Tag: Money Manners

 

Reset Your Money Habits With a Spending Cleanse

Bad habits have a way of creeping into your life when you’re not paying attention. Maybe you have a screen addiction that you just can’t quit, or you have a habit of procrastinating that leaves you scrambling all the time.

Or maybe you have spending habits that leave your bank account in bad shape at the end of each month. Whereas fixing bad financial habits can take focus and willpower, sometimes you need to take a more extreme approach. This is where a spending cleanse comes into play.

A spending cleanse is designed to help you get a handle on your spending habits. During your spending cleanse you’ll set a period of time when you give yourself a spending limit or curb your spending altogether. It can last for any amount of time and you can decide your spending rules. For example, you might decide to stop eating out during your cleanse. Or you may decide to completely forgo all unnecessary spending. While you’re at it, you’ll become more aware of your spending habits and where you currently spend too much. As a bonus, you’ll probably save money.

If you’re ready to save extra cash and kick your bad financial habits to the curb, here are six steps to set you up for success. Take a look:

1. Decide why you want to cleanse

A spending cleanse is going to be difficult. But a great way to keep you motivated is to remind yourself why you’re doing it. Maybe you want to escape the paycheck to paycheck cycle and start building up your savings. Or, maybe you want to finally understand where your money is disappearing to each month. If you can get clear on why you want to cleanse, you can more readily stay the course.

2. Set a length of time

Next, it’s time to decide how long you want your cleanse to last. Ideally, it will last at least a few days. If you’re feeling extra ambitious, try a few weeks or a full month. Choose the length and the timing that works for you. Don’t plan to start this cleanse when it’s going to be really hard to complete. You’ll want to steer clear of any obligations that you’ve already committed to like travel or attending a wedding. For example, if you’re going on a weekend trip, that’s clearly not the right time to stop spending money.

Take out your calendar, pick your start and end dates, and set yourself up for success.

3. What are you giving up?

You can choose what you want to give up during your spending cleanse. You may decide that you really want to get your eating out habit under control, so you’ll stop dining out. Maybe you want to ditch your car and taxis and ride your bike for the entire cleanse. Or, you may want to go all in and only spend money on things that you truly need, like food, transportation to work, and your bills.

Whatever you choose, set rules for yourself. If you’ve decided to only spend money on the things you truly need, make sure you define what that looks like. For example, you need to eat so spending on groceries counts as a need. But buying lunch out? You may want to skip that.

4. Spend cash only

Once you’ve set your cleanse timeline and decided what you can and can’t spend money on, you’re ready to dive in! A good tip here: Use cash. Why? Spending money is easier to do when you’re just swiping your card and studies show that people spend more when using a credit card. Because you’re trying to be more aware of your money habits, using cash will help you be even more in tune with your spending during the cleanse.

So, head to the ATM, pull out some cash, and get started.

5. Track what you spend…and what you don’t spend

Tracking your spending will help you see exactly how much you spend on things like gas, groceries, and non-essential things. You may realize that some of your small expenses really add up over time.

For example, if you’re pulling out a sandwich you’ve packed for lunch when you’d usually spend seven dollars at the deli down the street, make a note of that. If your friend asks you to meet for drinks but you suggest a hike instead, write that down. These are all instances where you could be spending money, but you’re not. Once your cleanse is over, you may find that it’s easy to stay with these alternatives rather than go back to your old ways.

6. Pay attention to how you feel

As you stop spending money, pay attention to whether you really miss the things that you’ve cut out. How do you feel about making coffee at home rather than stopping for your daily lattes? Does it make you feel good to sock away extra money towards bigger things, like a vacation, paying off debt, or funding your emergency savings?

Decide what to add back in

Congratulations! You’ve just made it through your spending cleanse. But don’t rush right back to your old habits just yet.

Now that you’re more aware of your spending habits, it’s time to determine how you can continue saving money.

Maybe you’ve kicked your coffee habit and you have no intention of going back to dropping $25 a week at Starbucks. Or, maybe taking the bus instead of an Uber really isn’t so bad. Remember: The goal of a spending cleanse is to help you make some long-term changes. So, maybe it’s time to break up with your bad financial habits for once and for all!

 

Best Money Advice from Dads

For better or worse, your parents were likely your first money role models.

While I don’t recall my dad distilling any particular nuggets of wisdom on the topic, his actions preceded his words. For one thing, he was the ultimate cheapskate. We would only dine out on “Kids Eat Free Tuesdays”, and our go-to spots for quality time were the neighborhood park and local library.

One year, after spending $100 on an “Adventure Girl” bike for my birthday – complete with a safari-pattern frame, and pink and baby blue streamers dripping from the handlebars – my dad muttered after we left Toys R’ Us, “Nothing is free.”

The apple doesn’t fall from the tree.

As a self-described “frugalista,” I still enjoy a good bargain and have trouble parting with my money. In honor of Father’s Day, here’s a round-up of the best money advice from dads:

Know your numbers

It’s easy to let your money management slide when you’ve long neglected your finances, or when your money situation isn’t exactly where you would like it. Michael H.’s (that’s his blog pseudonym) dad helped him understand the basics of cash flow management by teaching him about income and expenses.

