices going forward.</p> <h2>3. Not saving for retirement</h2> <p>Most people don't think to start <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=internal" target="_blank">putting money aside for retirement</a> when they are young. In your 20s and 30s, not only does retirement seem too far away to worry about, but you've got plenty of competing needs that seem more important.</p> <p>Of course, if you read <em>any </em>advice on retirement, it's clear that saving as much money as you can when you are young is the best route to a secure retirement. Unfortunately, this advice can feel like it's meant to shame anyone who didn't start funding their 401(k) on the day they started their first job. That's not helpful to late funders.</p> <h3>How to fix it</h3> <p>When it comes to retirement, we should all save early and save often. Unfortunately, financial advice tends to beat the &quot;save early&quot; drum so much that it's easy to believe that there is such a thing as &quot;too old to start saving for retirement.&quot; But as long as you are bringing in an income, you can save for your retirement. Write down your future goals and your vision of retirement, so you can get excited about saving. Then you can let go of the anger at your younger self, and start putting money in your retirement accounts today, tomorrow, and beyond. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>4. Racking up credit card debt</h2> <p>I got my first credit card in college. Though I tried to pay off the bill every month, it got away from me pretty quickly. Sometime in my senior year of college, when I realized that there was no way I could pay off my bill, I made the decision to just let the debt rack up, since I'd have a good-paying job after graduation and could take care of it then.</p> <p>Of course, after I graduated, I was unable to find a job for about three months, and the first job I did land was working retail for $8.25 an hour. My credit card debt crept up even more.</p> <p>My youthful problems with credit card debt are incredibly common. When you get your first sweet taste of credit, it's pretty hard to stop using the plastic even when your budget can't handle your charges. The fact that you're not required to pay off the cringe-inducing full amount allows you to assume the problem will take care of itself, as I did.</p> <p>Then, one day, you realize that you are in debt up to your eyeballs with nothing to show for it, and you are kicking yourself for your youthful credit card spending.</p> <h3>How to fix it</h3> <p>Start by recognizing the fact that humans are not wired to be able to handle the combination of instant gratification plus delayed payment. Young adults are particularly susceptible to this, which is the very reason why credit card companies have been banned from college campuses.</p> <p>Once you recognize this, it becomes much easier to start digging yourself out of the hole. You can much more easily leave your credit cards at home and remove them from your favorite e-tailer sites when you realize the cost of their convenience. Sending extra money to your credit card each month also starts feeling like steps toward freedom. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>5. Buying too much car</h2> <p>Buying a new car for yourself can be one of the most satisfying moments in young adulthood. You can finally choose the car <em>you</em> want to drive, rather than making do with a beater or your parents' minivan. So it's very easy to go hog-wild when you're in a position to buy a new car. You can get the horsepower, or the luxury, or the bells-and-whistles you've always dreamed of having.</p> <p>But the monthly payments end up being a bigger deal than they seemed when you were in the showroom, and your high-end car keeps needing expensive maintenance and insurance. When you realize how much you could have saved if you opted for that reliable low-key sedan instead, you want to kick your younger, flashy self.</p> <h3>How to fix it</h3> <p>Once you have forgiven yourself for putting too much emphasis (and money) on your car, you can start thinking more rationally about your transportation needs. If your vehicle is just a means to get from point A to point B, then what do you really need from it? What's the minimum that would be acceptable for your transportation?</p> <p>Going through this thought exercise allows you to think about what you really need, and will help you do the research necessary to find the right car for your life. Then you can trade in your too-much car for something more appropriate, or drive something that meets your barest of needs until you have paid off the mistake of buying too much car.</p> <p>And don't forget &mdash; you can always put some racing stripes on &ldquo;Old Reliable&rdquo; if you want it to represent you. Loving your car doesn't have to be expensive.</p> <h2>Let it go</h2> <p>Feeling shame over things you did in the past is a way of letting your mistakes continue to hurt you. Yes, you may have screwed up when you were younger and it might be hurting your bottom line right now. But you give that old mistake far more power over your future if you continue to beat yourself up for it instead of simply accepting it and doing what you can to bounce back from it. Step out of regret and into action today.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">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/your-good-credit-doesnt-mean-you-have-good-money-habits">Your Good Credit Doesn&#039;t Mean You Have Good Money Habits</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-personal-finance-resolutions-anyone-can-master">8 Personal Finance Resolutions Anyone Can Master</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-after-these-5-personal-financial-disasters">What to Expect After These 5 Personal Financial Disasters</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-moves-to-make-before-moving-out-on-your-own">5 Money Moves to Make Before Moving Out on Your Own</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-new-year-budget-resolutions-you-should-make-now">4 New Year Budget Resolutions You Should Make Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance budgeting debt emergency funds forgiveness missteps money mistakes retirement savings student loans young youth Fri, 31 Mar 2017 09:00:15 +0000 Emily Guy Birken 1918286 at http://www.wisebread.com 8 Money Moves to Make Before You Start Investing http://www.wisebread.com/8-money-moves-to-make-before-you-start-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-to-make-before-you-start-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_growing_plants_67145371.jpg" alt="Finding money moves to make before you start investing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I'm a staunch advocate for investing &mdash; especially if the alternative is piling up money in a savings account just to have &quot;savings.&quot; Savings are great, but you only need so much in that offensively low-interest account. Put the excess to work, hopefully making even more money out of your investment. Before you take that plunge, however, there are a few financial matters you need to mind.</p> <h2>1. Organize Your Budget and Expenses</h2> <p>If you're considering making an investment &mdash; whatever it may be &mdash; you should have a solid handle on how much money is coming in and going out on a monthly basis. You want to make sure you can afford the investment without teetering on the edge of debt, but this also is a good time to find any weak spots in your budget so you can address them accordingly. Online money-tracking services like Mint.com can make this task much easier on you, and help you stay on track over the long term.</p> <p>&quot;When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities,&quot; says Carla Dearing CEO of SUM180, an online financial planning service. &quot;Mint, for example, gives you complete access to your data through the website and your mobile device, whether you use iOS or Android. Better yet, Mint keeps an eye on your money for you. It even sends alerts to remind you to pay your bills or when you go over budget.&quot;</p> <h2>2. Get That Emergency Fund in Order &mdash; Stat!</h2> <p>In almost every &quot;money moves&quot; article I write, the &quot;emergency fund&quot; usually pops up somewhere. That's because it's a critical and indispensable part of your overall financial picture. You should have a sizable cushion in the bank to cover life's little mishaps, and that &quot;should&quot; becomes a &quot;must&quot; when you add investing to the equation. If you don't have an emergency fund, you have no business investing &mdash; bottom line.</p> <p>Just how much dough are we talking for an emergency fund to be considered satisfactory? Six times your monthly expenses, according to Dearing.