Texting is still a new world for many, and it has its own rules. Nicoleta Ionescu / Shutterstock.com
There’s no question that text messaging can be a helpful, even entertaining, way to communicate. Family chats can keep relatives in touch with each other’s lives. Friends can offer support and encouragement. And it’s tough not to appreciate the practical uses, whether that’s reminding your spouse to buy coffee beans or wishing a far-flung friend a happy birthday. “Texting is part of our daily…
Winter is kicking into gear. Read on to make sure you’re financially equipped to cope with a major storm.
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Although winter officially kicked off a short while ago, now’s the time of the year when weather activity tends to pick up in a really big way. And unless you live in a warm weather climate, there’s a good chance that in the coming weeks, at least one winter storm, if not more, will impact your area.
Now, not every winter storm is a major event. And those who live in snow-prone areas know how to cope when a few inches of powder grace the pavement.
But even if you’re someone who’s experienced their fair share of storms, when a major one hits, there’s often not much you can do other than hunker down at home. It doesn’t matter if you have the biggest pickup truck or the baddest snow tires in town. If a storm dumps two feet of snow in your neck of the woods, you’re probably grounded for a few days. And you may be looking at problems like extended power outages, too.
For this reason, you need to be prepared logistically for a winter storm. That means stocking up on things like batteries or, if you have a portable generator, gas to power it (just make sure to store it in a proper container for safety reasons).
It’s also important to prepare your personal finances for a winter storm. Here’s how.
If you live on a tight budget and normally only buy a few days’ worth of food at a time, having to stock up on extra items ahead of a blizzard could result in credit card debt. Review your savings account now and try to add to it if you barely have enough money to cover an additional week’s worth of food.
In general, you should aim for enough savings to cover three full months of essential bills in case you lose your job. But for now, at the very least, aim to sock away a few hundred dollars in case you need to load up on food and other supplies ahead of a storm.
If you’re self-employed and work from home, an extended power outage following a storm may be more than just inconvenient. It could also cost you a lot of money if you aren’t able to work.
Make sure you have a cushion in case you’re forced to go without a paycheck.
Even if you have a back-up plan — say, a standby generator and a hotspot that gives you internet access even when your main service is out — if you have young kids, you may not be able to get work done after a storm if roads are blocked and schools can’t open. So make certain you’re in a position to give up a few days of pay.
You never know when your home might sustain damage, but that may be more likely to happen during a winter storm. So to that end, find out what your homeowners insurance deductible looks like and make sure you have enough money in savings to cover it. You’ll need to shell out that money if damage occurs and you need to file a claim against your homeowners policy.
Progressive says that homeowners insurance deductibles typically range from $500 all the way up to $5,000. That’s a pretty wide range, so make sure you know what your personal deductible amounts to. Some insurers also set different deductibles for your roof, which could lead to more out-of-pocket costs for you if your roof is damaged by heavy snow and ice.
A nasty winter storm could be a huge headache in more ways than one. Do your best to prepare financially so you’re ready for everything Mother Nature might throw at you this season.
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The COVID-19 virus is continually changing, and a recent variant — a descendant of omicron — is rapidly climbing the charts. sasirin pamai / Shutterstock.com
Editor’s Note: This story originally appeared on KFF Health News. It’s winter, that cozy season that brings crackling fireplaces, indoor gatherings — and a wave of respiratory illness. Nearly four years since the pandemic emerged, people are growing weary of dealing with it, but the virus is not done with us. Nationally, a sharp uptick in emergency room visits and hospitalizations for covid-19…
Investing can be a great way to beat inflation and get rich over time. Discover four ways you might use $1,000 to build wealth this year.
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If you’re starting the new year with $1,000 and plans to invest it, congratulations. Investing — buying assets that you hope will accumulate value over time — can be a great way to build wealth. And there’s no time like the present to get started.
Before we get started on ways to invest, a word about emergency funds. Investing for the long term — at least five years — means your money has more chance to grow. And having three to six months of living expenses socked away in a savings account can help you leave your investments alone. It’s a cushion. So if you, say, lose your job or face an unexpected medical bill, you are less likely to have to dip into your portfolio.
If you’re good on emergency savings and comfortable with leaving your $1,000 to bake for a good chunk of time, here are four ways you might invest $1,000 in 2024.
