Tag: Banking

 

The Financial Benefits of Same-Sex Marriage

Since the Supreme Court legalized gay marriage in 2015, more than a million same-sex couples have tied the knot.

Yet, love and marriage comes with much more than a day filled with vows, dancing and cake. It comes with a lifetime of financial considerations for the future. For example, this may be only the beginning of saving toward your retirement as a couple, setting up a joint bank account, and working toward your other money goals.

If you have questions about how to best navigate your finances as part of a same-sex married couple, you’re not alone. For example, typical questions include: Can you save money by getting married? Will your tax rate plummet once you tie the knot?

To answer your money questions, we turned to Robert Castillo, an investment advisor and accredited domestic partnership advisor at Gerber Kawasaki, an investment management firm based in Santa Monica, Ca.

Castillo talked us through the money-related aspects of married life for same-sex couples. Read on to see how walking down the aisle could affect your financial future.

Taxes

“There’s been a study done, and about a third of same-sex couples who have married between 2015 and 2018 still have questions about their taxes—whether to file joint or single, or how to file,” says Castillo.

Castillo cautions against the assumption that marriage always means lower income taxes, which he says is one of the biggest misconceptions about matrimony.

“There’s something called a marriage penalty. If two people are high-income earners, they actually end up paying more taxes than if they were single,” Castillo says.

Thankfully, the so-called marriage penalty doesn’t apply to all spouses. If one partner earns considerably less than the other, this usually leads to overall tax savings for the married couple, Castillo says.

Indeed, you shouldn’t let a tax increase deter you from getting married. There are still other financial perks of your nuptials that can make up for the uptick in income taxes, he says.

“There are over 1,100 federal benefits allotted to married couples,” Castillo says.

Retirement Planning

First, here’s the bad news: If two high-income earners get married, they may not qualify for a Roth IRA with their combined income.

A Roth IRA is a type of retirement plan that allows you to contribute money after taxes and withdraw your earnings tax-free upon your retirement. With a traditional IRA, on the other hand, you contribute pre-tax earnings, yet you won’t be taxed on any of your investment gains until you withdraw funds. For both types of IRAs, the contribution limit per person in 2019 is $6,000 if you’re under 50. However, with Roth IRAs, there are limitations on what high-income individuals can contribute. For example, married couples filing jointly cannot make Roth IRA contributions if their combined income exceeds $203,000.

Here’s something else to know: If you have both a traditional IRA and an employer-sponsored 401(k) plan, you can’t deduct traditional IRA contributions from your taxes after a certain income limit. For married couples filing jointly, that limit is a combined income of $123,000.

Now, the good news: Marriage makes it easier for one spouse to pass retirement savings to the other if one passes away. If you’re the surviving spouse, you have the option to absorb your deceased spouse’s 401(k) into your own or claim your partner’s traditional IRA as your own. If your spouse had a Roth IRA, you can also claim it as your own if you’re the sole beneficiary.

All told, marriage makes it easier to deal with the unexpected and still have a comfortable retirement nest egg, Castillo says.

Pensions and Social Security

Marriage offers big-time benefits to the spouses of pension holders. A pension is a type of retirement plan where an employer does all the contributing and investing on behalf of an employee (although some plans allow for optional employee contributions). The employee then collects payments monthly or in a lump sum upon retirement.

Pensions are rarer now than they were a generation ago, but if you’re a teacher, government employee, work in law enforcement or work in other particular professions, you may still be able to reap the benefits of this type of retirement plan. And, if your spouse has a pension and were to pass away, that pension may go to you. What does this mean? It means that you, as the surviving spouse, may be eligible for a lifetime of payouts, depending on the plan. What’s more: This benefit is not available to non-married couples in a domestic partnership.

Here’s another financial perk of marriage: It can boost your social security payments. Social security is a topical subject as many have predicted the demise of this government program. However, American workers in all industries still receive credits for every $1,260 they earn, up to four credits per year. As it stands now, upon retirement, you can start receiving monthly social security payouts. Here’s an online calculator where you can see an estimate of your future monthly social security checks. If you’re married, you stand to receive 50 percent of your spouse’s social security payments or 100 percent of your own, whichever is higher.

Writing a Will

If writing vows seems more appealing than writing a will, you’re in luck: Marriage lessens your need for a will.

In community property states like California, all assets accumulated during the marriage belong equally to both spouses. If one spouse passes, then the assets automatically go to the surviving spouse.

“If a couple isn’t married, they absolutely need not just a will, but also a living trust. It’s not cheap, but it definitely saves a lot in probate taxes later on,” Castillo says.

An Individual Choice

The financial benefits of marriage are clear, but even so, not every couple needs to rush to the altar.

“I don’t try to convince my clients to get married or not. I just give them the numbers,” Castillo says.

With the information above, you’ll have an easier time deciding whether marriage is a smart financial choice for you and your partner. But, no matter what you decide to do now or in the future, we can all celebrate marriage equality. Happy pride!

 

8 Ways to Get One Month Ahead On Your Expenses

As you can probably imagine, most Americans live paycheck to paycheck. This means they spend money as they earn it.

In fact, more than one-third of American millennials (34%) say they could not come up with $2,000 in the next month to handle an unexpected expense.

But, what if you could cover all your expenses at the start of the month – before you even get paid? Then, when you get paid, imagine how much more organized and financially prepared you’d feel. You wouldn’t actually need that money for another 30 days and it could sit in your bank account.

Getting one month ahead on your expenses is a cool concept. Here are 8 things you can do to make this happen.

1. Add Up All Your Monthly Expenses

First, you’ll want to get a good idea of how much your monthly expenses are. So, go through your budget and track your spending to make sure you don’t miss anything.

Be realistic about how much you comfortably spend in a given month. Sometimes, what you actually spend doesn’t match the amount you budgeted for. Make sure you go back to your budget and enter in how much things really cost. For example, once you know you’re spending a set amount per month, you’ll know how much you need to have in order to get one month ahead and save for the following month.

2. Use Lump Sum Payments and Windfalls

If you get windfalls like a tax refund, inheritance or a bonus at your job, you can use this money to cover your expenses for the month.

