Tag: Money Mindset

 

10 Minutes For 10 Days: Easy Ways to Prep for the New Year Financially

The new year is a great time to get a fresh start. And while you’re making a pact to get back into a morning yoga routine or to cut down on the carbs, don’t forget to also prep your finances for the new year.

It’s not as hard as you think to turn your money situation from a frowny face emoji to a muscle arm emoji. Here are 10 ways you can shape up your finances for the new year in just 10 minutes a day:

Auto Save

I’m a huge fan of the “set it and forget it” approach, and autosaving is my Number 1 favorite money tactic. With minimal effort, you can set it once and you’re golden.

Don’t be discouraged if you can’t save as much as you’d like. Even automatically saving five dollars a week into your emergency fund adds up to $260 in a year. Double that to $10 a week, and you’ll have $570 buckaroos. Not too shabby!

Make a Date With Your Spending Plan

Check yourself before you wreck yourself—with your budget, that is. It’s important to remember that your budget is a living, breathing thing. It changes as your money situation evolves, and what worked last year may not work next year.

Did your income change from switching jobs? Did you have to move? Are you spending more money on quality groceries? You get the picture.

Case in point: This was my year of “forced upgrades.” I moved and bought a new car. In turn, my monthly expenses went up, and I had to make changes to my spending plan.

Time Your Bill Payments With Paydays

If you are member of the gig economy, and get several paychecks at different times of the month from different gigs, staying on top of your bills can be challenging.

To ease the cray, time your payments so they sync up with when you get paid. For instance, if you get paid from a particular gig on the 10th of each month and your cell phone bill is due on the 15th, sync up that payment with your cell phone bill. If you’re a Chime Member, you can get paid early – making it easier to pay bills earlier as well. All you need to do is set up direct deposit with at least one employer.

Turn On Alerts

By setting alerts on your credit cards, you’ll get notified if a transaction exceeds a set amount, or if a payment was made online instead of in-person. This can help you keep your spending in check, as well as keep you informed of any fishy activity on your cards.

Check Your Net Worth

It’s easy to get caught up in the illusion of wealth—flashy cars, designer clothes and McMansions. But true wealth can be boiled down to one thing: your net worth. You can determine your net worth by adding up the amount of money you have in the bank, as well as the value of your car, house and any investments. Subtract your debt from this amount and you now know your net worth.

An easy way to track your net worth is to use a money management app. Just poke around the Apple Store or Google Play and you’ll find no shortage of free apps to help you track how many Benjamins you’re stacking.

Prioritize Your Money Goals

You likely have some of these financial goals—paying off your debt, saving for an emergency fund and saving up to buy a house.

If you’re like me and have a gazillion goals, it’s best to prioritize them. This way you can focus your efforts and yield greater results. For 2019, for example, I’ll prioritize bolstering my retirement, saving for my first home, and socking cash away for my personal projects.

Link Up with a Money Accounta-Buddy

Teaming up with a buddy to help keep you accountable with your money goals is super helpful. This may mean hopping on a Google Hangout with a friend once a month to keep each other in check, or having casual conversations in person.

What works for me is to just chat about money. I am lucky to have a handful of money accounta-buddies, and we talk about everything from paying off debt, to saving for retirement, to any issues that arise. Talking about money with trusted pals is cathartic. And it feels good to know you’re not suffering alone.

Link Up a New Habit to an Old One

The majority of our actions are rooted in habits, so try forming a new habit by linking it to an existing one. For instance, if you meditate for a few minutes every day, commit to checking your recent transactions or net worth right after that.

Figure Out an Easy Win or Big Win

To make progress on your money situation, you can either focus on an easy win or a big win. An easy win is something that will give you a boost in the beginning, while a big win will help you make greater strides.

For instance, if a money goal for 2019 is to cut back on your expenses, an easy win would be to lower your cell phone bill. You only have to negotiate once and then enjoy a lower bill. A big win would be to cut back on your food expenses. While it requires more work to lower your grocery bills, this can help you net greater savings.

Look for Forgotten Money

This is one of my favorite feel-good money tactics. In-between wading through your debt load and coming up with a plan to bolster your emergency fund, finding forgotten money gives you  a psychological lift.

To start, look in places where you may have forgotten money stashed away, like funds in a savings account you once opened but haven’t used, contributions to a retirement account through a former employer, coins in your “spare change” jar, or even cashback credit card rewards.

The Best Time to Start Is Now

There’s no time like the present to begin improving your money sitch. Using the 10 suggestions here, you can spend just 10 minutes a day taking positive actions. Just remember: No matter how many financial mistakes you made in the past, you can make changes for the better starting right now. What are you waiting for?

 

6 Year-End Money Moves: Salary vs. Hourly

It’s that time of year again – the time when everyone focuses on the holidays. This includes buying gifts, planning holiday travel and preparing for all those holiday parties.

Yet, this is also the time of year when you can easily let things fall to the wayside, including your own finances and career. So, before you let yourself get carried away with holiday spending, it’s time to take an inward look at your own money matters.

A good place to start is to answer this question: Are you paid by the hour or are you salaried? The answer to this question is important because how — and when — you earn your money can make a big difference in the year-end financial actions you take. For example, if you are a salaried employee, you may already have company-sponsored insurance and a retirement plan in place. If you are hourly, however, you may have to set up your own retirement account and purchase insurance. On the other hand, if you work an hourly job, you may have the opportunity to earn extra money by working overtime hours.