</p> <p><strong>&quot;</strong>Be disciplined about saving a little every month until your emergency fund is where it needs to be, even if it means sacrificing little luxuries once in a while,&quot; she says. &quot;Remember to replenish the account every time you use it. Having your cushion ready whenever you need it will give you a great sense of security and freedom. It will also free you up to work on other savings goals without getting derailed by unexpected expenses.&quot;</p> <h2>3. Pay Off Your High-Interest Debts</h2> <p>You don't need to be completely out of debt before you start investing. Many financial advisers argue that you should be debt free before you start investing, but that's just not true. Most people don't pay off their homes for up to 30 years, and you wouldn't want to wait that long before you start a retirement fund.</p> <p>You should, however, pay off your high-interest debts. They'll drag you down faster than the Titanic.</p> <p>&quot;Whether it's a credit card or student loan, it doesn't make any sense to invest and make a market average return of 7% annually while you're paying 20% on credit debt,&quot; says Nick Braun, founder of a pet insurance company. &quot;Pay off your high-interest debts first, then start using excess income to save for the future.&quot;</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=article">Fastest Way to Pay Off Your Credit Card Debt</a></p> <h2>4. Contribute to Your Retirement Savings</h2> <p>Retirement savings <em>is</em> an investment. It may not seem like it now, because what you're funding seems so far away &mdash; but you'll see it as such when you reach retirement age. Which is why, before you start throwing money at other investment opportunities, you need to invest in yourself. If you don't have a retirement account set up yet, make that a priority. If you have one currently, like a 401K, for instance, take advantage of free, pretax contribution opportunities where available, like matching funds from your employer. Then max those contributions out so you don't miss a single cent.</p> <h2>5. Contribute to an HSA</h2> <p>If you have a health insurance policy that comes with a qualifying Health Savings Account, take full advantage of it and fully fund it.</p> <p>&quot;Most contributions are tax-deductible, and withdrawals to pay qualifying medical expenses &mdash; at any time in life &mdash; are tax-free,&quot; explains Kevin Gallegos, vice president of Freedom Financial Network in Phoenix. &quot;These accounts are essentially emergency funds devoted to health care costs, and so savings have a double benefit of tax relief and savings.&quot;</p> <h2>6. Refinance Your Student Loans</h2> <p>Are student loans holding you back from building your savings or investment accounts or from making other types of investments? Free up some of your budget by <a href="http://www.wisebread.com/should-you-refinance-your-student-loan?ref=internal">refinancing your loans</a> for a lower monthly payment.</p> <p>&quot;The average Class of 2016 graduate owes more than $37,000 in student loan debt,&quot; says financial expert Michael Blattman, professor at University of Maryland. &quot;With 43 million borrowers nationwide, Americans owe nearly $1.3 trillion in student loan debt. Individually, this crushing debt delays borrowers' life decisions, such as getting married, investing in the stock market, buying a house, or having children. Collectively, it's hampering the U.S. economy.&quot;</p> <p>You don't, however, have to be part of these statistics. Take back some of your financial freedom by making a call to your loan provider(s) to discuss refinance options that are right for you.</p> <h2>7. Get Started on a Taxable Investment Portfolio</h2> <p>After you've maxed out your retirement accounts, Dearing suggests starting a taxable investment portfolio. You can get started investing with just a few simple steps.</p> <p>To get set up, call one of the high-quality, low-fee money management companies, like Vanguard, Fidelity, or T. Rowe Price, tell them about yourself, and ask them to tell you what type of account or fund you need, and what minimum investment requirements apply. These companies, which are the gold standard in the financial services industry, are extremely knowledgeable and committed to serving their clients (who, in the case of Vanguard, are also their shareholders).</p> <p>&quot;Companies like this get you started with a comprehensive, diversified, low-cost fund that will serve you well as a beginning investor,&quot; says Dearing. &quot;Follow their recommendations and you won't go wrong.&quot;</p> <h2>8. Set Savings Goals for Your Taxable Investment Portfolio</h2> <p>Once you have your taxable investment portfolio established, set goals &mdash; $10,000, then $25,000 and, eventually, $100,000.</p> <p>&quot;When you are just starting out, choose one or two tax-advantaged funds, like the Vanguard Total Stock Market ETF or the Vanguard Small Cap Index ETF, or similar index funds,&quot; Dearing suggests. &quot;These passively managed funds do a minimum amount of buying and selling &mdash; what the industry calls 'churning' &mdash; which translates into significantly less taxable investment income for you to deal with each year. They also tend to outperform most actively managed mutual funds over time.&quot;</p> <p>Revisiting the goal aspect of this equation, it helps to have a contribution target in place so you have a solid idea of what you're trying to achieve. Likewise, make sure that it's a goal that you <em>can</em> achieve. $10,000 may take a while to reach, but you can do it. If that goal is too steep for you right now, start smaller. There's no harm in that. The most important part of this is that you set the bar just high enough to accomplish it and be motivated by your success to continuing striving further.</p> <p><em>Do you have additional suggestions on money moves to make before investing? I'd love to hear your thoughts 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/8-money-moves-to-make-before-you-start-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/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</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-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</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-essentials-for-building-a-profitable-portfolio">5 Essentials for Building a Profitable 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/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment advice emergency funds health savings account money moves Paying Off Debt portfolio retirement savings stock market student loans Wed, 17 Aug 2016 09:00:08 +0000 Mikey Rox 1771628 at http://www.wisebread.com With Micro-Investing, Your Smartphone Pays YOU http://www.wisebread.com/with-micro-investing-your-smartphone-pays-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/with-micro-investing-your-smartphone-pays-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_phone_93826397.jpg" alt="Woman using micro-investing and getting her phone to pay her" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Approximately two-thirds of Millennials do not have any money invested in the stock market due to concerns about risk, putting them at a distinct disadvantage when it comes to retirement. Without regular returns and compound interest, young professionals will need to sock away a much larger amount of <a href="http://www.wisebread.com/are-you-making-the-biggest-investment-risk-of-all">money to retire</a>.</p> <p>But new, micro-investing apps can help Millennials dip their toes into the stock market. Because the invested amounts are small, and the apps make investing accessible, young adults are more likely to start contributing money and earning returns.</p> <h2>What Is Micro-Investing?</h2> <p>Micro-investing, where users invest tiny amounts of money on a regular basis, allows people to start investing with relatively small sums. Some brokerages have investment minimums as high as $1,000; for those just starting out or battling debt, coming up with that first $1,000 can be overwhelming.</p> <p>With micro-investing, your account is linked to your debit card or bank account. Every time you make a purchase, such as your morning coffee, the apps round up the purchase and the difference is invested in stocks. While the amounts are negligible and you are likely not even going to notice the withdrawals from your account, small investments build over time and help you develop the habit of saving and investing.</p> <p>These innovative apps and platforms make investing simple and easy to do, even if you are new to financial management.</p> <h2>Acorns</h2> <p><a href="https://www.acorns.com/">Acorns</a>' name is derived from the saying &quot;From little acorns mighty oaks grow.