Then, you can save whatever you earn during this time for the following month. Before you know it, you’re one month ahead and no longer living paycheck to paycheck.

3. Give Up a Vacation

The average vacation can cost a family more than $1,000. It may be no fun to forego a trip, but doing so will allow you to save up the money you need – fast.

But you don’t have to sit home and do nothing. Consider taking a staycation and planning low-cost or free activities during your week home from work. Then, take all that money you would have spent traveling and sock it away into your bank account.

4. Eat Through Your Pantry

If you spend hundreds of dollars on groceries each month, see if you can challenge yourself to cut that amount in half.

This may be difficult, but you can do it by getting creative and encouraging your family to use up food in your pantry and freezer. You can also shop the sales at your local supermarket and buy generic brands. Then, eat at home for 30 days and see how much money you can save.

5. Cancel Subscriptions

Try cutting out subscriptions in order to temporarily save money. This can include things like your gym membership, cable, streaming services, subscription boxes and so on.

Consider cheaper alternatives or do without for a few weeks – or more. For example, you can likely exercise outside or at home without having a gym membership.

Once you get a month ahead on your expenses and you’re into a good rhythm of saving money, you can consider adding back in your favorite subscriptions.

6. Sell Stuff From Your Home

You may have a lot of unused items lying around your house. Stop telling yourself that you’re going to fix them or use them again someday. You know that’s probably not true.

So, sell these items on eBay, or local sites like OfferUp and the Facebook Marketplace. Go all in with decluttering your home and you can earn extra cash.

7. Try Saving Half of Your Partner’s Income

If you have a two-income household, consider saving half of one of your incomes. This may sound like a stretch, especially if you’ve struggled with saving money in the past.

However, you can achieve this with dedication and the right plan. Start by committing to save half of the lower income in the family. For example, if your partner brings home $2,000 and you bring home $3,500 a month, commit to saving half of his income which would be $1,000/month.

You may have to make several cuts, like not dining out as much, finding free and cheap entertainment, reducing your utility use, driving less to save on gas, getting new quotes for lower insurance rates, and finding a cheaper phone company. Remember: All of these changes can be temporary.

8. Hustle Like Crazy

This is an option you can consider once you’d made a solid effort to reduce your expenses. Making extra money can help you meet your goals faster without sacrificing your lifestyle for an extended time.

For example, see if you can pick up more hours at work, get a part-time job or start a flexible side hustle. You can donate plasma, apply for focus groups and panel studies, walk dogs, babysit, edit resumes, clean cars, or offer your services as a graphic designer. The sky’s the limit.

Anything extra you can do to earn more money will get you closer to your savings goal.

Focus On Big Wins

Getting one month ahead on your expenses can be intimidating. So, try to focus on big wins and make sacrifices for a short period of time.

For instance, if you need to save up $4,000 to cover one months’ worth of expenses, setting aside only $50 per month will drag out the process and you can lose motivation before you reach your goal.

Instead, go after big wins that will allow you to save larger chunks of money in a shorter period of time. For example, cutting out four subscriptions, curbing your dining out habit, and not taking a summer vacation can result in thousands of freed up dollars over just a couple of months. From there, you’ll quickly get one month ahead, which will improve your cash flow and allow you to pay for surprise expenses.

 

8 Ways to Protect Your Personal Information While You’re Banking

Links to external websites are not managed by Chime or The Bancorp Bank.


While banking security has certainly improved over the years, thieves, scammers and hackers still find ways to steal your personal information and gain access to your hard-earned funds.

In fact, according to a 2018 online survey by The Harris Poll, almost 60 million Americans have been affected by identity theft. And, in 2017, $16.8 billion was stolen from 16.7 million victims of identity theft, according to the 2018 Identity Fraud Study by Javelin Strategy & Research.

So, what can you do to safeguard your identity and finances against unscrupulous types? Here are eight steps you can follow to keep your money safe.

1. Change your passwords often

Keeping the same passwords across each of your bank, credit card, and email accounts for too long increases the risk of hackers accessing your information.

So, change your passwords frequently. Doing this at least once a month is recommended to keep your accounts safe and secure. If you find it hard to remember your passwords, try using a password generator/scrambler like Dashlane to create and organize your passwords. You can also store your passwords on a secure browser extension like LastPass.

Here’s another tip: Don’t store your passwords on your mobile device or laptop, says Nathan Grant, a credit industry analyst. While it may be convenient, if your device is stolen, your password is right there for a thief to use without having to lift a finger.

“Also, be careful not to enter any passwords or financial information on websites if the URL doesn’t have a secure lock symbol or https in the web browser address bar, especially on public networks,” says Grant.

2. Avoid using public WiFi and shared computers

Speaking of security, be careful before connecting to WiFi in a public place, say experts.

“Public WiFi is great for browsing the web, but you shouldn’t use it to log into your personal accounts and mobile banking apps,” says Adele Alligood of EndThrive.com.

“Doing so can make it easy for someone to intercept your login information and steal your financial data.”

Likewise, avoid sharing your computer or using a public shared computer (like one in a library) if you’ll be conducting banking or financial transactions. If you must do this, log off after your session is over — and, depending on your device, enable two-factor authentication when logging is.

How to tell if your connection is secure? There will be an image of a padlock next to the WiFi address or before the URL on your Web browser. And, if you have to access your bank app? Make sure the app you’re using is security encrypted — especially if you’re making payments.

3. Download anti-virus software

A computer virus is an inherent risk when using public WiFi. But even in private, you may be at risk if you don’t have a good antivirus software installed on your laptop or desktop.

“With a little research, you can choose which antivirus software is right for your computer,” says Justin Lavelle, a spokesman at BeenVerified.com.

“Antivirus software makes sure malicious software is detected and removed from your computer,” says Lavelle.

4. Use caution at the ATM

You can never be too careful at an ATM — even if you guard your debit or credit card carefully.

Lavelle says you should be mindful of criminals who use credit card skimmers. These are devices that can record your card’s information to then use that information to make unlawful purchases.

“Whenever you use a credit card reader, it is smart to inspect the device first,” he says.