So, with one month left to go in 2018, take a look at these 6 financial housekeeping moves for salaried versus hourly employees.

Contribute to a Retirement Plan

Regularly saving money in a retirement plan is one of the most important things you can do to prepare yourself for retirement. And one of the best ways to do that is by contributing to a 401(k), a tax-deferred retirement plan offered by many employers.

You’ll often hear about 401(k) plans coming with a “company match.” Matching contributions are when your employer will deposit a dollar amount or certain percentage into your retirement plan. It’s basically free money from your job – which you can get just for contributing to your retirement account.

“Perhaps the worst financial mistake someone can make is turning down free money,” says Robert Johnson, a professor of finance at Creighton University.

“If one doesn’t contribute enough in a 401(k) plan that has a company match, one is basically turning down free money.”

Here’s how you can maximize your investments if you have an hourly or salaried job.

Salary:

  • Max out your allowable retirement account contributions by adjusting your limits through your employer or investment portal.
  • If you’re already spreading yourself too thin financially, aim to contribute as much as you can to your 401(k) to get the maximum company match.

Hourly and self-employed:

Review Your Insurance Policies

“As the year comes to a close, it’s important to review insurance policies to make sure your coverage still fits your life,” says Lingwe Wang, co-founder of life insurance provider Ethos.

Take a look at the suggestions below.

Salary (and hourly, where applicable):

  • Thoroughly review your insurance policies, to include health, auto, homeowners and life – particularly if you anticipate a major life change in the upcoming year, like a marriage, birth or relocation.
  • Open new policies and close old ones. Make this move by determining if you may need more or less coverage, depending on your individual situation.
  • Monitor insurance rates. Keep an eye on insurance rates all year, but make sure you conduct a full scale review at the end of each year.
  • Pay attention to your deductibles. Here’s a good example: “If you have an expensive (medical) procedure coming up, and have reached or nearly reached your deductible, you could consider scheduling the procedure this year, rather than next, to maximize your benefits,” says Kevin Gallegos, senior vice president of client enrollment for Freedom Debt Relief.

Hourly/contract/self-employed:

  • Pick a plan. Now is the time to select the health insurance coverage right for you. Open enrollment for healthcare coverage on the health insurance marketplace lasts from November 1 to December 15. Make sure you don’t miss this window!

Utilize an FSA (if applicable)

A Flexible Spending Account, or FSA for short, is a tax-exempt way to save money to pay for certain qualifying medical expenses that may not be covered by your health insurance. This may include prescription medications, co-payments, or even portions of your deductible.

Salary:

If you’ve been making deposits into an employer-sponsored FSA plan, start using those dollars. According to HealthCare.gov, you’ll generally need to spend your FSA funds within your plan year. So, if you started coverage at the time of open enrollment, this leaves just two short months before the money you’ve socked away goes to waste.

“There is still time to make relevant purchases to use the money,” says Gallegos.

“Many kinds of products and services apply, so if it’s too late for a doctor’s appointment, determine if you need other qualifying items.”

Hourly/contract:

If you don’t have an FSA in place, now is the time to open one for more flexibility within your health insurance coverage. You’re allowed to deposit up to $2,650 per year, per employer, into an account.

Check Your Credit Report

Ensuring your credit is in good standing is important no matter whether you’re salaried or hourly.

With that, make a habit of checking your credit report at least once a year, and now is a great time to start. Your credit report is available for free at annualcreditreport.com and by reviewing your report, you’ll be able to spot signs of identity theft, which can adversely affect your report and credit score.

If you find anything that looks suspicious or errant — such as a loan listed as delinquent that you paid off, an unfamiliar looking credit account, incorrect spellings or dollar amounts, or other information that’s amiss  — you can dispute your findings with the three credit bureaus: TransUnion, Equifax and Experian.

Checking your credit report gives you the security and control you need over your financial situation, regardless of your employment status: full-time, part-time, salaried, hourly or contract.

Prep Your Taxes

Before you know it, the holidays will be over, a new year will have begun, and tax time will be here. April 15, 2019 is the next deadline for filing taxes, so make sure you prepare ahead of time.

Salary and hourly:

  • Check your tax withholdings. “Depending on your preference and your salary, some tax withholdings are better than others,” notes McCall Robison, chief editor of Best Company.

“Look at this year’s finances and tax withholdings, and determine if your current tax withholding is working with your budget. If not, you may want to change your tax withholding choice to better work with your financial situation.”

Hourly only:

  • Calculate any extra pay you earned throughout the year. For example, if you worked overtime or earned tips, include that in your total annual income. To learn more about how to report tips on your tax return, you may want to access IRS Form 4070.

Build Your Budget

Salaried and hourly employees may be paid differently, but making an effort to start a budget or make changes to improve your current budget is a great way for everyone to save money.

“Take into account your budget for the current year and think of where you could improve,” advises Robison.

“Did you eat out too much this year? Are there some bills you could cut down on? Do an expense audit, making a list of all of your bills and other expenses, and see where you can improve next year. This will give you a great start in the new year.”

