How to Save Money on Your Utility Bills

Do you cringe each month when you get your utility bills? When you see a super high bill, do you wonder what happened? We’ve all been there, and high bills for gas, electricity and cable can certainly put a dent in your bank account.

But all is not lost. If you want to keep your utility bills low, here are some habits you can change.

1. Use it or lose it

It’s easy to keep lights on after you’ve left a room or keep a heater cranked even if you’re not cold. In fact, keeping the water on might be second nature for you.

But, if you want to save money on your utilities, you may want to instead adopt a use it or lose it strategy. In other words, if you’re not using it, lose it. Turn it off.

Besides simply getting into the habit of turning everything off, it also helps to practice mindfulness when it comes to your consumption of energy and other resources. Ask yourself, “Am I using this right now? Does this need to be on?” If the answer is no, take some time to turn off certain appliances. This may help you feel better as well as save money on your electric, water and heating bills.

2. Buy energy efficient products

If you have to buy a new appliance like a fridge, washer or dryer, make sure you buy an energy efficient model. This will help cut down on your electricity costs and you may also be eligible for rebates. If you don’t need a new appliance, you can also save money simply by swapping out your incandescent light bulbs for energy-efficient options. According to Energy.gov, if you replace your five most used light fixtures with ENERGY STAR models, you can save up to $75 per year.

3. Keep your thermostat temperature low

Having just the right temperature in your home is important. But let’s face it, you’re probably at work and gone for at least eight hours a day. You certainly don’t need to be blasting the heat or air-conditioning when you’re not home.

To help you save money, consider keeping your thermostat set seven to 10 degrees lower than you normally do. While you may decide to manually change the temperature to suit your comfort level when you’re home, this will help you from wasting energy in the long-run. In fact, by doing this one simple thing, you can potentially save 10 percent of your heating and cooling costs each year, according to Energy.gov.

4. Unplug

If you’re not using a certain appliance, consider unplugging it to help reduce your electrical costs, according to Energy.gov. Just think about it: when you’re not using your TV, coffee maker, and phone charger, they are probably still plugged into the wall socket. Give your appliances a break and unplug. Your wallet will also thank you.

5. Plug up leaks

It’s common for windows and doors to have air leaks. Hot or cool air coming in or out through these holes and gaps can result in higher energy costs without you even realizing it. To fix this, try caulking your doors and windows to create seals and prevent air from getting in or out of your windows and doors. Check out this how-to-guide to get started. According to Energy.gov, this simple change can result in a savings of $83 to $166 per year.

6. Get advanced power strips

While it’s a good idea to unplug your electronics when they’re idle or not in use, sometimes you’re in a rush or you may forget. The solution? Advanced power strips (APS). These can help lower energy costs by reducing the electricity that is used when your devices are not being used.

7. Negotiate your bills

You might think that your utility bills are set in stone but this isn’t always the case.

Companies like Billcutterz or Trim can help you negotiate better rates on services like cable, wireless, and cell phone. In essence, Trim and Billcutterz can contact your providers for you and do all the dirty work. These cost-saving services are free and make money if they actually score you some savings or refer you to a partner. Of course, you can always pick up the phone and call your service providers yourself. You may be able to negotiate a lower price on your own.

Bottom line

Your utility bills can spike at any time and it can be frustrating. Luckily, you can refer to these 7 tips to effectively lower your utility bills. This, in turn, will help you free up money to save for your financial goals.

 

Tax Professional or DIY? Here’s How to Choose

The thought of filing taxes on your own can be daunting. At the same time, hiring a professional accountant comes at a price: around $273 of your potential refund.

But, with the availability of low-cost online options – like TurboTax and TaxAct – you may still be wondering if hiring a tax professional makes the most sense for you. To help decide which way to go when filing your taxes, here are a few questions you should ask yourself.

Have you experienced any life changes this year?

Major life changes can definitely be a reason to seek out the help of a professional tax preparer as these events have the potential to complicate the tax filing process. Here are a few lifestyle shifts that may prompt you to hire an accountant:

  • You had a baby. While it’s fairly easy to input the child tax credit on regular tax software, if you had a baby within the last year, you may want to seek out a professional to help you figure out possible medical deductions pertaining to your child’s birth. You may also be able to deduct childcare costs.
  • You moved. Whether you moved across the street or across the country, if your relocation involved the purchase or sale of a home, you may want to get in touch with a tax professional to make sure you’ll benefit from possible tax breaks.
  • You earned more money. If your income spiked significantly in the past year (especially if you made over $250,000), you may benefit from the help of a professional. Why? Taxes often get more complicated as your income rises, and a professional who understands the tax code can often help out.

Do I feel confident doing my own taxes?

You may be great with a budget and managing your money, but taxes are an entirely different beast. If you have a simple return with only your W-2 information to input, you may be ok filing on your own. But, if you started up a new business or have a side hustle in addition to your job, it may be worth the peace of mind to hire a professional.

Also, if you’re going through the free filing process and find that you’re second guessing yourself, it’s time to outsource your taxes. Keep in mind that working with a pro can help you find deductions you never knew existed — like the ability to deduct home office space used to run your side hustle or moving expenses incurred for a new job.

Am I ready to deal with the IRS?

If you are filing solo, even if you feel certain you did everything right, there is no guarantee that you won’t get audited by the IRS. The audit process can be time consuming, nerve-wracking, and costly. Also, if you’re the one preparing your taxes, you’re on the hook should an auditor come calling.