&quot; Its goal is to empower people to build a large nest egg from small, regular investments. The app links to any credit card or debit card. When you make a purchase, the app rounds up and deposits your change into a portfolio of exchange-traded funds (ETFs). There are different portfolios available depending on your risk tolerance, from conservative to aggressive. If you do not know where to begin, Acorns also provides recommendations based on your age and target retirement date. There are no minimum account balances or commission fees, but there is a monthly cost of $1 and a management fee of 0.5%.</p> <h2>Robin Hood</h2> <p><a href="https://www.robinhood.com/">Robin Hood</a> is one of the few apps that offers zero-commission stock trading. It features a simple and intuitive design and allows you to connect to your bank account and make recurring deposits. You can shop for specific stocks or sell shares directly from your phone. Each day, the menu will show you how much you have earned on the market. Once you are ready to withdrawal money, the funds are easily transferred to your bank with the touch of a button.</p> <h2>Stash</h2> <p><a href="https://www.stashinvest.com/start-investing/wisebread">Stash</a> is one of the newest apps on the market. Their motto is if you have $5, two minutes, and a phone, you can be an investor. It is a tool that allows you to buy fractional shares, rather than having to pay the entire amount for a single share yourself. You can pick investments based on what is <a href="http://www.wisebread.com/a-simple-guide-to-socially-responsible-investing">important to you</a>, such as clean energy or fair trade. Stash charges $1 a month with no commissions. <strong>Special offer: <a href="https://www.stashinvest.com/start-investing/wisebread">Wise Bread users can get $5 to get started with Stash</a>!</strong></p> <p>For Millennials spooked by the stock market and traditional stock market investments, micro-investing apps can be a useful tool to help them test the waters and get used to regular investing. These apps enable users to start investing with just small amounts, eliminating one of the main barriers to entering the stock market. With regular contributions and patience, over time, these small amounts can grow to substantial amounts of money.</p> <p><em>Are you a micro or macro investor?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/with-micro-investing-your-smartphone-pays-you">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-money-moves-to-make-before-you-start-investing">8 Money Moves to Make Before You Start Investing</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-millennials-should-stop-being-afraid-of-the-stock-market">7 Reasons Millennials Should Stop Being Afraid of the Stock Market</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-boomers-and-millennials-are-creating-winners-on-the-stock-market">Here&#039;s How Boomers and Millennials Are Creating Winners on the Stock Market</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/are-you-making-the-biggest-investment-risk-of-all">Are You Making the Biggest Investment Risk of All?</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/3-ways-technology-makes-personal-finances-easier">3 Ways Technology Makes Personal Finances Easier</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Technology fractional shares micro-investing millennials retirement savings rounding up spare change stock market Mon, 15 Aug 2016 10:00:07 +0000 Kat Tretina 1771547 at http://www.wisebread.com 13 Money Goals You Can Still Reach by 2017 http://www.wisebread.com/13-money-goals-you-can-still-reach-by-2017 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-money-goals-you-can-still-reach-by-2017" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_2016_78370695.jpg" alt="Finding money goals you can still reach by 2017" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've passed the halfway point of 2016, and maybe you're down on yourself because you haven't achieved some of your annual financial goals. Life can sometimes derail our money-saving plans &mdash; and that can make you feel like a failure. But the year isn't over yet. So chin up, buttercup! It's never too late to give your money a makeover, like with these 13 money goals that are still attainable by 2017.</p> <h2>1. Increase Your Emergency Fund</h2> <p>Whether you want to increase your fund by $500 or $1,000, there's still time to build your bank account.</p> <p>Ideally, you should have about three to six months' of income in reserves. If you're not in a position to save this much, aim for an emergency fund sufficient to help you get through most unexpected expenses, like a home or car repair. You'll have to make a few sacrifices, such as spending less on entertainment or shopping less, but with five months left in the year, you can hit this goal by saving $100 to $200 a month.</p> <h2>2. Start Planning for Retirement</h2> <p>Your retirement account isn't going to grow itself. The older we get, the more important it is to plan for the future. If you haven't started saving for retirement yet, now's the time to get serious. Talk to your employer about enrolling in the company's 401K plan. If this isn't an option, open an Individual Retirement Account (IRA) through your bank or with the help of a financial adviser.</p> <h2>3. Increase Retirement Contributions</h2> <p>Then again, maybe you're already saving for retirement, but feel now's the time to increase your contribution. Whether you're currently contributing 2% or 5% of your income to a retirement account, set a goal of increasing your contribution by at least 1% before the end of the year.</p> <h2>4. Reduce Expenses</h2> <p>It's easier to attain money goals when you reduce expenses and free up cash. For the next four to five months, eliminate or reduce at least one expense a month. This can include downgrading your cable package or getting rid of cable altogether (it's a common trend these days), using coupons to lower your grocery bill, or riding your bike or carpooling to work a few days a week to save on transportation costs. The savings add up quickly, and before you know it you'll have a bigger bank account.</p> <h2>5. Create a Second Income Stream</h2> <p>Our income isn't always enough to meet our money goals. Rather than complain about your situation, think creatively about ways to increase your income. Working a side hustle a few days a week can generate money to build your savings account, pay off debt, or start saving for retirement.</p> <p>If you're an expert in your field, offer consulting on the side. Or if you have excellent writing skills, look into <a href="http://www.wisebread.com/22-websites-that-will-pay-you-to-write-for-them?ref=internal">freelance writing opportunities</a> and share your knowledge. Don't think your second income stream has to be glamorous, either. If you don't mind odd jobs or getting your hands dirty, you can make extra money around the neighborhood cleaning houses, doing handyman work, or cutting grass.</p> <h2>6. Give Up a Costly Habit</h2> <p>Bad habits are expensive.</p> <p>Before the end of the year, make a concerted effort to eliminate at least one bad habit. This includes things like drinking too much alcohol and smoking, as well as habits that aren't as dangerous to your health but detrimental to your finances. Do you have a routine of stopping for coffee and breakfast every morning on the way to work? If you can eliminate this $5 daily purchase from your budget, you'll save about $25 a week, or $100 a month.</p> <h2>7. Simplify Your Life</h2> <p>Less can be more. If you're tired of clutter or feel the stuff you own takes too much of your time and energy, set a goal to simplify and unload a few possessions. Selling off items can put extra cash in your pocket, plus you can save money on storage fees and free up space in your house, garage, attic, or basement.</p> <h2>8. Give to Charity</h2> <p>It's not too late to make a charitable donation and give back. While you're simplifying and decluttering your life, consider donating a few items to your favorite organization. You'll not only help someone in need, you can write off charitable donations on your tax return and lower your tax bill.</p> <h2>9. Purchase Life Insurance</h2> <p>Life insurance is necessary for everyone, but especially for people with children and other dependents who rely on their income. A policy can cover the cost of a funeral and burial, plus pay off any expenses you leave behind, such as a mortgage and credit cards.</p> <p>There are no hard-and-fast rules regarding the amount of coverage to purchase, but some money experts recommend a policy that's eight to 10 times your income. If you already have a policy, review your coverage to make sure it's adequate for your needs. If you don't have a policy, it's time to get one.