A Fresh Financial Beginning at the End of the Year

The end of the year is an opportunity to make positive financial changes in the upcoming year. No matter what kind of work you do, how much you’re paid, how you’re paid, or what your unique work situation is, this is the time to make some smart money moves.

 

5 Money Questions Every 35-Year-Old Should Ask Themselves

Everyone has that magic moment where they decide to double down on their financial health — or risk meeting long-term life and money goals. After all, wealth rarely builds itself. If you’re unsure of how to get or stay financially fit, here are five money questions every 35-year-old should ask themselves.

1. What is my credit score?

Your credit is uber-important to your financial health, as a solid score qualifies you for better rates on home loans, insurance policies, cell phone plans and more. That’s why credit monitoring isn’t one-and-done. In fact, you should check your digits regularly, ideally once a month, not just right before you apply for a loan. Added incentive to stay on stop of your credit standing: Errors on credit reports, along with instances of identity theft, are more common than you may think.

Fortunately, you can check your credit reports from the major bureaus for free every 12 months via AnnualCreditReport.com and you can monitor your credit score sans charge via certain credit card issuers or certain personal finance websites, like Credit Sesame.

2. What is my net worth?

Your net worth is the sum of your assets (investments, savings, home equity), minus your liabilities (mortgage, credit card debt, student loans). It’s also probably the best gauge of your financial health at any given time. If your liabilities outpace your assets, you’ve got some work to do — and you can prioritize what debt or issue to tackle first. If your assets outpace your liabilities, you can explore the best ways to put your money to work.

Your net worth is also a great benchmark when you’re ready to put a financial protection plan in place. Case in point …

3. How much life insurance do I need?

If you have dependents — or plan to have dependents — life insurance is a key component to your family planning … well, plan. A policy allows your loved ones to cover their expenses and liabilities were you to pass away while they are still reliant on you. It can also cover big-ticket items in your family’s future, like college tuition. Life insurance rates increase as you age or develop health conditions so it’s important to get coverage when you are young and healthy.

Most people are best-served by a term life insurance policy, which covers you for a set number of years, then expires, though there are a few instances that call for whole life insurance, which lasts until you die and comes with a forced-savings component. Policygenius can help you compare and buy life insurance, starting with a tailored online recommendation.

4. Am I paying myself first?

That’s a fancy way of asking if you are saving enough for a rainy day? Basic rule of thumb says everyone should bank at least three-to-four months of expenses away in emergency savings.

If your cash-on-hand falls short of that stat, try auto-depositing a small amount of your paycheck into a high-yield online savings account. Those dollars will eventually add up. You can also tap a budgeting app or tool to find places to pare back. This simple budgeting spreadsheet, for instance, has line for “savings contribution” all ready for you.

5. Do I need to save more for retirement?

Most people do. In fact, a recent survey from Northwestern Mutual found one in five Americans (21%) have no retirement savings at all and nearly half (46%) haven’t taken any steps to prepare for the likelihood that they could outlive their savings. That’s unfortunate, because there are a few easy ways to boost your nest egg.

Start by upping your 401(k) contributions, even by as a little as 1%. (A small increase can make a difference, thanks to compound interest.) Where possible, take advantage of other employer-sponsored benefits to lower your taxable income, like flexible spending accounts, commuter benefits and health savings accounts. Bonus: HSAs often double as de facto supplemental retirement account because you can make penalty-free withdrawals for any reason once you turn 65.

Finally, consider opening a Roth individual retirement account. Here’s why.


This article originally appeared on Policygenius.com.

 

4 Financial Decisions You’ll Need to Make in Life

When it comes to building a life you love, a host of choices can play a role. If you take care of your body through regular exercise and healthy nutrition, for example, it’s more likely you’ll enjoy good health. If you strive to do your best work your job, you have a better shot at a raise or a promotion.

But when it comes to money, the “right” thing isn’t always cut and dry. Many financial questions have more than one good answer. You’ll likely need to make some tough choices. Here are four of the biggest financial decisions you’ll have to make in life — whether you want to or not.

Roth vs. traditional IRA

While traditional workers typically save for retirement in an employer-sponsored account like a 401(k), most people have the option to invest more money in a traditional individual retirement account or Roth IRA. In 2018, you can invest up to $5,500 across both types of accounts (or $6,500 if you’re ages 50 and older). (Want a bigger nest egg? Try these five ways to save more for retirement.)

Which should you choose? According to financial adviser and retirement podcast host Benjamin Brandt, you should consider two factors — time in the market and future taxable income.

Brandt says a Roth IRA can be appealing for young investors since funds invested have tremendous potential for compounding growth. And since funds invested in a Roth IRA are after-tax dollars, retirees can take withdrawals tax-free starting at age 59 ½.

Some investors deduct contributions to a traditional IRA may be better off with this option, particularly if they are older and believe they will earn less in retirement than in their working years, says Brandt.

With a Roth IRA or traditional IRA, you’re either paying taxes on your contributions now or later. The right option can vary, so consider the pros and cons before you decide.

Buy or lease a car

Another important financial decision has to do with one of the most popular depreciating assets Americans buy — their automobiles. You can buy a car if you want, but you also have the option to lease a car. While leasing doesn’t allow you to build equity, it protects you from paying for major car repairs that can destroy your budget or decimate your emergency fund.

