You have all kinds of financial goals you want to achieve, but where should you begin? There are so many different aspects of money management that it can be difficult to find a starting point when trying to achieve financial success. If you’re feeling lost and overwhelmed, take a deep breath. Progress can be made in tiny, manageable steps. Here’s are 16 small things you can do right now to improve your overall financial health. (See also: These 13 Numbers Are Crucial to Understanding Your Finances)
1. Create a household budget
The biggest step toward effective money management is making a household budget. You first need to figure out exactly how much money comes in each month. Once you have that number, organize your budget in order of financial priorities: essential living expenses, contributions to retirement savings, repaying debt, and any entertainment or lifestyle costs. Having a clear picture of exactly how much is coming in and going out every month is key to reaching your financial goals.
2. Calculate your net worth
Simply put, your net worth is the total of your assets minus your debts and liabilities. You’re left with a positive or negative number. If the number is positive, you’re on the up and up. If the number is negative — which is especially common for young people just starting out — you’ll need to keep chipping away at debt.
Remember that certain assets, like your home, count on both sides of the ledger. While you may have mortgage debt, it is secured by the resale value of your home. (See also: 10 Ways to Increase Your Net Worth This Year)
3. Review your credit reports
Your credit history determines your creditworthiness, including the interest rates you pay on loans and credit cards. It can also affect your employment opportunities and living options. Every 12 months, you can check your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) for free at annualcreditreport.com. It may also be a good idea to request one report from one bureau every four months, so you can keep an eye on your credit throughout the year without paying for it.
Regularly checking your credit report will help you stay on top of every account in your name and can alert you to fraudulent activity.
4. Check your credit score
Your FICO score can range from 300-850. The higher the score, the better. Keep in mind that two of the most important factors that go into making up your credit score are your payment history, specifically negative information, and how much debt you’re carrying: the type of debts, and how much available credit you have at any given time. (See also: How to Boost Your Credit Score in Just 30 Days)
5. Set a monthly savings amount
Transferring a set amount of money to a savings account at the same time you pay your other monthly bills helps ensure that you’re regularly and intentionally saving money for the future. Waiting to see if you have any money left over after paying for all your other discretionary lifestyle expenses can lead to uneven amounts or no savings at all.
6. Make minimum payments on all debts
The first step to maintaining a good credit standing is to avoid making late payments. Build your minimum debt reduction payments into your budget. Then, look for any extra money you can put toward paying down debt principal. (See also: The Fastest Way to Pay Off $10,000 in Credit Card Debt)
7. Increase your retirement saving rate by 1 percent
Your retirement savings and saving rate are the most important determinants of your overall financial success. Strive to save 15 percent of your income for most of your career for retirement, and that includes any employer match you may receive. If you’re not saving that amount yet, plan ahead for ways you can reach that goal. For example, increase your saving rate every time you get a bonus or raise.
8. Open an IRA
An IRA is an easy and accessible retirement savings vehicle that anyone with earned income can access (although you can’t contribute to a traditional IRA past age 70½). Unlike an employer-sponsored account, like a 401(k), an IRA gives you access to unlimited investment choices and is not attached to any particular employer. (See also: Stop Believing These 5 Myths About IRAs)
9. Update your account beneficiaries
Certain assets, like retirement accounts and insurance policies, have their own beneficiary designations and will be distributed based on who you have listed on those documents — not necessarily according to your estate planning documents. Review these every year and whenever you have a major life event, like a marriage.
10. Review your employer benefits
The monetary value of your employment includes your salary in addition to any other employer-provided benefits. Consider these extras part of your wealth-building tools and review them on a yearly basis. For example, a Flexible Spending Arrangement (FSA) can help pay for current health care expenses through your employer and a Health Savings Account (HSA) can help you pay for medical expenses now and in retirement. (See also: 8 Myths About Health Savings Accounts — Debunked!)
11. Review your W-4
The W-4 form you filled out when you first started your job dictates how much your employer withholds for taxes — and you can make changes to it. If you get a refund at tax time, adjusting your tax withholdings can be an easy way to increase your take-home pay. Also, remember to review this form when you have a major life event, like a marriage or after the birth of a child. (See also: Are You Withholding the Right Amount of Taxes from Your Paycheck?)
12. Ponder your need for life insurance
In general, if someone is dependent upon your income, then you may need a life insurance policy. When determining how much insurance you need, consider protecting assets and paying off all outstanding debts, as well as retirement and college costs. (See also: 15 Surprising Insurance Policies You Might Need)
13. Check your FDIC insurance coverage
First, make sure that the banking institutions you use are FDIC insured. For credit unions, you’ll want to confirm it’s a National Credit Union Administration (NCUA) federally-covered institution. Federal deposit insurance protects up to $250,000 of your deposits for each type of bank account you have. To determine your account coverage at a single bank or various banks, visit FDIC.gov.
14. Check your Social Security statements
Set up an online account at SSA.gov to confirm your work and income history and to get an idea of what types of benefits, if any, you’re entitled to — including retirement and disability.
15. Set one financial goal to achieve it by the end of the year
An important part of financial success is recognizing where you need to focus your energy in terms of certain financial goals, like having a fully funded emergency account, for example.