</p> <h2>10. Budget Your Money</h2> <p>If you overspend every month and can't get ahead, the problem could be poor budgeting. The truth is, attaining many of your money goals by 2017 will require an airtight budget. You have to know what's coming in and what's going out before you can come up with a plan for your personal finances. Now's the time to put pen to paper and review your income and expenses to determine a reasonable amount to spend in various spending categories, such as food, transportation, entertainment, shopping, etc.</p> <h2>11. Say No to Credit Card Debt</h2> <p>Credit cards are simple and convenient, but they're also a source of pain and suffering if you let balances grow out of control. Before the end of the year, come up with a plan to pay off or pay down at least one credit card. Don't stop until you're debt free. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=seealso">How to Get Rid of Interest on Your Credit Card Debt</a>)</p> <p>You can achieve this goal by paying more than your minimums every month. Or negotiate a <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">lower interest rate</a> with your creditors so that more of monthly payments go toward reducing the principal. Since the amounts we owe make up 30% of our credit scores, paying off credit cards also <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">increases your credit score</a>.</p> <h2>12. Automate Your Finances</h2> <p>Paying bills on time also contributes to a higher credit score. Forgetting a due date and paying late can result in late fees, and when bills arrive 30 or more days past due, your credit score suffers. To avoid these situations, automate your finances. Set up automatic bill payments between your bank and creditors and you'll never miss another due date.</p> <h2>13. Check Your Credit Report</h2> <p>Everyone should check their credit reports at least once a year and dispute erroneous information. If it's been more than 12 months since you last reviewed your reports, visit&nbsp;<a href="http://annualcreditreport.com">AnnualCreditReport.com</a> today and get a free copy of your reports from each of the three bureaus. Credit report mistakes and fraudulent activity can drive down your FICO score and trigger credit rejections and higher interest rates on loans and credit cards &mdash; and when you're charged higher interest rates, you pay more for credit.</p> <p><em>What are some of your money goals that you'd like to reach by the end of the year? How do you plan to meet those goals? Let's discuss in the comments below.</em></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F13-money-goals-you-can-still-reach-by-2017&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F13%2520Money%2520Goals%2520You%2520Can%2520Still%2520Reach%2520by%25202017.jpg&amp;description=13%20Money%20Goals%20You%20Can%20Still%20Reach%20by%202017"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/13%20Money%20Goals%20You%20Can%20Still%20Reach%20by%202017.jpg" alt="13 Money Goals You Can Still Reach by 2017" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/13-money-goals-you-can-still-reach-by-2017">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/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-complacency-is-keeps-you-from-financial-security">How Complacency Keeps You From Financial Security</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/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</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/13-financial-gifts-to-give-yourself-this-holiday-season">13 Financial Gifts to Give Yourself This Holiday Season</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 2016 2017 bad habits clutter credit reports donating emergency funds goals investments nest egg retirement savings simplifying Fri, 12 Aug 2016 09:00:08 +0000 Mikey Rox 1770701 at http://www.wisebread.com 6 Terrible Money Situations You Need to Stop Getting Yourself Into http://www.wisebread.com/6-terrible-money-situations-you-need-to-stop-getting-yourself-into <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-terrible-money-situations-you-need-to-stop-getting-yourself-into" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_money_wallet_87621441.jpg" alt="Woman getting herself into terrible money situations" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to money, I know I can be my own best friend and my own worst enemy. Most of the time, I'm frugal, intentional, careful, and deliberate with my money. But, every once in awhile, it's like I forget all of those principles. Maybe I want something badly, even though I can't afford it. Or I am tired and it's easier to spend than to think first.</p> <p>Now, I've never gone totally off the rails financially. But I can see where these acts of &mdash; let's call them what they really are &mdash; self-sabotage &mdash; undermine the principles I desire to live by.</p> <p>As I've gotten older, I've gotten better at staying out of these situations, and I know you can do the same. Here are some of the places where I've gotten into trouble in the past.</p> <h2>1. Overspending</h2> <p>It's hard to live within your means. It just is. There's so much that you want, and that doesn't even take into account what you need. But overspending &mdash; spending more than you make &mdash; is a sure way to get into deep financial trouble.</p> <p>Even if you don't get into debt, and some overspenders don't, you'll end up living paycheck to paycheck, juggling which bills need to be paid so that nothing gets turned off this month. That life isn't any fun at all, even though spending the money might be a blast. Besides, eventually some large expense will come up, and you'll end up in debt because you won't have the money saved to cover it.</p> <h2>2. Credit Card Debt</h2> <p>This usually comes as a result of overspending for a period of time. When you get used to spending, it starts to feel natural to just put something on your card. Do this enough times, and you'll find yourself with a bill you can't cover at the end of the month.</p> <p>The problem with credit card debt is that it feels deceptive. Sure, there's interest to pay, but the minimum payment looks so small. It might take you a while, but paying it off feels entirely doable.</p> <p>However, you'll end up paying forever and paying a lot in interest. And even those minimum payments can add up. Maybe you can handle one or two of them, but get three or four (or 10), and making the payments becomes a lot more financial stress than you need.</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=article">The Fastest Way to Pay Off Credit Card Debt</a></p> <h2>3. Not Saving for Retirement</h2> <p>It's easy to prioritize everything else over retirement. When you're young, retiring feels like such a long way off that it's easy to wait too long to get started. And when you're older, it's easy to spend or save for your kids rather than for yourself. Many parents panic about paying for college and end up putting their savings there rather than into their retirement accounts.</p> <p>Most &quot;real&quot; jobs come with some sort of retirement account and, often, with a matching plan from the employer. Take full advantage of this as soon as you are eligible. If possible, have the money deducted from your paycheck automatically, so you don't even have a choice in where it goes each month.</p> <h2>4. Buying Too Many Toys</h2> <p>This probably comes with the territory of overspending, but it seems like a specific trap that you can fall into. Many people (myself included) tend to live pretty frugally most of the time, but are willing to spend quite a bit of money on a toy. This can be something like sports equipment, a designer purse, a new car, technology, and other splurges.</p> <p>I think that a lot of us live such stressful lives that we feel like we deserve something that will help us rest or, at least, make us feel better about ourselves. So we spend a lot on an item based on the idea that it will improve our lives. Even if it does actually help us de-stress, the financial impact can cause as much or more stress in the long run.</p> <p>It's much better to save up for a toy, or rent one, or ask friends and family to contribute to a fund toward it for your birthday or another holiday. That way you will actually lower your overall stress levels, rather than adding to them.</p> <h2>5. Going Out Too Much</h2> <p>Sure, it's fun to get dinner and drinks with your friends. And it's probably a good idea to go to happy hour with the coworkers here and there, to forge connections and get to know people. But when you're doing it every night, those bills are going to add up.</p> <p>You don't need to deprive yourself to make good decisions about when and where you spend when it comes to eating (and drinking) out. Lowering your spending can be as simple as ordering an appetizer and a beer instead of a meal and a cocktail. You can get creative, too. Some of my friends and I take turns hosting a meal along with one or two signature drinks and the overall cost is much lower than what we'd spend if we met at restaurants.