“Look at the machine for scratches, ill-fitting parts or seals. Jiggle the machine as well as the PIN pad, or credit card insert. Most gas pumps, ATMs or vending machines are manufactured to be secure. Broken seals or loose parts may be an indication that the machine has been breached, and a skimmer has been installed.”

Lavelle says that most skimmers use Bluetooth technology, so one way to detect a skimmer is to use your smartphone.

“Turn on the Bluetooth pairing, and then see how many odd things pop up. It might just alert you to a skimmer.”

5. Watch out for “sidlers”

You should also exercise caution at busy public points of sale, since this is where thieves known as “shoulder surfers” are known to use stealthy methods to get the digits off your card.

“If another consumer is crowding you in line to pay, don’t be shy to ask them to please back up and give you space,” says Jim Angleton, president of AEGIS FinServ Corp.

“Yes, it seems a bit harsh; however, the vast majority of ‘sidlers’ are purposefully inching up to pretend to use their smartphone to look at email when they are really taking cellphone video of you entering your card and inserting your PIN.

Once they have the perfect photo, they go to their car and use a laptop and portable printer to create a blank card that looks just like your card. They can then go online and purchase a five dollar item to see if the card works. Once they have confirmation, they can then sell the fake card with your valid credit card number, explains Angleton.

Want to know how you can avoid this problem? Opt for merchants that accept mobile payments straight from your phone.

6. Never reveal your personal information

Guarding your bank account numbers or debit card digits isn’t just about hiding your details physically or behind passwords. Sometimes, ID theft involves revealing info to the wrong people.

“Emails and phone calls may seem official and important, but you should never give out your personal details unless you can verify, without a doubt, that it’s safe,” says Lavelle.

“Most retailers make it clear that they will never ask for your password, social security number, or other sensitive information by phone or email.”

Pro tip: Make sure your bank account offers added protection against hackers. Chime’s debit card, for example, comes with an instant block function to prevent unauthorized use of your funds. You can simply disable transactions through the Chime app.

7. Destroy your documents

In the event you want to get rid of old receipts and sensitive banking information, don’t just dispose of this in the trash. Thieves know no shame and will happily dumpster dive to find each piece of a torn-up document.

Instead, invest in a paper shredder that makes any document unsalvageable and unreadable. You can also bring your documents to a UPS, Staples or other local office supply store that offers low-cost document shredding services.

8. Check your credit report

When was the last time you checked your credit report?

Checking your credit report and score is essential so that you know where you stand with your credit. Getting a copy of your credit report will also reveal any erroneous information that could negatively impact your credit.

So, scour your report — everything from the spelling of your name, the amount of your loans and your credit accounts (both open and closed). If you find an inaccuracy, each of the three credit bureaus (Experian, TransUnion and Equifax) have simple steps you can take to dispute anything unfamiliar on your report.

And, here’s another layer of protection: Switch to a bank account that will send you real-time alerts each time a transaction is made.

Stay Safe and Secure

Using these eight steps, you’ll be well on your way to safeguarding yourself and your finances in any scenario — whether you’re banking from your laptop at home, getting cash at an ATM, or shopping on your mobile device.

 

4 ‘Rich Habits’ Millennials Should Start Developing Now

Want to be rich? Like really rich?

Rather than scheming about winning the lottery, or getting paid to invent the next Candy Crush, you might want to take a look at the things you do every single day. Why? Since your habits are the foundation for all your actions, changing them is usually more effective than hoping for a single lucky strike.

Tom Corley would know. He spent five years studying the habits of hundreds of Americans, whom he separated into two groups: the “rich,” who had annual gross incomes of more than $160,000 and net liquid assets of $3.2 million or more, and the “poor,” who earned less than $35,000 and had a maximum of $5,000 in liquid assets.

Based on his discoveries — and the striking differences between each group’s daily activities — Corley wrote a book called “Rich Habits.” Since it was published nearly a decade ago, I caught up with Corley to ask which habits were most important for millennials today. Here are the four he chose.

1. Create Blueprints for Your Life

The most important habit, says Corley, is to begin “dream setting.” (Think: goal setting, except that dreams come first.)

Here’s how to get started:

  • Create a script: Decide what you want your life to look like in five, 10, 20 years. Picture every detail, including your job, salary, partner, house, and lifestyle. Then write it all out — Corley recommends your script be at least 1,000 words.
  • Make a list: From that script, pull each specific dream into a bulleted list. For example, your bullets might be: Earn $100,000 per year, take an annual trip to Hawaii, live in a four-bedroom house on a corner lot. “Each dream is like a rung on the ladder,” says Corley. “When you reach the top… that is the moment you are living the life of your dreams.”
  • Set your goals: For each dream, list the goals that will get you there. If your dream is to live in a four-bedroom house, your goals might be to: 1) Pay off your credit card debt within the next six months, 2) Begin saving $300 per month for a down payment, 3) Improve your credit scores, and 4) Hire a trustworthy real estate agent. Ask yourself if you possess the skills and knowledge to accomplish each goal; if not, determine how you’ll acquire them.

“The components of your life’s blueprint are all of the things that make a perfect life,” Corley explains.

“Your goals are your construction team. You need to define all of the goals that will make all of your dreams become a reality.”

By dream setting early and often, you’ll understand which goals you should be pursuing — and which roadblocks may stand in your way.

2. Devote 30 Minutes a Day to Learning

When was the last time you read a book? Or took a course? If you’re like most millennials, you probably spend more time with your face in Facebook than real books.

Corley says this is a mistake. He told Kiplinger that 96% of self-made millionaires read 30 minutes each day for education, career, or self-improvement. He also found that, while 77% of poor people spent an hour or more watching TV each day, only 33% of rich people did.

“The successful see time as the most valuable asset they possess,” says Corley.

“They are continuously engaged in some constructive project to increase their skill sets, promote their business or careers, keep their minds sharp, or expand their knowledge…The wealthy invest their time; the poor spend it on wasteful activities.”

So, instead of scrolling through social media or bingeing on Netflix, pick up a book from your local library. Listen to an educational podcast on your way to work. Attend a workshop where you’ll learn skills relevant to your career. Be like the wealthy, and invest your time in educational activities that will pay off down the road.

3. Exercise Every Day

Though exercising might seem irrelevant to gaining wealth, Corley says it’s one of the most fundamental habits for millennials to develop.