If a tax professional prepares your taxes, this person or firm will be required to defend your return to the IRS. Instead of you, your accountant will be the contact person required to answer questions posed by the IRS, even though you’ll ultimately be on the hook for any amount owed. For this reason alone, hiring an accountant may be worth it.

How much time do I have?

The average time it takes to complete a tax return, according to the Washington Post, is about 13 hours. If you’re already strapped for time, you may want to consider outsourcing this work. And, if you do want to prepare your taxes on your own, make sure you get organized early and set aside plenty of time to file before the April 17th deadline.

Make a decision and start planning

The earlier you plan for tax season, the better off you’ll be. Weigh the pros and cons now to help you decide whether to file alone or hire a professional. And, one final tip: make sure you sign up now for a Chime account. This way, you can get your tax refund deposited directly into your account. Better yet, you’ll get your refund in three weeks rather than waiting for two months.

 

8 Timeless Money Tips to Put to Work in 2018

If you’re hoping 2018 is the year you (finally!) get your money on point, it’s smart to look back on last year’s successes and failures, while focusing on new, doable goals. That means foregoing, say, a quest to find the next cryptocurrency or better time the stock market. Instead, try focusing on some tried and true financial rules. Call them cliche, if you want, but they’re certainly effective. Here are 8 timeless financial tips to follow in the new year.

1. Live below your means

If you’re struggling with bills or debt, chances are, there’s a disconnect between how much you earn and how much you spend. Drafting a new budget — we’ve got a good template here — can resolve that disconnect, but here’s a big trick if you’re trying to build wealth: Aim to live below your means, not simply within them. That might mean sacrificing a few luxuries or downgrading to, say, a different cable subscription, but it’s a surefire way to maintain long-term financial health.

2. A penny saved is a penny earned

In 2017, it was all about the side hustle. Everyone was driving for Uber, teaching kids English online with VIPKID or delivering groceries with Instacart. But more money can’t solve your financial problems if you don’t put those dollars to work. And if you’re working more and more, but still in debt or barely paying the bills, something’s gone awry. In lieu of looking for more income, think about spending less and saving more. We know, easier said than done — which brings us to our next adage.

3. Pay yourself first

It’s easy to work all month, gather your paychecks and pay the bills only to realize there’s nothing left to save. That’s why many financial experts suggest “paying yourself first,” a method of budgeting where saving is essentially your primary expense. We’ve got a full explainer on how paying yourself first works, but it’s pretty much exactly how it sounds. You budget a set amount of your paycheck that’ll go into a savings account each month and deposit those funds before paying for your other wants and needs. Viola! — savings problem solved.

4. Be fearful when others are greedy & greedy when others are fearful

This advice comes from investment oracle (of Omaha) Warren Buffet — and it’s particularly worth following in 2018. In a world where speculation can drive the price of Bitcoin up from a few hundred bucks to nearly $19,000 in a matter of months, it’s smart to know a bubble when you see one – and to strive to do things differently.

In Buffet’s world, you wouldn’t buy Bitcoin at the top, but at the bottom when most investors are spooked and ready to cut their losses. Of course, this advice doesn’t just apply to Bitcoin. It applies to real estate, the stock market and anything else we invest in, but you catch the drift.

5. Avoid credit card debt like the plague

With the average credit card carrying an annual percentage rate over 15%, 2018 is a great year to break the cycle. Consider taking advantage of 0% APR balance-transfer offers — they’re pretty popular this time of year — to eradicate high-interest credit card debt. Then curb any impulses to run balances back up again.

6. Buy less home than you can afford

In a world where housing prices seem to rise at an endless pace, it’s hard to buck trends and borrow less than you can afford. But it’s more important than ever if you want to keep your financial house in order. By spending less on housing than the bank will lend you, you’re freeing up cash to save and invest.

7. Don’t keep your eggs in one basket

When it comes to investing, your best bet is diversifying your portfolio as much as you can. Make sure you have an appropriate balance of stocks, bonds, real estate and other investments. And if you want to take the easy way out, invest in low-cost index funds that diversify on your behalf.

8. Be prepared

Your future depends on the financial decisions you make today, so think beyond your basic checking and savings account. Be sure to build a proper emergency fund, bank money for retirement in a 401(k) or IRA, think about a college savings plan for the kids and cover your family for a worst-case scenario with life insurance.


This article originally appeared on Policygenius.
Image: Aleksander Nakic

 

A Crib Sheet for Getting Your Money On Point in 2018

Welcome to January, the time of year where we promise to do better. Common, and yet nebulous goals, include diet, exercise, time with family and friends or living life to the fullest. Also on the docket: money. If financial health is your New Year’s resolution, it helps to set specific goals. Here’s a crib sheet for getting your money on point in 2018.

1. Kill high-interest debt 

Most credit cards carry over 15% annual percentage rates (APRs), so keep balances non-existent to avoid paying unnecessary interest. Already owe? Look into transferring those debts to a 0% APR balance transfer credit card.

2. Boost retirement savings 

Inquire with human resources to bump up the money going into your 401(k) by a few percentage points. If you got a raise, you can save more for retirement without noticing a difference in your take-home pay.

3. Get an emergency fund 

Start by saving $1,000 and keep saving until you have at least three to six months of expenses stashed away.

4. Save for a splurge 

If you want money to travel, upgrade your home or just do something fun, budget for it by setting up and rolling any extra dollars into a separate savings account. That way you avoid tapping your emergency fund.