Still, leasing is typically a poor financial decision, says San Diego financial planner Taylor Schulte.

“Although it’s nice to have a new car every few years and potentially deduct a portion of the payment through a business, leasing a car means you will forever have a car payment dragging down your monthly savings rate,” he said. “If you want the best deal, spend time finding a reliable used car that fits your needs or attempt to ditch the car altogether.”

Schulte says that, between public transportation, ride-sharing programs, and ride-hailing companies like Uber and Lyft, there are more alternatives to owning a car than ever.

Credit or debit

Another financial decision you’ll need to make can have a lifelong impact on your finances. Should you use credit cards for convenience, rewards and consumer protections? Or should you stick to debit and avoid the temptation of overspending and debt?

Schulte says credit cards can be a solid choice for consumers who have proven they can actively use a credit card and pay off the balance each month. But the opposite is also true.

“If you miss payments and pay interest and penalties, you will quickly offset any benefits the card might be providing,” he says.

If you’re prone to take on debt, miss payments or overspend when you use credit cards, you’re better off skipping them and sticking to cash or debit instead.

Term life or whole life

Chances are, you need a certain level of life insurance to cover your final expenses and debts when you die. If you have kids, you’re the breadwinner in your home, or you have considerable debts, you may need 10 times your annual income or more in coverage to feel secure.

You need to choose which type of life insurance to buy. While there are many different variations to choose from, most people buy either term life insurance or whole life insurance. While term life insurance lasts for a specific term (usually 10 to 30 years), whole life lasts, as you might guess, your whole life

While whole life insurance may seem like a good idea, these policies are often expensive. That’s why most people are better off with a high-quality term life insurance policy that replaces their income in the event of their death.

On the flip side, a whole life insurance policy could make sense in some situations. Make sure to weigh the pros and cons and compare costs (and the opportunity costs of buying expensive whole life instead of term) before you decide.


This article originally appeared on Policygenius.com.

 

10 Ways To Save Money Now For 2018 Holiday Shopping Season

The holiday shopping season is rapidly approaching and this may leave you feeling just a tad bit stressed about everything you need to buy. With a mounting list of gifts for your partner, your nieces and nephews, and of course, those white elephant presents for the company holiday party – it’s enough to make your head spin.

“How can I afford all this?” you may wonder. One way to ease the stress is to sock money away now for your holiday shopping. Here are 10 ways to start saving money today.

1. Automate your savings

Don’t rely on willpower alone to get you started. Instead, automate your savings and set up automatic withdrawals from your checking account to your savings account. This way you’ll grow your savings account every time you get paid. Even if it’s just $20 a month, this will still help you boost your savings. Plus, if you’re a Chime member you can automatically save 10 percent after every payday, and you can save even more by taking advantage of Chime’s round up program.

2. Create a budget

A lot of overspending and holiday debt happens because consumers haven’t created a budget and adequately prepared for the holiday season. So, come up with a holiday shopping budget and work backwards on meeting that goal. For example, if you need to save $1,000 and have two months to do this, try to save $500 per month.

3. Use coupons

Before you buy anything, you should always check to see if there are any coupons you can use to lower the price. But don’t worry, you don’t need to scour the newspaper and get out the scissors! You can use Honey, a program that automatically applies coupons to your online shopping cart. You can also check out sites like RetailMeNot to find coupons and deals.

4. Look for holiday bargains

During the holiday shopping season, retailers often tout great deals and sales. You can check out sites like UncommonGoods.com, Overstock.com and OrientalTrading.com for some sweet holiday deals, as well as unique gift ideas. For other sites, it can pay to do your research ahead of time to see what holiday bargains you can score. A little research can go a long way to helping you save money!

5. Cut out one thing

One of the best ways to save money is to eliminate something from your budget. If you’re saving money for holiday shopping, you may think you need to take drastic measures. But that’s not realistic and can backfire! Instead, focus on one thing you can cut out until the holidays roll around. For example, can you give up Starbucks from now until the holidays? Can you go on a restaurant ban until Christmas? Find something in your budget that is a “want” and cut it out. It’s only temporary. This will free up some money for you to spend on your gifts.

6. Save on shipping

Shopping online can certainly make your life easier. But shipping costs can add up quickly. Before buying anything online, check out sites like RetailMeNot to see if there are free shipping codes available. Of course, you don’t want to spend extra money just to get free shipping, but if you have a large shopping list, these free shipping codes make sense.

7. Use cash or your debit card

After creating a budget for your holiday shopping, this will give you a sense of how much you can afford to spend. In order to stick to this budget, consider using cash or a debit card when shopping. This way you can avoid holiday debt and spend only what you have available in your bank account.

8. Start early

When you’re rushing and things are last-minute, it’s easy to make mistakes and pay for convenience. Yet, aside from budgeting money, it’s important to budget time too. Going to the mall on December 23rd, for example, can lead to stress and you may end up paying more just so you can quickly get out of the stores. And, if you’re shopping online, you may be forced to pay a lot more for express shipping, instead of paying a fraction of that for standard shipping. So, give yourself the gift of time so you can save money.