If you’re overwhelmed by trying to simultaneously work on reaching all of your goals, pick one that you can focus on and achieve it by the end of the year. Examples include paying off a credit card, contributing to an IRA, or saving $500.
16. Take a one-month spending break
Unfortunately, you can never take a break from paying your bills, but you do have complete control over how you spend your discretionary income. And that may be the only way to make some progress toward some of your savings goals. Try trimming some of your lifestyle expenses for just one month to cushion your checking or savings account. You could start by bringing your own lunch to work every day or meal-planning for the week to keep your grocery bill lower and forgo eating out. (See also: How a Simple "Do Not Buy" List Keeps Money in Your Pocket)
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This article is from Alicia Rose Hudnett of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:
5 Money Moves to Make Before You Turn 40
7 Important Money Moves to Make in the New Year, According to Financial Advisors
The Pros and Cons of Paying Off Your Debt Early
5 Things Keeping You From a Life of Financial Independence
If you’re a busy individual and have no time for the day-to-day management of your money, you may need to consult a financial consultant.
Beyond being busy, however, there are major turning points in your life where working with a financial consultant is absolutely necessary.
For instance, if you’re approaching retirement, you’ll have to figure out how much money you need to live during your non-working years.
So what is a financial consultant? And what do financial consultants do? In this article, we’ll run you through situations where financial consulting makes sense.
We’ll show you where you can get a financial consultant that is ethical and who will act in your best interest, etc.
Of note, hiring a financial consultant is not cheap. A fee-only financial advisor can charge you anywhere from $75 to $300 per hour. If your situation is simple, you may not need to hire one.
However, hiring a financial consultant in the situations discussed below is worth the cost.
Related: 5 Mistakes People Make When Hiring A Financial Advisor
What is a financial consultant?
A financial consultant is another name for financial advisor. They can advise you on a variety of money subjects.
They can help you make informed decisions about managing your investments and help you navigate complex money situations.
Moreover, a financial consultant can help you come up with financial goals such as saving for retirement, property investing and help you achieve those goals.
To get you started, here’s how to choose a financial advisor.
5 Reasons You Need To Hire A Financial Consultant:
1. You have a lot of credit card debt.
Having a lot of credit card debt not only can cause you severe emotional distress, it can also negatively impact your ability to get a loan (personal loan or home loan).
For instance, if you see 50 percent of your income is going towards paying your credit card debt, then you need professional help to manage debt. Your best option is to find a financial consultant.
Luckily, the SmartAsset’s matching tool is free and it helps you find a financial consultant in your area in just under 5 minutes. Get started now.
2. You are on the verge of bankruptcy.
If you have way too much debt and can’t seem to pay it off within a reasonable time, another option for you is to file for bankruptcy.
Although bankruptcy will free you from most of your debts, avoid that option if you can.
One reason is because it can have a long, negative impact on your credit file. Once you go bankrupt, the bankruptcy will be on your credit report for a long time.
Working with a financial consultant can help you come up with different strategies. They may advise you to consider debt consolidation, which can significantly lower interest rates.
Speak with the Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
3. You’re ready to invest in the stock market.
If you’re thinking about investing in the stock market, then the need for a financial consultant is greater. Investing in the stock market has the potential of making you wealthy.
But with great returns come great risks. The stock market is volatile. The price of stock can be $55 today, and drops to $5 the next day.
So, investing in the stock market can be very intimidating. And if you’re a beginner investor and unsure about the process, it is wise to chat with a financial advisor to see if they can benefit you.
A financial consultant can help build an investment portfolio and help manage your investments.
4. You’re starting a family.
If you’re just got married seeking a financial consultant is very important. A financial advisor can help you figure out whether you should combine your finances, file taxes jointly or separately.
You also need to think about life insurance as well, in case of death of one spouse. And if you’re thinking of having kids, you need to think about saving for college to ensure the kids’ future.
Turning the job over to a financial consultant can save you a lot of money in the long wrong and is worth the cost.
Related: Do I Need A Financial Advisor?
5. You’re just irresponsible with money.
If you make emotionally based financial decisions all of the time, you’re buying things without planning for them, you may be irresponsible financially and therefore need professional advice.
If you’re spending money on expensive items when you could be planning and saving for retirement, then you may need a financial consultant.
You may find yourself having trouble saving money. Then it may make sense to speak with a financial advisor.
Speak with the Right Financial Advisor For You
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
The post 5 Reasons You Need To Hire A Financial Consultant appeared first on GrowthRapidly.
When most parents offer to fund their childâs tuition, itâs with the expectation that their financial circumstances will remain relatively unchanged. Even with minor dips in income or temporary periods of unemployment, a solid plan will likely see the child through to graduation.
Unfortunately, what these plans donât tend to account for is a global pandemic wreaking havoc on the economy and job market.
Now, many parents of college-age children are finding themselves struggling to stay afloat – much less afford college tuition. This leaves their children who were previously planning to graduate college with little or no debt in an uncomfortable position.
So if youâre a student suddenly stuck with the bill for your college expenses, what can you do? Read below for some strategies to help you stay on track.
