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, 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

4. Unplug

If you’re not using a certain appliance, consider unplugging it to help reduce your electrical costs, according to 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, 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.


How to Budget for Spontaneity

Budgeting is one of the best ways to save money, and it’s so simple — create categories, set aside a certain amount of money for each category, and then only spend what has been designated for that account.

But what do you do when your best friend asks if you’re free for dinner, and you open your budgeting app and realize that your “dining” budget only has a few dollars left in it? You don’t want to cancel plans with your best friend, so you make the decision to transfer money for dinner from your savings account. Just like that, you’ve blown your budget.

There will always be last minute dinners with friends, drinks with colleagues, or unexpected celebrations. Unfortunately, spontaneity can often derail your budget. Luckily, there’s a simple fix: preparing for spontaneity.

It might sound counterintuitive, but here’s how it works.

Cash-back websites

Did you know you can earn money from shopping online? It’s true. Websites like Ebates and Topcashback will give you cash back on your online purchases when you shop from their website.

Here’s how it works. The websites earn money through affiliate links from the stores that customers use to shop. To encourage customers to use the link, the cash-back websites share a percentage of their profits with the customer (that’s you!).

The best way to earn cash back is to pick one cash-back website, install the cash-back button (a reminder to use the website that appears at check-out), and always use it when you shop.

Cash-back credit card rewards

If you’ve never used cash-back credit cards, you’re missing out. The premise is simple: use your credit card to earn points that you can redeem for cash or other perks.

Most credit card rewards range from 1% to 2% of your purchase, and some cards offer rotating categories. But there is a catch. In order to take advantage of the rewards, it’s important to pay your card on time and in full every month. If you don’t, you’ll end up paying more in fees and interest than you could earn in cash-back rewards.

Cold, hard cash

Budgeting for spontaneity doesn’t have to be difficult. In fact, it could be as simple as going to the ATM and getting out cash at the beginning of the month.

This money is designated as your “fun” money: It can only be used for an unexpected movie date with friends, celebratory beers, or Sunday brunch. It’s spontaneity with a limit, because when the cash is gone, so is that month’s fun budget.

Give yourself a tip

You tip for a good haircut and a cocktail from the bar, so why not tip yourself? That’s the premise of the app TipYourself. Every time you accomplish a task or goal, you can use the app to send yourself a tip. The goal can be as simple as drinking eight glasses of water per day or as complex as repainting your bedroom wall, and tips can be as small as $1.

The secret to using an app like TipYourself? Setting aside your “tips” for fun. Here’s how it works: set your goals, accomplish them and enjoy a spontaneous adventure with someone you love (and yes, that includes yourself).

This article originally appeared on Policygenius.
Image: Youngoldman


5 Ways to Teach Your Kids Good Money Manners

As a parent, you’re responsible for teaching your children many important life-long lessons.

One of the most valuable lessons is this: how to use money responsibly. But, before you dive in, consider first that money is a taboo topic for many families. In fact, discussing money is often awkward.

At the same time, it’s imperative to put your apprehension aside and talk about money with your kids. Why? The sooner your kids understand the inner workings of your family’s finances, the sooner they’ll appreciate the value of money. In turn, you will be teaching them that’s it ok to talk about their own finances – and ask for help – as they grow up.

To help you successfully discuss money with your kids, take a page from our book with the following 5 suggestions:

Teach them about debt

Despite its ubiquitous place in modern American society, debt has an extremely negative connotation. People who carry debt are sometimes viewed as irresponsible with their money, even if they manage their debt payments comfortably.

To explain the role of debt in your overall financial picture, start by explaining some of the debts you’ve had or still have. For example, you can talk about the fact that you owe money on the car you drive to take your kids to school. Or, you can explain that your home is still technically owned by a bank.

As your kids approach the tween years, you can also talk to them about other forms of consumer debt, like credit cards and high-interest personal loans. Once they understand that using a plastic card is not akin to free money, they’ll have a better idea of why it’s important to spend responsibly. They’ll also understand that, if used right, debt can help improve your financial footing.

