Tag: Money Mindset

 

How Much do You Really Need in Your Emergency Fund?

Saving up an emergency fund is one of the best things you can do to prepare for unexpected expenses. Conventional wisdom says that you should save up at least three to six months’ worth of expenses.

That’s a lot of money. If you don’t earn Silicon Valley wages or if you’re just starting out from scratch, that can seem like an impossible amount to save, so why even try? But, try this on for size: Maybe you don’t necessarily need to save that much. It all depends on your personal situation.

Luckily, we’ve broken things down to help you decide what’s the right amount for you to save in an emergency fund.

How Much Money Should I Save?

The answer to this question is: It depends.

As with all rules of thumb, the three-month minimum emergency fund rule is a one-size-fits all prospect. For most people, this is great advice, and it’s infinitely better than no advice at all. But there are certain factors about your specific lifestyle and personal situation that may make you lean towards more – or less – than a three-month or six-month emergency fund.

We’ll walk through some considerations here, but in general: The riskier your situation, the more you need to save. If your situation is a little less risky, you may be able to get away with saving less.

Take a look at four questions to ask yourself when determining how much money to save:

1. Is Your Job Secure?

One of the biggest factors to think about is how stable your job situation is. After all, one of the biggest uses of emergency funds is to help you cover your costs if you lose your job. So, consider both your specific job situation and your industry in general.

If you’ve been working at your job for a long time, you may be more immune to layoffs or other unfortunate events.

Also, take a look at how your employer is doing. Do you think the company will be in business six months from now? Lastly, if you’re a freelancer, you may also want to consider saving more money since this is one of the most shaky forms of employment of all.

As far as your industry goes, consider whether it runs on a cyclical cycle. After all, the construction industry is booming right now and you may be able to find a job as a carpenter fairly easy, but five years from now it may not be the same story. The same thing goes for automation — is your job at risk for robots taking it over? If so, consider a larger emergency fund.

2. Are Your Specialized Skills in High Demand?

If you went to college or trade school to learn a specific, specialized skill, that’s supposed to help you find a job. And if you live in an area where that skill is in high demand, chances are you can find employment quickly if you lose your job. But if you live in an area where it’s not in high demand — or if jobs in your field are scattered around the U.S. — consider saving a bit more than normal.

3. How Much do You Need to Feel Comfortable?

Another consideration is simply how much money will make you feel safe. Maybe you’ve been burned in the past with outrageous home repairs, or a lemon (car) to end all lemons. If you would feel more secure and sleep better with a larger emergency fund, then go for it. If you’re OK playing with a bit more risk, then consider cutting back a bit.

4. What Type of Lifestyle do You Lead?

If you lose your job, your emergency fund is meant to tide you over until you can find gainful employment again. Most people recommend cutting back your expenses so that you can stretch your emergency fund as far as possible in this case.

But, consider this: Do you want to live the lifestyle of an ascetic monk while you’re job hunting again? Maybe you still want to go out with friends, or more importantly, attend networking opportunities.

In this case, it might be wise to err on the side of saving more money so that you can still afford these things. Conversely, if these factors don’t matter to you as much, you can get away with saving less.

Needs vs Wants: A Lesson in Essentials Assessment

Even if you don’t want to bump up your savings target to include everyday lifestyle expenses, you at least need to save a minimum amount. And for everyone, this amount will be different, because everyone has different needs.

To figure out what your basic needs are, tally up all the things that you really need to be able to continue on living. Things to include are:

  • Rent/mortgage
  • Necessary utilities (electricity, gas, water, cell phone, Internet, etc.)
  • Groceries
  • Transportation expenses

On the other hand, consider what you can cut out of your budget should you lose your job:

  • Restaurants
  • Unnecessary utilities (cable, HBO, etc.)
  • Entertainment
  • Fun money

Don’t Overfund Your Emergency Savings

We’ve given you some things to think about when deciding how much to save in your emergency fund. But also consider this: It is also possible to save too much money in your emergency fund.

For example, if your emergency fund is the only savings fund you have, you’re missing out on a lot of opportunities to save for other important things — namely, retirement. It’s a good idea to make sure you’re still saving money for your retirement, whether in a workplace 401(k) plan or an IRA. You may also have other goals you’re saving for, such as health care, vet bills, or a new car.

A Cash Reserve is Essential

Whether you choose a three-month or six-month emergency fund, one thing’s for sure: You do need a cash reserve of some sort and you can use this guide as a primer to help you figure out how much you need to save.

Also, keep in mind that no matter how much you decide to save, the most challenging thing is to get started. Once you get going, however, you can rest a bit easier. Just think: Even if you don’t have a fully-funded emergency savings account yet, every bit you save today will help keep you protected in the future.