His dad helped him create spreadsheets, and always made sure that his numbers were balanced. “It was a tedious task at the time, but the lesson was invaluable,” says Michael, the founder of Financially Alert.

Michael wants to teach his children that money is merely a tool – nothing more, nothing less.

“I don’t want them to be afraid of it, and I also don’t want them to feel entitled to it,” he says.

“It’s a fine balance of teaching them the value of a dollar through hard work, saving and investing, and giving to those less fortunate.”

How to apply this to your own money situation: Check your bank balance. You can easily do this by logging into your bank account, or by way of a money management app. Know how much is coming in and how much you’re spending each month. There’s nothing like being blindsided by a low bank account balance.

The best way to double your money

When Logan Allec was around eight years old, his dad asked him, “Would you rather have $1,000,000 or a penny doubled for 30 days?”

Even though he was just a youngster, he instinctively went with the cool million. But his dad then demonstrated how a penny doubled for 30 days would actually yield more money.

“The morale was that you want to multiply your money and not just go for the quick wins,” says Allec, CPA and founder of Money Done Right.

“Since I’ve been making money, I’m also looking for ways to multiply my pennies,” he says.

“A lot of the frugal decisions I’ve made in my life trace back to this mentality: Would I rather spend my pennies on some item or experience, or would I rather invest them so that they can multiply and make me rich?”

How to apply this to your own money situation: Find ways to save so you can grow your money. For instance, drum up tactics to help you save on your living expenses. Or, learn how to negotiate to earn more money on the job. For easy, no-brainer savings, open a bank account with no fees.

Pay yourself first

The best money lesson Mike Pearson’s dad ever taught him was to pay himself first. For instance, every time you receive a paycheck at work, the first 15 to 20 percent should go into either a savings account, retirement account – or both. That’s right: You should pay yourself before paying your rent, car loan, cell phone bill, or what have you.

Now that Pearson’s a dad himself to two young kids, he wants to teach them to automatically invest in the stock market once they get their first “real” job out of college.

“The magic of compound interest is real,” says Pearson, the founder of Credit Takeoff.

“If you start investing 15 percent of your paycheck into a 401(k) for your entire working life, paycheck after paycheck, you will retire a multi-millionaire – simply because of automatic savings and compound interest.”

How to apply this to your own money situation: Before you pay your bills and debt, stash some money aside for your savings and retirement. To set aside money toward your future goals,  create an account and set up automatic savings. Even saving a dollar a day adds up to $365 a year. Save two bucks a day and you’ll have $730 in a year.

Don’t treat your paycheck like a cash advance

When Kristin Larsen was in college, she had a job working at a clothing store. Truth be told, she took the job mainly to snag an employee discount. Instead of receiving a paycheck and then making a purchase as a separate transaction, Larsen had the option to have her purchases come directly out of her paycheck.

“That wasn’t very smart as I barely broke even with each paycheck,” says Larsen, who is the founder of Believe in a Budget.

“Once my dad caught wind and took a look at my earnings and spending, he told me it was time to find another job.”

Bottom line: Don’t treat your paycheck like cash advance. It’ll be gone by the time you receive it.

How to apply this to your own money situation: If you’re a Chime Bank member, the “Save When I Get Paid” feature can help you sock away some money before all that money goes toward your living expenses. If you have direct deposit set up with Chime, you can even get a bit of an actual advance up to two days before your payday.

Parting Advice

Whether your dad gave you sound financial advice or not, pay attention to your money matters. This way you can take steps to improve your situation and reach your financial goals.

 

Money Mindsets That Are Keeping You Poor

The word “wealthy” conjures up images of depraved oil tycoons. Morose and isolated, these rich folks had to enjoy their wealth alone. At least that’s what I believed when I was a kid.

Growing up, I was taught to share pretty much everything with my older brother. To have more than him was considered selfish. And, if you were greedy, that was even worse. I made the assumption that rich people were inherently bad.

This myth blocked me from pursuing wealth. I figured it was better to earn a modest living and be frugal than bear the stigma of being rich and lonely. It was only after doing some inner work that I got past this limiting belief. I realized that having extra scratch doesn’t mean you’re greedy, selfish or unethical. Money merely enhances who you already are. And the more you have of it, the more freedom you can enjoy. To me, it’s all about syncing up your money to your values.

Chances are, you also have your own money stories that get in the way of your financial goals.

Here are five common money misconceptions that may be blocking you from achieving wealth.

You need a ton of money to start saving

While it certainly doesn’t hurt to have a healthy sum of disposable income, it isn’t a requisite to saving money.

The most important thing is to make it a priority and to start somewhere. Do I hear a grumble? Believe you me, saving doesn’t have to be difficult. And there’s a reason why “pay yourself first” is considered a pillar of personal finance. If you’re a Chime member, the Save When You Get Paid feature helps you tuck away a percentage of each paycheck.