Besides the obvious physical benefits of exercise, he cites a range of reasons it could help you get rich. Specifically, Corley says exercise can:

  • Improve mental function by flooding the bloodstream with oxygen.
  • Reduce stress, as well as combat its negative effects (like a weakened immune system).
  • Increase the volume of nerve tissue in the hippocampus, improving your ability to remember and learn.
  • Elevate your testosterone level — and therefore your confidence — prompting you to pursue new and challenging opportunities.
  • Boost willpower and self-control, enabling you to make good decisions and avoid bad habits that can wreck your finances and life.

To turn exercise into a habit, you’ll need to find a regimen that appeals to you. Instead of forcing yourself to run, give yourself the freedom to try a range of options, from yoga to Zumba to Crossfit to basketball. When you make an exercise habit fun, it becomes much easier to maintain.

“Rid yourself of your demons by exercising every day. You and everyone around you will be better off for it,” says Corley.

4. Experiment With New Activities

Corley recommends experimenting with a new activity or skill every six months.

Maybe you try coding. Maybe you volunteer as a tutor for homeless youth. Maybe you take piano lessons. Whatever it is, Corley promises that, “Through experimentation, you will stumble upon something that makes your heart sing — something you will want to devote the rest of your life.”

He believes we all have innate talents that set us apart from everyone else, but that you can only discover them by veering off the typical career paths. When you finally uncover your “main purpose,” as Corley calls it, he says it’ll be easier to excel at your work (and thereby reap the financial benefits that accompany excellence).

Three Mistakes Millennials Should Avoid

In addition to building rich habits, Corley says it’s important for millennials to avoid these common mistakes:

  • Multi-tasking: Do you check your email or phone every few minutes while you’re working? Corley views these constant distractions as detrimental to the success of many millennials. To stay focused (and crush the tasks on your plate) he recommends putting your phone in do-not-disturb mode and closing your email for a two-hour chunks during the workday.
  • Allowing lifestyle creep: When you start earning more, that doesn’t mean you need to spend more. Corley told Kiplinger one of the biggest mistakes people make is increasing their standard of living to match their income. “You don’t want to supersize your life just because you’re making more money,” he said. “Stuff doesn’t make you happy.”
  • Not saving enough: In lieu of spending more, strive to save more. In Corley’s study, 95% of the wealthy people saved at least 20% of their net income each year — a practice they started “long before they became rich.” (Chime’s automatic savings feature can help.)

If you’re feeling discouraged by all the rules and advice, don’t despair. The good news, according to Corley, is that “never in the history of civilization has there been so much opportunity to become rich and successful.”

By making intentional life choices and developing these basic habits, you’ll hopefully find a way to become rich — or, at the very least, to have more money. Because, even if you feel like you’re getting a late start, now is better than never.

As Corley says: “It’s only too late when you are six feet under.”

 

What Is Financial Literacy? And Why Should You Care?

Links to external websites are not managed by Chime or The Bancorp Bank.


The majority of Americans are illiterate.

Not in terms of basic reading — most of us can do that — but in terms of our finances.

When the FINRA Education Investor Foundation asked more than 25,000 Americans six simple questions about personal finance, 63% failed. Millennials fared the worst, with a passing rate of just 24%.

This lack of financial literacy is, understandably, having a huge impact on our country. Many of us are paying high bank fees, falling behind on our bills, drowning in debt, and failing to save for retirement. Clearly, something needs to change.

We’re here to help by breaking down what financial literacy means, why it matters, and how you can improve yours. Read on to learn more.

What Is Financial Literacy?

Financial literacy is the ability to understand your money.

When you’re financially literate, you have a grasp on concepts like budgeting, saving, investing, credit, debt, insurance, and interest. And, with a bit of basic knowledge, you’re able to make smart financial decisions about taxes, retirement, real estate, and college.

To Jill Fopiano, CEO of O’Brien Wealth Partners LLC, financial literacy means “the ability to understand and manage important areas of your finances so that you can meet your financial goals.”

This includes financial jargon, too.

“It is as important to be an educated consumer of financial products as it as for any other major purchase,” says Fopiano.

Knowing the difference between a Roth and traditional IRA, or compound and simple interest, for example, can significantly affect your financial future.

Why Does Financial Literacy Matter?

You may think personal finance is boring or unimportant. If you whole family is “bad with money,” you may even think you’re doomed to follow in their footsteps. But the truth is you can transform your life by learning basic financial concepts.

“Financial literacy is the foundation of a life where you feel secure and safe enough to do what you want,” explains Bobbi Rebell, a certified financial planner and host of the Financial Grownup and Money in the Morning podcasts.

“If you don’t have the information, you can’t create a path to your goals,” says Rebell.

For many, one of those goals is retirement. Whereas most Americans used to receive post-retirement benefits from their employers, fewer than 20% of today’s private sector jobs come with pensions. This means you’re responsible for your own future. And, this isn’t something that’s easy to do. In fact, the median amount of retirement savings for a working family is a paltry $5,000.

In addition to affecting your future, financial illiteracy can harm you in the present, too. Take a look:

  • In 2018, the average American lost $1,230 due to a lack of knowledge about personal finance.
  • A shocking 39% of millennial women do not pay their bills on time, resulting in costly late fees and interest charges.
  • A dearth of general financial knowledge, according to one study, cost investors $200 billion over the past 20 years.

“Financial literacy is really about empowerment,” says Fopiano.

“The more you know, the more able you are to make good decisions, avoid sketchy offers, and secure your own future.”

Four Steps to Increase Your Financial Literacy

Since only 17 states require high schools to teach personal finance, it’s important to take your education into your own hands. Here are four steps to help you get started.

1. Devour financial media

As Rebell says, “Becoming financially literate is easier than ever because of the incredible resources we all have access to.”

Feel free to consume information in a way that suits you best. Maybe you’d like to listen to podcasts during your commute; maybe you’d rather watch videos on your days off.

Here are some recommended resources:

2. Take it slowly

Financial literacy is like a tall mountain: You’re not going to reach the summit right away — or maybe ever. The best you can do is take it slowly, tackling one topic at a time.