 

4 Things Daenerys Stormborn Could Teach You About Money

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She walks through fire. She frees entire cities of slaves. She has dragons at her beck and call.

Without a doubt, Daenerys Stormborn of the House Targaryen, First of Her Name, the Unburnt, Queen of the Andals and the First Men, Khaleesi of the Great Grass Sea, Breaker of Chains, and Mother of Dragons is the fiercest character on Game of Thrones.

She’s also one of the most complicated, and one of the most admirable. While I don’t agree with her every decision, I do believe she can teach us something about life — and about how to get paid, even when it requires some blood, sweat, and tears.

Here are four ways to rule your money like the Mother of Dragons.

Believe in Yourself

So many of us have self-doubts when it comes to our finances. We think that we’re doomed to be “bad with money.” Or that being “comfortable” — wealthy, even — is for other people, but not for us.

If you’re nodding along in agreement, take a page from Dany’s book. “So many men have tried to kill me, I don’t remember all their names,” she told Jon Snow. “Do you know what kept me standing through all those years in exile? Faith. Not in any gods. Not in myths and legends. In myself.”

Unless you believe in yourself and your abilities, you’ll never find financial success. The best way to empower yourself is through education. By devouring podcasts, newsletters, and articles, you’ll eventually develop the financial confidence you need.

To fast-track your knowledge, I recommend the books Get Money and Broke Millennial. Since both were penned by kickass women authors, I’m pretty sure Queen D would approve.

Build a Team

Although Daenerys exudes confidence, she’s also smart enough to know she doesn’t know it all. Along her journey to power, she’s amassed a slew of advisors to help guide her decisions.

As she once said, “It takes courage to admit fear… and to admit a mistake.”

The same goes for your finances. While it’s essential to build confidence, it’s also essential to create a strong financial team as backup. You don’t need to be rich to do so, either. Here are some potential members of a 21st-century financial team:

  • Apps, apps, apps: All of us have a team of financial advisors in our pocket. Between apps for budgeting, paying and trimming bills, and managing money with a partner, embrace the wealth of technology available.
  • A trustworthy bank: Make sure your bank’s got your back. The Breaker of Chains would never stay with a bank that nickeled and dimed her — in fact, she’d probably burn it the ground. So choose banking with no hidden fees that prioritizes you as a customer.
  • A robo- or human financial advisor: This one’s not as vital as the others, but it can certainly help. Get robo-advising for your investments through apps like Wealthfront or Personal Capital, or seek human assistance with a fee-only advisor through the XY Planning Network.

When you surround yourself with high-quality people and products, you’ll find the support you need to achieve financial success. (Even if nobody on your team loves you quite as much as Ser Jorah loves Khaleesi.)

Listen to Your Values

“Our fathers were evil men,” Dany told Yara and Theon Greyjoy. “They left the world worse than they found it. We’re not going to do that. We’re going to leave the world better than we found it.”

Daenerys lets this sense of justice guide all of her decisions — even if it means slaying thousands of slave masters. While I’m not suggesting you follow those specific footsteps, I do think you can consider your values when making financial decisions.

One way is through “sustainable investing,” which encompasses a range of different strategies, including:

  • Divesting: Pulling your investments out of companies you don’t support, such as those in the fossil fuel or firearms industries.
  • ESG monitoring: Investing in companies with high environmental, social, and governance (ESG) scores, or in ESG-focused index funds.
  • Impact investing: Funneling your money toward specific causes like renewable energy.

Just like the woman who would become “Mhysa” to many, you can also let your moral compass drive your financial moves.

Don’t Let Anything Stand In Your Way

Throughout Game of Thrones, people have scoffed at Daenerys and her lofty goals. The Dothraki warlords laughed when she said she would rule them all. Then she burned them down. Others said the Dothraki would never cross the sea. Then they did.

Khaleesi never let the haters get to her. “I am not your little princess,” she declared. “I am Daenerys Stormborn of the blood of old Valyria and I will take what is mine, with fire and blood I will take it.”

Using that as inspiration, think about your money goals. How can you Mother-of-Dragons them by making dramatic changes?

If you want to retire early, for example, move to a new, more affordable city. If you want to accrue a six-month emergency fund, calculate how much to set aside each week, and set up an automatic savings contribution right now. If you want to earn more money, walk into your boss’ office and ask what you need to do to get a raise.

The bottom line: If you have a financial goal, don’t make any excuses. O.K., maybe don’t burn down an entire city with your dragons (#dracarys), but you know what I mean.