By prioritizing savings over spending, you’re taking your financial well-being and your goals seriously.

You need to make a certain amount to get serious about finances

Once again, this is an easy excuse to not save money. It’s far easier to brush off saving until you make, say, $120,000.

When I was making $30,000 at my first job out of college, my rent in Los Angeles ate up a third of my income. But I still wanted to save money, so I started side hustles. And even though my side hustles raked in a mere $1,000 a year, I was committed to saving. By being judicious about what I spent my money on, I managed to save $5,000 my first year on my own.

When I started earning more, I kept the same habits and avoided lifestyle creep. As a result, I was able to make greater headway on my savings goals.

Other people have it easier

As they say, compare and despair. We all know someone who gets a generous allowance from their parents, or is making a cool six-figures at a posh job.

It may seem easier for them to build their worth, but appearances can be deceiving. You don’t know what debt load they carry, or if they struggle to stay on top of their bills like everyone else.

While you’ll need to get real and be honest with your own financial situation, everyone can start small. I’m a big fan of auto-saving, and there’s a reason why it’s recommended by personal finance gurus. Auto-saving is easy and you can start small. Five bucks in a cushion account adds up to $260 a year. Double your auto-savings amount to $10 a week, and that’s $520 annually.

I’m not privileged enough to focus on net worth

This is a bunch of bull. Earning more and spending less is something we’re all capable of. While we don’t have control over greater forces—tax codes, inflation, getting laid off—we do have agency in our saving and spending decisions, and in our ability to earn more.

Thinking that net worth is for a privileged few is getting in your way. If I was able to build my savings making very little, so can you.

To figure out your net worth, tally up your debt. This includes student loans, credit card debt, and car loans. Next, add up your assets—money you have sitting in savings, retirement accounts, savings apps, and so forth. Then, subtract your debts from your assets to determine your net worth.

It might be an unpleasant endeavor to find you have negative net worth. But it’s only in taking an honest look that you can work toward being in the green.

I’m an artist and will always be poor

Just because you have creative pursuits doesn’t mean you will always be stuck in the poor house. By fusing your vision and talents with entrepreneurism, you can make a decent living.

From freelancer marketplaces to online platforms, there are tons of resources to help you build your own business. Granted, being a self-employed creative or artist does come with its own host of challenges. For one, you’ll likely have to deal with variable income. Because your cash flow can change month to month, it’s tough to stay on top of bills and save for anything.

Chime can help. With its Get Paid Early feature, you can get direct deposits up to two days early. In turn, this can help you pay your bills on time.

Bust those myths today

Busting harmful money mindsets can help you earn more, save more, and land you in positive net worth territory. Just remember: Building your net worth may be a slow and steady climb. So, stay the course and over time, you’ll move closer to your financial goals.

 

What Is Financial Literacy? And Why Should You Care?

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The majority of Americans are illiterate.

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

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

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

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

What Is Financial Literacy?

Financial literacy is the ability to understand your money.

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

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

This includes financial jargon, too.

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

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

Why Does Financial Literacy Matter?

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

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

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

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

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

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

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

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

Four Steps to Increase Your Financial Literacy

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

1. Devour financial media

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

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

Here are some recommended resources:

2. Take it slowly

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

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

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

3. Ask for help

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

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

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

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

4. Stay curious

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

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

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

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

 

How Women Can Get the Salary They Deserve

Have you heard? Women still get paid less than men.

In fact, Economic Policy Institute reports that women earn an average of 22% less per hour than men — even when controlling for race, education, experience and location.

Although a myriad of societal and economic factors contribute to the wage gap, you have direct control over one important thing: the amount of money you ask for. According to a recent survey by Robert Half, only 46% of men and 34% of women negotiated their starting salaries. And, Glassdoor estimates that by not negotiating, the average worker leaves $7,500 — or 13.3% of their salary — on the table.

While you can’t go back in time and negotiate your starting pay, you can aim to get a raise this year. Here’s advice from three salary negotiation experts on how to get paid what you deserve.

Determine What You’re Bringing to the Table

Before asking for a raise, Kathlyn Hart, financial empowerment coach and creator of Be Brave Get Paid, says you need to figure out why you deserve one.

“You can’t just say, ‘Oh I work hard,’ because everyone works hard,” she says.

Specifically, you should ask yourself:

  • What are your job duties? How are you excelling beyond them?
  • How has your work — either by cutting costs or boosting profits — improved the company’s bottom line?

“At the end of the day, a raise can only be merited because you’re helping your company move further,” she says. “Or because you’re holding responsibilities above and beyond your current job description.”

Jacqueline Twillie, a negotiation strategist, also recommends aligning your contributions with your company’s quarterly and annual priorities.

“Get clear on how your work plays into the overall objectives. Managers really want to know that employees are buying in,” says Twillie.

Communicate With Your Boss

If you have regular meetings with your supervisor, get straight to the point — and acknowledge that you’d like a future raise or promotion, says Ashley Paré, the CEO and founder of Own Your Worth.