While you should get a basic grip of personal finance as soon as possible, don’t dive deep into every topic at once. That would be overwhelming, and could discourage you from progressing further.

“Pick an area that is particularly relevant to you — say, budgeting — and commit to mastering it over the next three months. Once you have accomplished that, move on to the next area,” says Fopiano.

3. Ask for help

You probably wouldn’t try to fix your plumbing on your own. Or try to learn chemistry without a teacher. The same goes for money. Although teaching yourself is a fantastic way to get started, you may eventually need some professional assistance.

“This doesn’t have to be a self-study course,” says Fopiano.

“If you are really serious about getting your financial future in order, and could benefit from a sound financial plan, seek out a certified financial planner,” she says.

If you’re not ready for human help yet, turn to financial technology. Use Mint to create a budget and track spending, Charlie to monitor your finances as a whole, Credit Karma to track your credit scores, and Chime to save automatically.

4. Stay curious

The key to financial literacy is, of course, education.

If you dream of becoming financially secure, and stable, and maybe even wealthy, you should keep learning. You should continue your education by reading about personal finance, seeking professional help, and using technology that simplifies the process.

This is your money, after all, and it affects every single aspect of your life.

“Financial literacy is about knowing the right questions to ask. None of us have all the answers, but if we have the right questions we can get there,” says Rebell.

 

Overdraft Protection: What to Know & How to Avoid Fees

Have you ever swiped your debit card and worried that you might not have enough money in your account? If this sounds like you, you might consider overdraft protection to save you from such a predicament.

But is it worth it? Read on to learn all about overdraft protection and overdraft fees.

What is overdraft protection and how does it work?

In general, if you make a purchase with your debit card and don’t have enough funds in your account, the purchase won’t go through. This is typically called an overdraft — which is when you go below your account balance and dip into the negative territory. This situation can be awkward for you and the person behind the cash register. It also can be highly inconvenient if you need whatever you’re purchasing like now.

This is where overdraft protection comes in. Overdraft protection essentially protects you from overdrafting. So, instead of getting your card declined and leading to an uncomfortable situation, your card will go through like normal – even if you don’t have enough money in your account to cover that purchase.

But overdraft protection comes at a price, in the form of overdraft fees which can add up (more on that later). So, while overdraft protection, on the surface, can seem like a great solution to a temporary problem, it’s not all it’s cracked up to be.

So, what does overdraft protection do?

Overdraft protection is a safety net that helps you avoid overdrawing your account. In short, it’s a type of financial protection that will help float you money if you have insufficient funds. So if you swipe your debit card or try to get cash out of an ATM, you may be able to do so even if you technically don’t have enough money in your account.

If interested in this protection, you’d want to talk to your bank and enroll in the program. Additionally, it’s important to know all the upfront costs such as overdraft fees, credit line limits, etc.

Pros of overdraft protection

The main pro of overdraft protection is convenience. Overdraft protection allows purchases to go through, even if you don’t have enough funds in your account. This can save you embarrassment, inconvenience and time. You don’t have to deal with your card getting declined in public or being unable to access cash when you really need it.

How do I use my overdraft protection?

If you want to use overdraft protection, first make sure it’s something you’re signed up for. As noted above, your bank must get consent from you first to enroll you in overdraft protection.

Once you are enrolled, see if you have to link another account or a credit card to complete the process. Each bank may have different policies and procedures.

When it’s set up, overdraft protection will be in place if you overdraw your account. But remember: The hope is that you never have to use it! If you do, this means you’ve run out of money in your account, which is no fun.

Cons of overdraft protection

Overdraft protection seems good in theory but it can cost you in the long run. The fees can vary from bank to bank and your financial institution can decide what to charge. And it’s not just one charge either. You can continue getting hit with overdraft fees if your account is overdrawn.

We found that consumers can get hit with four to six overdraft fees per day. In some cases, that number can be as high as 12. What’s more: Consumers who frequently overdraft end up paying more fees than those who do not opt into overdraft protection. In fact, The Consumer Financial Protection Bureau (CFPB) found that frequent overdrafters who opt into this coverage pay nearly $450 more in fees.

On top of that, if you accrue enough overdraft fees and stay in the negative, you’re at risk of your account being closed. Having your account closed by your bank is more than just a pain, but a major inconvenience on your financial life. Just think about all the bills that are connected to that account, or not having access to your money for a period of time.

All of these are major cons of overdraft protection and should be considered carefully.

The reality of overdraft fees

Overdraft fees – by and large – are big business for many banks. In fact, the average overdraft fee is around $35. In 2017, consumers paid 34.3 billion dollars in overdraft fees in 2017, a number which has been on the rise since the Great Recession.

Even credit unions, which are often thought of as more community-minded and consumer friendly have jumped on the overdraft fee bandwagon. Overdraft fees at credit unions have nearly doubled from $15 in 2000 to $29 in 2017.

In short, overdraft fees are the bread and butter for many financial institutions. They give banks a way to make money off consumers by positioning overdraft protection as a useful service.

What does overdraft protection mean for your credit?

As noted above, in some cases your bank may offer you a line of credit or link your overdraft protection to a credit card. If linked to a credit card, you could end up paying more. Why? Because some card issuers might consider the overdraft a form of “cash advance,” which has its own set of fees, not to mention higher interest rates.

Can you overdraft if you have no money?

To get overdraft protection, your bank will typically connect a savings account and move over funds to cover the overdraft. If you don’t have any money in savings, the protection may not work.

However, other banks have overdraft lines of credit. If eligible, the bank will loan you a line of credit so that your purchases are covered, even if you don’t have enough money in your account. Of course, you will still have to pay it back, with interest, like any other line of credit.

Can you withdraw money from an ATM if you have a negative balance?

If you’re headed to the ATM to get cash, and end up taking out more than you have in your account, you will overdraft. The overdraft definition means that you “overdraw” on your account, which means taking more than you have available.

If you have overdraft protection, you will likely be able to withdraw money from your account and you’d have a negative balance.

But of course, there will be an overdraft fee attached. So while you may get the cash you need, if you don’t have the funds in your account, it will cost more in the long-run.

How can I avoid overdraft protection?

