All Posts By:


  • Personal Growth

    5 Personal Finance Tips For Millennials

    Millennials are finding more and more that their money doesn’t go as far as their parents’ money did. As such, they have to be both more clever, and more determined, to make their money work for them. That isn’t easy in this day and age, but there are a few tips that can give younger people a hand up on getting on top of their finances.


    5 Personal Finance Tips For Millennials

    Tip #1: Pay Yourself First

    With so much money going out the door for food, rent, and Friday night drinks, it’s easy to feel like you’re never going to be able to actually build anything. One thing you should do before you pay anyone else, though, is to pay yourself. What that means is that you need to take a chunk of your check, and put it right into your savings account. And another into a retirement account, if you can afford to.

    It doesn’t matter how much you save, either, as long as you get into the habit of saving. It might just be $5 a check, but that will add up over time. It’s the muscle memory of making sure you put savings away first that you’re trying to build.

    Tip #2: Set An Honest Budget

    We all know the basic idea behind a budget. You take your check, and divide it up so there’s a certain amount of money going to every part of your life. X amount for bills, Y for savings, Z for groceries, etc. However, too often we set unrealistic budgets, or budgets that don’t account for all our needs.

    You’re living your life. No one knows better than you what you need, so you have to be honest with yourself. If you know you go out on your lunch break twice a week, or that you’ll need to get a new pair of work boots at least once a year, include that.

    Tip #3: Cash Over Plastic

    It’s all too easy to lose track of how much you’re spending when you’re using plastic. While it’s true we all have online banking apps these days, so we can always check our balance before we head to the check out, how often do we really do that?

    An easier way to spend less, or at least to think about spending a little harder, is to carry cash instead of a credit card. Cash feels physical, and we can feel how much we’re parting with every time we make a purchase. Psychologically, cash is easier to deal with, because you know you want to hang onto it. Credit is often an out-of-sight-out-of-mind scenario, and that can be a problem.

    Tip #4: Get Tax Smart

    Taxes are something we rarely think about, until it’s time to fill out all our paperwork again. They’re inescapable, though, and it pays to think about them throughout the year.

    For example, did you know that if you donate items to charities like Goodwill or the Salvation Army that you can claim those deductions on your taxes? The same is true of contributions to many retirement savings accounts, like an IRA. If you save your receipts all year long, you might be surprised what it does to how much you have to pay in taxes.

    Tip #5: Don’t Be Afraid To Ask For Help

    Though we live in an age of unprecedented information freedom, getting help on your finances can be hard. Don’t be afraid to ask for help in managing them. Most banks have investment officers, and there are often programs at your local library, government center, and other locations geared toward helping people get their money under control. Friends, family, and even co-workers are also good sources of information. If you’re looking to get on the inside track, then try to follow in the footsteps of those who’ve succeeded before you.


  • Budgeting

    How to Create a Budget That Works

    Budgeting! It’s a word that can strike fear in our hearts. For one thing, many people associate budgeting with not having much money. You have to stick to a budget to make sure you pay the bills. Budgeting can have associations of always buying generic paper towels, and doing without concerts, wine-tasting, or any other fun activities of choice.

    But budgeting doesn’t have to be associated with deprivation. At it’s best, budgeting is a plan for clarity. You need to know where your money needs to go every month to pay the bills. Without clarity on that, you can fall behind. That impacts your quality of life, by leading to (potentially) calls from debt collectors and loss of a good credit rating.

    Budgeting allows you to know how much you need. You need concerts and wine-tasting just as much as paying the electric bill. With a budget, you can plan for those events. You can plan for vacations. You can plan for a down payment on a house, or a new car.

    Here’s how to create a budget that works, for all these things.

    1. Monitor Your Expenses

    One of the chief reasons budgets fail is that they are established without real knowledge of how much you spend and how much you need to spend.

    So one key part of doing a budget is simply monitoring what you do spend. Put any thoughts of “that’s too much!” or “wait, do I need this?” aside for now. What you’re after is an honest tally of what you really spend, without censoring yourself.

    For a month, monitor and track what you spend. On everything. You can use a notebook, a spreadsheet, or software like Mint.