For example, asking your boss: “What else do you need from me…to advocate on my behalf?” will give you “clarity on where they stand in supporting you and your performance.”

Twillie agrees. “When you’re in a one-on-one with your boss, tell her about your career aspirations and find out what it will take for you to get there,” she says.

“Then level up in those areas, clearly communicating along the way that you’re expecting a promotion or raise.”

Be sure to amplify any positive feedback, too.

“Accept the compliment and share it with your direct supervisor. If you downplay your contributions, so will everyone else,” Twillie says.

Do Your Research

Once you’ve taken the necessary actions to merit a raise, it’s time to determine your target number.

Websites like Salary.com, Payscale, and Glassdoor will give you a salary range based on your industry, job title, education, and years of experience. To pinpoint where you fall, consider the amount of value you bring to the company.

“As women, we’ll naturally cut ourselves a little bit short,” says Hart.

“I always encourage [upping] your expectations a little bit. For any salary negotiation, you’re always going to start higher and come down. You don’t want to negotiate against yourself before the negotiation has even happened,” she says.

Prepare Your Case

If you’re afraid of negotiation, the best armor you have is information.

Paré suggests asking peers, mentors, and other leaders how your organization generally handles raises and promotions. If you can grab coffee with someone who recently went through the process, even better.

“The more you know up front, the less stressful the experience will be,” says Paré.

Hart advises preparing a one-pager that outlines your accomplishments and your competitive research. Twillie recommends including metrics that are important to your manager, too. (You can determine those by paying attention to what they reference in emails and meetings.)

“Negotiation is a conversation — not a battle — and the more information you’ve gathered prior to the discussion, the better-informed [case] you’ll be able to make,” says Twillie.

Practice Your Pitch

Whatever you do, don’t wing it with your ask.

“Write out exactly what you plan to say in the meeting, then practice the pitch out loud. Feeling confident is key,” says Paré.

Both Paré and Twillie suggest recording yourself on your phone, then listening to the playback and tweaking your delivery.

Hart also urges raise-seeking women to “look for ways to negotiate outside your job.” At a restaurant, for example, you could ask for a side of ranch after your server has already come to the table. Or you could ask for a slight alteration to your Starbucks order — after it has already been rung up.

She says pushing your boundaries in these small ways will help you conquer the “fear of asking for more” that nearly all of us have.

Crush Your Meeting

It’s almost showtime. To schedule a conversation with your boss, Hart suggests saying: “I want to set up a meeting to talk about my future with the company.”

Then, once you’re in the meeting, avoid diving straight into the salary talk.

Instead, Hart says you should discuss the following:

  • What you’ve accomplished over the past year
  • How much you’ve enjoyed being a part of the company
  • What you’re most proud of
  • What you’re excited to tackle next

“When a company gives you a raise, it’s not just based on your past,” explains Hart.

“It’s also on your promise for what you’re delivering in the future… [Your manager] is really looking to not only reward what you’ve done, but also show you they’re looking forward to you continuing to contribute,” she says.

Only after highlighting your accomplishments and goals should you ask something like: “Moving forward, what could my compensation look like?”

Usually, Hart says it’s better to leave the discussion open and see what your manager offers. If, however, you’re trying to justify a big leap in pay, then she suggests starting from that high number and seeing where she can meet you.

Accept Your Fears

Still nervous? That’s totally normal.

To combat your anxiety, Paré suggests identifying your biggest fear. Are you worried about “ruining” your relationship with your boss? Are you afraid you don’t deserve more?

“You’re capable of handling any outcome. So face your fear and take action anyway,” says Paré.

To push yourself, imagine how it would feel to pay 10% more on your student loans each month, or to accumulate thousands of dollars in extra savings over the next few years.

Hart also notes that, when you make an ask, you’ll nearly always be successful in some way. Even if you don’t get the raise you were looking for, you’ll gain the knowledge or confidence to land one in the future.

“If you don’t ask, the answer is always no,” she says, adding that it’s important to “be brave.”

 

Money Traditions Celebrated for Lunar New Year

Growing up Vietnamese-American, Chinese New Year is important to me. Instead of busting out bottles of bubbly and watching a ginormous ball drop at midnight, festivities include dragon dances, lion parades, and offerings of fruit baskets and moon cakes.

The best part of celebrating Chinese New Year? The money traditions. And while the date changes every year (it coincides with the new moon of the first lunar month), here are a few ways the dollar is used to ring in every Chinese New Year.

Lucky Money

Fact: Money doesn’t grow on trees. But it does (sorta) during Chinese New Year. Red envelopes containing money are given to kids or unmarried folks. If you’re an established couple or are bringing in the Benjamins, you’re expected to gift grandparents and other respected elders with these red envelopes. If you live in China, your boss might even hand you a red envelope with a small amount of cash.

The color red symbolizes good things: energy, happiness, prosperity and good luck. And the dollars inside – which should be crisp – are a sign that you wish goodwill and success to the recipients.