</p> <h2>6. Spending to Save</h2> <p>Sure, there are times when it's worthwhile to spend a bit more on a quality product so that you don't have to buy another one anytime soon. But I've also seen this as an excuse to spend way too much. Not sure how this might apply to you?</p> <p><span style="font-size: 13px; line-height: 1.7em;">What about when your car dies? Y</span><span style="font-size: 13px; line-height: 1.7em;">ou might legitimately need a new one. But it's a trap to believe the voices that say, &quot;Buy a brand-new car. That way you will save, in the long run, on maintenance costs.&quot; Instead, you can buy a car off a two or three -year lease. You still get the benefits of low maintenance, but you save a lot off the initial price.</span></p> <p>Or, maybe, you see a pair of nice new boots in the store. They're high quality, and you think to yourself, &quot;Sure, that's a lot of money. But if I buy those, I won't have to buy boots for several years.&quot; That might be true, but before you purchase, think about how many pairs of boots you already have sitting in your closet.</p> <p>Sometimes, buying quality is the way to go. But other times, it's an excuse we use to let ourselves spend more than we should.</p> <p><em>What financial traps do you tend to fall into? How do you keep yourself from jumping into them with both feet?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-terrible-money-situations-you-need-to-stop-getting-yourself-into">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-excuses-we-need-to-stop-making-about-overspending">5 Excuses We Need to Stop Making About Overspending</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-a-surprise-credit-limit-increase-can-harm-you">How a Surprise Credit Limit Increase Can Harm You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-turn-your-buyers-remorse-into-better-financial-habits">How to Turn Your Buyer&#039;s Remorse Into Better Financial Habits</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-10-biggest-lies-we-tell-ourselves-about-money">The 10 Biggest Lies We Tell Ourselves About Money</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-types-of-overspenders-which-one-are-you">5 Types of Overspenders — Which One Are You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Shopping debt going out money traps overspending retail therapy retirement savings stress shopping Tue, 02 Aug 2016 09:00:11 +0000 Sarah Winfrey 1763991 at http://www.wisebread.com Best Money Tips: Things You Can Save for Retirement Besides Money http://www.wisebread.com/best-money-tips-things-you-can-save-for-retirement-besides-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-things-you-can-save-for-retirement-besides-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_paying_bills_000046468662.jpg" alt="Couple finding things to save for retirement besides money" 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 things you can save for retirement besides money, ways social media is making you poor, and changes to the homebuying process that you need to know about.</p> <h2>Top 5 Articles</h2> <p><a href="https://aboutlife.com/blog/Retirement/Save-For-Retirement-Besides-Money">3 Things to Save For Retirement Besides Money</a> &mdash; If you plan to do some traveling after you retire, save up your airmiles, hotel rewards and points, and discounted gift cards to use in your golden years. [aboutLife]</p> <p><a href="http://creativemoney.biz/2015/11/10/is-social-media-making-you-poor/">Is Social Media Making You Poor?</a> &mdash; With social media, it's easy to compare the life you lead to the seemingly perfect lives of the friends you follow. But remember, not everything is as it seems; most photos are carefully framed and edited, and what you see might not be the reality. [Creative Money]</p> <p><a href="http://www.forbes.com/sites/learnvest/2015/11/12/house-hunting-again-3-need-to-know-ways-the-process-has-changed/">House Hunting Again? 3 Need-to-Know Ways The Process Has Changed</a> &mdash; There are new specialty mortgages that can help cover improvement costs if you buy a fixer-upper. [Forbes]</p> <p><a href="http://www.popsugar.com/smart-living/Cyber-Monday-2015-39047972">12 Things Major Retailers Have Released About Cyber Monday</a> &mdash; Expect deep discounts at eBay &mdash; up to 90%! [PopSugar Smart Living]</p> <p><a href="http://inexpensively.com/articles/budgeting-your-thanksgiving-dinner/">Budgeting Your Thanksgiving Dinner</a> &mdash; Once you have a menu, create a master ingredient list that includes everything you need for every recipe, with quantities. Then, check your pantry! [Inexpensively]</p> <p>Other Essential Reading</p> <p><a href="http://www.thefrugaltoad.com/frugal-living/downsizing-your-living-quarters-the-trend-towards-smaller-homes">Downsizing Your Living Quarters: The Trend Towards Smaller Homes</a> &mdash; Tiny homes are easier to maintain, leave a smaller environmental footprint, and tend to be more budget-friendly. [The Frugal Toad]</p> <p><a href="http://www.moneyunder30.com/keep-money-at-one-bank-or-not">Should You Keep All Of Your Money At One Bank? Probably Not</a> &mdash;Reaching your financial goals become much easier when you make it more difficult to borrow money from yourself for things you don't really need. [Money Under 30]</p> <p><a href="http://blog.allstate.com/5-ways-to-make-your-small-space-feel-bigger/">5 Ways to Make Your Small Space Feel Bigger</a> &mdash; Use a neutral palette for your walls with brighter focal points to make your home seem bigger. [The Allstate Blog]</p> <p><a href="http://www.sidehustlehq.com/how-to-avoid-side-hustle-burnout/">How to Avoid Side Hustle Burnout</a> &mdash; Don't let your side hustle take over your life. If you want to maintain a healthy work-life balance, be sure to set a time limit for work and separate your personal and professional spaces. [Side Hustle HQ]</p> <p><a href="http://parentingsquad.com/5-tips-to-help-parents-prep-for-the-holiday-season-rush">5 Tips to Help Parents Prep for the Holiday Season Rush</a> &mdash; Don't try to do everything by yourself. Ask your spouse and kids to pitch in! [Parenting Squad]</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-things-you-can-save-for-retirement-besides-money">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/14-ways-to-retire-early">14 Ways to Retire Early</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-money-will-you-need-to-retire">How Much Money Will You Need to Retire?</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/put-off-saving-for-retirement">Put Off Saving for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</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/how-to-retire-during-a-recession">How to Retire During a Recession</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement savings Fri, 13 Nov 2015 19:15:13 +0000 Amy Lu 1612001 at http://www.wisebread.com 5 Simple Ways to Boost an Underperforming 401(k) http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-simple-ways-to-boost-an-underperforming-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-chalkboard-retirement-savings-growth-Dollarphotoclub_77966716.jpg" alt="piggy bank retirement savings" title="piggy bank retirement savings" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are about 52 million Americans saving up for retirement using a 401(k). While this is an impressive number, it doesn't tell the full picture of the state of U.S. retirement planning. (See also: <a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement?ref=seealso">12 Things You Didn't Know About Retirement</a>)</p> <p>In 2014, the average U.S. worker had only accumulated in their 401(k) enough for $4,000 annual retirement income, or about $333 monthly. That's an alarmingly low figure.</p> <p>Here are five simple ways to boost those underperforming 401(k) plans.</p> <h2>1. Switch Actively Managed Funds to Index Funds</h2> <p>When allocating the funds in their 401(k), folks often choose accounts that promise high returns. In other words, they look to beat the market.</p> <p>Stop it.</p> <p>Chasing those high returns is eating away your 401(k) contributions. Funds that try to outperform the market, also known as actively managed funds, generally have higher fees than those that seek to simply track market performance, known as index funds.</p> <p>While investing in index funds may sound like a boring investment strategy, consider these three facts:</p> <ul> <li>While the average expense ratio for actively managed U.S. mutual funds is 1.32%, the Vanguard Total Stock Market Index (VTSMX), the largest index mutual fund, charges just 0.17% per year.