How the Mother of Dragons Can Help Your Finances

While Daenerys’ strategies may be a little, well, unconventional, we can still learn a lot from this powerful character.

By sticking to your values, educating yourself, and creating a solid financial team, you’ll gain the confidence to crush all of your money goals — no dragons required.

 

The Most Valuable Career Skills That Will Help You Get the Raise

Once you’ve landed a job that you enjoy and you’re excelling at work, these questions may pop up: “How can I get a raise or promotion, and what skills should I master to climb the career ladder?”

Whether you’re in an entry-level job or you’re a more experienced career professional, there are a number of skills that will help you get a raise and develop your career over the long-term.

Take a look at four top skills to help you build a career in nearly any field, boost your earnings, and save more money in your bank account.

1. Improve communication

Do you ever feel like your manager or co-workers don’t understand what you’re trying to say? If so, you may want to work on your communication skills.

Communication is a vital skill to develop in any work situation, but especially when you’re trying to progress in your career.

“We all hear that the most important thing is to become a good communicator, and it really is,” says Jane Scudder, coach and founder of The New Exec.

Scudder says that often an employee will communicate with a manager by jumping right into the details, without understanding that the manager needs to see the situation’s big picture first. She says this is a big communication mistake.

“Don’t start with the details. Start with the bigger picture and let the details follow.”

Before talking to your boss, ask yourself: What does she care about and how can I communicate this in a way that makes sense to her? Once you know this, you can then dive into the details.

2. Manage your time

Time management has been one of the top skills on the LinkedIn list of in-demand soft skills for multiple years in a row. It’s easy to understand why. No one wants an employee who shows up late or isn’t able to meet deadlines. And, a survey of employers found that time management skills were one of the most difficult skills to find among MBA graduates.

Luckily, time management doesn’t need to be a difficult skill to develop. There are a lot of small changes you can make to see improvements in the way you manage your time. An easy place to start is to identify your priorities ahead of time.

Time management expert Laura Vanderkam suggests that if you work a Monday to Friday schedule, you should spend time on Friday afternoon setting your priorities for the upcoming week. Plan to tackle the most important priorities on Monday or Tuesday so that if other things pop up during the week, you’ll already have completed your most important tasks.

3. Network

Networking can get a bad rap, but it’s a skill that will help you move up the career ladder and earn more money. Thankfully, improving your networking skills doesn’t have to mean forcing yourself to go to networking events – if that’s not your thing. But skipping events doesn’t mean you can skip out on mastering this skill.

Learning how to network takes practice and preparation. If someone has agreed to meet you for coffee, Scudder advises sending them a calendar invite, picking a meeting location that is convenient for that person, and planning discussion points ahead of time.

“Come prepared and be ready to answer the question, ‘How can I help you?’ This is your moment,” she says.

And, don’t forget to offer your help as well. We often think that networking with someone further along career-wise makes this a one-way street. Scudder says this isn’t true. Think of ways you can offer up guidance or resources and, if you’re truly at a loss, you can always ask a simple question: “How can I help you?”

The ability to network isn’t just important in the early years of your career. In a survey of companies hiring MBA graduates, the ability to build and maintain a network was one of the most sought after skills.

4. Expand your technical skillset

Soft skills, like the ones listed above, are indeed important when it comes to career advancement. Yet, it’s also valuable to continue expanding your technical skillset.

Technical skills make it easier for you to raise your hand and take a new opportunity when it comes along. Not only will this help you get the raise, but this can ensure your skills stay relevant in the ever-changing job market.

Just how quickly are jobs changing? According to an estimate from the World Economic Forum, 65% of children in primary school today will work in a job type that doesn’t currently exist. And some of the most in-demand jobs didn’t exist 10 years ago (like app developer and social media manager).

While no one can predict exactly which skills will be in demand in the future, LinkedIn has a list of the most in-demand hard skills that employers are currently looking for. Topping the list are cloud computing, artificial intelligence, analytical reasoning, and people management.

Fortunately, learning these new skills doesn’t always require going back to school. If you’re looking to develop some of these hard skills, there are plenty of online resources that can help. For example, online courseware sites like Udemy and Coursera have affordable options that cover a broad range of topics.

Are you ready to uplevel your career?

Once you’ve honed these four skills and landed your raise, it’s time to celebrate!

But don’t get ahead of yourself by letting your newfound money slip through your fingers. Start creating a financially secure future for yourself by creating a budget and automatically saving your hard-earned cash.

 

Money Horoscope: What Your Zodiac Sign Says About Your Financial Habits

Perhaps you’ve read your daily horoscope hoping to gain insight about your career or personal relationships. But did you know that your zodiac sign can also teach you a lot about money?