Buying stocks is probably one of the first things that comes to mind when you think about investing. But where to start? The idea of picking individual stocks can be pretty daunting at first. I know I delayed investing for a long time because I thought I had to be the next Warren Buffett to be successful. I saw experts posting charts and analyses with all kinds of jargon and numbers — I thought I’d never be able to do it myself.
Here’s the exciting thing. You can choose to learn how to research stocks and understand company balance sheets. But you don’t have to. Many self-made millionaires didn’t pick stocks. They built their wealth by consistently investing in index funds or exchange-traded funds (ETFs). These are baskets of securities that can contain a mix of assets. For example, a fund that tracks the S&P 500 gives you a very small piece of the top 500 U.S. companies.
Over the past 30 years, the S&P 500 has generated average annual returns of over 10%. There are no guarantees and there will be years when the market falls. However, let’s assume you invested $1,000 in an S&P 500 index fund and earned a more conservative rate of 8%. The power of compound interest means your investment could be worth over $10,000 in 30 years.
Let’s face it, $1,000 may not get you that far if you’re trying to buy a home. If this is your dream, you could put that money toward your down payment savings. But you don’t have to buy property to invest in real estate. You might instead buy shares in a real estate investment trust (REIT).
REITs are companies that own and often manage a portfolio of income-producing properties. That might take the form of office buildings, shopping malls, warehouses, or apartments. I hold a couple of REITs in my portfolio. It’s a good way to diversify my holdings and REITs often pay attractive dividends.
As the REIT advocate group Nareit points out, REITs have to distribute at least 90% of their taxable income as shareholder dividends. As a result, it says REITs pay higher dividends than other stocks. You can buy REITs from your brokerage account, but you will need to do some research to decide which REITs you want to buy.
Gold is often viewed as a safe-haven asset that may hold its value during a recession. It can also be a good hedge against inflation, as gold prices tend to rise when living costs increase. That said, owning physical gold can be complicated as you may have to think about storage and insurance. But you might instead look to a gold ETF or mutual fund.
Bear in mind that gold is still an alternative asset class. Prices are less predictable than index funds or REITs, and you won’t benefit from dividend payments. Don’t go all in on gold (or any other asset for that matter). Experts suggest gold should make up no more than 5% of your portfolio.
Strictly speaking, paying down debt is not an investment. That said, you won’t find many investments that pay an annual return of 20% — guaranteed. That’s the current average credit card interest rate. So if you’re carrying a credit card balance and paying two-figure interest rates, consider paying it down before you invest. Once your balance is gone, you could put the extra cash toward your investments.
The type of investment you buy is important, but how you invest matters too. For example, it’s worth investigating tax-advantaged accounts to find ones that suit your situation. Many Americans have a mix of brokerage accounts, IRAs, and 401(k)s.
Start by finding out if your employer has a 401(k) scheme and whether it will match your contributions. You can put ETFs, index funds, and REITs in many 401(k)s. If a 401(k) isn’t an option, look into individual retirement accounts (IRAs). Broadly speaking, a traditional IRA lets you reduce your taxable income now, whereas a Roth IRA can reduce the tax you pay in retirement.
There’s a lot to think about, but try to avoid analysis paralysis. Once you decide on the type of account or accounts that will make sense, you can build a diversified portfolio containing a mix of assets. What matters is getting started and learning along the way.
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Want to maximize your tax deductions in 2024? Here’s how a health savings account (HSA) can give you extra tax breaks and investment options.
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Depending on your health insurance plan, you might be able to get an extra tax deduction. People who are covered by a qualifying high-deductible health insurance plan (HDHP), whether through an employer or via a plan bought at HealthCare.gov, can open a health savings account. This account, also known as an HSA, is a special tax-advantaged account that gives you extra benefits in paying for healthcare or saving for retirement.
Once you have an HSA, it’s important to understand the tax benefits and rules. Just like a traditional IRA, putting money into an HSA is tax deductible up to certain limits. For 2024, the IRS has announced that the contribution limits to an HSA are $4,150 for individuals with self-only coverage, or $8,300 for families. If you can use an HSA for 2024, you should consider maxing out your contributions.
Let’s look at three reasons why making the maximum contribution to your HSA could be a smart move for your personal finances in 2024.
The first reason to use a health savings account is right in the name: You can use this account to save money for healthcare expenses that aren’t covered by your insurance. And you get a tax deduction for the money you put into the HSA (your contributions) up to $4,150 for individuals or $8,300 for families in 2024. Withdrawals are also tax-free as long as they’re used for qualified medical expenses.