To put these principles into practice, consider lending your kids money to pay for something they want instead of simply buying it for them. When I was 14, for example, my dad loaned me $750 to help me buy a computer. It was my responsibility to pay him back, interest-free. I learned quickly that this debt meant I was beholden to someone else.

Be wise about giving allowances

Giving your kids allowances can help them learn the importance of work and the value of money. On the flipside, allowances can also cause problems down the road – especially if your kids grow up to expect free money.

Instead, help your kids understand why they are receiving an allowance in the amount you deem fair. Then, consider giving them household tasks to earn their allowance money. Lastly, talk to them about jobs you’ve held and how much you were paid. This way, your kids will appreciate the value of working hard to earn money.

And, here’s another pro tip: encourage your kids to save some of their allowance money. Not only does this teach them to use money prudently, but it can also prevent them from attempting to make frequent withdrawals from the Bank of Mom and Dad.

Include them in budget discussions

Your kids may not be pleased with all of your financial decisions. When I was in middle school, my dad hyped up a mysterious family vacation for months before it happened. We all thought it would be a blast to go to Disneyland or spend a week at the beach.

But, when the day arrived, my dad pulled into our driveway in an RV and told us we were going on a road trip through Wyoming and South Dakota. We all felt let down, and some of us, regrettably, complained about how lame the trip was going to be. Fortunately, we did end up having a great time.

Perhaps if we grumbled less and had been part of the planning process, we would not have had such high expectations. Clearly, my parents couldn’t afford the exotic or theme park-centric trips we all wanted.

Keep in mind, however, that involving your kids in the vacation planning experience doesn’t mean you have to show them your monthly budget. But, if you’re taking a vacation or considering a large purchase for the family, perhaps you can sit down all together and talk about how you plan to budget and save up for the purchase or trip.

Explain why

Kids typically ask the question “Why?” when they don’t get exactly what they want. In fact, you may hear them repeat this one word question over and over again in the same conversation. Responding with something like “Because I said so,” or “We can’t afford it” may shut down the conversation, but it isn’t the best way to address the issue.

Instead, try explaining the real reason why you’re not going to buy something they want. This can also be a good time to teach your children about budgeting and saving money.

Avoid net worth comparisons

It’s hard for kids to avoid comparing their house to their classmate’s. Likewise, older kids get caught up in comparing clothes or even cars.

But, you can help your kids avoid the comparison trap by steering clear of this yourself. If your kids catch you trying to keep up with the Joneses, they may start to equate financial success with social status.

Instead, teach your children why it’s important not to play this game. The earlier they understand that a person’s value extends far beyond their net worth, the more self-assured they will be later on in life.


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.


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:


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


How You Can Maintain Long-Term Focus

The majority of us lead very busy lives.  With so many things going on it’s often difficult to maintain long-term focus. We tend to focus so much on what’s directly ahead of us that our long-term goals get pushed back. Luckily for you, there are ways to stay on track.

Here are four strategies you can use to maintain long-term focus:

Create Your Plan

This one sounds real obvious. It’s so remedial that people often think they don’t need to perform this step – and that’s where they’re mistaken. Your goals need to be clearly stated. In addition, the steps and path you’re going to take to reach those goals also needs to be clear.

One strategy you can use is to create a vision board. If you’re like me and not an artist you can do away with all the fancy decorations and collages. On a very basic level you should map out your goals and what milestones you need to hit to achieve them. Once it’s finished make sure your vision board is somewhere you can see it every single day. The point is you want to create your plan and get it down on paper. Thoughts are not concrete enough to maintain long-term focus. When it’s above your bedrest it’s a much different story.

Reward Smaller Victories

Whether you’re starting your own venture or working in another it often takes years (or much longer) before you’re able to reap the big rewards. That said, we often become stagnant and lose motivation when things start to drag on.