5. Get life insurance

To ensure your family is protected financially in the event of your death. (Bonus: Term life insurance rates are currently at a 20-year low.Here’s why.) If your income, responsibilities or family size has increased, consider whether you need to up coverage.

6. Shop around for a better deal

 On well, everything. That includes your credit card APR (see above), auto insurance, homeowners insurance, cable television and internet service.

7. Question your money choices

Look at your spending, fixed expenses and investment strategy to see if you’re set up to live your best life. If not, be open to change. (Listen to Confucius, perhaps?)

8. Calculate your net worth 

That’s the sum of your investments and assets minus your liabilities — and probably the best gauge of your financial health at any given time.

9. Check your credit report 

Your credit is also incredibly important to your financial health since a good score qualifies for better rates on loans, insurance and more. See where you stand by getting your free annual credit reports from the three credit reporting agencies – Experian, Equifax, and TransUnion – at AnnualCreditReport.com.

10. Brush up a bad credit score

By fixing any errors you find on your credit report, paying down big debts and limiting new credit applications.

11. Look into refinancing 

With interest rates hovering near record lows, now’s a good time to refinance a house, car or even student loans.

12. Track your spending for a month 

If you spent more than you should in 2017. Write down every purchase you make and keep a close eye on your credit card bills. You might be spending more than you want on food, entertainment or miscellaneous expenses without even knowing.

13. Create a monthly budget

Nobody likes the dirty “b” word, but that doesn’t mean budgets aren’t helpful. In reality, budgeting is one of the best ways to afford everything you want in life. The new year is a great time to create a one. Plus, we’ve got a simple spreadsheet that’ll help you set up a budget in five minutes or less.

14. Automate your savings 

Not saving enough? Set up automatic bank drafts to a savings account so you have no choice but to hit your savings goals in the new year.


This article originally appeared on Policygenius.
Image: wundervisuals

 

Easy Money: How to File Taxes in 2018

Welcome to Easy Money, where we make super-complicated financial stuff simple(r) to help you do it better.

Whoa, boy. Republicans have everyone confused about taxes. That’s what happens when you pass a massive system overhaul less than a month before W-2 forms go out. (Thanks, Congress!) Here’s the thing, though: The tax bill won’t directly affect the taxes you file this year. Most provisions go into effect Jan. 1, 2018, but they’re not retroactive — and your 2017 taxes are due by April.

So, as we talk tackling taxes this year, a lot of information will look old hat. But don’t worry: We’ll note some of the big changes on the way — and how they can influence your 2017 tax return.

Let’s dive in.

First, get your ish together

To file, you need any applicable:

  • W-2s,
  • 1099s, which report other income, like interest and dividends or self-employment wages
  • 1098s, which report stuff you can deduct, like mortgage interest or tuition expenses
  • Documentation for other deductions you want to take, like receipts for charitable donations
  • Your 2016 tax return
  • Bank account and routing number, if you want the IRS to direct-deposit your refund
  • Your adjusted gross income (AGI), which is basically your gross income (including any interest you’re including on 1099s), minus “above the line” deductions, most notably, retirement plan contributions, alimony, medical expenses and unreimbursed business expenses. Sounds complicated, but your 1040 walks you through calculating AGI.

Next, bookmark these dates

  1. Expect last year’s W-2s by Jan. 31, 2018.
  2. Your 2017 taxes are due by April 17, 2018. (Not a typo. You get two extra days this year because April 15 is a Sunday and April 16 is Washington D.C. Emancipation Day.)
  3. If you need more time, you must file for an extension by April 17, 2018.
  4. If you get an extension, your tax returns are due by Oct. 15, 2018. But don’t get it twisted: That extension only applies to your paperwork. If you owe the Internal Revenue Service money, you must pay by April 17, 2018.

Figure out your filing status

There are five options, pretty much determined by your marital status on the last day of the year.

  • Single Filing Status, meaning you’re not married, divorced or legally separated
  • Married Filing Jointly, meaning you’re married and filing a return with your spouse
  • Married Filing Separately, meaning you’re married, but not filing a return with your spouse
  • Head of Household, meaning you’re not married, but have paid more than half the cost of maintaining a home for yourself and a qualifying dependent
  • Qualifying Widow/Widower, meaning your spouse died within the last two years, you haven’t remarried and you have a dependent child

Your filing status is mostly straightforward. If you’re single, file single. If you’re a head of household, file head of household. If you’re a recent-ish widow(er) with a dependent, file qualifying widow(er). If you’re married, you’ve got a choice to make. Most couples score the bigger tax break by filing jointly, but there are reasons to file separately. Here’s a high-level overview of filing together vs. filing solo.

Why married couples file jointly

  1. For a higher standard deduction (more on this in a few)
  2. To reduce what you owe, since higher tax brackets kick in sooner when you file separately
  3. To qualify for certain deductions you can get more easily when filing jointly, like the Child & Dependent Care tax credit

Why married couples file separately

  1. To separate your tax liabilities (say, you’re worried your spouse is evading Uncle Sam)
  2. To score a significant itemized deduction one spouse can’t take were the couple to combine incomes (some deductions are limited by your adjusted gross income)
  3. One spouse has debts subject to refund seizure or an income-based payment (like student loans)

We can’t tell you what to do. You — or your tax preparer — need to look at your finances and crunch the numbers. Having said that, you may want to crunch the numbers, i.e., prepare your tax returns both ways to see if it’s better for you to file jointly or separately. Yes, that’s extra work. It’s also the best way to know how to come out ahead.

