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6 tips for stronger savings
If you’re wondering when you need to start saving money for the future, that time is now. Whether you’re saving for a trip, a house, a car, retirement, or something else, setting aside money now for future benefit is an action that has to be repeated until it becomes a habit. Here are several helpful suggestions—perhaps you’re already doing some of them. The more steps you take, the faster your savings will grow!
Tip 1: Avoid instant gratification
Some call it the 30-day rule. Before you make a significant purchase, wait a month. More often than not, your urge to buy the item has waned or passed completely. Now, you’re enjoying the effects of your patience instead of suffering from buyer’s remorse. A short wait can save you a lot of money.
Tip 2: Set up an emergency fund
One of the fastest ways to get in debt is to be financially unprepared for an emergency. This can include everything from a medical emergency or sudden job loss to unexpected car repairs. As a rule of thumb, you should have at least 3–9 months’ worth of living expenses saved up for these situations.
Tip 3: Record your expenses
When you document your purchases, you avoid the familiar “where did all my money go” scenario. This includes even small purchases, such as that fancy cup of coffee. If you want, you can cross-reference your list with your bank statements to ensure accuracy. Now that you’ve collected your data, break it out into categories (gas, groceries, rent, etc.). Where can you trim? Are you going out to eat too much? Maybe it’d be better to brew that java at home.
Tip 4: Automate your savings
Virtually all banks and credit unions offer automated transfers between your checking and savings accounts. Determine an amount that can be automatically transferred and saved without straining your budget. You’ll be surprised how fast your savings account grows. Just set it up and forget it.
Tip 5: Renegotiate your terms
Whether it’s your cell phone or cable bill, the closer you are to the end of your contract, the more leverage you have to get a better deal. Call and ask to speak to the retention department. Let them know that you are considering a new provider and see what they offer to keep you as a customer. You’ll be surprised at how much you can save. Also, keep an eye on aggressive offers from its competitors. It may be time for a switch. The same goes for your home and auto insurance. Get a quote to make sure you’re getting the best price.
Tip 6: Install a programmable thermostat
Why pay to keep your house or apartment comfortable while you’re away? Programmable thermostats can be set to reduce your heat or air conditioning use during certain times to boost energy savings. According to Energy Star, you can save approximately $180 a year with a programmable thermostat. Now that’s a
This is just a small sample of what you can do to maximize your budget and savings. The important thing is to get started!
How to stop anxiety from ruling your finances
Financial decisions are rarely easy, whether it’s buying your first car or home or deciding whether to refinance student loans.
The anxiety can be heightened for millennials who witnessed economic turmoil during the Great Recession as they weigh milestone financial choices as adults.
“Many [millennials] grew up and saw their parents lose a house or have to delay retirement,” says Brad Klontz, a financial psychologist and associate professor at Creighton University. “Of course, they are going to be anxious.”
In fact, a survey this year by insurance company Northwestern Mutual found that this generation not only has a stronger inclination to make financial plans compared with older generations, but also has a higher level of anxiety about whether they are following the right strategy.
The survey found that 66% of millennials (those born from 1981 to 1996) said they were “highly disciplined” or “disciplined” financial planners, compared with 60% of Generation X (born 1965-1980) and 52% of baby boomers (born 1946-1964).
At the same time, 70% of millennials said their financial planning needs improvement. That’s compared with 68% of Gen Xers and 52% of baby boomers.
There are ways to reduce the stress of financial decisions. Start by identifying your attitude toward money. Then, take action in a way that’s tailored for you and turn to others who’ve been there.
Know your attitude toward money
Most of us grow up with a specific approach toward money, often learned from our parents, imbibed from those around us, or informed by our own experiences.
Being aware of your relationship with money can help you avoid pitfalls like worrying too much. Klontz, the author of several books on finances and psychology, says he’s found four common approaches to money: worship, avoidance, vigilance, and status.
For example, those who are vigilant about money always worry about having enough and experience trouble making spending decisions. On the other hand, avoiders don’t look at bills or statements until they absolutely have to, Klontz says.
Another source of insight about your financial mindset is Gretchen Rubin’s book “The Four Tendencies,” which explores what drives people’s decisions. She categorizes people as obligers, questioners, rebels, and upholders.
“Your ‘tendency’ shapes your perspective on the world and influences what kinds of [financial] strategies will work for you,” Rubin says. For example, a “questioner” likes doing their own research and will only seek outside counsel they trust, Rubin says.
Take actions tailored to you
Once you’ve identified your attitude toward money, use that knowledge to ease the anxiety of financial decisions.
Make a to-do list
a financial to-do list, says Eric Tyson, author of “Personal Finance for Dummies” and a former financial advisor. You could calculate how much money you earn and spend every month or add tasks like saving money for a goal or getting your credit in shape for a loan.