So how much money should you give out if you celebrate this holiday? It really depends on your relationship with the recipient. If you just got married, for example, you’re typically not expected to include as much money in a lucky envelope as someone who has been married for two decades.

This is a favorite money tradition for obvious reasons. Who doesn’t like free money?

What it teaches you about money: If you are gifted with red envelopes of cash, figure out how this can help your financial situation. Maybe you can sock some money away toward your e-fund, or use it toward debt repayment. I typically spend part of the money, and the rest goes toward savings.

On the flip side, if you’re expected to dole out cash, make sure to save for it well ahead of time. Figure out how much you’ll need, and auto-save so you can meet your gifting goals. If you’re a Chime Bank member, you can automatically put aside a set amount on payday.

Games

We’re not talking about mind games or outdoor games or kiddie games. We’re talking about games of chance, like Blackjack or Mahjong. Vietnamese folks like me play Bầu Cua Tôm Cá, a gambling game involving three dice. It’s pretty common to play these games during Chinese New Year, and at least in my family, it’s certainly more about the camaraderie than winning.

What it teaches you about money: Gambling is a big no-no for obvious reasons. If you want more money, you’ll need to save it, perhaps by using a money-saving app. You should also earn it or maybe invest it. But the idea is: Do the right thing with your money, and you’ll be more apt to increase your net worth after many years.

The Year of the Pig and Money

While you’d like to think that your Chinese Zodiac year is going to be 100 percent awesome sauce, the truth is: It can go either way. This year – 2019 – marks the year of the pig in the Chinese Zodiac system. If you were born in the year of the pig, which is the twelfth year in the 12-year Chinese zodiac cycle, this means you were born in 1971, 1983, 1995, 2007, 2019 – you get the point. It also means you’ll want to be cautious with your money as those born in the year of the pig tend to stress about money big-time.

You may also experience a stroke of good luck and get a windfall of cash, perhaps in the form of a donation, inheritance or bonus. And if you had a bad time with investments in years past, things might turn around for you in 2019. If we’re talking about which periods are best for those born in the year of the pig, it’s February, March and July. The least favorable period is the month of May.

Keep Your Eye on the Prize

Whether you were born in the year of the pig or not, it’s always important to make the most of your money, and treat it right. After all, you can’t depend on the Chinese Zodiac, fate, or the cosmos to work in your favor. It’s up to you to take steps to boost your finances.

 

Good Credit Scores vs. Bad Credit Scores

Your credit score is a huge indication of your financial health. In fact, your credit is so important that lenders refer to it when you apply for a line of credit, a home mortgage, a car loan or even a new credit card.

But, in order to be approved for loans and credit cards you often need a “good” credit score. That begs the next question: What makes a good score vs. a bad score? Before we jump in, let’s go over the basics.

What is Credit and How is Your Score Calculated

Your credit score is a three digit number that helps lenders determine how credit worthy you really are. In other words, it’s a tool lenders use to determine if you are a good borrower and thus most likely to pay off your loans.

The three major credit bureaus – Equifax, Experian and TransUnion – collect information on you to help determine your credit score. For instance, whenever you open a new account via a loan or line of credit, this information gets reported to the three bureaus.

The bureaus then use a credit scoring model to determine what your score is. The two most popular credit scoring models are FICO and Vantage. FICO is used widely by lenders, but you’ll want to aim for a high credit score no matter which scoring model is being used.

What Makes a Good Credit Score?

There are a few important factors that help contribute to your credit score. These factors include your payment history, amounts owed, length of credit history, credit mix (how many different types of account you have,) and new credit.

Credit scores range from 300 to 850. Good credit scores fall in the 670 to 850 range. Anything below 670 is either considered a fair or bad credit score, according to FICO.

If you want to raise your credit score, it’s important to prove that you’re a responsible borrower and not a risk to the lender. Why? Lenders don’t want to give money to people who won’t pay them back. This is why the most crucial things you can to do improve your credit are:

 

  • Pay your bills on time
  • Keep credit card balances low

To help you do this, you can create a detailed budget and set up reminders or automatic withdrawals to ensure you pay bills on time. The longer you keep up with this habit, the better your score will get. For example, say you have a student loan with a 10-year term. You’ve made on time payments for about eight years so far. Good for you! This will improve your credit and show lenders that you can be trusted to pay back a sum of money over time.

Here’s another pro tip: When it comes to credit cards, never spend more than 30% of your credit limit. Remember, credit is a tool, and it will not help your score if you max out your credit cards. So, if your limit is $2,000, only spend 30% of that limit, or $600. Then, pay the bill on time. If you continue this habit, your credit score should improve.

What Makes a Bad Credit Score

There are a few things you can do that will result in a bad credit score. They include:

  • Not paying your bills and loan payments on time
  • Not paying your loans at all
  • Keeping a high balance on your credit card
  • Applying for multiple credit accounts regularly

For example, let’s take a look at your bills. If you don’t pay your bills on time, companies can report you to the major credit bureaus and this will result in a negative mark on your credit report. Keep in mind that this can happen for medical bills, utility bills, and even your phone bill. If you just stop paying altogether, this is even worse. Your account will become delinquent and it will reflect poorly on your credit reports.