<br /> &nbsp;</li> <li>Warren Buffett's will stipulates that 90% of his assets be invested in a very low-cost <a href="http://www.berkshirehathaway.com/2013ar/2013ar.pdf">S&amp;P 500 index fund</a>.<br /> &nbsp;</li> <li>Mad Money's Jim Cramer has gone on the record about the benefits of index investing: &quot;After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him.&quot; John &quot;Jack&quot; Bogle, the founder of Vanguard, has championed low-cost index investing since the 1970s.</li> </ul> <h2>2. Stop Playing Stock Trader</h2> <p>Would you hire a plumber to fix your car?</p> <p>Definitely not!</p> <p>So, why are you insisting on trading the stocks and accounts in your 401(k)?</p> <p>A nationwide <a href="http://pressroom.aboutschwab.com/press-release/schwab-corporate-retirement-services-news/workers-bank-401k-retirement-need-help-makin">survey of 401(k) participants</a> found that:</p> <ul> <li>52% of American workers find explanations of their 401(k) investments more confusing than explanations of their health care benefits;<br /> &nbsp;</li> <li>46% don't know what their best investment options are; and<br /> &nbsp;</li> <li>34% feel a lot of stress over allocating their 401(k) monies.</li> </ul> <p>If you're still unconvinced about the negatives of actively trading your account, remember that the average actively managed mutual fund has an average <a href="http://www.fool.com/School/MutualFunds/Performance/Record.htm">annual return of 2% less</a> than that of the stock market. A sample of <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/06/18/some-401k-plans-let-you-take-the-wheelif-you-dare">self-directed account holders</a> showed that 76% of their account returns underperformed the S&amp;P, and 72% underperformed the core model of their plans.</p> <p>On top of that, some 401(k) plans may charge you additional fees for self-directed brokerage options. Now that's a double whammy for playing stock trader. Instead, request a one-on-one appointment with your plan's administrator (over half of retirement plans offer individual investment advice) to go over your retirement saving strategy, and stick to it. (See also: <a href="http://www.wisebread.com/this-is-the-basic-intro-to-having-a-retirement-fund-that-everyone-needs-to-read?ref=seealso">This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read</a>)</p> <h2>3. Consolidate 401(k) Balances</h2> <p>The term &quot;four-year career&quot; has gone from oxymoron to a reality for younger generations. According to data from the Bureau of Labor Statistics, today's average worker <a href="http://www.forbes.com/sites/jeannemeister/2012/08/14/job-hopping-is-the-new-normal-for-millennials-three-ways-to-prevent-a-human-resource-nightmare/">stays on the job</a> for 4.4 years. And for younger workers, that time period is cut in half.</p> <p>This means that there are many workers who have several 401(k) plans laying around. Since not all 401(k)s are alike, it's a good idea to consolidate all those balances into a single account. It will simplify your life and make it easier to keep track of your nest egg's performance.</p> <p>While there are several criteria to evaluate plans, there are two that lead the pack:</p> <ul> <li>Choose the plan with the lowest expense ratio. A good rule of thumb is that your total expense ratio should be no more than 1%.<br /> &nbsp;</li> <li>Evaluate the additional perks that may become available for maintaining a larger balance at a single institution.</li> </ul> <h2>4. Maximize Employer Contributions to Your 401(k)</h2> <p>Vanguard reports that the <a href="https://pressroom.vanguard.com/content/nonindexed/How_America_Saves_2014.pdf">most common matching formula</a> for employers is $0.50 on the dollar on the first 6% of pay. This means that an employee with a $50,000 annual salary would receive a $1,500 boost to her 401(k), if she were to maximize her contributions.</p> <p>It's in your best interest to bump up your savings to the full 6% (or the applicable maximum of your plan) of your pay. If you don't use it, you are missing out on <em>free </em>retirement cash.</p> <p>Additionally, ask your plan sponsor about a couple of key plan details: true-up and vesting schedule.</p> <h3>True-Up Feature</h3> <p>Some companies have complicated contribution matching formulas, so a true-up feature helps you maximize the amount of possible matching funds under your 401(k)'s guidelines. This feature is particularly useful for those employees that wait for big bonuses to make a contribution to their retirement accounts.</p> <h3>Vesting Schedule for Employer Contributions</h3> <p>Employer contributions to your 401(k) plan may be subject to a vesting period. If you change jobs before the vesting period, you lose your employer's contributions to your retirement plan.</p> <h2>5. Ask Your Plan Administrator for Lower Fees</h2> <p>If you're using an employer-sponsored 401(k), then ask your plan's sponsor to renegotiate operating expenses. During the 2013-2014 period, more than 75% of employers attempted to <a href="http://www.kiplinger.com/article/investing/T001-C000-S002-employers-trim-401k-fees.html#buTvG5muw7udQ0Hw.99">cut 401(k) expenses</a>, so your request is nothing out of the ordinary.</p> <p>Find out why your plan administrator is choosing the funds that the're choosing. If there is no record of legitimate reasons, then you have ammunition to demand a re-evaluation of current fees and class shares. The lower your plan's fees, the better your returns.</p> <p><em>What have you done to boost an underperforming 401(k)?</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/5-simple-ways-to-boost-an-underperforming-401k">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/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</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/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</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/3-common-retirement-regrets-you-can-avoid">3 Common Retirement Regrets You Can Avoid</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-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People Make</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/9-silly-reasons-people-dont-invest-but-should">9 Silly Reasons People Don&#039;t Invest (But Should)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) investing retirement savings saving Tue, 03 Mar 2015 14:00:09 +0000 Damian Davila 1315320 at http://www.wisebread.com 14 Ways to Retire Early http://www.wisebread.com/14-ways-to-retire-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/14-ways-to-retire-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/seniors-beach-3630112-small.jpg" alt="relaxing" title="relaxing" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>It seems like the economy is making it more difficult for people to retire at 65. That's true in some ways, but what if you had more control over your own retirement than you realized?</p> <p>What if there were some practical things that you could do that would enable you to retire closer to 60 instead of 70? While we can't control the economy around us, there are some practical financial things we can do to round down our retirement age. (See also: <a href="http://www.wisebread.com/retirement-planning-if-you-re-under-30?ref=seealso">Retirement Planning if You're Under 30</a>)</p> <h2>1. Know What You'll Need to Live On</h2> <p>Simply knowing what your monthly expenses will be during your retirement years can be helpful when it comes to planning when exactly you'll be able to quit working. This <a href="https://personal.vanguard.com/us/insights/retirement/tool/retirement-expense-worksheet">worksheet from Vanguard</a> covers most expenses and will give you a rough estimate of what you'll need to live on a monthly basis.</p> <p>Let's assume that currently you're 27 years old and earning around $35,000 per year. We'll also assume (generously) that between a 401(k), savings, and other assets, you already have $30,000 saved.</p> <p>According to <a href="http://money.cnn.com/calculator/retirement/retirement-need/">CNN's retirement calculator</a>, if you can save 15% of your income, you can retire at 65. That's $5250 a year or $438 a month at your starting income. (The calculator assumes that your income will grow at an annual rate of 3.8%, so your savings in actual dollar amounts should also increase each year.)</p> <p>Now, if you knock your hopeful retirement age down to 60, 15% of your income suddenly isn't enough, as it falls quite short of what you'll need. It's not until you're saving 21% of your income that you make the cut to retire at 60. That's $7350 a year or $613 a month.</p> <p>So your challenge is to increase your savings by 6%, or $175 a month.</p> <h2>2. Start Early</h2> <p>Starting to plan and save for retirement in any capacity is far easier in your mid-20s than your 40s or 50s. The earlier you start, the more time your money will have to accumulate and grow.