Believe it or not, your astrological sign can help you learn a lot about your financial strengths and weaknesses. And this can be helpful if you want to make positives shifts with your money, like save automatically or tackle your debt.

Read on to learn the best and worst traits of each zodiac sign. Plus, get a glimpse into your own personal money horoscope.

Aries

If you were born under the sign of Aries, you have a natural hunter/gather mentality. When it comes to money, this makes you exceptionally well-suited to seeking out deals and bargains. There’s a flip side, however. Your efforts to be thrifty can be detrimental financially if they lead you to overspend just to score perceived savings.

At the same time, you can also approach your savings goals with the same zest and zeal as your desire to bargain hunt. For starters, try redirecting your impulsive tendencies by shopping wisely. For example, you can take advantage of money-saving apps, clip digital or paper coupons, and impose a 24-hour waiting period before making any large purchases. These are just some of the ways to put your thrifty skills to use in a financially healthy way.

Taurus

What does your zodiac sign say about you if you’re Taurus? In a nutshell, you really like to treat yo’ self. But not just any old thing will do. Tauruses lean towards luxury and like to spend money on high-quality items that hold their value. The positive side of the coin is that even though you like to spend, you’re also great at making savings a priority because you understand the need to have a financial cushion to maintain your lifestyle.

The downside? You can be as stubborn as a bull, which can make it harder to commit to making money changes. If you recognize these zodiac sign traits as your own, here’s a mantra you may want to keep in mind: Just because buying something gives you a rush, this doesn’t make it a need. Rather than putting yourself at risk of overspending or buying things needlessly, use your natural persistence in your favor. If you’re going to spend, make getting the best deal your number one priority.

Gemini

Geminis are curious and adventurous by nature. If you’re a Gemini, you probably get a buzz from spending your money on new experiences and unfamiliar things versus just buying “stuff”. Your intellectual side likely shows through when it’s time to make a purchase. For example, you may spend hours researching prices or product features before you buy. And you know how to buckle down and save.

The money trap you need to avoid, however, is spending just because you’re bored. A good way to counter this is by channeling your restless energy into productive hobbies so you’re not spending simply because you have nothing else to do.

The next time you have a free hour to kill, for example, sit down and map out a short-term savings plan for your next vacation or travel adventure. Having a plan to follow can also counter another negative zodiac trait Geminis share: a lack of consistency.

Cancer

Being a Cancer generally means you’re a homebody who prefers being in comfortable surroundings. While your friends may splurge on dinners out or new clothes, you might savor a shopping trip to Target to buy sheets or comfy pillows. The faithful and generous sides of your personality can also lead you to help out your friends financially when they’re stretched thin.

The trouble with this is that you may not be keeping your eyes on your own finances. One way to counter this is to surround yourself with people who are financially stable and don’t need the occasional money bailout. If you don’t want to cut ties with your squad, the next best thing is drawing some firm boundaries.

Let your friends know that you’re not an ATM and that you have your own money goals you’re working towards. And, as you spend money on feathering your nest or meeting other needs, ask yourself if there’s a less expensive way to do it. Both of these tips can help you keep more of your money in your wallet.

Leo

Leos are extremely big-hearted and kind, especially when it comes to showing their generosity to their friends. The downside is that they spend to impress. This can make it easier for Leos to end up in credit card debt if they can’t curb their spending. The silver lining is that Leos are also analytical and skilled at taking in the bigger picture.

If you’re a Leo, you can put these traits to work by coming up with a plan for paying off debt. For example, you might choose the debt snowball method to make a dent in your balance. Or you might decide to consolidate debt with a low interest loan or credit card. You can apply these same critical thinking skills to improving your credit score. For example, if you know that late payments can hurt your score, you can set up automatic bill payments through your online bank account.

Virgo

Virgos have a pretty solid head on their shoulders. They’re practical, analytical, meticulous and intelligent. They’re also organized, diligent and hard workers, with a penchant towards charitable giving. To the typical Virgo, needless or unnecessary spending doesn’t make sense.

This all sounds good except that your one money flaw may be a reluctance to spend on yourself. What your zodiac sign says about you is that you may need to loosen the reins a little with your money. If you can’t justify spending on things you don’t need, consider investing it instead. Investing in a retirement account, a taxable brokerage account or a savings account can make you feel better about letting your hair down financially every once in a while.

Libra

Libras tend to have a desire to please and they have a hard time saying no. This extends to saying no to purchases they don’t really need. The good news is that despite a desire to spend impulsively, Libras are the least likely zodiac sign to use credit. They’re also highly creative, a trait that can come in handy for saving and making smart decisions with money.