“Prioritize it, get some early victories,” he says. “Don’t beat yourself up thinking you’ve got to do it quickly.”
If you’re an “obliger” and want to save up for a goal, use accountability to get started and stay motivated, Rubin says. That may be in the form of friends, a financial advisor or thinking about what you want in the future, she says.
Visualize the end goal
If you are a “rebel” who doesn’t like being told what to do and wants to pay off debt, think of the freedom you’ll have when you’re debt-free. Set up automatic payments so you don’t have to think about them, Rubin says. The automatic payments option is effective for anyone, she notes.
Turn to others for guidance
Tyson says the biggest mistake he’s seen people make is that they don’t get advice—or rely on one source—before making a financial decision.
“If your Uncle Joe seems financially savvy, you can run your thinking by him, but you should be selective about taking one person’s advice as gospel,” Tyson says.
If you want an expert’s perspective, turn to a fiduciary fee-only financial advisor. Advisors who are paid by fees only, not commissions, have fewer conflicts of interest; those who follow the fiduciary standard put clients’ interests ahead of their own. Or you can set up a free consultation with a nonprofit credit counselor.
This article was written by NerdWallet and was originally published by The Associated Press.
Amrita Jayakumar is a writer at NerdWallet. Email: [email protected] Twitter: @ajbombay.
Don’t shop this way in 2020
Overspending can be a serious downer for your budget.
Kind of like that person in the movie theater who kicks the back of your seat: It’s annoying, distracting and ruins your experience.
But that doesn’t mean you should stop spending entirely, just like you don’t have to stop going to the movies altogether. You just need to pick your purchases (and maybe your seats) more carefully.
Now that 2020 is upon us, here are some things you can kick out of your budget and some other changes to consider.
Easy purchases with one-click shopping
Cashless shopping is convenient, but it can be a budget-buster. This year, make it more difficult to spend money online. This could help cut out some of your impulse purchases.
“It is so easy to buy on Amazon,” says Jane Boyd Thomas, professor of marketing at Winthrop University. “You know, one-click shopping. But you can put in your own safeguards to keep you from doing that.”
For example, don’t save your credit card in your online retail accounts. And think twice before using mobile payment methods like Apple Pay. If you have to pick up your physical credit card or part with tangible cash, you might pause and reflect on whether you really want to spend your money on that item.
Next up: frivolous foods. If you’ve been guilty of throwing away groceries that have gone bad, you’re probably not shopping as efficiently as you could.
“Try eating your way through some of your food,” says Natasha Knox, a member of the Financial Therapy Association’s board of directors and founder of Pax Planning.
“If you are throwing stuff out regularly, you are overshopping on groceries. One hundred percent.”
How can you fix it? Make a grocery list before you shop. Plan out your meals for the week ahead of time. Pick products with long shelf lives.
And be realistic, Knox says. If you’re probably never going to whip up that gourmet meal you saw a chef make on TV, don’t buy the ingredients for it — only for them to be thrown out. You can find plenty of recipes online that require minimal effort and experience.
Some handbags are more expensive than others. Some paper towel brands are pricier than others. In just about any store or department you browse, you’ll find options for products of varying prices.
Knox recommends figuring out which high-quality products you really love. Then, be willing to compromise on the rest.
“Everything can’t be as important as every other thing,” Knox says. “So some things have to give.”
Adjust your perspective
This category isn’t a bill to cut from your budget. Rather, it’s a mindset you should remove from your spending habits.
“Stop thinking of yourself as a consumer,” says Tim Howes, professor in the College of Business at Johnson & Wales University’s Rhode Island campus. “Stop thinking of yourself as a shopper. You’re an individual.”
According to Howes, that means focusing less on things to buy and more on nonmonetary aspects of your life, like how you spend your time and the relationships you build.
“It’s really being intentional about every dollar you spend,” he says. “Does this add value to my life or not? When you start to figure out that what matters is relationships, more than material things … you start to change your mindset about what matters.”
It’s easier if you change your perspective, Howes says. Instead of thinking of skipping that trip to Starbucks as a sacrifice, focus on how you’re actually saving time and money.
However you lighten your load in 2020, consider now a good time to reassess your budget.
“Maybe for some people expenses over the holiday season were particularly high,” says Deeksha Gupta, assistant professor of finance at Carnegie Mellon University’s Tepper School of Business. “Your bank account could be lower than usual, causing you to take pause and evaluate your budget.”
If you don’t know where to start, Thomas recommends writing down all of your spending for at least one month. This exercise can help shed light on where you’re spending — or overspending.
“It’s very painful and very tedious, but it’s very eye-opening.”
This article was written by NerdWallet and was originally published by The Associated Press.