    Why? A budget won’t work if you don’t really know how much you spend. A budget plan can’t be based on lack of knowledge. Say you have never really tracked how much you spend on groceries. You might decide that $250 per month is a good budget.

    But what if actually you have been spending $450? That’s not an unreasonable amount; the price of food has been rising steadily for the last few years. Your budget is doomed to failure if you decide $250 a month is your budget. It’s highly unlikely that you can cut nearly half of what you have been spending.

    2. Budget Based on the Monitoring Data

    Once you know how much you are spending, sit and make adjustments that make your expenses match your income. Do start with basic bills. Need $50 for the electric bill? Budget for it. Need $375 for groceries? Budget for them.

    Don’t stop until every category is covered.

    For the first few months, don’t worry if you go over or fall under your budget. It’s normal to have some categories not match completely. Spending for everything not fixed varies. It’s normal. You’re still gathering and refining data.

    The important thing is to get clarity on what you need every month.

    3. Make Your Budget Match Your Income

    What happens if your income doesn’t cover the budget?

    Well, one of the joys of monitoring expenses if that you know what you have been spending. After you know what you spend in a typical month, you can cut it. If you need to make adjustments in the budget, start by cutting discretionary expenses 10%. So if you’ve been spending $375 on groceries, see how you can cut grocery bills by $37.50.

    Every discretionary category can be done this way. Spend $200 on eating out? Cut 10% the first month. See if you can make a game of it. One less lunch or dinner can be $20+ saved. Entertainment? If you spend $100, rent DVDs at the library (DVDs? Yes DVDs lol) and add your $10 for a movie ticket to balancing the budget.

    Then, as you salary increases, add back that 10% and save for big ticket items like vacations, houses, and cars!

    And that’s how you develop a workable budget.


  • Budgeting, Cash Flow, Personal Growth

    6 Tips to Combat Impulse Spending

    Every day our email in boxes are filled with tempting offers from online stores and brick and mortar retailers — bait for the millions of “fish” they hope to land. If the bait works and you bite, guess what? You’re part of the billion dollar catch! There’s a carefully planned strategy behind their actions. The strategy has one aim and one aim only — to convince you that if you don’t buy now, you’ll miss your chance to snag their great deal! That’s why you’ll often see phrases like “last chance!” or “sale ends at midnight!” on so many online solicitations. And so you “bite”, grab the “deal” and feel a mixture of temporary elation mingled with guilt for breaking your budget and spending money you know you shouldn’t spend. The next day, new offers from the same retailers unfailingly appear with phrases like “sale extended for one more day!” or “absolutely your last chance!”.

    Since the whole strategy behind creating a workable budget is careful planning, impulse spending has to be one of the biggest budget “whammies” there is, since by its very nature it’s unplanned. According to Ian Zimmerman, PhD for Psychology Today, impulse buying is related to anxiety and unhappiness. Paradoxically, impulse buying typically results in buyer’s remorse and unhappiness, which should be a convincing argument for finding a way to stop doing it!

    Some of us are more likely to succumb to impulse spending than others. Zimmerman says that’s because some of us have a personality trait called, logically enough, “impulse buying tendency”, meaning that impulse buying isn’t an occasional trap we fall into, but rather a habit that we succumb to regularly. People who possess the trait are more social, more conscious of social status, and concerned with their image. They also tend to experience higher levels of anxiety and have trouble controlling their emotions.

    But whether you’re spending on impulse to look better in the eyes of your peers, or to get yourself out of a bad mood by “buying” a little (short-lived) happiness, there are ways to combat your urges and take control of your finances. Here are 6 tips to help you combat impulse spending once and for all:

    1. Don’t shop when you’re upset.

    It’s too easy to fall into the trap of buying something you don’t really need in the hope that it will make you feel better. (It might — for an hour or a day!)

    2. Stop thinking of the mall or online shopping sites as “entertainment”.

    Real entertainment makes us feel good. Shopping for entertainment tends to do the opposite. We wind up feeling cheated because we can’t afford something we see that we’d like to have, or we buy it and feel guilty for spending impulsively and breaking our budget. It’s a no-win situation! Start by unsubscribing to any physical catalogs or online solicitations you’re regularly receiving. You can use a service like Unroll Me, to unsubscribe from multiple retailers at once, or simply find the “unsubcribe” link usually found at the bottom of a retailer’s email message and click on it.