If you find yourself losing interest or motivation then you should setup a reward system that can reward you for smaller victories. When you make an effort to outwardly acknowledge your achievements it’ll motivate you to work harder in the future. Bring your team out to a nice meal or buy yourself that new pair of shoes you’ve been looking at. These small victories will keep you going until you have your big win down the road.

Always Prioritize

Time management is something that even the most successful business people still struggle with today. The ability to prioritize tasks and schedule meetings is a full-time job for the majority of executives. Hence why they use assistants.

Until you’re able to get to the executive level you’ll need to prioritize things yourself. Take a look at your to-do list or calendar and always mark off the one task you need to finish that day. If you can’t find one then you have too much free time. Prioritize each item by level of importance and soon you’ll have created an outline for what needs to be accomplished and when.

Find Your True Passion

Why is it that all the wealthiest individuals constantly tell us not to “do it for the money”? Since they already have their riches it’s easy for them to say right? The truth is, they’re correct and they likely wouldn’t be standing where they are today if it was solely “for the money”.

When you set out on your journey make sure to find your true passion and motivation. Sure wealth can be a driver but it should never be your main focus. It may take 20 years before you get your first big check. Whether you want to help the environment or build awesome technology you need to find that inner passion. Once you have it you’ll remain focused on the task at hand and will enjoy the journey no matter how long it takes.

Final Thoughts

We are entrepreneurs, dreamers, and innovators. We all have different goals and different paths to achieve those goals. If you want to reach those goals you need to maintain long-term focus or else the time will slowly slip away. That said use these four strategies to stay focused and achieve your dreams!

This article was originally published on Calendar by Renzo Costarella.


How to Rock Your Finances While Self-Employed

Keeping an eagle eye on your business and personal finances while self-employed is highly important. When your business is having a cash flow problem your wallet is also having a cash flow problem.

Here are ways to rock your business and personal finances while running your own show:

Overplan for Emergencies

Your household’s emergency savings account is going to be your savior in situations when checks don’t come in. Clients can pay late or you may lose a client altogether. You need to be prepared for all circumstances.

The typical amount that everyone should have socked away for a rainy day is about three to six months of household bills. Self-employed workers may want to have a few more months of bills in savings. Your income is variable, so an extra bit of cushion can be a lifesaver.

Choose a Savings Vehicle 

Traditional employees can take advantage of company-sponsored 401(k) plans with company matches.  There’s also a 401(k) solo plan for self-employed workers that comes with tax benefits and allows you to make employer contributions from your own business.

For 2018, you’re able to contribute up to $18,000 into the 401(k) solo account as an employee. Your business (employer) can make contributions of up to 25% as well. 

Aside from the 401(k) solo account, Traditional IRA, Roth IRA, or SEP IRA accounts are other options. Social security is not something you can rely on to live comfortably in retirement. Make sure you have your own savings plan in place. 

Keep Your Money Separate

At first I kept my personal finances and business finances combined. It’s a nightmare. It makes record keeping difficult and filing taxes tragic.

Set up a different checking and credit card account for your business. Save for taxes and pay your business expenses before giving yourself a paycheck. Choose an accounting system for business bookkeeping that will make sending invoices and collecting payments a breeze.

Set Up Two Budgets

Don’t feel bad if you’re a little bit disorganized right now with your money as long as you commit to making a change. Create a budget for your business. This will help you monitor how much money you’re spending to operate. It’ll also keep you aware of whether or not your business is profitable.

There may be some months (or even years) when you’re business is not profitable or breaking even because you’re investing in resources, tools, equipment, or coaching. This isn’t a bad thing if you’re aware of it and investing with a purpose.

Final Word

Even the most organized people can find managing business and personal finances difficult when working for themselves. There was definitely a learning curve for me. I kept a meticulous budget that helped me save and pay off debt aggressively when I worked a full-time job with a steady paycheck.

Having a variable income threw me for a loop for a while, but it was something I got better and better at managing over time. Experiment and find a system that works for you.


How to Change Banks When Moving Out of State

No matter if you’re leaving town to buy a new home across the country or relocating around the corner, moving is never fun.