Keeping a high balance on your credit cards is another common mistake that indicates you may not be able to pay back what you borrowed. The takeaway: Borrow only what you can afford to repay in a timely manner.

Ways to Improve Your Credit

If you want to improve your credit, focus on improving your standing with each of the five factors that impact your credit score. Here’s a breakdown of those factors and how much each one contributes to your score:

Payment history: 35%

Amounts owed: 30%

Length of credit history: 15%

New credit: 10%

Credit mix: 10%

Ideally, you’ll want to focus on improving your finances in the two areas that hold the most weight. This means you should pay bills on time and keep your balances around 30% (or lower) of your overall limit.

You should also avoid applying for new credit too often. Each time you apply for credit, it adds an inquiry to your report. Too many inquiries can hurt your score.

Over time, your credit history length will increase as long as you keep accounts open. If you close an account, your credit history will die with it. This is why it’s better to keep credit card accounts open even if you aren’t using them regularly.

Here are some other tips: If you have existing debt, you can boost your credit by paying it off. You can also establish positive borrowing history by getting a secured credit card and paying off the balance in full each month. With this type of credit card, you have to put money down first to establish your credit limit. Then, you borrow against it and repay it responsibly.

Lastly, consider establishing a no-fee bank account and emergency fund so you won’t be tempted to use credit to help you cover unexpected expenses that you can’t afford.

Know the Difference and Protect Your Score

In order to improve your credit history, you’ve got to start somewhere. A good place to begin is to know what makes a good credit score and a bad credit score. Ultimately, improving your credit score boils down to your spending and money management habits.

Are you ready to develop better money habits? Follow this guide and over time you will watch your credit score move into the “good” range.

 

Money Manners: Should you Stage a Money Intervention for Your Family?

Talking about money with trusted pals and your boo may be hard enough. But, envisioning a holiday sit-down for a mature pow-wow with your family over finances? Well, that may feel like a far-fetched, unicorn scenario.

But, what should you do if you have a relative who is royally screwing up his finances, especially if you know this mess may have a ripple effect on other loved ones? You may need to step in and intervene.

Take a look at our tips for determining whether you should stage a money intervention with the fam bam during the holidays, and our shortlist on how to proceed.

Assess the Gravity of the Situation

Communicating about money matters is well, extremely complicated. Add to the mix deep-rooted resentment, history and family dynamics, and you may feel like you’re precariously tip-toeing over landmines.

To gauge whether you should set up a money intervention, figure out exactly how serious the matter is. Is someone committing an act of financial infidelity, such as running up credit card debt, hiding bank accounts, or keeping a huge sum of student loan debt under wraps from a significant other? Or, maybe you have a teenage cousin who has no idea how to manage her finances and constantly spends everything she has. This can turn ugly once she hits college.

If it’s a serious matter, think about what would happen if nobody stepped in to intervene. If doing nothing can lead to debilitating, long-term consequences, a money intervention may be in order.

Figure Out If It’s Appropriate to Stage an Intervention

On the flipside, let’s say your sister has been complaining about how her money habits don’t align with her boyfriend’s. Perhaps she’s a saver and he never puts enough in a savings account. This would perhaps be considered a minor “flare-ups” and may be better handled between the two of them. While you feel inclined—or may have even been asked —to have a “little talk” with the couple, it may heighten feelings of tension and cause resentment.

Don’t be afraid to set boundaries around the types of money matters you’re comfortable discussing with your relatives. And, perhaps you can simply suggest resources such as a money management app or a mobile wallet that can help them with some of the issues they’re facing. Maybe this is all that’s needed to point your family members in the right direction.

Determine If You’re the Right Person

Let’s say that you’ve looked at the facts at hand, and determined that a money intervention is appropriate. If that’s a given, it’s time to decide whether you are the right person to facilitate this type of discussion.

Ideally, the facilitator should be an unbiased person who can remain calm throughout the intervention. Maybe a family friend who knows both parties would better suited. Or, you may want to bring in an experienced, trained professional, such as a financial therapist. Someone like this has no emotional ties to your family and may be the best person for the job.

If you’re the one handling the intervention, here are a few dos and don’ts to get started:

Don’t: Make Assumptions

Most of the time you only know one side of the story. For example, you may only hear from your Uncle Bill about how his wife Jane neglects to pay the bills on time. But to be fair, you may not have gotten wind from your Aunt Jane that Bill is no money saint, either.

It’s tough to do, but leave your assumptions at the door. Go into the situation with an open mind, and get the facts and details from everyone involved. If you take an unbiased, balanced perspective, you can then stage a more effective intervention.

Do: Time It Well

Just like it’s a major faux paus to ask for a loan during someone’s birthday party (yes, I’ve been guilty of this), a holiday gathering is not be the best time to stage a money intervention.