    3. Go shopping with a list.

    Buy only what’s on the list and get out of the store as fast as you can — no browsing!

    4. Ask yourself questions.

    “Do I really need this?”, or “Will buying this really change my life and make me happier?”. Be honest with yourself! Don’t try to “sell” yourself to justify an impulse buy.

    5. Watch out for the “on sale” trap.

    An astonishing number of us buy things simply because they’re on sale and we “could use it”. Truth is, we could all use the extra money more!

    6. Keep a list of the things you really want/need.

    (That way, if you find one of them on sale and have the cash on hand to buy it, it really will be a good deal!)

    There will always be “stuff” out there that we’d love to have, and there will always be people who have more than we do. Those are things we can’t control. The only thing we can do is learn to control our impulses by stopping, taking a breath, and remembering we can actually find happiness without acting on every impulse!


  • Debt, Personal Growth

    Avoiding the Debt Cycle

    Financially speaking, millennials have it rough. College is more expensive than ever, with college loans taking a chunk out of many millennials’ paychecks long after they graduate. Cost of living is high, while finding an entry-level job that will support a family is next to impossible. When you’re faced with the standards your parents and grandparents lived with–getting married young, easily affording that first home, and handling the cost of having children –it seems impossible to stay out of debt and still have the things you and your family deserve. Avoiding the debt cycle, however, can help you get ahead financially–and stay there.


    Stay off of social media pages that encourage a buyer mentality.

    This is particularly true of pages geared toward new parents. Everyone of them, from the admins to the other moms, seems determined to convince you to buy, buy, buy! The truth is, there’s no need to buy multiples of one item when one will do well enough. If you find that social media pages are encouraging you to make purchases that are rapidly draining your wallet, stop following them! Your finances will thank you.


    Save up and buy quality.

    When you’re stuck in a low-income spot and trying to stay out of debt, it’s tempting to buy a low-quality, low-price item instead of saving up for a higher-quality item. Unfortunately, that means that within a few weeks or months, you’ll find yourself right back in the same position! Instead, find ways to make do short-term in order to save for the higher-quality purchase. From work clothes to appliances, it’s often worth the higher price tag to invest in quality.


    Prepare mentally for bigger payoffs later.

    Early in your career, you may need to work for low pay or embark on expensive training programs in order to move ahead in your field. It’s alright to live frugally.  Don’t be embarrassed about packing a lunch or work.  Remind yourself that there are bigger payouts coming down the road and stick to your guns against debt.  Don’t fall victim to the lifestyle creep (3 Keys to Avoiding Lifestyle Creep). It will make it easier to make it through the tight times.


    Learn to live simply.

    Minimalism is a lifestyle that’s quickly coming back. Instead of an overcrowded house that seems to be exploding at the seams, look for ways to enjoy a minimalist lifestyle. Avoid buying “stuff” just to have it. You don’t have to go full-blown minimalist, living off the grid, with a capsule wardrobe and no knick-knacks to be found anywhere, but avoid buying things you don’t need.


    The trick to staying out of debt as a millennial is to avoid overspending. Avoiding excessive stuff, whether that means embracing minimalism or staying off of sites that encourage you to buy things you don’t really need, can make it easier to stay out of debt. Changing the way you think about your purchasing habits can keep you debt-free and your life moving smoothly.



  • Children

    5 Great Ways to Teach Your Kids About Money

    One of the most important lessons you will ever teach your child is how to handle money–and that’s a lesson that begins in early childhood. By working with your child now, you can cement the financial lessons you want them to learn early in life. Ultimately, this will help them manage their finances much more successfully as adults.


    1. Start as you intend to go forward.

    As adults, we’re encouraged to put 10% of our income into savings each paycheck. Starting your child off this way is a great opportunity to cement the concept of savings in their heads while they’re still young. When your child receives money, whether as part of their allowance or as a gift, encourage them to put a percentage of it in their savings account for later use. This can be a long-term savings account to help them pay for expenses in college or a short-term account that will allow them to save up for big purchases that they really want. Over time, that account will really start to add up!