Courtney Jespersen is a writer at NerdWallet. Email: [email protected] Twitter: @CourtneyNerd.
9 ways to prevent childcare costs from busting your budget
If you’ve already joined the working parents club, then you completely understand the pain of having childcare costs eating away your budget each month. The hefty price tag of childcare pushes many to delay having children until they feel they can easily afford such responsibility. Before you begin your search for childcare, or if you’re just looking to reduce childcare costs, be sure you know just how much of your budget you can actually afford to allocate to childcare.
Money isn’t the only way to pay for goods and services. Do you have a skill or provide a service that your daycare could use? Simply talk to the director of the daycare to see if you could offer your skills to reduce the costs, or even better, remove the costs altogether. Daycares often hire services for marketing, cleaning, cooking, janitorial, and more. Bartering is still a thing these days, and it relieves the financial burden for both parties involved.
2. Research and compare
First and foremost, research daycares near your home and compare pricing. Think about what’s most important to you, and create a list of questions that can be your guide. Do you want a daycare that’s close to home or one that stays open later than most daycares? While it’s nice to have a low rate, you don’t want to risk your child’s safety or place them in childcare where the teachers are overwhelmed with more children than they can handle.
3. In-home childcare
Businesses exist to generate income, and you can believe that daycares aren’t any different. To take advantage of lower rates, consider an in-home daycare. In-home daycares typically don’t face the same overhead expenses as regular daycare centers that have to hire staff, pay rent, buy food, pay utilities, and buy supplies. If you want to check on the license of an in-home daycare or find valuable childcare resources and tips, visit childcare.gov.
4. Adjust your work schedule
Many employers will work with employees if they need to adjust their work schedules. If your daycare offers part-time or drop-in options, work half the week from home and utilize the daycare the other days. Or, if you want to work nights and weekends, while your partner stays home in the daytime with the children, see if that is available to you. Don’t be afraid to ask for what you want. Many companies aren’t as strict as they were many years ago, appealing to hard-working, young, and thriving parents who are a valuable asset to the company.
5. Work remotely
Telecommuting is a great way to eliminate or reduce childcare costs. Many employers are flexible and understand the need for employees to work remotely occasionally or full-time. Working from home is also beneficial in that it allows you to attend school events, reduce evening stress, save on gas and car repairs, and most off all, allows you to save more money for other day-to-day financial needs. Stay on top of your work responsibilities to ensure your boss doesn’t regret it and suspend your work from home privileges.
6. Government assistance
Yes, childcare is so expensive that the government has stepped in to help parents who struggle to pay the high cost of care each month. While there are certain qualifications that must be met to receive help from the government, it’s a great financial resource worth researching. And don’t assume you exceed the income limits. When you factor in children and the expenses of running a household, many people will be surprised to find out they actually do qualify.
7. Boys & Girls Club or YMCA
Many Boys & Girls Clubs have been around for decades and, just like the YMCA, provide great afterschool hours and very affordable rates. These youth activity centers help students with their homework, engage them with physical and mental activities, provide food, and offer a safe environment for them to work and play.
8. Ask family
Is grandma sitting at home all day watching her favorite court-television shows? Why not ask granny to look after your little one while you work? After all, she’s experienced. Typically, grandmothers love spending time with their grandchildren, or any small children. It may not be the same type of care you’d find at a daycare center, but it’s usually convenient, safe, and affordable. Maybe you have another relative nearby whose schedule isn’t hectic. Family is often supportive of their working family members who have little ones and need to save money. Reach out to your family members and explain the ever-rising costs of daycare and how difficult it is to pay. If they are reluctant, maybe you can pay them something to soften the blow, while helping you to avoid the hefty expense at regular daycares.
9. Try church
Many churches have joined the childcare business, but the best part is their competitive pricing. Most church daycares operate at a 20 percent or greater discount than most private daycare centers. Call around to churches in your neighborhood and inquire about their rates. Once you find one that matches your budget, stop in for a visit. You’ll often find there are fewer children and a very friendly staff. However, more likely than not, there will be some teachings about religion as a part of the church ministry. If you don’t want your child learning about the religion of that church, find one that has similar religious views.
A Quick Guide to Becoming a Freelancer
Freelancing comes with endless freedom, but also endless responsibilities. Businesses have accountants, marketing teams, benefits administrators, and everything in between. However, if you want to be your own boss, then these responsibilities fall on—you guessed it—you! Before taking the plunge into freelancing full-time, consider sticking with your day job with a steady income until you get your footing.