First off, there are tons of things you have to do. You have to find a new home, pack up all of your possessions, move them to your new location, clean your old home, clean your new home, unpack, organize, and more. This doesn’t even include all of the other logistics that can go along with moving, like setting up new accounts for utilities, switching Internet providers, and changing your address on pretty much everything.

This list can be even longer if you’re moving to a new state. And, one of the most important things to add to this to-do list is to change banks.

Before you get stressed out thinking about changing banks while in the midst of a move, we’re here to offer a helping hand. Take a look at the following steps to change banks.

Open a New Account

One of the very first things you must do is open a new account. Unfortunately, this might take a little leg work to find a bank with the best features for your lifestyle. For example, you may want a bank account with no fees. You may also want to pay bills online via a sweet mobile app.

With these goals in mind, you may prefer an online only account, like Chime. Or, perhaps you’ll want to open an account at a bank with brick and mortar locations in your new state. The benefit of opening an account with an online bank is you’ll never need to worry about changing banks again if you move out of state.

After deciding which kind of bank you prefer, you will need to provide identification, such as your social security number and a government-issued I.D. In addition, you will need a small amount of money to deposit into your new account. The minimum amount required can differ from bank to bank. In some cases, there is no minimum deposit required at all, such as the case with Chime.

Get a Debit Card

A debit card can be a convenient way to access the money in your new checking account, plus it’s also a good way to grow your savings.

Some bank accounts, like Chime, offer programs that round up your debit card purchases and deposit those round up amounts into your savings. This spare change can add up over time to make a big difference.

Keep in mind: getting a debit card for your new account may take some time, so make sure you factor in a week or two until your new card arrives.

Set up Automatic Withdrawals

As soon as you have enough funds in your new account, you should set up automatic withdrawals to come out of your new account – instead of your old one. For example, you can set up automatic withdrawals to pay new creditors, such as your landlord, your mortgage company, your homeowner’s or automobile insurance, or your utilities. You can also schedule automatic payments to pay your credit cards bills, Internet provider, and any other monthly bills you need to pay.

Schedule Automatic Deposits

Automatic deposits are another area you must address as you change banks when moving out of state. Talk to your new bank and employer about setting up direct deposits of your paychecks to the new account.

You should also set up automatic transfers into your new savings account too. Automating your savings can help you save money with each paycheck and reach your goals faster.

Monitor All Accounts

For starters, make sure you don’t immediately close your old bank account when you move. The reason for this is that there may still be outstanding checks, transfers, or other transactions that have not been completed yet.

Instead, monitor all of your accounts – the new and the old – until all of your pending transactions have cleared your old account.

Close Old Accounts

Once all of your transactions have cleared your old bank account, you are ready to close it.

Next up: contact your old bank and let the customer service representative know you are closing your account and intend to deposit the money into your new bank account located out of state. You can then ask for a cashier’s check for the remaining balance.

Ease the Stress of Changing Banks

Moving to a new state is a difficult process, but changing banks doesn’t have to be. Hopefully these tips will help ease the stress of moving out of state by making the process of changing banks a little smoother.

Have you ever moved out of state? How did you handle changing banks?


How to Save for Your Vices

Are these a few of your favorite things? Monthly subscription boxes that end up in your snail mailbox. Wining and dining at the newest hipster haunts in town. Splurging on designer goods your favorite Insta stars rave about. We all have our guilty pleasures that can do serious damage to our wallets. Yet, instead of going full-out puritan and denying yourself the non-essentials you enjoy, why not plan ahead and save for your vices? Here are some ways you can squirrel away funds for those guilty pleasures:

Set Up a Guilt-Free Spending Fund

First things first: Among money nerds, I put myself squarely in the anti-budget camp. Why? Allocating different spending amounts to particular categories makes me feel super boxed in. Instead, I figure out how much I roughly spend on discretionary expenses, such as eating out, groceries, gas, and so on. Next, I set aside a certain amount of spending for groceries and household items  – on one debit card. Then, I set aside money for eating out and entertainment  – on a second card. This gives me the leeway to spend without guilt. To set up your own guilt-free spending fund, figure out how much you can reasonably afford to spend each money on your vices. Then set up an automatic transfer each month to go toward guilt-free spending. If you’re a judicious budgeteer, you can also roll over any “leftover” money from certain categories and earmark this toward your guilt-free spending fund for the next month.