Before 2010, many consumers were unaware that they were being “opted in” to overdraft protection programs. However, starting in 2010, federal regulations shifted and required that banks get consumers’ consent to opt into overdraft protection.

To make things simple, however, you can avoid overdraft protection by not signing up for it with your bank. If you’re currently enrolled in this service, you can cancel it. This way, if you don’t have enough in your account, your purchase or transaction will get declined. While you won’t be able to make the purchase, you also won’t be hit you with an overdraft fee.

Another option is to open a bank account at Chime, which has no overdraft fees.

Lastly, to avoid this problem altogether, keep a buffer of money in your checking account. This can help you avoid dipping into the negative. Check your account balances daily and monitor your bill due dates and auto-drafts. This way you’ll know when money is coming out of your account.

Final word

There are certainly pros and cons with overdraft protection.

It can be convenient, yet costly. It can save you embarrassment and time, but also take a bite out of your hard-earned money. So, weigh these pros and cons carefully.

Final tip: If you never want to worry about an overdraft fee again, consider switching to a no-fee bank account.

 

Stop These Six Bad Money Habits and Save More Money

It’s hard to resist meeting up with friends after work for drinks, or buying that new pair of shoes right after you get paid.

But, if you want to save more money, you may have to do something to curb your spending habits. For example, do you buy a sandwich five days a week at the local bodega next to your office? Do you grab a latte every day on your way to work? Indeed, these purchases add up – fast.

Here are six habits you can easily change in order to save more money.

1. Buying coffee every day

Did you know that buying coffee Monday through Friday – especially cappuccinos and other fancy coffee drinks – can run you $25 a week or more? That’s more than $100 a month and $1,300 a year!

Instead, try brewing coffee at home and taking it with you to work. If you don’t have a coffee maker at home, purchase one on sale. Heck, you can even splurge on a fancy Nespresso machine. I bought one on sale for $199 last Christmas and absolutely love it. Yes, it was expensive. But, I now make my own lattes at home every day instead of spending five dollars a day for these drinks (yes, that’s $35 a week!)

Think of it this way: Less than six weeks of coffee runs paid for that fancy machine, which included a starter pack of 24 coffee pods. Each pod now costs around 90 cents. This leaves $4.10 a day on the table – or almost $1,500 a year to put into a bank account.

2. Purchasing lunch at work

Buying lunch every day while you’re at work will run you a pretty penny. According to CNBC, if you eat lunch out, you’ll spend an average of $10 per lunch, or about $2,500 a year.

Yet, if you make your own lunch, you’ll spend only about five to six dollars per lunch, leaving you with an extra $20-$25 a week or $1,000-$1,300 that could go into your savings account.

3. Paying full price

We get it: Not everyone likes to shop for deals or make use of those reams of CVS coupons like I do. But, you don’t have to be an expert coupon clipper to make a few small money-saving moves.

For starters, you can use shopping apps that will give you coupons, provide you with cash back or find you the best deals. Some top apps in this category include Honey, Ebates, Ibotta, and RetailMeNot.

Looking for local restaurants, activities or even a new gym? Before plunking down full price, search for neighborhood businesses on Groupon. For example, I wanted to try barre classes but I also know that boutique barre studios are expensive. So, I purchased a 10-class pass for about $79 on Groupon (or less than eight bucks a class) to a popular barre franchise. I used those classes but also discovered that I would prefer cardio classes to barre. That was a good thing as the regular price for a 10-class pack is $230! All told, using Groupon meant I saved $151.

4. Not sticking to your budget

A budget helps you stop overspending and get ahead financially.

If you haven’t created a budget yet, now is the time to do so. And, if you have a budget and still overspend, now is the time to buckle down. Why? Because if you don’t stick to your budget, it’s difficult to reach your financial goals and save money.

For example, if your budget only allows for $100 a month of “fun money” and you spend $200, that extra money has got to come from somewhere. It may mean you’re not paying off as much of your credit card debt, or you’re not saving $100 a month. Instead, commit to staying within your budget and perhaps figuring out ways to earn a bit more money each month. For instance, you can start a side hustle like driving for Uber or Lyft, walking dogs, or even teaching Pretzel Kids yoga classes.

Pick something that you can do around your schedule with little to no start-up costs. Most importantly, remember that you’ve got to live within your means if you’re going to save money.

5. Overspending on credit cards

It’s easy to spend too much with credit cards, yet this can cause you to go into debt and lead to a never-ending cycle of racking up interest. This, in turn, makes it hard to save money as any extra money you have may be going toward paying down high credit card balances.

To avoid this, try taking a break from your credit cards. Instead, use your debit card or cash. This way you’ll be more likely to buy things you can afford. Better yet, if you’re a Chime member, you can save when you spend by using your Chime Visa Debit Card. Each time you make a purchase, Chime will round up the transaction to the nearest dollar and deposit this extra change into your Chime Savings Account.

6. Not automating

Automating is our No. 1 money-saving hack. Chime helps you do this by rounding up your debit purchases. But did you also know that you can automatically save money with every paycheck?

This hack helps you save as you won’t have to manually transfer money to your savings on your own. Better yet, you won’t blow that cash on the day you get paid on a purchase you’ll later regret. Chime members, for example, can automatically save 10% of each paycheck into their Savings Account. This way your hard-earned money hits your savings automatically. Out of sight, out of mind.

Are you ready to save more money?

Even if saving money is a struggle, there are ways you can start saving right now, simply by changing a few habits. For starters, try brewing coffee and making lunches at home, shopping for deals, and sticking to your budget. From there you can take a break from your credit cards and use your debit card or cash instead. Lastly, make savings automatic.

If you follow these six simple tips, you’ll be on your way to changing your financial habits and saving more money. Are you ready to give it a try?

 

The State of Savings in America

During the recent government shutdown, thousands of federal workers filed for unemployment. While the 35-day shutdown wasn’t the employees’ fault, it did reveal their precarious financial situations.

“It is concerning that government workers with stable employment can’t make ends meet when their next paycheck is late,” says Pauline Paquin, owner of Frugaling.

“Being financially resilient is important because charging your card or resorting to payday loans is very expensive.”