Contact the University
Your first step is to contact the university and let them know that your financial situation has changed. You may have to write something that explains how your parentâs income has decreased.
Many students think the federal government is responsible for doling out aid to students, but federal aid is actually distributed directly by the schools themselves. In other words, your university is the only institution with the authority to provide additional help. If they decide not to extend any more loans or grants, youâre out of luck.
Ask your advisor if there are any scholarships you can apply for. Make sure to ask both about general university scholarships and department-specific scholarships if youâve already declared a major. If you have a good relationship with a professor, contact them for suggestions on where to find more scholarship opportunities.
Some colleges also have emergency grants they provide to students. Contact the financial aid office and ask how to apply for these.
Try to Graduate Early
Graduating early can save you thousands or even tens of thousands in tuition and room and board expenses. Plus, the sooner you graduate, the sooner you can get a job and start repaying your student loans.
Ask your advisor if graduating early is possible for you. It may require taking more classes per semester than you planned on and being strategic about the courses you sign up for.
Fill out the FAFSA
If your parents have never filled out the Free Application for Federal Student Aid (FAFSA) because they paid for your college in full, now is the time for them to complete it. The FAFSA is what colleges use to determine eligibility for both need-based and merit-based aid. Most schools require the FAFSA to hand out scholarships and work-study assignments.
Because the FAFSA uses income information from a previous tax return, it wonât show if your parents have recently lost their jobs or been furloughed. However, once you file the FAFSA, you can send a note to your university explaining your current situation.
Make sure to explain this to your parents if they think filing the FAFSA is a waste of time. Some schools wonât even provide merit-based scholarships to students who havenât filled out the FAFSA.
Get a Job
If you donât already have a job, now is the time to get one. Look at online bulletin boards to see what opportunities are available around campus. Check on job listing sites like Monster, Indeed and LinkedIn. Make sure you have a well-crafted resume and cover letter.
Try to think outside the box. If youâre a talented graphic designer, start a freelance business and look for clients on sites like Upwork or Fiverr. If youâre a fluent Spanish speaker, start tutoring other students. Look for jobs where you can study when things are slow or that provide food while youâre working.
Ask anyone you know for suggestions, including former and current professors, older students and advisors. If you had a job back home, contact your old boss. Because so many people are working remotely these days, they may be willing to hire you even if youâre in a different city.
It may be too late to apply for a Resident Advisor (RA) position now but consider it as an option for next year. An RA lives in the dorms and receives free or discounted room and board in exchange for monitoring the students, answering their questions, conducting regular inspections and other duties.
Take Out Private Loans
If you still need more money after youâve maxed out your federal student loans and applied for more scholarships, private student loans may be the next best option.
Private student loans usually have higher interest rates and fewer repayment and forgiveness options than federal loans. In 2020, the interest rate for federal undergraduate student loans was 2.75% while the rate for private student loans varied from 3.53% to 14.50%.
Private lenders have higher loan limits than the federal government and will usually lend the cost of tuition minus any financial aid. For example, if your tuition costs $35,000 a year and federal loans and scholarships cover $10,000 a year, a private lender will offer you $25,000 annually.
Taking out private loans should be a last resort because the rates are so high, and thereâs little recourse if you graduate and canât find a job. Using private loans may be fine if you only have a semester or two left before you graduate, but freshmen should be hesitant about using this strategy.
Consider Transferring to a Less Expensive School
Before resorting to private student loans to fund your education, consider transferring to a less expensive university. The average tuition cost at a public in-state university was $10,440 for the 2019-2020 school year. The cost at an out-of-state public university was $26,820, and the cost at a private college was $36,880.
If you can transfer to a public college and move back home, you can save on both tuition and housing.
Switching to a different college may sound like a drastic step, but it might be necessary if the alternative is borrowing $100,000 in student loans. Remember, no one knows how long this pandemic and recession will last, so itâs better to be conservative.
The post My Parents Can’t Afford College Anymore – What Should I Do? appeared first on MintLife Blog.
Taking care of aging parents is something you may need to plan for, especially if you think one or both of them might need long-term care. One thing you may not know is that some states have filial responsibility laws that require adult children to help financially with the cost of nursing home care. Whether these laws affect you or not depends largely on where you live and what financial resources your parents have to cover long-term care. But itâs important to understand how these laws work to avoid any financial surprises as your parents age.
Filial Responsibility Laws, Definition
Filial responsibility laws are legal rules that hold adult children financially responsible for their parentsâ medical care when parents are unable to pay. More than half of U.S. states have some type of filial support or responsibility law, including:
Puerto Rico also has laws regarding filial responsibility. Broadly speaking, these laws require adult children to help pay for things like medical care and basic needs when a parent is impoverished. But the way the laws are applied can vary from state to state. For example, some states may include mental health treatment as a situation requiring children to pay while others donât. States can also place time limitations on how long adult children are required to pay.
When Do Filial Responsibility Laws Apply?
If you live in a state that has filial responsibility guidelines on the books, itâs important to understand when those laws can be applied.