Know the tax brackets

OK, remember, we’re talking about filing taxes in 2018 for 2017, so you’re subject to the tax brackets in place before the Republican-led tax reform. Here they are.

tax-brackets-2017

Now, here’s the thing about tax brackets: They’re not all that straightforward. (Who’d a thunk it, right?) You don’t make, say, $80K and get taxed at 25% for all those dollars. The system’s progressive. So, assuming you’re single, the first $9,325 you make gets taxed at 10%, the next $9,326 to $37,950 gets taxed at 15% and the remaining amount (given the next tax bracket, for 2017 at least, is $37,951 to $91,900) gets taxed at 25%.

This is confusing, but also important so (a) you don’t try to needlessly claw your way into a lower tax bracket and (b) you get an accurate estimate of your tax bill before you must pay it. Part B is all-the-more important as we head into 2018, since the tax brackets are changing. (The progressive system is not.) Effective Jan. 1, 2018, they become:

2018-brackets

Decide if you’re taking the standard deduction

Deductions lower your taxable income. The standard deduction is the most basic way to approach this. In lieu of listing every qualified expense that ate into your net worth during the year, you claim a fixed amount associated with your filing status. For tax year 2017, the standard deduction is:

  • $6,350 for single filers
  • $6,350 for married filing separately
  • $12,700 for married filing jointly
  • $9,350 for heads of households

Flash forward: The GOP tax bill practically doubles the standard deduction for all filers, so for tax year 2018, it’s $12,000 for singles and married people filing separately, $24,000 for married couples filing jointly and $18,000 for heads of household.

If you don’t take the standard deduction, you’re itemizing. People itemize when (a) their deductions exceed the standard deduction and/or (b) they can’t take the standard deduction, because there are exemptions. For example, someone who’s married filing separately is ineligible if their spouse itemizes deductions. If you’re itemizing, you need to …

Know your deductions & exemptions

Let’s start with deductions. There are a bunch of them, but, for the sake of simplicity — which, again, is what we’re going for — here are the most common ones. By the way, a lot of these deductions, though totally fair game this year, are changing in tax year 2018. We’ll flag some of the bigger changes as we go.

Mortgage interest deduction: You can deduct the interest paid on up to $1 million in mortgage debt on your primary home and, sometimes, a second one. Flash forward: The GOP tax bill lowers the cap to $750,000 of mortgage debt, though it’ll stay at $1 million for mortgages made before Dec. 15, 2017.

State & local tax (SALT) deduction: Itemizers can deduct state income, sales and property taxes. Flash forward: The GOP tax bills caps the SALT deduction at $10,000, starting next year — which is why people were rushing to prepay 2018 property taxes in December.

Student loan interest deduction: You can deduct up to $2,500 of interest paid on student loans.

Charitable donations: Itemizers can deduct donations made to eligible organizations. The deduction can’t exceed 50% of your adjusted gross income (or 30%, in some instances). Plus, you’ll need the receipts.

Medical expenses: You can deduct out-of-pocket medical expenses exceeding 7.5% of your adjusted gross income. That’s a result of the GOP tax bill, which lowers the threshold from 10% for tax years 2017 and 2018. It goes back up for most Americans in 2019.

Health savings account contributions: Money put into an HSA, which helps with out-of-pocket medical expenses, is tax-exempt. In 2017, you can deposit up to $3,400 if you’re a single filer or $6,750 for families.

Individual retirement contributions: You can deduct Roth and traditional individual retirement account contributions, depending on your income, filing status and whether you have a retirement plan at work. Contributions are limited, too: In 2017, you can put up to $5,500 or, if you’re age 50 or older, $6,500, into an IRA account. You can see if qualify for a full or partial deduction here on the IRS website.

Genius tip: You can make retroactive HSA and IRA contributions up until April 17, 2018, so there’s still time to score those tax breaks.

Moving expenses: You can deduct some moving expenses if you relocated because of a job change. Flash forward: This deduction is donezo next year, thanks to the GOP tax bill, which suspends it through 2025.

Exemptions also reduce your taxable income, but, for individuals filing taxes, there are really only two of them.

  1. You can claim a personal exemption, so long as no one else is claiming you as a dependent. The personal exemption in 2017 is $4,050, but it starts to get lower once your adjusted gross income hits $261,500 ($313,800 for married couples filing jointly) and is null and void if your AGI is $384,000 or higher ($436,300 for married couples filing jointly.)
  2. You can also claim a dependent exemption, if, you know, you have dependents. That’s usually means children, but there are other scenarios where a relative qualifies. In 2017, you can deduct $4,050 for each dependent.

Flash forward: The GOP tax plan does away with the personal exemption, starting next year through 2025. The impact this could have on your taxes will vary, because, remember, the standard deduction nearly doubles next year. Still, itemizers and families, especially, should discuss with their tax preparer whether it’s worth adjusting their withholding for 2018.

Don’t forget credits

Credits, unlike deductions, get subtracted from your actual tax bill, not your taxable income. Tax credits come in two flavors: refundable and non-refundable. Refundable credits can reduce your liability beyond $0. Non-refundable credits don’t. There are a bunch of credits, too, but here are the most common.

Earned income tax credit: A refundable break for low-to-moderate income families; the amount varies based on your number of children and income. There’s a bunch of boxes you need to check off to qualify for the EITC, but, as a benchmark, if your earned income and AGI exceeds $53,930, you’re definitely not eligible.