</p> <p>In the retirement calculator above, the starting age was set to 27. Knock that number down to 24, and you can get away with saving 19% instead of 21%.</p> <h2>3. Contribute a Weekly Amount to a Long-Term, Low-Risk Investment</h2> <p>If you start early, contributing as little as $20 a week to a money market mutual fund can grow to five figures (six if you start with a five-figure initial balance) by the time you're ready to retire.</p> <p>Depending on your income and what you're saving already, $20 a week is $80 a month (plus two bonus weeks every year!), which gets us almost halfway to $175.</p> <h2>4. Save Your Salary Increases After a Certain Point</h2> <p>Our habit is to increase our income and upgrade, always hovering at the ceiling of what we can afford. If you get to a certain point where you're content with your lifestyle and living situation, stop upgrading when your salary increases, and instead, save that increased amount every year as a lump sum for your retirement accounts.</p> <p>If you've been saving 21% of $35,000 (or even 15%), it's okay to loosen up a little. But keep your eyes on the prize. (See also: <a href="http://www.wisebread.com/lifestyle-inflation-the-ultimate-financial-trap?ref=seealso">Lifestyle Inflation: The Ultimate Money Trap</a>)</p> <h2>5. Keep Your Living Expenses Low</h2> <p>Keeping your living expenses capped will allow you to put more money aside for retirement and contribute more to investment accounts or a 401(k).</p> <p>Stay practical for this one.</p> <p>Start with a <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps">simple budget plan</a> and then carve out unnecessary expenses. You also can work to <a href="http://www.wisebread.com/4-ways-to-win-the-war-against-this-summers-electric-bill">lower your utility bill</a>, which can save anywhere from $30 to $100 per month. (See also: <a href="http://www.wisebread.com/5-things-you-can-do-in-15-minutes-that-could-save-you-1500-this-year?ref=seealso">Save $1,500 a Year in 15 Minutes</a>)</p> <h2>6. Pay Off the Principal on Your House</h2> <p>If you can get your house paid off, you'll free up all the money that would normally go to a mortgage payment every month, which can go to retirement savings. Also, the more principal you've paid, the more you get to keep when and if you sell your house.</p> <h2>7. Take a State- or Federal-Level Government Job</h2> <p>Those who were born after 1970 and work for the state or federal government have a minimum retirement age (MRA) of 57, and often retire before 60 with a pension. These employees are entitled to <a href="http://en.wikipedia.org/wiki/Public_employee_pension_plans_in_the_United_States">public employee pension plans</a>, though they vary by state.</p> <h2>8. Max Your 401(k) Contribution</h2> <p>If you have a 401(k) and can afford to contribute more, try to contribute as much as your employer will match.</p> <p>If you're able to contribute an extra $1,500 a year total (starting when you're 25) that will give you roughly an extra $15,000 a year to live on if you want to retire at age 60.</p> <h2>9. Downsize Your Home When the Market Is Good</h2> <p>This can be a particularly good move if your house is paid off and the kids are all grown and moved out. Assuming the market is good, sell your home at a profit and move into a place that's smaller, cheaper, and better suited for just a couple people. Odds are that you'll have a sizeable amount to put away; perhaps even enough to get you through a year or two. (See also: <a href="http://www.wisebread.com/this-is-how-you-downsize-your-home-and-start-living-a-better-life?ref=seealso">How to Downsize and Live a Better Life</a>)</p> <h2>10. Move to a State With Lower Taxes</h2> <p>Some states are easier to retire in than others. <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/States-with-the-Highest-and-Lowest-Taxes/INF23232.html">Property, income, and sales tax</a> should all be taken into consideration if you plan to move. Reduced taxes mean reduced living expenses which means your retirement dollars go farther.</p> <h2>11. Exercise and Manage Your Health</h2> <p>One way that you can help to prevent increased expenses in your later years is to exercise and take care of your body. If you do, you might be able to qualify for cheaper health insurance plans and be less susceptible to increases in your monthly premiums. (See also: <a href="http://www.wisebread.com/live-long-and-prosper-with-these-15-small-healthy-habits?ref=seealso">Live Longer With These Small Healthy Habits</a>)</p> <h2>12. Start a Roth IRA</h2> <p>A Roth IRA is a retirement account that allows you to contribute after-tax money. The appeal over a traditional IRA is that withdrawals won't be taxed in retirement, and that your contributions can be withdrawn anytime without penalty (with some caveats), for emergencies.</p> <h2>13. Work the Tough Hours While You're Young</h2> <p>Working overtime and weekends, and doing what you can to bring in more cash flow is much easier in your 20s and 30s than when you're older. Work those hours now and put money away so that you can wind down as you get closer to retirement age.</p> <h2>14. Cultivate a Skill That You Can Do Part-Time in Retirement</h2> <p>Many people work part time in their retirement, if for nothing else as a means to kill time. Try to plan for a way to continue to bring home a paycheck even after you've retired. This can mean continuing in your line of work part time or perhaps going from a business owner to a consultant for another company. It also means your retirement funds won't be your sole means of support.</p> <h2>Planning Ahead</h2> <p>The most important thing you can do when it comes to securing your retirement is to do as much advanced planning as you can. While certain things can't be predicted, like exact living expenses or the cost of insurance, you don't have to wait until your 50s to start putting money away.</p> <p>Be prudent when you're still young, and you'll make an early retirement far easier.</p> <p><em>Do you have other ideas on how to retire early? 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/14-ways-to-retire-early">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/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</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-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 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/how-to-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/50-ways-to-save-money-on-clothing">50 Ways to Update Your Wardrobe for Cheap</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-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> General Tips Retirement early retirement retirement savings saving Mon, 07 Apr 2014 08:36:22 +0000 Mikey Rox 1134347 at http://www.wisebread.com Why Canada’s TFSA Is Totally Awesome http://www.wisebread.com/why-canada-s-tfsa-is-totally-awesome <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-canada-s-tfsa-is-totally-awesome" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/old-couple-enjoying-retirement.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>In a recent article, I <a href="http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees">compared the Canadian and American retirement systems</a>, and while I tried to include as much as I could, a lot of people jumped on my omission of the Tax Free Savings Account (TFSA). I left it out because, strictly speaking, a TFSA is not a retirement savings vehicle. But I should&rsquo;ve included it anyway for one simple reason&nbsp;&mdash; TFSAs are totally awesome, especially for investors. That&rsquo;s because if you put your investment in one of these, you don&rsquo;t have to pay capital gains tax. For regular people, that&rsquo;s as close as you can get to the benefits of an account in some tropical, offshore banking center (which, let&rsquo;s face it, probably wouldn&rsquo;t be interested in a $3,000 deposit anyway).</p> <p>According to a poll released by the Bank of Montreal in November, about 38% of Canadians have a TFSA account. If you aren&rsquo;t in that group, you&rsquo;re missing out. Here I&rsquo;ll go over this relative newcomer to Canadian financial (and yes, retirement) planning.