For instance, rather than buying something new, you may look for ways to repurpose things you already have. Or, instead of splurging on luxury items, you can bargain hunt or shop second-hand to find the same items for less. These kinds of creative moves can help you grow your savings.

Scorpio

Scorpios tend to be passionate and focused, with a need to control situations and things. Being born a Scorpio can give you an edge with money management, since you may be more inclined to save than spend. You like being a step ahead with your finances and may have a solid emergency fund in place. Unexpected expenses are less likely to throw you off-course.

Your money horoscope is probably pretty good already, but there are still ways you can improve it. For example, you can review your budget and look for room to carve out additional savings for emergencies. This way you’ll feel fully in control if a large (or small) unexpected expense pops up.

Sagittarius

Being a Sagittarius usually means you’re brave, confident and ready to take on any challenges life throws your way. You’re optimistic and always look on the bright side and it seems that the planets regularly align to bring you good luck. Those born under the sign of Sagittarius are more interested in spending on experiences, rather than things.

While you may not be extravagant in your spending, you also tend to buy first and ask questions later. You can rein in that tendency by considering the return on investment before making a purchase. For example, ask yourself if a particular purchase is worth the price. Putting purchases in perspective can help you decide which ones are worthy of your time and money.

Capricorn

Capricorns get high marks for being financially responsible. They’re wise, patient and disciplined. And, this pays off. As a Capricorn, you’re not into trends and you value quality in the things you buy.

The downside? You may be forgetful when it comes to smaller purchases, like getting your oil changed. Taking a broader view of your finances – that includes both needs and wants – can help you be more holistic in your approach. And, knowing where you need to put your money can also help you cut down on spur of the moment spending.

Aquarius

Aquarius’ are practical and they like being financially independent. They’re okay with spending on group activities and they don’t lose sight of what’s going on with their money. They can, however, get taken advantage of when divvying up costs with friends.

If this sounds like you, then you need to get comfortable splitting bills with friends. Using a payment app to split group expenses can make it easier to keep track of this. And if you spend a lot of time (and money) hanging out with friends, consider looking for lower-cost or free activities to do together to save some cash.

Pisces

Those with the Pisces sign tend to be generous and don’t get hung up on material possessions. This means that if you’re a Pisces, you’re probably good at keeping your spending under control.

So, if you have extra money on hand regularly, put it to work in a positive way. Use it to grow your emergency savings for those rainy days when cash may be less abundant. Also, consider how you can use it to invest and build wealth for the long-term or pay off your debts.

What Does Your Zodiac Sign Say About You?

Did you learn anything new about your zodiac sign and what it means for your money? Understanding your sign can reveal some surprising insights about what drives your financial choices. Now that you know what your best (and worst) money traits are, use this to your advantage to improve your financial situation going forward.

 

This Millennial Saved $200K Before Turning 30 — Here’s How

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The majority of millennials have next to nothing in their bank accounts.

You’ve probably heard the stats: Millennials couldn’t cover a $1,000 emergency, and they have an average of $36,000 of debt. And when it comes to retirement — which, to most millennials, seems like a billion years away — 66% haven’t saved a cent.

The blogger behind Fiery Millennials, however, is tipping the scales. Gwen Merz is only 28 years old, and has already saved $200,000 for retirement. Want to know how she did it? Merz revealed her savings story to us — and also offered advice for fellow millennials who want to prepare for their futures. To learn more, keep reading.

Stumbling Upon Financial Independence

One day in college, Merz was using the 2000s relic known as StumbleUpon when an article about FIRE (financial independence, retire early) popped up in her browser. Merz, who had grown up poor, immediately became “hooked” on the ideals of frugal living and financial security.

“Here are these people who never have to worry about having enough money ever again,” she says.

“That was very appealing to me, as someone who internalized a lot of those lessons about poverty early in life.”

Though she couldn’t save much money as a college student, Merz says learning about FIRE gave her a “really good foundation” for her adult life. When she totaled her car, for example, she didn’t take out a loan, and instead bought a used vehicle with cash. And when she graduated debt-free, thanks to a full-ride scholarship and her service in the National Guard, Merz was “so ready” to put financial independence (FI)  into practice.

“I was super stoked that I got to put money in my 401(k) and open a Roth IRA,” she says. “So nerdy, but it’s true!”

The Road to $200K

After she graduated college in 2013, Merz landed a full-time information technology job at the Fortune 100 company at which she had interned.

Her base salary? A lucrative $65,000, plus bonuses that averaged $7,000 to $8,000 after taxes, and a 10% 401(k) match.