Child tax credit: A non-refundable credit of up to $1,000 per qualifying child; eligibility is determined by age, relationship, family income and more.

Child & dependent care credit: A non-refundable credit for paying someone to look after a dependent while you work; the amount is between 20% and 35% of your allowable expenses ($3,000 for one dependent; $6,000 for two or more), depending on your AGI.

Savers credit: A non-refundable tax credit that offsets the first $2,000 low-to-moderate income workers save for retirement. Eligibility varies by filing status and AGI.

American opportunity credit: A partially refundable tax break for students paying for college. The maximum annual credit per student is $2,500.

Lifetime learning credit: Another tax break for students, this non-refundable credit is worth up to $2,000, depending on income and filing status.

Mind your penalties

This is the stuff that’s gonna up your tax bill. Penalties aren’t abundant, per se, and you’re probably familiar with most of them, but here’s an overview of what can jack up your tax bill.

Early withdrawals: In most cases, if you withdrew money from a retirement account during the tax year and you’re not 59-and-a-half, you must pay an additional 10% early withdrawal tax. There are some exemptions, though. For instance, first-time homebuyers can take up to $10,000 out of an IRA for their house, sans penalty.

Missed minimum distributions: Conversely, once you hit age 70-and-a-half, you have to start withdrawing from retirement accounts, including 401(k)s, traditional IRAs, SEP IRAs and SIMPLE IRAs. If you didn’t make your minimum distribution by Dec. 21, 2017 (or April 1, 2018 if you turned 70-and-a-half this tax year), you’ll pay a 50% excise tax. Minimum distributions vary by age and marital status.

Failure to file/failure you to pay: The exact charge depends on where you went wrong (failure to file costs more), how long you go AWOL, how much you owe and whether you enter a payment plan. There are also penalties for bouncing checks, underpaying or misreporting what you owe.

Filing late: If you miss the April 17 deadline — and didn’t get an extension — you face a penalty of 5% of the unpaid taxes each month the return remains late. That penalty accrues the day after your due date, but won’t exceed 25% of the unpaid taxes.

Not having health insurance: Yes, the GOP tax bill repealed Obamacare’s individual mandate, but it was still in effect for tax year 2017, so, if you went without a health care plan last year, you face a penalty of either 2.5% of your taxable income or $695, whichever is greater. In fact, you’ll face a penalty in tax year 2018, too. The repeal doesn’t take effect until 2019.

Get ‘er done

OK, now you (more or less) know what’s up, it’s time to file. And, again, you have a choice to make: How should you do your taxes? The best option varies, depending on how much time you have, how complex your returns are and how tax-savvy you are. Still, technically, everyone has three options.

  1. Do-it-yourself: Yeah, going old-school probably isn’t your best bet if your taxes have a lot going on. However, if you’re filing via a 1040EZ — meaning you make under $100,000, are filing single or married jointly and don’t have any dependents — or even fairly straightforward 1040, you could give it a go. It’ll certainly save you some dough: Filing via good old paper and pen pretty much only requires paying for postage. (You can download all the forms you need from the IRS website.) But, if you make under $66,000 a year, you can actually e-file for free. There are volunteer groups, too, that work with the IRS to provide free tax assistance to qualifying individuals.
  2. Use tax software: If your taxes are all Baby Bear (you know, not too hard, but not too easy), basic tax software is probably the way to go. It’ll take a little time, but you’ll pay less for the goods than you would to a tax preparer.
  3. Hire a professional: If you’ve got a complicated estate, the expertise of a reputable, licensed tax preparer is probably worth their fees. Ditto for if you have zero time to do your taxes. But notice how we specify using a reputable tax preparer. That’s because there are, unfortunately, plenty of scammers out there. To avoid getting got, make sure a prospective preparer has a Preparer Tax Identification Number (they’re required to by law). And check with the Better Business Bureau or online review sites to see how past clients rate them.

Recommended reading

To help you build your expertise, here are some useful tax resources from around the web.

For more life & money tips, visit our Moneygenius magazine.


This article originally appeared on Policygenius.
Image: Yuri_Arcurs

 

5 Ways to Make Money Online in 2018

It’s a new year which means it’s time to set new goals for ourselves. If you’re like most people your new years goals are either to get healthy or make more money. If you said make more money, then you’ve come to the right article. Want somewhere to start? I suggest trying to make money online. If you can run a business from your couch what’s the excuse right?

Here are five ways to make money online in 2018.

Launch an Online Store

If you’re willing to really put in the time and effort launching an online store can be immensely profitable. Now before you say no because you don’t know how to code listen to this. Thanks to ecommerce platforms like Shopify and WooCommerce you can easily build beautiful online stores with little to no technical experience.

You can create and run an entire online business using one of these platforms. They offer plenty of integrations like marketing, payment processing, search engine optimization, and more!

Ghostwriting or Guest Posting

Every single blog on the internet could use more content. If you’re a good writer you can make serious money ghostwriting or guest posting for various companies. If you’re an expert in a specific field like FinTech or cryptocurrencies you can make well over six figures a year writing full-time.

You can research companies in your field and try to find the person in charge of content. Reach out to them either with a finished post or a few sample titles. Once you get approved by a few companies start typing away and watch the cash roll in!

Start Your Own Blog

If you want to take your writing to the next level you may want to consider starting your own blog. Again this works best if you’re an expert in a specific area or industry. For example if you’re a fitness expert you can start a health and fitness blog. Make sure your content is creative and try to offer as much guidance as possible.