    2. Let them save for big purchases that they really want.

    Avoid the temptation to buy your child everything they want the moment it releases. Instead, give them the opportunity to save the money they’ve earned and been given–an allowance, birthday money, even tooth fairy money–toward those big purchases. While it’s perfectly fine to give your child gifts, the satisfaction of working for something they really want is a gift of its own.


    3. Try a unique take on chores and allowance.

    Instead of offering your child a blanket amount of money for the chores they’re assigned to complete each week, allow your child to decide how much they’re going to earn. Assign a specific payment to each chore: a quarter for making their bed every day, for example, or a dollar for cleaning out the cat’s litter box. In many professions, your child will find that they are able to earn based on what effort they put forth, so learning early how to plan ahead when they want to make a purchase will benefit them in the long run.


    4. Talk to your child about your spending habits.

    Many young children, in particular, start to think that their parents are made of money–especially since “money” comes in the form of a plastic card that is scanned at checkout, rather than actual cash that has to be handed over. Instead of creating the illusion that Mom and Dad always have plenty of money, let your child see your thought processes. Explain that you can’t stop for dinner out on a particular evening because you need to be able to pay for their latest activity fees. Discuss why you coupon or shop sales at the grocery store. This will help your child develop a more mature perspective of money and may actually help increase their own financial responsibility.


    5. Discuss responsible purchasing.

    For some kids, especially those who only receive money for gifts rather than having a regular source of income, money in their hand is money that they should spend as soon as possible. They rush out and buy the latest knickknack or the first interesting toy that they lay eyes on–and promptly lose interest in it within a matter of days. Instead, discuss responsible purchasing with your child. Encourage them to hold on to their money until there’s something that they really want to buy, rather than spending indiscriminately simply because they can. Talk through purchases before they make it: is this something they really want, or something that just caught their eye? If possible, encourage your child to wait a day before making a big purchase so that they have time to really think it through.

    Teaching your child financial responsibility is a process that lasts throughout their childhood and into their teen years. The younger you start, the deeper you can embed that sense of responsibility. The more you talk about money with your child, the greater the likelihood that they will develop the skills they ultimately need to manage money successfully.




  • Debt, Home Ownership

    How To Restructure Personal Debt – A Surprising Option

    You may or may not know that restructuring debt is a fairly common practice in business. The reason they do it is to save money by paying less interest on their debt. And by saving money on interest costs, they increase profits. Simple, right? But have you ever considered increasing your own “profit” (aka. discretionary income) by restructuring your personal debt? If you’re like most people, the answer is probably no. The reason you’ve probably never considered it is you never realized you could. The question is, how do you go about it?

    The answer is by refinancing your home mortgage. Of course, that eliminates some people because they either don’t have their own home yet or, if they do, they don’t have enough equity in that home to make restructuring feasible. But if you do have your own home and you have enough equity, here’s how to use that equity to restructure your consumer debt:

    Qualify Yourself

    The first step is to determine how much equity you have in your home. To do that, simply subtract the current balance of your mortgage from the current market value of the home. If your home equity is equal to or greater than the total amount of credit card you have, you might be a good candidate for debt restructuring.


    How It Works

    If you determine that debt restructuring is right for you, the next step is to do a cash out refinance, and use the cash you receive to pay off your credit card and other high interest debt.


    Why It Makes Sense

    Some people will tell you that using cash out refinancing to pay off consumer debt is just trading one debt for another. That’s true. But there are some very real benefits to restructuring in this way:

    • Your mortgage interest is much lower than your credit card interest, so you’re saving money there – a lot of it.
    • Your mortgage payment is much lower than the total of your current mortgage payment and your consumer debt payments, so you’re saving money there too – potentially a lot, depending on the loan terms and other variables that are unique to your situation.
    • You can use the increased discretionary contribute to your savings and retirement plans every month.
    • If your cash out is greater than the amount you need to pay off your consumer debt, you can put that extra cash into a separate savings account designated as your emergency reserve. Having an emergency reserve will keep you from having to use plastic when an unforeseen expense arises.