Instead, choose a time that works for everyone involved, and pick a private space so you can discreetly discuss touchy matters.

While the holidays are one of the few times during the year when all your family members may be in the same place, avoid discussing money matters over the dinner table. If you must have an intervention the day of a holiday gathering, schedule it before or after the festivities in a separate location.

Don’t: Go for the Jugular

While you may know what the main issue is, consider starting out by having a general conversation about money. This can lead into deep-seated matters, such as financial infidelity, debts that have remained long unpaid, issues with gambling or bouts of overspending.

The key here is to harbor healthy and respectful communication. Otherwise, it can escalate into a shouting match and reflexive rounds of pointing and blaming.

Do: Defer to a Professional If Necessary

As I mentioned above, it may be easier to bring in a pro, such as a licensed therapist or maybe even a money coach who works with couples or groups.

A money intervention can cause tension, and dredge up deep-seated, bad feelings. Without proper training, a well-intended conversation can quickly go south.

Handle the Situation Gently

When trying to decide whether staging a money intervention is appropriate and necessary, just keep this in mind: For every action, there is a reaction.

Do your best to create a safe space before bringing out the elephant in the room. And whatever you do, tread with care. If executed properly, facilitating a family financial intervention can shift your family’s money situation in a positive direction. It can also foster deeper communication and trust.

 

Too Broke to Date? How to Handle Relationships and Money

As student loans and housing costs have risen over the past 15 years, you may have accumulated your fair share of additional financial baggage. Indeed, millennials are struggling to meet traditional markers of financial success.

Whether you are in debt or have an apartment you can’t really afford, you’re not alone. And, while you struggle to pay your bills and get ahead, you may not feel comfortable discussing your financial sitch with a new romantic partner.

Here’s the deal though—studies show that conflicts about money are related to divorce. While you may be far away from wedded bliss, learning to talk about money—the good, the bad and the ugly—with your romantic partner is a smart skill to practice. Here’s everything you need to know about how and when to share your financial truth.

Understand your money

If you don’t understand your own financial situation, it’s impossible to talk about money. Period. Because of this, the first step to discussing your financial status with a romantic partner is to make sure you know what you’re talking about. This doesn’t mean you need an MBA in finance, but it does mean that you need to understand the basics—including what’s on your bank account statements and credit card bills. You should also have at least a rough monthly budget and be able to stick to it. From here, you can then opt to make a few quick changes that will boost your confidence and your bank account balance. Here are 3 suggestions:

Step #1: Switch to a bank with no fees.

Step #2: Cut out unnecessary expenses (like subscriptions you never use).

Step #3: Track your spending and earnings.

The changes may feel minor, but being proactive with your finances is an important first step. Now it’s time to get clear about how you feel about money.

Own your emotional baggage

The more you understand about your own relationship with money, the easier it is to confidently talk about it with a new romantic partner.

For Jeff Proctor, a 28-year-old entrepreneur in Blacksburg, Virginia, it was his own self-doubt that made it difficult when he started dating his girlfriend more than two years ago.

“At the time, I was at a low point in my first attempt at entrepreneurship. My income was effectively zero. With business expenses mounting and my own personal cash reserves running dangerously low, it definitely had an effect on our relationship, but not in the way you might expect. We were both perfectly content with being frugal and not making fancy dates the norm, but what was hard for me was my own self-perception of being inferior,” says Proctor.

“My girlfriend was on a very upward career trajectory, so I almost felt like I had to hide my current lack of success. Since our relationship was so new, I was very self-conscious about that,” he recalls.

When you start dating someone new, you may be under pressure to impress that person. And, this can bring out your own internal insecurities. To help combat this, remember that trust is more important than perfection.

Honesty is key

When you feel self-conscious about something—student loans, debt, low income—it’s tempting to hide it, but that’s actually the worst thing you can do when you’re getting to know a new romantic partner.

Debbie Todd, CPA, and CEO at iCompass Compliance Solutions, LLC and 1 Hour Impact, says:  “Be honest with yourself about your real financial picture. Don’t ‘puff and bluff’ your way into seeming to be in better shape than you are. Pretending and lying only makes it worse.”

If you potentially see a future with someone you’re dating, it’s important to be honest because the truth will eventually come out, says Todd. With this in mind, it’s infinitely better to mention your financial baggage on the third date than to mention it three days before you’re getting married.

Here’s the deal: if a romantic partner is worth your time and energy, then he or she is going to be understanding about your financial situation. If not, you’re probably better off without that person.

“It sounds cliché, but you really do need someone who loves you for you, and doesn’t care about your financial situation…When I hit entrepreneurial rock bottom and had to go back and get a full-time job, my girlfriend still supported and believed in me,” says Proctor.

“Fast forward to now, and I am 100% full-time in my business and making more than I have ever made before,” he says.

If you’re doing the work—paying your debt, saving what you can, working hard at your job and taking positive financial steps—then you don’t have anything to be ashamed of. The right boyfriend or girlfriend will understand. The likelihood is that he or she also has some financial regrets to share with you.