The thing is: These public servants are the rule, rather than the exception. Only 39% of Americans could cover a $1,000 emergency with money from their savings. And, 19% would have to finance an emergency on a credit card, while 17% would have to borrow the money and 13% would have to reduce spending on other things.

Here’s more on the dire state of savings in America — and how you can fight back with better financial habits and a bank that has your back.

The United States of Spending

Wondering how the U.S. is doing when it comes to saving? The numbers should tell you everything you need to know:

“We live in a society where immediate gratification is something most of us think we deserve,” explains Paquin.

“We work hard, we should treat ourselves. But we fail to see the long term effect of having everything we want right now.”

Those long-term effects can include a minor emergency causing you to lose your car, then your job, then your apartment. Or they can include never being able to retire, and forcing your children to support you in old age.

“Americans struggle to save because we aren’t taught to think about money as a tool to reach our goals,” says certified financial educational instructor Galit Tsadik.

“We think of it as only something to satisfy our immediate needs. There is also this misguided notion that you need to have a lot of money to start saving or that you need to put big chunks away in order for it to be worth it,” says Tsadik.

Three Ways to Save More Money

The truth is: You can start saving money any time, with any amount. Although it may be difficult at first, making saving a habit will pay off in the end.

Here are three expert tips to get you on the right track.

1. Change your mindset

“Keep your internal money dialogue positive, otherwise you’ve already lost,” says Tsadik.

She suggests replacing negative money thoughts like “I can’t save because I don’t make enough” with positive ones like “I’m putting this extra $5 toward my future.”

“As with anything in life, your attitude matters,” she adds.

Paquin says gamifying money can lead to mindset shifts, too.

“I like saving challenges, such as saving 1% of your income this month, then 2%, etc. — or saving all the $5 bills you come across,” she explains. “Money can be fun when you make it work for you.”

2. Track your spending

“You can’t change what you can’t see,” money saving expert Andrea Woroch points out.

“By writing down all your purchases and expenses, or inputting them into an app, you can visualize your spending habits and start the process of changing those that keep you from saving… i.e. impulse buys at Target or excessive entertainment spending.”

To do this, she suggests using an app like Mint, which tracks your purchases and alerts you when you’re overspending in a certain category. She also recommends tracking your debt repayment goals through Debt Free.

Speaking of goals, write them down.

“This gives you a sense of purpose. It allows you to set parameters, such as how much you want to save and by when, instead of trying to save with nothing to guide you. That’s when a lot of people get lost and give up,” says Woroch.

3. Start small — and automate

For Tsadik, the financial educator, successful saving is “all about paying yourself first.” She advises setting up a small weekly transfer — maybe just $10 — from your checking account to your savings account.

Wait a few weeks to see if you feel the pain. If you don’t (which I’m betting you won’t!), increase the amount. Wait a few weeks, then rinse and repeat.

“Before you know it, you will have a nice little savings cushion. And you will have gradually trained yourself to live on less and save more without feeling like you are depriving yourself of anything,” says Tsadik.

How Chime Can Help You Save

Ready to kick your savings journey into high gear? You need a bank you can trust — a bank like Chime.

Chime saves you money by, first and foremost, charging zero fees. Given that the average American pays $329 in bank fees each year, that’s a huge perk.

Beyond that, Chime also helps you save money automatically. As a Chime customer, you’ll have two accounts: one for spending and one for saving. Every time you make a purchase with your debit card, we round up the transaction to the nearest dollar — and transfer that amount from your spending to your savings account.

You can also set up automatic savings from your direct deposits, funneling up to 10% of every paycheck into your savings account. If your biweekly paycheck is $2,000, that means you’d save $5,200 in a single year. Imagine what you could use that for: an emergency cushion, a Roth IRA, or a seed fund for a house.

As Tsadik says: “Money should never be the end goal — it is what we use to get us to our end goal. When you save, you are building a financial foundation so that you can accomplish your dreams and live the life you desire!”

 

Where Do Our Taxes Go? A Breakdown With the Help of Cardi B

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As the saying goes, nothing in life is certain except for death and taxes. And every year when you file your tax returns, you may be scratching your head, thinking “Where the heck does the money go?”

Cardi B wants to know, too. Last year the superstar rapper, on an Instagram video that went viral, asked, “So you know the government is taking 40% of my taxes. And Uncle Sam, I want to know what you’re doing with my… tax money.”

This is a great question, and the answer: It’s complicated. To keep things simple, here are some figures from an article at The Hill: The federal government spent $33,054 per household and collected $26,198 in taxes. What’s the budget deficit? We’re talking $6,856 per household.

Based on this $33,054 household amount, here’s where the money went:

Social Security/Medicare: $12,401. This comes out of your paycheck, and the 15.3 percent for Social Security and Medicare is divided evenly between you and your employer. Note: If you’re self-employed, you’re responsible for the entire 15.3 percent.

Anti-Poverty Programs: $6,112. This comprises assistance programs to help the less fortunate, like aid for low-income families. Some of these programs include Medicaid, Temporary Assistance for Needy Families (TANF), food stamps, housing subsidies, child care subsidies, Supplemental Security Income (SSI) and low-income tax credits.

Defense: $5,046. This is everything from military paychecks, operations in the Middle East, and the R&D and acquisition of new technologies and equipment.

Interest on the National Debt: $2,434. Just like how you pay interest fees on credit cards, mortgages and car loans, our government pays interest on the national deficit.

Veteran’s Benefits: $1,390. This includes income and health benefits provided to our veterans. 

Federal Employee Retirement Benefits: $1,098. This goes toward retirement benefits for federal employees.

Justice Administration: $546.  This is earmarked toward law-enforcement grant programs, and paying for federal attorneys and prisons.

Education: $536. While the majority of education spending comes from a city and state level, nine percent of K-12 education spending comes from the federal government. Where does the money go exactly? The lion’s share goes to low-income school districts, college student financial aid, and special education.

Health Research and Regulation: $533. This goes toward dozens of grant programs for health providers, as well as the National Institute of Health (NIH), Centers for Disease Control (CDC), and the Food and Drug Administration (FDA).

Highways and Mass Transit: $487. This is funded primarily by the 18.4 cent per gallon tax you pay on gas.