Generally, you may have an obligation to pay for your parentsâ medical care if all of the following apply:
One or both parents are receiving some type of state government-sponsored financial support to help pay for food, housing, utilities or other expenses
One or both parents has nursing home bills they canât pay
One or both parents qualifies for indigent status, which means their Social Security benefits donât cover their expenses
One or both parents are ineligible for Medicaid help to pay for long-term care
Itâs established that you have the ability to pay outstanding nursing home bills
If you live in a state with filial responsibility laws, itâs possible that the nursing home providing care to one or both of your parents could come after you personally to collect on any outstanding bills owed. This means the nursing home would have to sue you in small claims court.
If the lawsuit is successful, the nursing home would then be able to take additional collection actions against you. That might include garnishing your wages or levying your bank account, depending on what your state allows.
Whether youâre actually subject to any of those actions or a lawsuit depends on whether the nursing home or care provider believes that you have the ability to pay. If youâre sued by a nursing home, you may be able to avoid further collection actions if you can show that because of your income, liabilities or other circumstances, youâre not able to pay any medical bills owed by your parents.
Filial Responsibility Laws and Medicaid
While Medicare does not pay for long-term care expenses, Medicaid can. Medicaid eligibility guidelines vary from state to state but generally, aging seniors need to be income- and asset-eligible to qualify. If your aging parents are able to get Medicaid to help pay for long-term care, then filial responsibility laws donât apply. Instead, Medicaid can paid for long-term care costs.
There is, however, a potential wrinkle to be aware of. Medicaid estate recovery laws allow nursing homes and long-term care providers to seek reimbursement for long-term care costs from the deceased personâs estate. Specifically, if your parents transferred assets to a trust then your stateâs Medicaid program may be able to recover funds from the trust.
You wouldnât have to worry about being sued personally in that case. But if your parents used a trust as part of their estate plan, any Medicaid recovery efforts could shrink the pool of assets you stand to inherit.
Talk to Your Parents About Estate Planning and Long-Term Care
If you live in a state with filial responsibility laws (or even if you donât), itâs important to have an ongoing conversation with your parents about estate planning, end-of-life care and where that fits into your financial plans.
You can start with the basics and discuss what kind of care your parents expect to need and who they want to provide it. For example, they may want or expect you to care for them in your home or be allowed to stay in their own home with the help of a nursing aide. If thatâs the case, itâs important to discuss whether thatâs feasible financially.
If you believe that a nursing home stay is likely then you may want to talk to them about purchasing long-term care insurance or a hybrid life insurance policy that includes long-term care coverage. A hybrid policy can help pay for long-term care if needed and leave a death benefit for you (and your siblings if you have them) if your parents donât require nursing home care.
Speaking of siblings, you may also want to discuss shared responsibility for caregiving, financial or otherwise, if you have brothers and sisters. This can help prevent resentment from arising later if one of you is taking on more of the financial or emotional burdens associated with caring for aging parents.
If your parents took out a reverse mortgage to provide income in retirement, itâs also important to discuss the implications of moving to a nursing home. Reverse mortgages generally must be repaid in full if long-term care means moving out of the home. In that instance, you may have to sell the home to repay a reverse mortgage.
The Bottom Line
Filial responsibility laws could hold you responsible for your parentsâ medical bills if theyâre unable to pay whatâs owed. If you live in a state that has these laws, itâs important to know when you may be subject to them. Helping your parents to plan ahead financially for long-term needs can help reduce the possibility of you being on the hook for nursing care costs unexpectedly.
Tips for Estate Planning
Consider talking to a financial advisor about what filial responsibility laws could mean for you if you live in a state that enforces them. If you donât have a financial advisor yet, finding one doesnât have to be a complicated process. SmartAssetâs financial advisor matching tool can help you connect, in just minutes, with professional advisors in your local area. If youâre ready, get started now.
When discussing financial planning with your parents, there are other things you may want to cover in addition to long-term care. For example, you might ask whether theyâve drafted a will yet or if they think they may need a trust for Medicaid planning. Helping them to draft an advance healthcare directive and a power of attorney can ensure that you or another family member has the authority to make medical and financial decisions on your parentsâ behalf if theyâre unable to do so.
There are only two ways to get extra money to save. Either you can cut your expenses or start earning extra income. While reducing your expenses is a good first start to sticking to your budget, thereâs only so many soy lattes and unused gym membership that you can get rid of. Itâs often much more productive to focus your energy on increasing your income.Â
There are a couple of different ways to earn more money. You might consider a side hustle or starting your own business. You can look for another job that pays more or try to get more money from your current employer. In this article, weâll take a look at how to negotiate salary increases and promotions and make sure that youâre getting paid what youâre worth.
The difference between a promotion and a raise
One important distinction to make is the difference between a promotion and a raise. A promotion is usually a change in job title and/or job responsibilities. A raise is just what it sounds like – more money. The two often come together, but not always. Be careful when you get a promotion that it comes with a salary increase commensurate with the added responsibilities youâll be taking on.
Know how much youâre worth
Knowing how much youâre worth is a key factor in the negotiations for a promotion and salary increase. There are many online sites where you can see the average salaries for just about every type of job out there. Compare several different sites to see where your salary fits in. If you can show data that youâre underpaid for someone with your experience, education and responsibilities, that can be something your manager can take to HR to approve your promotion and raise.