9. Put it off the ‘gram

You know all those great group photos you took and put on the ‘gram? Get it off the ‘gram and go to your local Walgreens to print out those photos. You can get an affordable frame and voila: affordable gift. For about $5, I got a photo printed and a frame at the local dollar store and had a cute gift for my family. It was meaningful and a nice keepsake. Remember, sometimes simple is better!

10.  Buy gift cards at a discount

A 2017 survey by the National Retail Federation and Prosper Insights & Analytics found that gift cards continue to be popular gifts. The survey found that 59 percent of consumers planned to give a gift card, and gift card spending was projected to be a whopping $27.6 billion dollars. One of the best tips to save money on gift cards is to buy them at a discount. Check out sites like CardPool.com and Raise.com to score gift cards at discounted rates.

Bottom line

Want some of the best ways to save money during the holidays? Use these 10 tips to help you stay on track. These money saving ideas will help you stick to you budget and avoid holiday debt.

And remember: While the holidays can be stressful, starting to save and prepare now can help you get through the season without the added financial stress.

 

7 Simple Ways to Improve Your Credit Score

Unless you possess a magic wand or supernatural powers, improving your credit score isn’t something you can do in the blink of an eye. But here’s the good news: a better credit score is in reach — it just takes a little planning to get there.

What if you don’t have time to monitor your credit and finances every second of the day? No problem. Follow these 7 tips for a better credit score, with minimal hassle.

1. Open a Chime Account

An estimated 62 million Americans have a thin credit file, according to Experian. This means that they don’t have enough credit history to generate a credit score.

If you have no credit history at all, you’ll have to start somewhere. Opening a Chime account can help. You can open a checking and savings account by downloading the Chime mobile app. From there, you can set up an automatic deposit to savings. This will help you grow a cash cushion that you can use as a deposit for a secured credit card. This deposit doubles as your credit limit. You make purchases with your new card and your account activity shows up on your credit report.

According to Jill Caponera, consumer savings expert at PromoCodes.com, this can help you build your credit with one caveat: Make sure “you’re paying more than the minimum balance due and submitting your payments on time.”

2. Automate Your Bill Payments

Payment history accounts for the largest share of your credit score. And, putting bill payments on autopilot can help you avoid late payments, which can cost you major credit score points.

“Automating your bill payments can be super helpful, especially if you’re forgetful, busy or something unexpected happens,” says James Garvey, CEO and co-founder of credit-building app Self Lender.

Garvey knows about this first-hand. He launched the app after several late payments seriously dinged his credit score. “I was surprised such a simple mistake could have such a big impact,” he says.

3. Use Alerts to Manage Due Dates and Balances

If you don’t want to automate, you can stay on top of payment due dates by scheduling payment alerts for your credit cards and loans. When you get an alert, you can then set up a payment.

To schedule bill payments from your Chime spending account, log in to the Chime mobile banking app, navigate to the Move Money section, then choose Pay Bills from the drop down menu. You can schedule Chime Checkbook payments, or set up direct debit payments by providing billers with your Chime deposit account number and bank routing number.

Alerts can help you keep track of your balances and how much of your available credit you’re using. In other words, alerts can help you manage another aspect of your credit score: credit utilization.

“Credit utilization ratio is the amount of available credit you’re using,” says Randall Yates, CEO of mortgage marketplace The Lender’s Network.

“The lower your credit card balances, the higher your score will be,” says Yates.

4. Increase Your Credit Limits

Paying down your balances can free up available credit and improve your utilization ratio. But, debt payoff can take time.

Bumping up your credit card limits may be a faster way to see score improvement. The trick is to avoid charging up to your new credit limit. Garvey says a good rule of thumb is to try to keep your credit usage at 30% of your total limit or less.

“Assuming you have a good payment history, asking for a credit limit increase can be a good way to lower your credit utilization ratio, which can positively impact your credit score,” Garvey says.

5. Sign Up for Free Credit Monitoring

Free credit monitoring services, like those offered by Credit Sesame and Credit Karma, can help you keep tabs on your credit history as you work towards improving your score. You can also get a free credit report every 12 months from the three major credit bureaus at Annual Credit Report.

Monitoring your credit can help inform you of errors or inaccuracies on your credit report. For example, you can spot any changes to your credit report and therefore figure out what’s contributing to up and down movements in your credit score, says Nathalie Noisette, founder of credit counseling service Credit Conversion.

6. Dispute Credit Report Errors If You Find Them

An incorrectly reported balance or inaccurate gaps in your payment history can hurt your score in a big way.

You can, however, do something about errors by disputing them with the credit bureau that’s reporting the information. Noisette says she’s worked with clients that have seen their scores increase by 30 to 50 points after successfully disputing an error. If you’re not sure where to start with a credit report dispute, the Federal Trade Commission has a handy guide you can follow.

7. Pay Off Your Cards but Don’t Close Your Accounts

If you’ve successfully zeroed out the balance on one or more of your credit cards, you’ve definitely earned the right to a victory dance. Just don’t shut your account down completely if you’re trying to improve your credit score.

“Doing so could have a negative impact on your credit, as it will lower your available credit limit and raise your credit utilization ratio,” Caponera says.

And, if you end up needing a credit card down the road, you may have to apply for a new one, which could hurt your score since inquiries for credit shave off a few points each time.

The better option? Keep the card open and use it to make a small purchase every month, then pay off the balance, Yates says. This keeps the account active so your credit card company doesn’t shut it down and it’s an easy way to continue your positive payment history streak.