Sooner is better than later

Disclosing your financial status to a new romantic partner is hard because it requires vulnerability. But the longer you delay the conversation, the harder it will become.

“[Disclosing your financial status] is probably not a topic for a first or second date, but if you both think the relationship has significant potential, then the ‘money talk’ should commence shortly after,” says Todd.

“One of the key reasons why relationships (and marriages) end is squarely pointed at money issues. You don’t have to be financially rich to be happy, but you do have to have a rock-solid foundation of trust, honesty and willingness to address major life areas of the relationship. Money is surely one of them,” she says.

Remember: there’s no set timeline for talking about money, but the rule of thumb is simple – sooner is better than later.

Bottom line

Money is complicated and everyone makes mistakes and has regrets. With this said, large student loans, credit card debt and other financial situations don’t define who you are as a person or who you are as a life partner.

Take time to review your finances and check-in with your emotions. After that, follow the advice here. Before you know it, you’ll be ready to take the plunge with your new love interest and come financially clean.

 

Relationships and Money: 5 Financial Questions to Ask Your Partner

First comes love, then comes…financial discussions?

Sure, talking about money may not be the most romantic thing in the world, but it is important in any relationship. Whether you are just starting to get serious with your partner or you’ve been married for years, there is no better time than the present to talk about cash.

Let’s back up a bit. This doesn’t mean that you should ask financial questions on a first date. Yet, if things get more serious, it is vital to know where your partner stands financially. In fact, according to a recent Experian survey, 59 percent of those who have been divorced say finances played a role in the breakup of their marriages. Furthermore, 20 percent of these people went on to say that financial conflict was a significant factor in their divorce.

To avoid major financial issues with your partner, it’s important to be the same page when it comes to saving money and prioritizing financial goals. Ready to talk about money with your love interest? Here are 5 money-related questions you should ask your partner – starting right now.

1. What are your financial goals?

Asking your partner about his or her financial goals is a relatively broad question, and this makes it the perfect conversation starter. Once you understanding your partner’s goals, you’ll then have a better idea of how to support him.

So, ask your partner about his or her short-term and long-term financial goals. How does he or she envision the future? What type of lifestyle does he imagine? As long as your partner is willing to open up and share information, this is a great starting point. It will hopefully offer up a way to naturally guide your conversation.

2. What’s your current debt situation?

Before you become serious with your partner, it’s vital to know what you’re getting yourself into. Down the road, if you want to get married, your partner’s debt will become your own. While this may not be a big deal for some people, it may be a make it or break it factor for you.

So, find out if your partner has debt. If so, what actions is he taking to pay it off? Does he have a solid debt-repayment plan?

Debt doesn’t necessarily have to be a deal breaker. If your partner has a realistic plan to pay it off, then you can rest easy. On the other hand, you may want to think twice before you get too serious with someone who is taking no action to pay off $100,000 of debt. This type of monumental debt can put a serious strain on your relationship.

3. What leisurely spending do you refuse to give up?

We all like to spend money in different ways – and in different amounts. This means we don’t always agree when it comes to spending choices. Failing to understand and accept how your partner spends money can create a major barrier in your relationship.

For instance, when my husband and I were dating, I couldn’t understand why he spent so much money on his favorite hobby – golf. Secretly, I was upset at how much he was spending. It wasn’t until we talked about it that I understood the importance of personal spending priorities. Golf was important to him.

Once we discussed this, we both understood the concept of individual spending freedom. Although we have since merged our finances, we still each get to spend a certain amount of money each month – on whatever we want.

4. Do you have plans to return to school?

Graduate school isn’t for the faint of heart. It requires a huge time commitment, not to mention a large financial obligation. In fact, according to Peterson’s, the average cost of graduate school is $30,000 at a public university, or $40,000 at a private college.

Many people desire to go back to school for one reason or another, but the decision can’t be made in the spur of a moment. Why? It takes two to tango when you’re in a relationship. Graduate school may require you to live on your partner’s income while you work toward a degree.

In short, graduate school is more than just a financial decision – it’s a lifestyle choice. If your significant other is considering graduate school, it’s time to start preparing.

5. How can we handle our finances together?

As a committed couple, you undoubtedly have many shared expenses. Do you have a plan in place to manage your finances – together?

For instance, how can you manage money together so you both reach your financial goals? How will you pay for dates? What about shared expenses, such as travel? If you live together, how should you best split rent and utility payments?

To avoid future frustration or resentment, talk about how you would like to handle finances together. Whether you split everything 50/50 or one of you pays more than the other, make it a point to create a system that works for both of you.

Happy Finances Lead to Happy Relationships

As a couple, you want to ensure that you meet your savings goals and financial commitments – together. By having money conversations on the regular, you’ll have an opportunity to talk through financial challenges and figure out how to achieve your money goals.

Just remember to be honest. This way you’ll avoid resentment and be on your way to a healthy and happy financial relationship.

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