Set Up Auto Transfers

Here at Chime, we’ve long touted the benefits of setting up auto contributions to reach your savings goals like buying a house, going on vacation, and any other big ticket purchases. Why not set aside money each month for your spending vices? It doesn’t have to a huge amount (your retirement savings should still stay top of mind, of course). For example, if you’re a Chime member and have enrolled in Automatic Savings, you can designate your savings account toward your vices.

Allocate Extra Cash Toward Your Vices

“Extra cash” can come in the form of money raked in from side hustles, spare change saved in a jar, a bonus from work, or a cash gift for your birthday. Feel uneasy about putting all your extra cash toward say, your spa fund? Then consider socking away just a portion of extra cash toward your vices.

Label Your Savings Funds

While this is a small thing, labeling your savings funds for specific guilty pleasures will keep you stay motivated to save and keep these funds in the flush. Instead of merely labeling a savings account as “savings 2018”, try renaming it to indicate a specific purpose, like “fancy cool clothes” or “video games.” It will also help you stay accountable for only spending the money designated in these savings accounts.

Reward Good Habits to Fund Your Vices

Okay, so you might be giving the noggin a good head scratching with this one. But hear me out. How about rewarding good habits you’ve developed by allowing yourself to splurge? To do this responsibly, every time you do X (good habit), you can put some money toward Y (vice). For example, if you’re trying to develop better financial habits, each time you spend 30 minutes at the gym, reward yourself by putting a few bucks toward that gadget habit of yours.

Try Less-Expensive Versions

Let’s say you want to spend less on your vices. Instead of stomping out spending on these categories altogether, find cheaper alternatives. For instance, do you have a problem indulging in pricey wine when eating out? Perhaps you can consider buying your favorite bottle of wine on sale at a liquor store and indulging in a glass at home before you go out. Or, do you tend to spend a bit too much on end-of-year holiday festivities? Maybe you can find cheaper ways to have fun this winter without ruining your budget. I did this when I was working on improving my health last year. Instead of swearing off french fries, I looked for healthier alternatives and allowed myself to enjoy greasy fries once a week. Trust me, if you do the same with your money, your pocketbook will thank you. Not only will saving for your vices steer you away from a bout of regret and other ugly feels, but you’ll curb your overspending habits. In turn, you’ll have an easier time making steady headway on your money goals while still enjoying yourself.


Matching Income to Expenses When You Don’t Have a Steady Paycheck

When you have a regular day job, you get paid on a predictable schedule. Getting paid twice every month means your paychecks are typically around the same amount when they arrive, and they show up magically in your bank account via direct deposit on a regular cadence. This means planning to pay your bills is easy.

When I still had day job income, I paid my credit cards every other week on payday and paid my mortgage on the last payday of the month. This made managing my personal cash flow easy and predictable. Any side hustle income was just gravy on top! But now that my side hustle has become my day job, my cash flow works a little differently. Here is what I’ve learned along the way.

Save and build revenue until you can pay yourself a paycheck

My first step in getting more normalized revenue was to avoid paying myself. I took the minimum cash from the business I could to pay for my family’s basic living expenses in the first few months I had the business until it had grown enough to start paying myself a regular, weekly paycheck.

When I moved from Portland to Southern California last year, I converted the business from an LLC to an S-Corp. There are some big tax benefits of S-Corps for businesses that make over around $40,000 per year, and it was clear from my prior year side hustle income of $40,000 that I would be doing more than that the first year I took the business full-time.