Track your accomplishments
If youâre looking to negotiate a salary increase or promotion, start by acting the part. Promotions and raises generally are backwards-looking. What that means is that youâre likely to get a raise for work that youâve done or are doing ALREADY. If youâre planning on talking to your supervisor about a salary increase or promotion, it can be helpful to track your accomplishments.Â
If youâve gone above and beyond your job description, or if youâve received praise from a customer or co-worker, keep notes of when and what. That can be useful ammunition to show why you deserve this raise. Avoid the temptation of comparing yourself to your peers – instead, look at the job responsibilities of the role youâre aiming for. If you have detailed descriptions of how youâve been doing those responsibilities already, youâll be well on your way to getting that promotion.
Have regular conversations with your supervisor
Healthy companies have regular conversations between supervisors and the employees that they manage. It is a trait of a good manager to care about the employment and advancement of the employees that they manage. Donât be afraid to talk with your supervisor regularly – ask her for constructive and timely feedback, and ask for concrete steps on what you would need to do to merit a promotion. Then document those steps and come back in a few months with details of how youâve met those steps and deserve a promotion and a raise!
Be prepared to come with a backup plan
Itâs important to understand the pay and compensation structure of the company youâre at. Many companies have pay âbandsâ or ranges of compensation for a given role. Knowing where your salary fits within that range can be helpful when youâre preparing to negotiate a salary increase.Â
Also, if the company has announced a hiring freeze or layoffs, it might not be the best time to ask for more money. Understanding the bigger situation can help you pick the right time to have the discussion. Be prepared for what youâll do or say if your supervisor turns your request for a raise down. Is there anything else that would be meaningful to you? Maybe itâs a more flexible working arrangement, deferred compensation like stock options or other types of non-monetary compensation.
Donât be afraid to leave
At the end of the day, youâll have to decide how much working at this job is worth it to you. Itâs always a bit nerve wracking to quit your job, but itâs generally much harder to get a significant raise without moving to a new company. You donât want to be hopping around from job to job every few months, but itâs also important to feel like you are getting paid the money that you are worth.Â
If you donât get the promotion youâre looking for, then it may be time to start exploring other options. After all, the best time to look for a new job is while you still have your OLD one (and donât have to worry about making ends meet)
The post How to Negotiate Salary Increases and Promotions appeared first on MintLife Blog.
Thereâs nothing like falling in love and finding the person you want to spend the rest of your life with. But when itâs time to shop for rings, itâs easy to get discouraged by the price tags. Just how much should you spend on an engagement ring? Weâll dive into the topic and discuss ways to save on the big purchase.
Find out not: How much do I need to save for retirement?
What the Average Engagement Ring Costs
Maybe you canât buy love. But if youâre in the market for an engagement ring, youâll quickly realize that it wonât be cheap. According to the Knotâs 2016 Real Weddings Study, Americans spent an average of $6,163 on engagement rings, up from $5,871 in 2015. Wedding bands for the bride and engagement rings combined cost between $5,968 and $6,258.
If you want your wedding to happen sooner rather than later, keep in mind that on average, couples spend more than $30,000 to tie the knot. Thatâs roughly how much you can expect to pay for everything from your wedding reception and DJ to your cake and your photographer. Location matters when it comes to weddings, however, so you might be able to save some money by choosing a more affordable place to host your ceremony.
How Much Should I Spend?
Conventional wisdom says that anyone planning to propose to their partner should prepare to spend at least two or three months of their salary on an engagement ring. But spending too much isnât a good idea for various reasons.
A recent study conducted by Emory University connected pricey rings to divorce rates. Men who spent more money on rings for their fiancees were more likely to end their marriages. Thatâs a possible long-term consequence of overspending on an engagement ring. In the short term, using a large percentage of your money to buy a ring might prevent you from using those funds to pay bills or stay on top of your debt, which can hurt your credit score.
If the marriage doesnât work out and your ex-spouse decides to sell their diamond engagement ring, its value wonât be nearly as high as it was when it was first purchased. Thatâs why diamond rings can be such bad investments.
So exactly how much should you spend on an engagement ring? Itâs a good idea to make sure that the price you pay doesnât prevent you or your partner from accomplishing whatever youâre planning to achieve in the future, whether thatâs buying a house or having a child. Rather than following an old-school societal notion that says you should spend x amount of money on a ring, itâs best to spend an amount that wonât compromise your financial goals or jeopardize the status of your relationship.
How to Save on the Ring
If you donât want the engagement ring youâre buying to break the bank, itâs a good idea to learn as much as you can about the rings and what makes some more expensive than others. Diamonds are the gems most commonly used in engagement rings, and if youâre buying one for your significant other, itâs important to familiarize yourself with what jewelers refer to as the four Câs: clarity, cut, color and carat weight.
In terms of clarity, the best diamonds are flawless, meaning that they donât have any blemishes when viewed under a microscope with 10 power magnification. Since no oneâs eyesight is that powerful, you can get away with choosing a diamond with a lower clarity grade that costs less. Getting a diamond that has fewer carats (meaning that it weighs less) or getting one that isnât completely colorless can also lower its overall price.