While her peers spent their paychecks on nights out and new clothes, Merz saved 60% to 80% of her income (which increased each year and eventually came close to six figures).

“It was really good that I got started so young because I didn’t have any set habits or lifestyle expectations,” she says.

Merz maxed out her 401(k) — the limit is now $19,000 per year — and her Roth IRA — the limit is now $6,000 per year — and put the rest into a health savings account (HSA) and other taxable accounts.

After six years of saving, her retirement accounts reached a balance of more than $200,000.

Cutting ‘The Big Three’

Despite her ample salary, Merz admits it wasn’t always easy to save so much.

“At the beginning, it was definitely harder. But that’s only because I was still trying to live a typical American life.”

As an example, she cites the fact that she was living in a three-bedroom house by herself — a decision she now deems “ridiculous.” So she got a roommate, and cut her monthly housing budget from $900 to $450.

She also kept the 2005 Pontiac Vibe she purchased in college. Whereas most of her peers have bought one or more new cars since graduating, her vehicle will soon hit the 200,000-mile mark.

“It’s the big three you have to watch out for: housing, cars, and food,” explains Merz.

“If you can keep those three to a manageable level — or figure out how to get rid of one — you’re going to be so much better off than the average American.”

Or, as she puts it: If “you make one or two different choices in life, that can make all the difference.”

How Millennials Can Save (No Matter Their Income)

Merz is the first to acknowledge that the FIRE movement is dripping in privilege.

“Some people say everyone can achieve FI — that’s just not true. It’s a lot easier to save half of your income if you’re earning a lot of money.” And, as she points out, it’s even easier if you don’t have student loans or dependents.

Still, Merz believes anyone can learn lessons about budgeting and consumption from the FI movement. Even if someone can’t save at high rates, for example, they can maybe build an emergency fund or open a Roth IRA.

If you want to start saving — regardless of your income — Merz says your first step should be automation.

When Merz received her first paycheck, she set up automatic withdrawals that funneled money into her savings and investment accounts.

“I never saw that money and didn’t miss it because I had never known what it was like to have that much,” she explains.

The good news with this automated saving approach is it can eliminate the need for budgeting. Since Merz covered her necessities and investment goals by paying herself first, she could then give herself “free reign” to spend whatever was left.

“There’s a lot of guilt and decision making that are involved with budgets. But if you artificially lower the amount of money that you have to spend… it’s easier to save.”

If your employer offers a 401(k) program, Merz also urges you to sign up. Not only will your contributions grow over the next several decades, potentially funding your retirement, but they will also lower your taxable income right now. For example:

  • Say you earn $50,000 per year and contribute $5,000 to your 401(k). You can deduct that $5,000 from your income, meaning you’ll only pay taxes on $45,000 of earnings.

 

  • Many employers match 401(k) contributions up to a certain percentage. A “3% match,” for example, means your employee will  match every dollar you contribute, up to 3% of your paycheck.

“There’s no reason to not save up to the match,” says Merz. “They’re giving you free money — who does that?”

When This Fiery Millennial Will Retire

When Merz began her FIRE journey, her goal was to retire at 35 with $635,000. But in the years since, her outlook has shifted.

“I don’t really have a number or a date in mind anymore. It’s less about early retirement now — and more about how can I optimize my life so I’m at peak happiness,” she says.

Even if she doesn’t retire early, Merz has learned a lot from FIRE, saying: “It’s been interesting to see all the things society says we need that I am actually quite comfortable living without.”

She has also given herself a significant amount of financial freedom in the years to come. By frontloading her retirement savings — and giving her accounts decades to compound — Merz could stop saving for retirement now and still have a healthy nest egg at 65.

“I gave myself the gift of not having to worry and stress out about money in the future,” she says.

 

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.

 

6 Seasonal Side Hustle Jobs You Can Do in the Spring

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Today marks the first day of spring, a time to renew yourself personally and financially.

For starters, spring is a good time to assess how well you’ve been doing with those financial resolutions. It’s also a perfect time to give your money a good spring cleaning.

While there are many ways to improve your finances, here’s a tried-and-true way to earn extra cash: Pick up a new side hustle.

To get you started, here are six ideas for jumping on a new springtime side gig.

Gardening/Landscaping

The spring season means flowers are in bloom and the grass starts to grow.

This is also when folks need to tend to their lawns and gardens. Many of these people have zero time. That’s where your landscape side hustle comes in.

“It’s a great side hustle that is vibrant during the spring, as everyone starts getting their yards and gardens back up and running to look great for the summertime,” says Dustyn Ferguson of Dime Will Tell.