Before you can begin your freelance career, you need to figure out what it is you want to do. What are you good at? What do you enjoy doing? Why do you want to freelance? Can you afford it? How do you plan to present your “brand” to future clients? Who is your target audience? Asking yourself these questions will help set you up for success in your field. Most companies and start-ups want a specialist to complete the job – wouldn’t you? Decide what your biggest selling point is and go from there. If you love graphic design, think of one area that you’re best at. Maybe your niche is designing graphics for t-shirts, but consider who those t-shirts are for. Continue narrowing down your market so you can brand yourself as a specialist in whatever field you’re in. This will allow you to build a dependable reputation and control how clients perceive you.
Showcase your skills by creating a portfolio or a website that features your best work. When a potential client sees your website, they’ll want to see your past experiences, your personality, creativity, and, most importantly, how to contact you. Keep your website domain name and social media handles consistent so it’s easy for potential clients to find you. Your online presence is often the first impression a new client will have of you, so make sure it’s professional, consistent, and on-brand.
Now that you have some of the groundwork out of the way, it’s time to start selling yourself and landing gigs so you can start earning money. If you already have a few clients lined up, great! If not, there are job sites for freelancers to help you get started. Ask friends and family for referrals, and consider reaching out to companies directly to offer your services.
Managing money as a freelancer can be tricky, especially when you’re just starting out, since you won’t know how much income you’ll have and how steady that income will be. Now’s the time to put on your accountant hat and start to develop a monthly budget. Start by tracking your revenues (income) and expenses. Find your monthly income by adding everything you’ve made in a year and then dividing it by 12. This will give you a rough estimate of how much you can spend and save each month. Each time you get paid for a freelance project, write it down, and every time you purchase an item to complete a project (e.g., a Photoshop subscription), write that down, too. Keep track of all of your fixed expenses, like rent, insurance, car payments, etc. Create a spreadsheet or use an app like Mint to track and organize your income and expenses.
If your budget is doing its job, you should be earning more than you’re spending. It’s tempting to use that extra money for travel or fun activities, but it’s more important to start saving some money and funneling at least 30% of every paycheck into a separate account to cover self-employment taxes. Don’t forget about retirement (you do want to retire, right?) – consider contributing to Individual Retirement Account (IRA) each time you get paid for a project. Your future self is already thanking you!
Freelancing is an enticing choice for many reasons, but it’s still a huge career choice that requires a lot of work, especially in the beginning, in order to be successful. If you’re ready to make the leap, congrats! If you’re still on the fence, why not freelance part-time to see if it’s right for you? After all, freelancing is about flexibility and freedom.
A Crash Course in Finance for College Students
Whether you’re just starting college or about to finish up, it’s good to know how your finances work and how to make the most of your banking experience. With all of the options out there, it can be tough to decide which financial institution
to choose and which one will best fit your needs as a student. Here are some tips to help you thrive financially during college.
Many young adults will open an account at the same credit union or bank their parents use. But what happens when you move away from home? Be sure to check if there is a branch, credit union service center, or surcharge-free ATM close to both your hometown and school. There will be plenty of times when you need cash and want to be close to a location that won’t charge extra fees when withdrawing money or making a deposit.
Numerous websites compare brick-and-mortar credit unions and banks to online financial institutions. Research before opening an account with any establishment—there could be hidden fees or minimum balance requirements, and these minimums could be hard to meet as a college student. To get the best deals and best interest rates, consider opening a checking account in one place and a savings account in another. As long as you can keep up with your earnings
and pay your bills on time, separate accounts shouldn’t
be an issue.
Save Money Now
If you’re taking out student loans, don’t wait until you’re earning a real salary to pay them off. Open a savings account with high interest rates and no fees. There will be plenty of expenses throughout your college years, so there may not be a lot of money to save up. However, a little savings here and there will eventually add up and help pay off those pesky loans in the future. Or, better yet, start chipping away at your loans while in school—this can save you money in interest in the long run.
Get a Flexible Job
You may think there isn’t enough time in the day with classes, studying, activities, and sports, but there is always time to get a flexible job. Even if it doesn’t pay much, it’s better than having no income. Some schools offer student work programs or federal work study and have jobs that will work around your class schedule. Some schools will even give you free housing or cut down on housing costs if you become a resident assistant. If you feel comfortable sharing your car, you could become an Uber or Lyft driver and work for yourself whenever you have the time. There are also plenty of odd jobs worth considering. Ask your parents if they know anyone who needs house sitting, dog walking, or babysitting. These don’t take up much time and are relatively easy ways to make money without making a full-time commitment.
Create a Budget
Even if a job is out of reach, talk to your parents, guardians, or whoever is helping pay for school about setting a budget and sticking to it. College is about new experiences, so make sure to factor in a percentage for entertainment and spending money. Make a list of expenses like books, supplies, groceries, bills, etc., along with other things you may need money for, like events, shopping, and eating out. Although, if you do have a job, put a percentage of your paycheck aside into a savings account—you’ll thank yourself later.