Or donât get a diamond at all. Your partner might be just as happy with a simple band, a white sapphire or an emerald ring and it probably wonât cost as much as a diamond engagement ring. Shopping for your ring at a vintage store, looking for one online rather than in-person and getting a ring with a series of smaller stones surrounding the center stone (also known as a halo ring) are a few additional ways to save when buying a ring.
Thereâs no need to spend a fortune on an engagement ring. And you donât have to feel guilty about cutting corners in order to find one that you can afford to buy.
Like any other major purchase, itâs a good idea to take time to save up for a ring. If you have to take on more credit card debt or a personal loan in order to buy an engagement ring, itâs a good idea to find out how long itâll take to pay off your debt. It isnât wise to begin a marriage by digging yourself (and your partner) into a deep financial hole.
Tips for Getting Financially Ready for Marriage
If you havenât already, start talking about money. Itâs important to establish an open dialogue and make sure you understand and respect each otherâs money values.
You might also consider sit down with a financial advisor before the big day. A financial advisor can help you identify your financial goals and come up with a financial plan for your life as a married couple. A matching tool (like ours) can help you find a person to work with to meet your needs. First youâll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
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Take a moment. Think about being your best self â living your best life.
What do you really want to do with your life? Raise a happy family? Travel the world? Buy a nice house? Start your own business?
Reality check: To accomplish any of those things, youâre going to need to know how to save money.
Unfortunately, Americans are bad at saving money, and weâre getting worse. Thanks to rising costs, stagnant salaries and student loan debt, weâre saving less than ever.
Table of ContentsÂ
Step 1: Develop Savings Goals and Strategies
Step 2: Pick Budgeting and Debt Repayment Methods
Step 3: Choose a Financial Institution and Accounts
Step 4: Automate Your Finances
Step 5: Establish a Budget-Conscious Lifestyle
Step 6: Make More Money
Here Are Our Best Tips to Save Money
Are you ready to actually start saving money? What youâre reading is a step-by-step guide on how to do it â how to come up with savings strategies, choose a budgeting method, pick the right financial institution, automate your finances and live a budget-conscious lifestyle.
Pour yourself a cup of coffee and buckle up. Itâs time to get serious about this.
Step 1: Develop Savings Goals and Strategies
Youâre probably asking yourself, âHow much should I save?â
Your first move is to set specific savings goals for yourself â emphasis on specific. Naming your goals will make them more real to you. Itâll help you resist the temptation to spend your money on other stuff.
Think Long Term and Short Term
What exactly do you want to save money for? How much will you need to save? And what do you need to save for first? Think short- and long-term:
Short-term: Save for a real vacation or nice holiday gifts. But first, save enough to have a decent emergency fund â three to six monthsâ worth of living expenses, in case you run into an unexpected car-repair bill or lose your job, for example.
Long-term: This involves big-picture thinking. Here, youâre saving money for things like your childrenâs college fund or for your retirement plan.
Analyze Your Income
How much can you realistically save for these goals, now that youâre making them a priority?
Write down your income and expenses â all of your expenses, from utility bills to your Netflix subscription.Â There are probably more ways to save money than you realize. Donât forget your student loans or credit card debt. Make sure you know what youâre spending in every budget category. Pay special attention to what youâre spending on non-essentials, such as eating out.
An easy way to automate this process is to use Trim, a little bot thatâll keep track of all your transactions.
Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts thatâll let you know when bills are due, when youâve hit a spending cap or when youâve (hopefully not) overdrafted. This will help you stick with your savings plan.
Check in on Your Credit
Do your own credit check. Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life â especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.
The better your credit, the better off youâll be when youâre getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.
Hereâs our ultimate guide to using Credit Sesame.
Step 2: Pick Budgeting and Debt Repayment Methods
Itâs time to start making a monthly budget and sticking to it â especially if you have debt.
This way, you can put savings right into your budget. Itâs never an afterthought.
Here are five different budgeting methods. We canât tell you which one to choose. Be honest with yourself, and choose the one you think is most likely to work for you. This is how to save money on a tight budget.
The 50/30/20 Rule
This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter Amelia Warren Tyagi.
Split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but donât really need). Put the money earmarked for your financial goals into a separate savings account.
Good for: People who worry they wonât have a life if theyâre on a budget. Hereâs our complete guide to 50/30/20 budgeting.
So-called envelope budgeting is traditionally a cash-only budget. Every month, you use cash for different categories of spending, and you keep that cash for each category in separate envelopes â labeled for groceries, housing, phone, etc.
Prefer plastic? Hereâs our review of Mvelopes, an app that lets you digitize this method.
Good for: People who know they need help with self-control. If thereâs nothing left in one envelope toward the end of the month, thereâs no more money to spend on that category, period.
Hereâs how you draw up this budget: Your income minus your expenses (including savings) equals zero. This way, you have to justify every expense.
Good for: People who need a simple, straightforward method that accounts for every dollar. Hereâs our guide to the zero-based budget.
This debt-repayment method helps you budget when you have debt. Pay off your debts with the highest interest rates first â most likely your credit cards. Doing that can save you a lot of money over time.