“People are willing to pay to do a lot of this work, especially for laborious work like placing mulch, creating pathways, picking weeds, and even designing a garden,” he says.

Even if you don’t have the greenest of thumbs, don’t count yourself out; there are always other yard care jobs to be had, like lawn mowing or trimming trees.

Pet Sitting/Dog Walking

Spring begins the vacation season – the time of year when your neighbors and local pet owners will need someone to care for their pets while they’re away.

Pet-sitting can include feeding cats, caring for a pet in your home, and most of all, dog walking.

You can advertise your animal loving, pet whisperer skills by hanging flyers around the neighborhood, but your best bet is to join a dedicated pet-sitting app like Rover.com.

Tutoring and Teaching

The school year is almost halfway over, precisely the time students need tutoring help to boost their grades, and start preparing and studying for SATs and other exams.

“The second semester is often the busiest time as students who struggled in the first part of the year seek additional support to earn passing grades, or to boost skills and confidence,” says educational therapist Ruth Wilson.

“Tutors get the satisfaction of helping a young person achieve success, which makes tutoring as personally rewarding as it is financially beneficial,” she says.

To get started, you can market your own skills or sign up on a site like Chegg.com to find in-person or online tutoring opportunities in a variety of subjects.

Another side hustle in the teaching-related family is to teach something that you have a passion for. For example, you can perhaps teach group exercise classes at a local gym or even teach children’s yoga classes. Whereas you can promote yourself, you can also connect with companies that provide you with all the necessary tools and branding to launch your own side hustle. For example, Boston-based Pretzel Kids trains you to teach yoga and mindfulness to kids via an affordable weekend or online certification course. Once you’ve taken the course, you can then join the licensing program for only $19 a month. This gives you the rights to use all of the company’s branding to launch your own Pretzel Kids business. Pretzel Kids Founder Robyn Parets calls it a “kids yoga business-in-a-box.”

“Teaching Pretzel Kids classes using all of our tools and resources is a great way to do something meaningful, while earning money around your own schedule,” says Parets.

Here’s yet another way to earn money teaching something you love: If you’re musically inclined, how about offering guitar, piano or drum lessons? Or, are you a sports lover? Perhaps you can coach or referee in local youth sports leagues.

Become a Tour Guide

Do you know your hometown like the back of your hand? Do you live in an area with a rich cultural history? Consider becoming a tour guide or docent for a local historical society or museum.

“People want to travel, and as a tour guide, you can give them best views of your city. (It’s a) great gig if you are someone who loves exploring and sharing your love for your hometown,” says career blogger Sireesha Narumanchi.

Narumanchi recommends signing up with sites like Vayable to advertise your availability.

Sell Your Stuff

Decluttering your life has a host of mental and emotional benefits, and spring cleaning is the perfect way to get rid of all that extra stuff in your house, apartment, attic or garage.

So, think about selling appliances, electronics, books, toys, bikes, clothing or other unwanted items — either at a local flea market, garage sale or online.

But how do you make it a consistent side gig instead of a one-off sale? One way is to visit thrift shops or department stores, buy items on discount or sale, and “flip” them for sale online at a higher price on sites like eBay or Craigslist.

Of course, the one thing you shouldn’t discount is selling your own creations. If you’ve got artistic skills, you can sell your wares on sites like Etsy.

Ridesharing

Rideshare services like Uber or Lyft have transformed the way we take public transportation, allowing motorists to earn cash using their own cars as a taxi service.

One reason this makes such a good spring side hustle is that the snow, ice, sleet and otherwise treacherous, wintry driving conditions are gone. You can share a scenic, springtime drive with others and get paid to do it.

Driving for a rideshare service also means you can set your own hours, drive when you want to, and get compensated quickly and easily. In fact, enrolling in direct deposit through Chime can get you paid two days early. Score!

Springing for a Side Gig

If you’re looking to rake in some extra income as the warmer weather approaches, this list should give you lots of ideas.

One more tip: Whether your side gig leads to a modest windfall or becomes something more lucrative, downloading the Chime banking app is simply the best way to manage your newfound earnings. In fact, the Chime app includes an automatic savings feature that helps you save money every time you’re paid. Are you ready to get a jump on spring with your new seasonal side hustle?

 

7 Ways to Recommit to Your Financial Resolutions Today

Did you set a New Year’s resolution? How’s it going for you so far?

If you have already fallen off the bandwagon, you’re not alone. In fact, 80 percent of New Year’s resolution fail by February.