    A Huge Caveat

    Of course, as is the case with most good things, there is a caveat to using your cash out refinancing to restructure personal debt. It requires ongoing fiscal discipline to be successful. That means avoiding the credit card trap in the future. If you pay off your credit cards in this way, then run up those balances again, you’ll find yourself in worse financial shape than before. So it’s best to just cut those credit card up (don’t close out the account since it could negatively affect your credit), or at least hide the cards in the freezer or somewhere so that you’re not tempted to use it every time you open your wallet of handbag.

    As you consider this option, you should seek qualified professional advice on your specific situation.



  • Investing, Retirement

    The Best Asset Allocation When You Are Under 35

    Typically, people don’t start thinking about retirement savings until later in life. However, the best time to start saving is as early as possible. Ideally, this means in your 20s, the moment you leave school and start earning an income. Currently, according to the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84. For a woman, that age is 86. However, these are just averages. One in four persons will actually live past 90.

    Therefore, if you retire at 65, the typical person should expect to live at least another 30 years. Additionally, the general advice given today is to target to replace between 70 to 90 percent of your pre-retirement income. Consequently, a person who earns $75,000 before retirement should expect to need at least $56,250 annually between their own retirement savings and Social Security. In fact, many financial advisors will advise you to plan to replace 100 percent of your income for the first 10 years of your retirement.

    How Much Should You Save for Retirement?

    That said, there is no one-size-fits-all answer for how much to save. How much you will need will depend on your personal circumstances. While these are things you may not even be thinking about yet, factors that you must try to project will include things like your future health, living expenses, and desired lifestyle. Some of these factors are based on personal goals that you can adjust over time. But, health care costs are a non-negotiable retirement expense. Even without major health issues, health and wellness costs do increase as a person gets older.

    Nevertheless, much of your retirement income needs will come down to lifestyle choices. The area where you choose to live in your retirement can have a dramatic impact. Choosing a walkable community, with easy access to public transportation, will save you a bundle. Also, starting your retirement being mortgage-free can considerably decrease your housing costs, as can downsizing to a smaller home that will cost less to maintain. Finally, you have to think about the lifestyle you want in retirement. Do you want to travel or will you be happy hanging out at the local rec center?

    So, how much will you need going into retirement? Let us presume that your goals will require $67,500 annually. It is also a good idea to project with an optimistic outlook beyond national life expectancy averages. So, plan that you will live until 95 years old. What is your “magic number”? Assuming that you will receive $2,000 per month ($24,000 per year) from Social Security, you will need $1.3 million. If at age 27, you start saving just $5,500 per year towards your retirement, you can reasonably expect $1.42 million by age 67 assuming an 8 percent annual return.

    What’s the Best Asset Allocation for Your Age?

    What is the best asset allocation for those under 35 years old? One general but well-established rule is to subtract your age from 100. This will provide you with a good idea of what percentage your retirement savings should be placed in stocks and what percentage should be placed in bonds and other “safe” investments. Therefore, if you are 27 years old, a good general strategy is placing 73 percent of your retirement savings in the stock market and 27 percent in other investments. Of course, there is no perfect allocation strategy that works for everyone, but it does create an easy to understand starting point.

    Be that as it may, many financial experts believe rising life expectancies and medical innovations will mean that younger investors need a more aggressive approach. Some are recommending asset allocations based on 110 or 120. This could mean that an individual at 27 years old should place up to 93 percent of their savings in stocks. Why stocks? With a buy and hold strategy, the stock market is one of the best ways to grow wealth. While the value can drop, a wise strategy will help to protect you.

    When you are thinking about the best asset allocation, your age should always be a prime consideration. Many 27-year-olds can weather the risk of having 93 percent of their retirement savings invested in the stock market. By the time this individual reaches 75 years old, only 45 percent of their investments should be in the stock market. It is a good idea to evaluate your investments annually, and make adjustments in order to keep yourself in line with your allocation goals. This also gives you the best opportunity to sell high and buy low, as you sell off well-performing stocks.