Health and fitness blogs work best if your readers use your advice to achieve their fitness goals. If you get big enough you can turn your reader’s success stories into case studies and attract an even larger audience. Once your blog is popular enough you can offer sponsored postings or product placement by health and fitness related products. This example for health and fitness can be used for virtually any industry.

Trade Cryptocurrencies

This is a controversial yet highly lucrative one. Cryptocurrencies seem to be hot right now and it’s for a good reason. So called “unsophisticated” investors are making millions trading digital currencies. The most popular coins now are Bitcoin, Ethereum, and Litecoin however there are new coins coming out every day.

If you want to make money trading cryptocurrency you need to get educated and use the proper tools. I suggest starting off with a Coinbase account and do your best to understand cryptocurrency and blockchain technology as a whole.

Offer Services on Fiverr or Upwork

If you consider yourself a professional you can offer your services on Fiverr or Upwork. These platforms connect freelancers with contractors for virtually any type of job. Services range from software development all the way to accounting.

The only issue with these platforms is that contractors typically only work with freelancers who have a developed work history. That said, it can be difficult to get your first few jobs. However if you’re good at what you do then you’ll be a 5-star freelancer in no time.

Final Thoughts

If you want to make money online there are plenty of options for you to choose from. For starters, I suggest considering the five above as they can all become highly lucrative side (or full) time gigs.

 

8 Things You Need to Do in the New Year to Set Yourself Up for Financial Success

The holidays are behind us and it’s time to look ahead to the new year. You may have already given some thought to your New Year’s resolutions. Perhaps you want to lose weight or travel more. Or, maybe you want to reach new financial goals.

Achieving financial success doesn’t have to be difficult. But, it does take a solid plan and dedication. Is 2018 going to be the year you get ahead and perhaps save more money? If so, read on and make sure you follow these 8 tips to get started down the right path.

Become a goal setter

Having defined goals can make a difference in all aspects of your life. It’s nearly impossible to attain anything when you don’t have a clear idea about what your end goal is. So, make sure you define your goals and break them into bite-sized pieces. For example, perhaps you want to increase your contribution to your retirement account or pay off your credit card debt. While becoming financially successful is the big picture goal, it may take many smaller steps to get there.

Change the way you think about money

If you want to make a real change with your finances, it starts with the way you approach money. This often means dropping the excuses and making a change in your life. According to an American Psychological Association study, 71 percent of adults report money as a major stress in their lives. This doesn’t need to be the case.

Instead, prioritize what is most important to you. Do you need a brand new iPhone or will an older model work? Do you need to buy a new pair of shoes or will the shoes you have last a little longer? The less you spend each month, the more opportunity you have to save.

Budget, budget, budget

Everything starts with a budget. It’s crucial to understand how much money is coming in each month and how much is being spent. Without this information, you’ll be in the dark when it comes to your financial state. But, once you have your budget set, you’ll have a better idea how much you can save each month.

To get going, pick a budgeting tool to help make the process easier. Now, get to work. Before you know it, budgeting will be a normal part of your routine each month.

Build an emergency fund

One of the best things you can do to protect your finances is to build an emergency fund.  Ideally, you should have anywhere from three to six months worth of expenses available in your rainy day fund. This will provide you with a cushion to fall back on in case of a job loss or another serious strain on your finances.

For a starting goal, aim to save $1,000 as quickly as possible. While you should work within your budget, the faster you save, the faster you’ll reach a sense of financial security. Once you’ve saved the first $1,000, you can try saving even more.

Chime can help you speed up the saving process with its automatic savings feature. Each transaction you make with your Chime card is rounded up to the nearest dollar. The rounded up amount is then transferred to your savings account. In addition, you can also elect to have 10 percent of every paycheck automatically moved into your savings account.

Set up automatic transfers to your retirement accounts

If you have a workplace 401(k), there’s a good chance your contributions are already deducted automatically from your paycheck. However, if your primary retirement account is an IRA or another type of retirement plan, you’re in charge of your own contributions. When income is tight, this is one of the easiest items to cut from your budget. Instead, set up automatic contributions. This way you are always paying yourself first.

Make sure your bills are set to autopay

One of the worst ways to get stuck paying late fees is to forget about paying a bill. Setting up autopay on things like your mortgage, utility bills, insurance, cable, and Internet will help eliminate this concern. Just make sure you check in periodically to ensure that the correct amounts are being deducted.

Work to reduce your debt

Americans have more credit card debt than ever before. In June 2017 this debt amounted to more than $1.021 trillion. If you are contributing to this staggering figure, then you should make paying off your debt a priority. Once your debt is gone, you can use the extra money in your budget to start creating wealth.

Plan a financial date night

Don’t attack your financial goals alone. Involve your significant other or a friend. Talk about your goals and what you plan to achieve. Then, make sure you celebrate the win because you earned it.

Final words: you can achieve financial success

As you can see with the steps above, achieving financial success doesn’t have to be difficult. You just need to be willing to work hard, set goals, and make changes in your life. Are you ready to make 2018 the year you hit your financial goals?

 

Big-Ticket Items: What to Think About Before Purchasing Them

Big-ticket items feel like a right of passage when you achieve a certain level of success or now make X amount of dollars. Many people spend a large chunk of their income on big-ticket items such as housing and vehicles without deciding how much money to put away first. It can be hard to change your financial landscape when you’re tied to paying a loan or a lease.