</p> <h2>TFSA 101</h2> <p>First things first &mdash; the <a href="http://www.standardlife.ca/en/individual/solutions/tfsa/">TFSA</a> is poorly named and, as a result, many people assume that it&rsquo;s a savings account. In fact, the TFSA isn&rsquo;t an account at all; it&rsquo;s more like a label that can be applied to all kinds of financial accounts, including regular savings accounts, stock trading accounts, mutual funds, bonds, and even certain types of small business shares. In other words, it isn&rsquo;t just for saving. In fact, the TFSA&rsquo;s tax-free capital gains mean you get the greatest advantage by using it to invest. Unlike virtually every other kind of account you could put your money into, if you use a TFSA, you won&rsquo;t have to pay tax on any interest, dividends or capital gains you earn. Ever. </p> <p>Of course, there are some limits. When the TFSA was introduced in 2009, every Canadian over the age of 18 got $5,000 of contribution room. Like a Registered Retirement Savings Plan (RRSP), this contribution room continues to accumulate each year, and remains open whether you use it or not. So, if you&rsquo;ve never contributed to a TFSA, you could deposit as much as $25,500 in 2013 (the contribution was increased to $5,500 this year). Plus, that contribution room <i>never</i> goes away, even when you spend the money, which you can do without penalty whenever you choose. You could sock some money away for your retirement or pull it out and spend it on a nice vacation. Your choice. And hey, if you do manage a solid capital gain during the year, it might just be a very affordable trip!</p> <h2>Tax-Deferred Versus Tax-Free</h2> <p>What many people don&rsquo;t understand about TFSAs is the tax implications, which explains why, according to the BMO poll, many people don&rsquo;t use them effectively. So here&rsquo;s a rundown.</p> <p>TFSAs are tax free. That means that if you contribute $5,500 this year, make a great stock pick, and end up with $10,000 in your account by the end of the year, you can avoid paying what would normally amount to $675 in capital gains tax (assuming a 30% income tax rate). Pretty sweet, right?</p> <p>Now take the RRSP. If you contribute $5,500 to this type of account instead, you can deduct that $5,500 from your taxable income, which could mean a tax refund. So, essentially, the money you contribute to an RRSP has not been taxed. However, if your contribution grows to $10,000, you will pay income tax on that amount when you withdraw it (which hopefully happens when you&rsquo;re retired). The logic behind deferring your taxes until retirement is that many people have less income during retirement, and therefore a lower tax rate.</p> <h2>Why the TFSA Is Totally Awesome</h2> <p>What really sets the TFSA apart is that it&rsquo;s flexible. You can use it to save money for short-term goals, or to save for longer term dreams like a new home or even retirement, and you withdraw that money whenever you want. Plus, if you&rsquo;re already maxing out your RRSP, a TFSA gives a little extra incentive to save more. For those with lower incomes who might not benefit from an RRSP&rsquo;s tax deduction, it also provides another option.</p> <p>Whether you&rsquo;re making big bucks trading stocks and other investments or just racking up a little interest, a TFSA means you won&rsquo;t have to pay taxes on those gains. In other words, a Tax Free Savings Account is about as close as you can get to a free lunch in the investing world. And what budget-savvy person ever turns down one of those?<b><br /> </b></p> <p>This post was made possible by support from&nbsp;<a href="http://www.standardlife.ca/" target="_blank">Standard Life</a>, a leading provider of&nbsp;<a href="http://www.standardlife.ca/prpp/index.html" target="_blank">Canadian pension plans</a></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/why-canada-s-tfsa-is-totally-awesome">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-money-will-you-need-to-retire">How Much Money Will You Need to Retire?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50">7 Reasons to Invest in Stocks Past Age 50</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in 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/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement Canada retirement savings savings plans Thu, 25 Apr 2013 10:24:33 +0000 Tara Struyk 973633 at http://www.wisebread.com Is Building an Emergency Fund Always a Good Idea? http://www.wisebread.com/is-building-an-emergency-fund-always-a-good-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-building-an-emergency-fund-always-a-good-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/7658205070_cb49629afd_z.jpg" alt="crumpled cash" title="crumpled cash" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>The Great Recession of 2007 drove home the common-sense notion of being prepared. Specifically, it gave a lot of traction to the idea of having a 6-8 month emergency fund. Today, nearly every financial advisor parrots the same call &mdash; everyone everywhere should have months and months of living expenses socked away in an easily accessible account.</p> <p>But is building an emergency fund always a good idea? And does the wisdom behind the advice translate to every financial situation? I don't think so. (See also:&nbsp;<a href="http://www.wisebread.com/put-off-saving-for-retirement">Put Off Saving for Retirement</a>)</p> <p>At the risk of sounding heretical, I humbly assert that every financial circumstance is unique and creating a hefty, low-interest, immediately-accessible emergency fund might not be the smartest way to manage your money. Here are a few situations where it just might be okay to skip scrimping and saving to build an emergency fund.</p> <h3>You Have High-Interest Consumer Debt</h3> <p>Unlike an emergency, your creditors are a sure thing. If you have <a href="http://www.wisebread.com/why-we-take-on-credit-card-debt">credit card debt</a>, those high interest rates will be applied month in and month out. But the interest you'll get from a bank on a savings account is something akin to not-worth-mentioning. Get more bang for your buck by paying off your credit cards first.</p> <h3>You Have No Retirement Savings</h3> <p>If you're young and trying to decide between funding a Roth IRA or 401(k) account and putting money away in case of emergency, bank on your retirement. The time horizon is long enough that you'll see real growth from compounding interest. Plus, with 401(k)'s company match and Roth IRA's tax-free growth, both types of savings vehicles can be powerful wealth producers over the long term.</p> <h3>You Have No Debt and Low Expenses</h3> <p>On the other side of the coin, if you have no debt and very low expenses, an emergency fund may not be the critical lifeline for you that it is for others. In an emergency, low overhead works in your favor and modest financial obligations can be met in a variety of ways besides a savings &quot;super-fund.&quot; Redirect that cash toward <a href="http://www.wisebread.com/7-great-investments-for-first-timers">investments</a> that offer better long term returns.</p> <h3>You Have Investments That Are Accessed Easily and Without Penalty</h3> <p>Panicked about not having money saved for the what-ifs in life? Relax &mdash; maybe you already have an emergency fund and just don't realize it. Investment dollars that you can withdraw without penalty achieve the same goal (and may be earning a higher interest rate in the meantime).</p> <h3>You Have Flexible Finances</h3> <p>If you're financially flexible and can easily contract in the event of a temporary layoff or unforeseen income hiccup, maybe an emergency fund isn't an absolute essential. Having some serious wiggle room financially has some real rewards &mdash; and not needing a huge emergency fund is one of them.</p> <p>None of this advice is meant to suggest that preparation is a bad idea. Being financially alert helps us survive, thrive, and <a href="http://www.wisebread.com/bestdeals">seize amazing deals</a> when they come our way. But bloated emergency funds, built only by ignoring other wealth producing opportunities and applied in one-size-fits-all fashion just don't make sense. In other words, sometimes the best preparation is knowing what we don't need to prepare for.</p> <p><em>Do you have an emergency fund? Is your fund in a traditional savings account or another type of investment?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/is-building-an-emergency-fund-always-a-good-idea">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/the-us-savings-rate-has-tanked-heres-why-that-matters">The U.S. Savings Rate Has Tanked — Here&#039;s Why That Matters</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/a-step-by-step-guide-to-creating-your-emergency-fund">A Step-by-Step Guide to Creating Your Emergency 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/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</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-ways-to-decide-if-its-a-fund-worthy-emergency">8 Ways to Decide if It&#039;s a &quot;Fund-Worthy&quot; Emergency</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/financial-lessons-from-its-a-wonderful-life">Financial Lessons From &quot;It&#039;s A Wonderful Life&quot;</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt free emergency fund retirement savings Wed, 27 Feb 2013 11:40:22 +0000 Kentin Waits 967979 at http://www.wisebread.com