Good for: People with a lot of credit card debt. Credit cards generally charge you higher interest than other lenders do. Learn more about the debt avalanche method here.
Money management guru Dave Ramsey champions the debt snowball method of debt repayment. Pay off your debts with the smallest balances first. This allows you to eliminate debts from your list faster, which can motivate you to keep going.
Good for: People who owe a lot of different kinds of debts â credit cards, student loans, etc. â and who need motivation. Hereâs how to use the debt snowball method to eliminate debt.
FROM THE DEBT FORUM
Eviction on credit report
Helping Covid-19 Victims
Struggling to pay debt or going bankrupt
Can’t afford car loan
See more in Debt or ask a money question
Step 3: Choose a Financial Institution and Accounts
You might be thinking, I already have a bank. And of course you do. If youâre like most of us, youâve had the same bank for years.
Most people donât give this a second thought. They figure itâs too inconvenient to switch. But itâs worth shopping around for a better option, because where you bank can make a real difference in how much you save.
What to Look for in a Bank Account
Does your checking account pay you interest? What are the fees like? What other perks does it offer?
Did you know the biggest U.S. banks are collecting more than $6 billion a year in overdraft and ATM fees?
Maybe itâs time to try another financial institution. Weâve found some great online bank accounts to help you avoid fees and get features you wonât find with the brick-and-mortar banks.
Hereâs one example: Thereâs a mobile baking app calledÂ Varo Money.
The FDIC reports that the average savings account pays a paltry .08% APY*, but when you open an online checking and savings account with Varo, it will pay you more than 20 times that amount on your savings account.Â
We know opening a new bank account isnât exactly everyoneâs idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
Oh, and there are no monthly fees.Â
Want more options? Hereâs our ultimate guide to help you choose the right account.
To free up more money for savings, try to spend less paying interest on your debts â especially if you have high-interest credit card debt.
These days, credit card interest rates often climb north of 20%. How can you avoid paying all that interest? Your best bet is to cut back on your expenses and pay off your balance as soon as you realistically can.
Start by using the right credit card for you, based on your situation and needs. Would you prefer a card that gives you cash back or travel incentives, a balance-transfer card, or a card thatâll help you build credit?
Also consider paying off your high-interest debt with a low-interest personal loan. Itâs easier than you might think. Go window-shopping at an online marketplace for personal loans. Here are some weâve test-driven for you:
AmOneÂ allows you to compare rates side-by-side from multiple lenders who are competing against each other for your business. Itâs best for borrowers who have good credit scores and just want to consolidate their debt.
Fiona is also a marketplace but allows you to borrow more money and borrow it for a longer period of time â if thatâs what you want to do.
Upstart tends to be helpful for recent grads, who have a young credit history and a mound of student debt. It can help you find a loan without relying on only your conventional credit score.
Step 4: Automate Your Finances
Thatâs right. Weâre deep into the 21st century, here, so make technology do the work for you.
The best ways to save include automation. Youâll save time, and time is money. Here are a few money-management steps you can take today to ensure you wonât have to think about money for more than a few minutes every month.Â
Automate Bill Pay
Most bills are paid online now, reports the Credit Union Times. But you can take it a step further. Set it up so youâll receive and pay all of your bills online through your bank. That simplifies things so youâll never miss a payment.
Hereâs how: Go to your bankâs online bill-pay feature. Enter all the companies that bill you, and the account numbers for each. Arrange to receive e-bills from whichever billers will do that.
You can also have your bank send digital payments to individuals (like a landlord).
Whatever you need done financially, thereâs an app for that. Weâve put several to the test.
Digit is an automated savings platform that calculates how much money you can save. Hereâs our review of Digit.
Long Game Savings combines online games and saving money.
Also, see whether your bank offers automatic savings transfers that will move money from your checking account to your savings account each month.
You donât have to be Warren Buffett to be an investor. You donât even have to follow the stock market, read The Wall Street Journal or watch CNBC.
You can take advantage of these apps offering easy, automatic ways to start investing â the âset it and forget itâ method. Theyâre useful for tricking your brain into saving more. Youâll do it without even realizing youâre doing it.
Stash lets you start investing with as little as $5 and for just a $1 monthly fee for balances under $5,000. Bonus: Penny Hoarders get $5 just for signing up!
Acorns connects to your checking account, credit and debit cards to save your digital change. It automatically rounds up purchases with your connected cards and invests the digital change into your chosen portfolio. Bonus: Penny Hoarders get $5 just for signing up! Read our full review of Acorns here.
Blooom is a company that offers a free âhealth check-upâ for your 401(k). Then, for only $10 a month (Penny Hoarders get the first month free!), itâll optimize and manage your retirement savings for you. See how Blooom helped one Penny Hoarder make the most of her 401(k).
You can automate your budget, too. Thereâs an app for that. Actually, weâve found several.
Charlie is a money-saving penguin who lives in your SMS text messages or Facebook Messenger (your choice, though Charlie is more fun and reliable on Messenger). He helps you save money through things like making sure youâre getting the best deals around (ahem, overpaying $24 a month on that cell phone bill?).
Mint lets you see all your accounts, cards, bills and investments in one place.