International Affairs: $371. This includes contributions to the UN, operation of American embassies abroad, and economic and military assistance to other countries.

Disaster Relief: $338. This amount provided assistance and relief to hurricanes and natural disasters.

Miscellaneous: $1,761. If you’ve been crunching the numbers, you might have noticed that there’s $1,761 still left to be spent. This remainder is distributed to federal programs that aren’t listed, such as unemployment benefits, social services, natural resources, farm subsidies, and space exploration.

Tax Filing Tips

Now that you have a basic idea of where the money paid from your federal taxes goes, how can you best prepare to file your tax return in 2019? Take a look at some of these tips:

Get Started Early. With all the changes from the Tax Cuts and Jobs Act and this historic, epic government shutdown, filing a return for the 2019 tax year might be a tad more complicated than in previous years. So, it’s important to get a jump on tax prepping as soon as you can.

If you’re going the DIY route, and using software to file on your own, gather all the required documents to file your taxes – starting with your wage and income statements (i.e. W-2s and 1099s). Have your receipts or credit card statements handy in case you need to include deductions. You can even try tracking some of your spending using a money management app.

If you’re working with a tax pro, ask her what documents you’ll need to gather to get the process rolling.

You can file your return as soon as it’s ready and this way you’ll get a refund sooner. And just think: This might be a nice boost to your savings as the average tax refund is $2,895 (this can vary by state.)

Consider Whether You Need an Extension. Need more time to file? You can ask for an extension. It gives you six more months to file, and pushes the deadline from April 15th to October 15th. Remember: Receiving an extension means you have more time to file, but payment for any taxes owed are still due by April 15th.

The More You Know

So there you have it. Both you and Cardi B now have a clear idea as to where those government tax dollars are going. It’s now your turn to file your tax return!

 

The Ultimate Guide to Building Your Emergency Fund

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What’s worse than an unexpected car repair, some urgent dental work, or losing your job? Not having enough of a financial cushion to get through this rough patch.

This is why you need an emergency fund. And we get it: It’s super hard to save up for unknown future expenses. Why is that? It may be that you’re staving off the uncontrollable impulse to spend until your bank account balance hits zero. Or maybe you’re inclined to cave in to FOMO. Or perhaps you simply don’t earn enough to save a ton. Whatever your reason, starting and maintaining an e-fund is a tall order.

However, it’s entirely possible to start an emergency fund. In this ultimate guide, we’ll go over everything you need to know about creating an emergency fund, including how to start, when to contribute, and how to keep it going.

Create a Designated Account

First things first: Set up a different savings account for your emergency fund. This can be linked to your main bank account, or an entirely separate account designated for long-term savings only. It will most likely take you a mere 10 minutes to set this up, but will help you big-time in the long run.

FYI: I’ve found it most useful to create an emergency fund and then pretend it doesn’t exist. Conveniently forgetting the money is sitting in an account ups your odds of not touching it.

Drum Up “Use Rules” for Your Spends

It may be useful to think of your emergency fund as guarded by a prudent, stringent warden, who only permits you to access this special account for dire emergencies.

So what makes up this elitist squad of “VIP emergency scenarios?” Start by thinking about what truly constitutes an emergency. Is it governed by amount or cluster of circumstances? For instance, does an emergency has to be over $200 for it to be a true 911 situation? What kind of situations have cropped up in the past where cash could have saved the day?

In the past year I’ve had to tap into my e-fund to replace a laptop that died, purchase a new cell phone that suffered water damage, pay for moving expenses after being forced to relocate, and cover $1,500 in car repairs. Without a healthy rainy day fund, I’d be drowning.

Pay Yourself Forward

The best way to save is to pay yourself. Commit to setting aside a given amount for each paycheck. It doesn’t have to be a large amount. If you’re a Chime member, you can set up an automatic transfer each time you get paid. (FYI: You first need to establish direct deposit.) Even 10 percent adds up quickly over time. If your take-home pay is $1,000 for each bi-weekly paycheck, that’s $200 a month, or $2,400 a year. Not too shabby, right?

It’s All About Auto-Saving, Baby

This is a classic money tip, but I can’t stress enough how automating your goals can save your behind. You can read countless money blogs until the cows come to pasture. But IMHO, no matter how much knowledge you gather about financial wellness, auto-saving is the easiest thing you can do to help your emergency fund grow. The beauty of it? You only have to set it up once. Then you can blissfully forget about it. If you want to save $500 in three months’ time, auto-transfer $42 a week. Easy-peasy.

If you’re a Chime member, you can also round up transactions. Each round up amount can then be deposited right into your Savings Account.

Create Milestones

So, how much should you aim to save for your emergency fund? The more you can sock away, the better. But when you’ve got bills to pay and other money goals to juggle, it’s generally recommended to save three to six months worth of your living expenses.

No need to get overwhelmed. I say start small and create milestones along the way. A recent survey by EARN reveals that the average shortfall of cash in a given month is typically anywhere from $250 to $500. So start by committing to saving $250, then $500, $1,000, and so forth. Each time you hit one of these milestones, treat yourself. I’m all about feeling good about my money decisions, and rewarding myself with small, reasonable splurges (and I do mean small), when I hit every little goal.

Top It Off As Necessary

Once you saved enough for your emergency fund, give yourself a big pat on the back and do a happy dance. But you’ll also want to monitor it and make sure it stays in the flush. So let’s say you needed to take out $500 for some 911 dental work. Turn your auto-transfers back on, round up transactions, and set aside a portion from cash that may “fall into your lap,” such as work bonuses, tax refunds, and cash gifts.

Systems Override Habits

No doubt that being disciplined about your money is the key to financial health. But developing solid habits takes time — and a ton of effort. In fact, it typically takes 66 days to form a new habit. And just like I can easily cave in to a carb-loading binge, you may also lapse into old, unhealthy habits.

In my case, I rely on systems that I’ve set in place for my savings. For example, auto-saving and creating rules to bolster my emergency fund have come in handy. This way I don’t beat myself up if I choose to spend on other things. Instead, I set up auto-pay and pay myself first when I receive income . This helps me feel good about where my money is primarily going.

Ready to kick-start your emergency fund? You got this!

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