Here are some ideas to help you prioritize and improve your financial decision-making when it comes to expensive purchases.

1. Get real with the numbers

No matter if you are buying something for your personal use or business, figure out what it actually costs. Determining what Ramit Sethi calls T.C.O. (the true cost of ownership) will reveal how much you will spend over time when purchasing something. He shows what a phone really costs you as an example and highlights what percentage of your income it will eat up. He notes that a $30,000 salary quickly turns into $24,905 after purchasing a #99 iPhone.

2. Get control back

Sometimes we lose touch with what we can control. Ryan Cravitz, a Financial Advisor in OrangeCounty recently told me about a discussion he had with a man in his 30’s. The man explained how he couldn’t afford to start saving yet.

After Cravitz noticed that the man was holding a Mercedes Benz keychain, he asked him when he stole that car in jest (knowing he wasn’t a criminal). After the gentleman explained how he purchased the vehicle, Cravitz says, “I jokingly asked him if they ran out of Hondas or Toyotas for sale that day. He got the point.”

Cravitz goes on to say that too many people are sacrificing their financial future to compete with the Joneses. While Mercedes are nice cars, if you can’t afford it, it’s not the wisest choice for you.

Move forwarding, Cravitz recommends younger people develop good money habits starting with a monthly budget and allocating a minimum of 10% of their income toward a retirement fund. That’s what paying yourself first looks like in action.

3. Have a game plan

You might have to restructure your whole financial picture and reprioritize. Jessica Bishop, Founder of The Budget Savvy Bride, knows how to set a budget and work within its limits. She had a $20,000 wedding for $10,000. Deciding what you’re not willing to skimp on and then finding creative solutions for things that aren’t as important keeps spending in check.

For example, you can buy flowers at a wholesale price or order flowers that tend to cost less. This concept can apply to other areas of spending whether for business or personal. Perhaps, you get a refurbished piece of equipment over buying something brand new. Or maybe you purchase IKEA furniture to save on your home office or purchase items from a thrift shop so you can spend money on more important areas.

Purchasing any high-ticket item whether it’s a big event like a wedding or an ongoing car payment shouldn’t interfere with saving long term.

“Saving has to be your #1 money priority. If you just try to save whatever is leftover from your spending at the end of the month, you won’t ever get anywhere,” says Bishop. She goes on to say that intentional saving has to be a top priority!

The Bottom Line

Before making a big purchase, figure out how much money you want to save first, then the remainder of your budget and understanding the actual cost will serve as a compass to guide your future decisions when making purchases.

 

This Is Your Financial Wellness Action Plan for 2018

If you’re like most of us, you probably have at least one New Year’s resolution to change your life for the better. Yet, more often than not, you may end up falling off the resolution bandwagon by the end of January.

Indeed, any type of change can be hard. However, with a little bit of foresight and planning, you can make positive changes to your finances. Read on to learn how you can create – and stick to – a financial wellness action plan for 2018.

First Things First

In order to create a comprehensive financial wellness action plan, you may want to break things down into smaller chunks. For example, try consolidating into these four categories:

  • Budget
  • Savings
  • Debts
  • Retirement Accounts

These four buckets are key to creating long-term financial wealth. By analyzing each one separately, this will help you create a more comprehensive overall financial wellness action plan. So, let’s break down each one of these categories.

Budget

Taking a look at your finances can be overwhelming, especially if you don’t have a budget in place. So, if you don’t have a budget, now’s a good time to create one.

When you do have a budget, sit down and go through your line items with a fine tooth comb. While you’re at it, ask yourself the following questions:

  • Where did you spend the bulk of your income this year?
  • Where did you go over budget?
  • Why did you go over budget in that category? For example, did you consistently overspend or did unexpected things pop up?

After taking a good hard look at your budget, it’s time to make appropriate adjustments as you move into the new year. For instance, where can you possibly cut your spending? Where are you unwilling to make changes to your budget? For example, perhaps you won’t cut out a monthly dinner date because this is important to you and your S.O. For all intents and purposes, these must-have expenditures become your “currency.” To this end, make sure that you factor your “currency” into your budget. Why? Because if you deprive yourself, this may affect your overall mental health and deter you from sticking to your plan.

On the flipside, it’s still important to find areas where you can cut your costs. As a starting point, try to cut your spending by 10%. This amount is usually attainable and won’t severely affect your lifestyle. If you’re able to cut your budget by more than 10%, this is even better for your long-term financial wealth.

Regardless of how much you decide to chop out of your budget, try not to bite off more than you can chew. The goal here is to stick with your plan and smaller changes are easier to handle than major shifts.

Savings

After you’ve created a workable budget for the New Year, it’s time to dig into your savings.

For starters, make sure you have an emergency fund and are working toward saving 3-6 months worth of living expenses.

Besides an emergency fund – set up to pay for unexpected expenses – you should also try automating to boost your regular savings. A Chime account, for example, helps you save more money by automatically rounding up purchases made on your Chime debit card. These round up amounts are deposited right into your Savings account. Before you know it, you’ll have boosted your savings without even thinking about it.

Debts

This category is no fun for any of us. Maybe that’s because approximately 35% of the American population is living with delinquent debt in collections, according to Experian. And, according to a recent report released by the Federal Reserve in November 2017, consumer credit increased at an annual rate of 6.75%. This means that we are just getting further and further into debt.

If you happen to be one of the millions of Americans in debt, then you certainly should make a plan to pay down your debt.