As an LLC, you have to pay self-employment tax on every dollar you earn. As an S-Corp, you only have to pay self-employment tax on your paycheck, which has to be a “reasonable salary” for your position according to IRS rules. I pay myself $35,000 per year, a reasonable salary for someone working as a full-time writer, divided over 52 weekly paychecks.

Knowing that I will get a check for $587 every Friday (after tax, I use Gusto as a payroll service) makes it easier to manage my monthly bills. It is hard to get predictability in self-employment, but this step helps smooth out my personal income.

Give yourself a small paycheck with monthly “dividends”

If you read my blog, you know I make a heck of a lot more than $35,000 per year in online revenue. After taking out my paycheck, taxes, and other business expenses, the business earns a nice profit every month. Even after my paycheck, the business often has at least a few thousand dollars in cash sitting in the bank.

The business pays me this cash in the form of dividends, which are just online banking transfers from my business checking account at Chase to my personal checking account at Charles Schwab.

These dividends are actually worth more than my paychecks! It’s nice being a business owner where the “employee” (that’s me) does the hard work for $35,000 per year while the owner (also me) gets to keep the profits!

Dividend payments are not on the same regular schedule as paychecks, which have to follow certain Federal and state regulations. My dividends are typically more of an “as needed” payment. My paychecks cover my rent but not much more, I live in Southern California after all, so the dividends make up the difference in my monthly living expenses to ensure we have enough cash in the bank to pay off the credit cards and other bills in full every month.

Build up a sizable business and personal savings

I only pay myself what I need to live, which means if the business earns more than my expenses, which it does every month, the business should end the month with more in cash in the bank than the start of the month. If your business doesn’t earn enough each month to cover you necessities, it is probably better as a side hustle than a full-time gig, or you need to do something to fix your business and earn more, or cut your expenses.

Because of the way LLCs and S-Corps are taxed, it doesn’t matter if the income sits in the business bankor the personal account, so last year when taxes were due it was nice to have that extra cushion in my business account. Last month, I took two weeks for work and vacation trips. It was nice knowing that even if I earned zero dollars in May, I have enough cash in the bank to cover my paycheck and other expenses for a month without blinking an eye.

Everyone should have an emergency fund that covers three to six months of expenses if they have a day job and steady income. Self-employed entrepreneurs should double that. Save three to six months of expenses in a personal emergency fund plus another three to six months of expenses in your business account as an absolute minimum. My long-term plan is for the business to have an entire year of expenses saved up plus at least that much in personal savings.

Make an annual plan and review your finances monthly

Solo entrepreneurs, small business owners, and startup founders typically don’t have a team of full-time finance and accounting professionals monitoring their money every day. That falls on your shoulders. So make sure to review your finances annually and monthly.

Every year at the start of the year, create a basic budget that outlines your expected revenue and expenses each month for the year. You know it won’t be exactly right, but it can act as a good guideline to follow. Make small adjustments and check in monthly to ensure you are on track and make changes as necessary if your revenue is too low or expenses too high to meet your business and personal needs.

You’re the boss, enjoy it!

One of the biggest benefits of self-employment is the freedom to adjust your schedule and be flexible as you want, or need. If money isn’t coming in, cut back on expenses and go on a ramen diet for a few weeks. If money is flush, save up during the good times to weather the bad.

Self-employment is an amazing lifestyle. As long as you have the finances and operations under control, you can relax and focus on the parts of your business you enjoy most. You’re the boss, enjoy it!


How to Choose Between a Credit Union or Online Bank

When you’ve arrived at the difficult and often personal decision to pull up stakes and leave your bank, a brand new challenge often emerges: you now have to find a new banking home.

But, you don’t have to stick to a traditional big bank. You also have two other attractive alternatives: credit unions and online banks. They’re both gaining in popularity with more than 100 million people banking at credit unions, and 67 percent of Millennials preferring to park their money with online banks. It’s easy to see why so many are flocking to alternative banking options. Credit unions and mobile banks both tout enhanced customer service, lower fees and other perks that you won’t find at your average big box bank.