Improving Your Credit Score Doesn’t Have to Be Complicated

Raising your credit score doesn’t involve any secret formulas or hacks. It’s all about patience and knowledge. It’s key to know which habits have the most impact on your score, such as paying bills on time and keeping your credit card balances low.

By following the tips here, you can put positive habits into regular practice and watch your credit score improve over time.

 

5 Money Questions Every 35-Year-Old Should Ask Themselves

Everyone has that magic moment where they decide to double down on their financial health — or risk meeting long-term life and money goals. After all, wealth rarely builds itself. If you’re unsure of how to get or stay financially fit, here are five money questions every 35-year-old should ask themselves.

1. What is my credit score?

Your credit is uber-important to your financial health, as a solid score qualifies you for better rates on home loans, insurance policies, cell phone plans and more. That’s why credit monitoring isn’t one-and-done. In fact, you should check your digits regularly, ideally once a month, not just right before you apply for a loan. Added incentive to stay on stop of your credit standing: Errors on credit reports, along with instances of identity theft, are more common than you may think.

Fortunately, you can check your credit reports from the major bureaus for free every 12 months via AnnualCreditReport.com and you can monitor your credit score sans charge via certain credit card issuers or certain personal finance websites, like Credit Sesame.

2. What is my net worth?

Your net worth is the sum of your assets (investments, savings, home equity), minus your liabilities (mortgage, credit card debt, student loans). It’s also probably the best gauge of your financial health at any given time. If your liabilities outpace your assets, you’ve got some work to do — and you can prioritize what debt or issue to tackle first. If your assets outpace your liabilities, you can explore the best ways to put your money to work.

Your net worth is also a great benchmark when you’re ready to put a financial protection plan in place. Case in point …

3. How much life insurance do I need?

If you have dependents — or plan to have dependents — life insurance is a key component to your family planning … well, plan. A policy allows your loved ones to cover their expenses and liabilities were you to pass away while they are still reliant on you. It can also cover big-ticket items in your family’s future, like college tuition. Life insurance rates increase as you age or develop health conditions so it’s important to get coverage when you are young and healthy.

Most people are best-served by a term life insurance policy, which covers you for a set number of years, then expires, though there are a few instances that call for whole life insurance, which lasts until you die and comes with a forced-savings component. Policygenius can help you compare and buy life insurance, starting with a tailored online recommendation.

4. Am I paying myself first?

That’s a fancy way of asking if you are saving enough for a rainy day? Basic rule of thumb says everyone should bank at least three-to-four months of expenses away in emergency savings.

If your cash-on-hand falls short of that stat, try auto-depositing a small amount of your paycheck into a high-yield online savings account. Those dollars will eventually add up. You can also tap a budgeting app or tool to find places to pare back. This simple budgeting spreadsheet, for instance, has line for “savings contribution” all ready for you.

5. Do I need to save more for retirement?

Most people do. In fact, a recent survey from Northwestern Mutual found one in five Americans (21%) have no retirement savings at all and nearly half (46%) haven’t taken any steps to prepare for the likelihood that they could outlive their savings. That’s unfortunate, because there are a few easy ways to boost your nest egg.

Start by upping your 401(k) contributions, even by as a little as 1%. (A small increase can make a difference, thanks to compound interest.) Where possible, take advantage of other employer-sponsored benefits to lower your taxable income, like flexible spending accounts, commuter benefits and health savings accounts. Bonus: HSAs often double as de facto supplemental retirement account because you can make penalty-free withdrawals for any reason once you turn 65.

Finally, consider opening a Roth individual retirement account. Here’s why.


This article originally appeared on Policygenius.com.

 

Are Millennials Losing Money to Bad Investments? The Data Says Yes.

Bad investments happen all the time. But when you think about bad investments, your mind likely goes right to the stock market where a lousy stock pick can lead an investment value to $0. Investments come in all forms, including a savings account or other cash-based asset class. But this is a big mistake! In an era where savings accounts offer poor returns, you may need to put a little more risk in your portfolio to avoid a bad investment. Follow along to learn why cash is a bad long-term investment, who is the worst offender, and what you can do to turn things around.

When cash joins the bad investments category

Cash is the most stable and secure option to store your assets, so what makes it a bad investment? With cash, the value of your holdings does not grow at a rapid rate. While your cash may grow when stashed in a bank account, the interest rates are terrible compared to other investments. As of this writing, just a few savings accounts offer over 2% annually, according to Bankrate. That is $20 for every $1,000 you have saved. But while the number of dollars in your accounts grows, the value of your account shrinks!

For July 2018, the annualized inflation rate was 2.9%. If you were earning 2% interest in savings, your account would lose just under 1% per year at this rate. For example, let’s say you have $1,000 saved at 2%. At the end of the year with simple interest, you would have $1,020. But the value of that slowly decreases over the year. Due to inflation, even with the $20 interest, your money would be worth $990 at the end of the year in terms of the dollars you started out with.

Because of the increase in the cost of groceries, movies, gas, and everything else across the economy as measured by the Consumer Price Index (CPI), you have less money than you started with if you invest in a savings account.

Who is investing the most in cash?