Medean for iOS ranks your finances based on how they stack up to those of people of similar age, income, location and gender. It calls itself a âhealth index for your finances,â and helps assess your situation and find ways to save money.
MoneyLion offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app. You can earn points in the rewards program by paying bills on time, connecting your bank account or downloading the mobile app.
Step 5: Establish a Budget-Conscious Lifestyle
Hereâs the harsh reality: To save more money, youâll need to spend less money. (Or make more money, but weâll get to that next.)
That doesnât mean you have to live like a monk. Nor do you have to survive on ramen noodles and the dollar menu, wear scuffed shoes and patchy clothes, or cut your own hair with hedge clippers.
You just have to be smart and strategic. Here are some of our best tips to help you spend less:
Save Money Around the House
Your home is your castle. But castles are so, like, expensive. Fortunately, there are lots of ways to save money around the house.
Your priciest purchases â like appliances and furniture â are a natural place to look for savings. Try repairing your appliances instead of replacing them. And hereâs a good list of other tricks for saving on furniture and appliances.
The cost of cooling, heating and lighting your home is massive. Try installing thermal curtains and a programmable thermostat. Or check out these creative, energy-saving ways to slash your utility bills.
Find Free Entertainment
Entertainment can cost an arm and a leg. But hey, we have to live, right? So do it for free! Next time youâre planning a night out, take advantage of one of these free date nights or group outings.
If youâre going to stay in, cut the cord. More and more people are doing this, because their cable bill has gotten so expensive.
If youâre thinking of switching to an online streaming service and youâre wondering which would be best, weâve got you covered with our comparison of Netflix, Prime Video and Hulu. We compared costs, type of content, number of available titles and more.
You also should reconsider that gym membership if youâre not really using it.
Cut Your Food Budget
Groceries are a huge part of everyoneâs budget, so theyâre a big target for savings. Next time youâre putting together your shopping list, make sure to check out our favorite tricks to save money at the grocery store:
Look for free printable coupons.
Compare your local grocery prices using this worksheet.
Ibotta pays you cash back on purchases if you take pictures of your grocery store receipts. Plus, youâll get a $10 bonus for signing up!
Scan grocery storesâ websites for deals and hit more than one store.
Not loving the supermarket? Nearly 70% of us say we spend too much on take-out or going out to eat. Hereâs how to save money at restaurants, too.
Find out If Youâre Wasting Money on Insurance
Buying insurance can be confusing and overwhelming, because there are so many options.
Hereâs how to find affordable insurance:
For Your Car: Auto Insurance
Here are the blunt facts about how to get lower car insurance premiums: Have fewer accidents, get fewer traffic tickets and boost your credit score.
Automotive experts also gave us the following tips:
Buy a used car.
Participate in your insurerâs safe-driving program.
Shop around for better rates. One easy way is The Zebra, a car insurance search engine that compares your options from more than 200 providers in less than 60 seconds. Hereâs how one guy is saving $360 this year on car insurance because of The Zebra.
For Yourself: Health Insurance
Letâs face it: Health insurance can be confusing and intimidating.
If youâre buying insurance for yourself, start with the federal health insurance marketplace at Healthcare.gov to see whether you qualify for any discounts or assistance.
Finding affordable health care coverage is a huge challenge for freelancers. Hereâs how to get covered if youâre self-employed.
For Your Family: Life Insurance
Life insurance pays your dependents a set amount of money if you die. Whether to buy it is a judgment call.
Life insurance is considered more important if youâre married or have children. You might also want a basic policy that would pay off your funeral, mortgage or other debt.
Youâll probably be asked to choose between two options: term or universal life insurance. If youâre like most of us, youâll choose term â the simplest, cheapest and most popular kind of life insurance policy.
To help you save money and navigate this complicated industry, modern companies are updating the old model:
Policygenius is an online-only platform that offers instant quotes from top carriers to help you make a quicker decision.Â Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
Haven Life can insure you quickly based just on the health information you provide online.
Ethos can get you term life insurance in less than 10 minutes â with no medical exam â for coverage up to $1 million. Ethos offers a digital application, and customer service is available if you have questions.
Step 6: Make More Money
How can you increase your income? Itâs easier to save money if youâre bringing in more money to begin with.
Here are a couple of simple ways to make extra cash at home:
Share Your Opinion
You wonât get rich taking surveys, but if youâre just vegging out on the couch, why not click a couple buttons and earn a few bucks? Weâve tried a lot of paid survey sites, and two of the best weâve found are My PointsÂ andÂ InboxDollars.
Clear Your Closets
Sell your old stuff! Use the Decluttr app to get paid for your old DVDs, Blu-Rays, CDs, video games, gaming consoles and phones.
You can also sell nearly anything through the Letgo app. Just snap a photo of your item and set up a listing in about 30 seconds. If you have more free time, try selling items on Craigslist or eBay.
Find a Side Gig
For our best ideas to boost your bottom line, check out the following:
Unique ways to make money at home.
How to make extra money online.
How to earn passive income.
The Penny Hoarderâs continually updated page on open work-from-home jobs.
Mike Brassfield (firstname.lastname@example.org) is a senior writer at The Penny Hoarder. Heâs slowly getting better about saving money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.