So, the question now becomes: which is the better choice: a credit union or an online bank? To help you figure out which one is best for you, we compared them to see how they stack up. Take a look.

Physical presence

Winner: Credit unions

If you like visiting the teller window, the tangibility of filling out a deposit slip and free coffee, a physical credit union is the better choice.

While there are some online-only credit unions, most credit unions operate with a traditional physical presence to conduct your banking business. Some credit unions also have multiple branches, allowing you even more convenience for making deposits and withdrawals on the go.

There is a downside here, however. Those long lines you grew to resent at your old bank may be the very reason you’re broadening your banking horizons. If this sounds like you, a walk-in location — credit union or not — is something you may want to avoid.


Winner: Online banks

Online banks are known for their apps, websites and mobile options. These technology advances are meant to help you bypass the unavailability of a physical branch and to optimize a 100 percent virtual banking effort.

Online banks are on the cutting edge of technology when it comes to banking services, and they typically accommodate a modern, fast, user-friendly — and most of all, safe — banking experience.

Most online banks, including Chime, let you make deposits, conduct peer-to-peer transfers, pay bills, and even check your credit score with just a couple of swipes or taps. And here’s another big perk to mobile banking: an online bank doesn’t close down for holidays like a traditional bank. It’s open 24/7, 365 days a year.

Although you can’t beat technology-driven online banks, credit unions still deserve some credit. They have come a long way in improving and delivering their online banking services. You just may need to be patient when it comes to upping the ante on quality mobile apps and websites. Since credit unions are not-for-profit banking providers, they typically don’t have the same operating budgets as their big bank counterparts, and they aren’t as nimble as online banks either.

Fees and interest rates

Winner: Online banks

Credit unions are on the end of a double-edged sword. Their nonprofit structure and community banking mission allows them to reward their member customers with higher interest rates and lower fees than a global name bank.

On the flipside, online banks may still edge out credit unions when it comes to lower fees. That’s because credit unions with walk-in branches still have overhead expenses. After all, they need to keep the lights on and pay their employees. Online banks, on the other hand, don’t have branches and can therefore afford to not collect fees from patrons.

Overall, you can’t go wrong with either a credit union or online bank if you’re looking to save on fees, and earn more money in interest. Both of these banking options are better bets than a mainstream bank.


Winner: A Tie

Even the most ardent online banking enthusiasts need to hit up the ATM from time to time. And, you better believe that online banks offer ATM options to grab cash on the go. Chime, for one, has over 30,000 ATM locations nationwide (fee free, in fact). Other online banks like Bank of Internet USA and Bank5 Connect also offer ATM networks.

At the same time, federal credit unions like Alliant and Americhoice also support large ATM networks, with 80,000 and 30,000 locations supported nationwide, respectively. To boot, both online banks and credit unions often reimburse ATM fees to customers using out-of-network cash machines.

Banking services

Winner: A Tie

Customer service is often a number one deal-breaker when it comes to picking a bank.

Yet, when it comes to customer service, both credit unions and online banks are superior to most big banks.

Credit unions offer personalized, customer-friendly access that is often a stark contrast with the impersonal, anonymous service found at most big banks. And, online banks can offer the help you want whenever you need it – even at 3 o’clock in the morning.

When it comes to accounts, credit unions and online-only banks can also both get creative with their services. Credit unions, for example, often feature a myriad of specialty savings programs like Christmas Clubs and rewards programs to help you reach your goals. Online banks also go above and beyond when it comes to customer service. For example, Chime account holders receive daily updates and real-time alerts every time they make a transaction. This type of responsiveness is rarely found at a big bank.

Final thoughts

Ultimately, both credit unions and online banks are viable choices when it comes to better banking. But, before you choose which option is best for you, examine your financial situation and ask yourself what you want in a new banking provider. Next: research credit unions and online banks, and determine which one offers the best services and features for your financial needs. Before you know it, you’ll be on the right path to a brighter financial future.