In the July 2018 Financial Security Report from Bankrate, 30% of Millennials said they think cash is the best place to invest funds they won’t need for ten or more years. This is entirely wrong, for the reasons explained above. Over time, Millennials and everyone else who put too much of their funds in cash will end up losing.

Of course, some cash makes sense. You should keep a cash emergency fund and any short-term savings, like a car fund or home down payment, in cash. But if you won’t need the cash for at least ten years, you can confidently invest in better performing assets knowing you have years ahead to recover if the markets take a turn for the worst.

Most Americans understand this vital concept. 32% responded that the stock market is the best place for a 10+ year investment. Fortunately, most recognize the risks of cryptocurrencies, and only 2% suggested that’s the best long-term investment. But cash came in second place with 24%, and the favorite for Millennials. Gen X, Baby Boomers, and the Silent Generation all knew better saying the stock market is the best place to invest long-term.

Best alternatives to cash investments

Millennials follow the trend of all Americans with poor savings rates. A 2016 Federal Reserve study found the average Millennials held just $2,600 in median savings. While that is more than you need for a $400 emergency, it is far from financial security. To help boost savings overall, make sure to participate in an employer-sponsored investment plan like a 401(k) if you have access.

For the self-employed, look to automatic deposits in an IRA or another self-employed investment vehicle. While Social Security appears to be safe and stable today, it is essential to save and invest on your own just in case those dollars shrink or dry up before you hit your target retirement age.

Most investment advisors suggest saving at least 10% to 15% of your gross income for retirement to ensure you maintain the same standard of living when you reach your golden years.

Focus on long-term goals for investment success

If you worry too much about little swings in the stock market, you could lose out on well over a million dollars in investment gains over the course of your career. While coming into careers during the Great Recession put the fear of investment losses in real estate and stocks into many Millennials, completely avoiding lucrative investments is the wrong choice.

Learn about how important investment classes work and structure your portfolio to follow along. In the worst case, pour your investments into a professionally managed target date retirement fund so you know your money is handled with your best interests in mind. But don’t put it all in cash. That is an expensive mistake every Millennial should avoid.

 

5 Things to Do with Your Money If You Get a Raise

Getting a raise can make you feel on top of the world. You get to do the same job for more money. Who wouldn’t want that?

Still, it’s important to put your raise to work if you don’t want it to disappear. Lifestyle inflation can take over when you’re complacent, which is why you should create a plan for your newfound wealth.

Before you do anything, wait a few weeks to let your raise sink in. Ask yourself what you want out of life and how your excess funds can help you achieve it. From there, come up with a strategy to put your raise to work.

Here are some of the best options.

1. Boost your 401(k) contributions

If a wealthy retirement is at the top of your list of future goals, using your raise to boost your retirement contributions is a smart move. This is easy if you invest for retirement through an employer.

With a work-sponsored account like a 401(k), all you have to do is increase your retirement contributions in an amount commensurate with your raise. If you scored a 5% raise, for example, head to your workplace human resources department and ask about increasing your contribution this much. Your employer may ask you to fill out a new W-4 form to set your new contribution level.

This strategy is easy since it’s automatic and conducted via payroll. You may never see the money from your raise, but it will grow for the future thanks to compound interest.

2. Open an IRA

Another option to consider is opening an individual retirement account. You can open this type of account whether you have a workplace retirement account or not.

There are two main types of IRAs to choose from — the traditional IRA and the Roth IRA. In 2018, you can contribute up to $5,500 across both accounts (or $6,500 if you’re age 50 or older).

Money contributed to a traditional IRA can be tax-deductible if you meet certain income requirements. Once you contribute, your money grows tax-free until retirement.

With a Roth IRA, on the other hand, you contribute with after-tax dollars. However, your money grows tax-free and you can take tax-free distributions once you reach age 59 1/2. You can also take out your contributions to this type of account at any time without penalty, which is why some people use this account to save for college or other goals.

3. Pay down debt

Paying down debt is a smart move since it can help reduce interest costs and increase cash flow. Since the average credit card interest rate reached 17% in May, according to Bankrate, it’s easy to imagine how paying off high-interest debt like credit card bills could improve your finances.

While your raise won’t arrive in a lump sum, you can still use it to pay down debt faster. Add the amount of your raise to the monthly payments you make each month, starting at your highest-interest debts. You’ll pay down debt faster and reduce the interest you pay.

4. Build an emergency fund

If you don’t have an emergency fund, you’re setting yourself up for a world of hurt. After all, cars need repairs and roofs need replacement — and insurance doesn’t always cover your bills.

Most experts suggest you have three to six months of expenses saved in an emergency fund. This way, you’ll be okay if you lose your job, take a pay cut or face unexpected medical or home repair bills.

You can use a raise to start building your emergency fund. Open a new savings account designated for your emergency fund only, then set up regular contributions on payday or once per month. If it seems like you’re saving for no reason, think how grateful you’ll be next time a surprise expense pops up and you have the cash to cover it.

5. Set up targeted savings accounts

Investing and debt repayment are important, but what if you want to have some fun? Whether you set aside money for retirement or pay down debt, you can still allocate part of your raise toward something you want.

Whether it’s a family vacation, a new deck for your backyard or a new car, set up a targeted savings account and automatic contributions. Even if you can only contribute $20 of your raise each week toward the cause, the money you save will add up — especially if you put it in a high-interest savings account that earns a decent return.