Start by getting hold of a free credit report to see much you owe and to which creditors. From there, I suggest using a basic spreadsheet to track your debts and figure out your plan of attack. There are many ways to approach paying off your debt, including the debt snowball and debt avalanche methods.

Retirement Accounts

Here is where the fun begins! To figure out how much you’ll need in retirement, try this calculator. Although this is a great jumping off point, don’t get discouraged if you have a long way to go to reach your future goals. You’ve got to start somewhere.

In fact, a good place to jump-start your retirement fund is at your job. If your employer offers a 401(k) plan, it’s recommended that you contribute as much as possible. The max contribution for 2017 is $18,000 and that rises to $18,500 in 2018. Better yet, your employer may offer a match and this means free money for you!

Let’s say you’re offered a 100% match up to 3% of your contributions to the company plan. This means that you get an extra 3% added to your retirement account. This free money, along with the magic of compounding interest, will help you reach your retirement goals faster. This is what we call more bang for your buck!

Implement Your Financial Wellness Action Plan

Now that you have taken apart every aspect of your finances, it’s time to implement the changes. I prefer a weekly check-in, although you can determine how often you need to examine your financial plan. The most important thing is to find a system that works best for you.

Here’s to a healthier and wealthier financial New Year!

 

How Americans Spend Their Money & What It Means For Your Budget

Your budget should answer one big question: How much should I spend on stuff? But it can be hard to know the right answer.

If you’ve thought at all about making a budget, you’ve probably encountered a pie chart. These charts tell you exactly what percentage of your money should go toward housing or food or transportation. Lots of personal finance writers use these pie charts. Even Oprah has one.

I depend, (probably to an unhealthy extent) on data and consensus, rather than instinct, to make a lot of decisions. So in the past, when I’ve made budgets for myself, I usually throw up my hands and ask: What do normal people spend? (Not that I’m not normal.)

I recently decided to find out. Lucky for me, there is publicly available data showing exactly what people spend on average, in the form of the Bureau of Labor Statistics Consumer Expenditure Survey. This survey collects data on the income and expenditures of Americans.

I took the BLS data for 2016 and made a pie chart of my own, showing how the average American spends their money.

Take that Oprah! Now I know how the average person spends. But this presented another dilemma: The average person can make some pretty terrible decisions. I often completely disagree with the average person, and they with me. So I called an expert to see how my “average American” budget could be improved.

A deceptively powerful concept

Pie charts like this can be a useful benchmark, especially for people who have never made a budget before, said Todd Curtis, chief customer officer for You Need a Budget, a budgeting software company. They can provide an idea of whether your spending is in the ballpark of where it should be and they illustrate that you have a finite pool of money. People often get in trouble when they try to repeatedly spend the same dollar.

“That’s a really simple concept but it’s deceptively powerful,” he said.

One of the immediate changes the average American can make is to spend less on food away from home. Eating out is usually more expensive than making food at home. Entertainment may also be an easy place to cut back. Apparel, too.

Aside from Social Security and, for some people, health care, most people can adjust their spending in any of the BLS categories, Curtis said. That includes housing. If you’re renting, you may be able to get a roommate or a place that’s smaller or farther from a major city.

Homeowners can save as well. Many people think when they buy a house they’re stuck with it, but if the costs are really too much to bear, homeowners should explore financing options or consider selling. People often assume they need the things they have. Curtis and his family recently went from two cars to one and he noticed all the times they thought they needed two cars, they really didn’t.

“Once we didn’t have two cars, we didn’t need two cars,” he said.

But the biggest flaw in the average American’s budget is that they’re not prepared for an emergency. The only thing in the chart that relates to savings is pensions and Social Security, money people can’t touch until they retire. The average American earned $74,664 before taxes in 2016 and spent $57,311, according to the BLS. That’s not much margin after taxes, especially in more expensive states.

This isn’t the only federal data to show this. A recent Federal Reserve survey found nearly half of Americans wouldn’t be able to afford a $400 emergency.

Bye, bye, American pie (chart)

So it may not be such a great idea to emulate the average American pie chart. But the same is true for Oprah’s pie chart. Or anyone else’s.

Each person’s situation and priorities is different, so each person’s budget will be different. Take food away from home vs. at home. It’s easy to say to go to the grocery store more if you live in the suburbs, but if you live in New York, where groceries are more expensive, eating out may not be such a bad value. Or if you’re set on only eating organic food, your food budget is going to be bigger than most.

Budgeting is about accepting that your resources are scarce, and prioritizing those resources, Curtis said.

“People are afraid of budgeting sometimes because they feel like they’re not going to have enough,” he said.

But budgeting is about having enough for the important things, like having enough to eat, making rent and, unlike the average American, saving for future goals and emergencies. It’s your priorities, not the percentages on a pie chart, that should guide your budget. It’s deciding, if you want to have a house one day, to save for a down payment instead of splurging on clothes or gadgets.

Your real expenses won’t fit neatly into percentages. If you bought a car, your loan payments and car insurance premiums are what they are, no matter what percentage of your income is supposed to go toward transportation. Those obligatory payments are your biggest priorities and your budget should reflect that. With what’s left over, you can make a place in your budget for smaller priorities — things that are wants rather than needs — like vacations or drinks with friends, Curtis said.

So how much should you spend on stuff? There’s no one right answer. Averages and pie charts can be helpful, but your budget should be based on who you are and what you value.


This article originally appeared on PolicyGenius.
Image: franckreporter