But, what if there was a way to revive your resolve and recommit to your financial goals in a way that increased your chances of success? What if we told you that we had a few ways to help you achieve your money goals?

You’re in luck. Keep reading to learn our top seven tips for creating a brand new financial blueprint for the rest of your year.

Make Sure Your Resolutions Are Personal To You

Sometimes we choose certain financial resolutions simply because they look good on paper. But it’s hard to have ownership over your goals if you aren’t personally motivated by them. So, before you recommit to your financial resolutions, first double check that they make sense for you and that they reflect the needs of your future self.

In other words, revisit your “why.” Do you want to have enough money for a downpayment on your first home in eight years? Do you want to save money to create a work optional lifestyle for yourself 10 years down the road?

If you find that you need to get rid of some of your original resolutions, that’s okay. The point is: Be true to yourself during this process of introspection.

Choose Monthly Resolutions Instead of Annual Ones

Trying to do too much all at once is a common reason why so many New Year’s resolutions fail. Instead, focusing on small wins month to month makes it easier to stick to your plan. This way you’ll also gain the motivation you need to keep going and create lasting financial habits.

In addition to setting monthly financial goals, I have also found that creating monthly “financial willpower challenges” has been an effective way to work my way up to accomplishing even bigger goals. Your monthly resolutions could look something like this for the next few months of the year:

  • March – cut out unchecked expenses
  • April – switch to a new bank
  • May – ask for a raise
  • June – find a new side hustle

Write Down Your Action Steps

Kumiko Love, an accredited financial counselor and founder of The Budget Mom, says that “a goal will not become a reality until you create action steps on how you’re going to get there.” In other words, you have to plan in order to make your dreams a reality.

Last year, Love’s biggest financial resolution was to get out of debt, and she achieved this in eight  short months. Her action steps were as follows:

  • Step 1: Pay off student loans 
  • Highest interest first
  • $500 a month using income from side hustle
  • Step 2: Tackle car loan next
  • $1,000 per month using income side hustle

As a rule of thumb, the more granular the action steps, the more likely you are to follow through on them.

Get Some Better Visual Aids

If tracking your progress with a boring old spreadsheet isn’t getting you fired up about creating better financial habits, then it may be time to try something new. Mint is one of several apps that uses graphs and charts. This helps you see how much money is coming in, how much is being spent and how much goes into savings each week. Once you set specific goals within the app, you can easily see how close you are to your goals – with the touch of a button.

Using a “Debt Free Chart” is another great way to keep your eye on the prize. My husband and I decided to try this approach with a printable chart created by Heidi Ifland Nash. This helped motivate us to save more money for our vacation fund this year. And so far, it’s working well. We pinned the chart to our refrigerator, and each day it serves as a constant reminder that we need to keep our eye on our savings goal. Plus, we actually enjoy coloring in the lines each time we hit a savings milestone. This helps us feel more in control of our financial future.

Build in Some Accountability

One of the best things you can do to stay on track for the remainder of the year is to develop a system of accountability for your goals. This can be done by finding an accountability buddy or creating a rewards system.

“Rewarding yourself is an important part of any financial journey. But remember that it doesn’t have to be expensive in order to be meaningful,” says Love.

A reward can be as simple as treating yourself to lunch on Fridays – if you stuck to your goal of bringing a packed lunch Monday through Thursday.

Take the Guesswork Out of Sticking to Your Financial Resolutions

One of the best ways to build healthy financial habits is to take an “out-of-sight, out-of-mind” approach. In other words, create a system that takes you out of day-to-day decisions about your finances – so that you don’t have to think about them. This method is also known as financial automation. You can’t spend money you never see, which makes automated savings one of the best ways to reach your savings goals year after year.

For instance, Chime has an excellent feature that automates 10% of your paycheck directly into your savings.

Cut Yourself Some Slack

Remember: Even when you recommit to your financial resolutions, setbacks are still likely to happen. They are a part of life and we are only human.

“Once you recognize that habits don’t change overnight, it takes the pressure off of expecting perfect results right out of the gate,” says Alli Rosenblum, founder of FinancialliFocused.com

It took Rosenblum, for example, almost five months to fully break her habit of spending $60 per month on lattes.

So, cut yourself some slack and start changing your habits now. Just think: You too can reach your money goals by hitting the reset button on your financial resolutions!

 

The State of Savings in America

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

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

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

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

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

The United States of Spending

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

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

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

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

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

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

Three Ways to Save More Money

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

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

1. Change your mindset

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

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

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

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

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

2. Track your spending

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

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

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

Speaking of goals, write them down.

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

3. Start small — and automate

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

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

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

How Chime Can Help You Save

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

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

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

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

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

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