A raise means you’ll have to redraft your budget. Check out our simple budget template to get started.


This article originally appeared on Policygenius.com.

 

Stop Wasting Money by Avoiding Bank Fees: Here’s How

It’s nice to feel like your financial institution has your back. After all, you entrust a bank to hold your money and help you manage it. With this in mind, why do so many big banks charge unnecessary fees?

Citibank and Bank of America both charge a $12 monthly maintenance fee if you can’t keep a minimum balance of $1,500 in your account or if you don’t have direct deposit. Wells Fargo has a $10 account maintenance fee if you don’t meet its requirements. On top of these charges, many big banks also charge a $35 overdraft fee.  These bank fees take a bite out of your hard-earned money and who benefits from this? The big banks — many of which have not had the best reputation lately or taken consumers’ best interests to heart.

But you don’t have to accept this. You can stop wasting money. Read on to learn more about bank fees and how you can avoid them.

The truth about bank fees

For many traditional banks, bank fees have simply been the status quo. Many consumers may not even realize they’re paying a monthly maintenance fee on their checking account or recognize that they could be charged multiple overdraft fees if they overdraw their account.

In fact, BankFeeFinder.com, powered by Chime, found that the average household is paying $329 in bank fees. That’s a cross-country flight! And as of 2016, overdraft fees from big banks were an astonishing $33 billion. Not million, billion.

Bank fees are unfair to consumers who are getting nickeled and dimed by their own financial institution. It’s especially unfair for young consumers who are just starting their financial lives, many of whom are saddled with debt and dealing with stagnant wages.

Many of these banks have minimum balance requirements in order to avoid the monthly maintenance fee. So, essentially, if you’re broke and don’t have how much money, you end up paying a price. Doesn’t that seem counter-productive? Your bank should be helping you build wealth, not punishing you because you don’t have a certain amount in your account.

As the big banks continue to charge unnecessary bank fees like monthly maintenance fees and overdraft fees, there are new options on the market that allow you to just say “no” to fees.

The rise of no fee bank accounts

In a post-Recession world, I think all of us are a little more mindful of our money. We’ve started questioning many of the structures that were part of the economic downfall — and subsequently bailed out.

While many of the big banks have recovered, American consumers have not, which sets the stage for major change in the banking world.

In the INC article “Why the Banking Industry is Ripe For Disruption,” author James Paine states: “To put it simply, the banking industry is ripe for disruption. The average consumer has little to no trust in their bank, they just use the cheapest option they can find. Combine that with a total lack of competition at the top-level of the industry and what you’re left with is an industry in desperate need of change.”

Because of this, there’s a new wave of startups looking to disrupt the status quo and shake things up in the banking industry. By doing things differently these new financial companies can put the power back in consumers’ hands and put money back in their pockets. These startups and online banking apps are providing a much-needed alternative to the old banking systems that no longer serve us. For example, the last several years have seen a rise in no fee bank accounts like Chime, Capital One 360 and Ally.

At Chime, we’re committed to offering a no monthly fee checking account with the simplicity and accessibility of a mobile app. No fee bank accounts are becoming the new norm and we’re excited to be a part of this trend. Because seriously, fees suck.

Avoiding bank fees with Chime

Chime was created as an alternative to costly banks and fees. Our mission is to help consumers not only keep their money but get ahead with their money. We’re not profiting off you at every corner.

We’ve ditched the unruly bank fees that many traditional banks still charge. Instead, we offer:

  • No monthly fee checking accounts
  • No overdraft fees
  • No minimum balance requirements
  • No foreign transaction fees
  • No in-network ATM fees
  • No ACH bank transfer
  • No card replacement fee

In fact, you don’t have to stress about having a certain amount in your account to avoid a monthly maintenance fee. If you lose your card, we’ve got you covered as well and won’t hit you with a fee. We won’t add insult to injury and charge an overdraft fee if you overdraw from your account. Even more, when you’re traveling you won’t be charged foreign transaction fees. We’re committed to being fee free and helping you hold onto your hard-earned dough.

Opening a no fee bank account

Not sure how much you’re losing to fees? Check out BankFeeFinder.com to see how much you may be paying in fees. Those fees can add up fast and it’s time to reclaim your money. It was yours to begin with and you can keep it that way by using online banking apps that don’t charge fees.

Whether you are opening your first bank account or you’re ready to switch from a big bank, it’s easy to join Chime. In fact signing up for Chime will take less than two minutes. It’s totally free and won’t affect your credit score. So, if you’re looking to avoid bank fees, you can open an account with Chime and ditch your old bank for something better (if we do say so ourselves).

Final word

In this day and age, there’s absolutely no reason for you to pay bank fees. Why settle? You can opt for something better that won’t hit you up for a fee for every little thing. Using online banks like Chime, you can say goodbye to fees forever. Imagine if you had $329 a year back in your pocket. What would you do with it?

Banking Services provided by The Bancorp Bank, Member FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. Chime and The Bancorp Bank, neither endorse nor guarantee any of the information, recommendations, optional programs, products, or services advertised, offered by, or made available through the external website ("Products and Services") and disclaim any liability for any failure of the Products and Services.