Your HSA can be used to pay for a wide range of IRS-approved qualified medical and dental expenses, including prescription drugs, eyeglasses and contact lenses, therapy, surgery, dental visits, orthodontia (braces), and more. If you want to be prepared to pay for big out-of-pocket costs for healthcare, or get a tax break for your kid’s braces, consider making the maximum contribution to your HSA.
Using an HSA to pay for healthcare lets you use pre-tax dollars to cover your medical and dental bills. Think of it this way: If you’re in the 22% tax bracket, your HSA saves you $0.22 on taxes for every $1 you put into the account. So that means by getting that 22% tax break, your HSA is effectively giving you a 22% discount on the cost of healthcare. If your kid’s braces cost $7,000 and you can pay for that entire expense with tax-deductible HSA money, it’s like getting a 22% discount on braces ($1,540).
Even if you spend every dollar in your HSA on qualified medical expenses within the current calendar year, your HSA can still be a great deal. It helps you save money on taxes and makes those orthodontist bills a little less painful. Another way to use your HSA is as an investment account.
What if you don’t have a lot of medical bills and you have extra money left over in your HSA at the end of the year? No problem: HSAs are not “use it or lose it” like flexible spending accounts (FSAs). You own your HSA just like a brokerage account. You can keep your HSA for as long as you want, and the HSA typically lets you save and invest your extra cash in the account in ETFs and other investments.
Don’t need your HSA money this year, or for a few years? You can invest to make your healthcare dollars grow. And when you invest in an HSA, you don’t have to worry about capital gains taxes or other taxes. Your HSA money grows tax-free!
The third and perhaps most intriguing reason to max out your HSA is that you can use it as an extra source of retirement savings. After you reach age 65, you can take money out of your HSA (distributions) for any purpose without a penalty, but you will owe income tax on non-healthcare withdrawals.
That’s right. If you don’t use all your HSA money for healthcare, if instead you invest it and let it grow, it can be another source of retirement income. Think of your HSA as an extra retirement account, like a traditional IRA or 401(k).
Bottom line: Not everyone can open a health savings account. To get an HSA, you must have a qualifying high-deductible health insurance plan (HDHP). But if you have the right health insurance plan, an HSA can be the perfect way to get a tax deduction, tax-free investment growth to pay for future healthcare expenses, and another source of retirement income.
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Financial disagreements can get in the way of an otherwise solid relationship. Read on for ways to reconcile your financial differences and avoid conflict.
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Finding the right romantic partner can be a tricky thing. You need someone you enjoy being around, but also, someone who’s kind, caring, and has similar values.
It’s also important to find someone you’re on the same page as financially. Recent data from Edelman Financial Engines, however, found that these are the top financial deal-breakers that tend to turn an otherwise good relationship into a breakup situation. Have a look and see if any of these apply to you.
The top financial deal-breaker in the aforementioned report is not being open about spending habits. Perhaps you have to have all the latest electronics when they come out. Rather than hide that fact, tell your partner.
Ideally, they’ll accept it as part of who you are. Maybe they’ll help you try to save for those purchases. Or maybe you’ll be able to come to a compromise where you buy a limited number of new gadgets each year to be fair to both of you. The key, though, is to be upfront from the start.
If you and your partner share a savings account, that’s money you’ve probably worked hard to sock away. So imagine how you’d feel if you suddenly saw your balance drop by $2,000 without warning. You’d likely feel pretty lousy, and even concerned.
That’s why it’s so important to discuss big purchases when you share finances. One way to avoid conflict here is to set a threshold at which you’ll have to consult each other on spending. You may decide, for example, that non-essential purchases over $250 have to be mutually agreed upon.
Keeping financial secrets is a great way to ruin a relationship. So if you’re coming in with a heaping pile of debt, say so. Similarly, if your credit score took a beating last year when you fell behind on some bills, be open about that so there are no surprises if you and your partner try to do something like apply for a mortgage jointly and get denied.
If you’re struggling with a financial issue, chances are, your partner will want to help. If you have debt, for example, they might help you map out a payoff plan and cover some of the expenses you’re supposed to split, like rent, temporarily to help you make progress.
It can be difficult when you and your partner have different financial goals. But if you’re willing to accept each other’s priorities and support each other, then your relationship might have staying power nonetheless.
Let’s say your big goal is to put kids through college while your spouse’s goal is to retire early and comfortably. With the right lifestyle choices, you may be able to pull both of those things off.
Another big financial issue for couples is how to manage debt or how much is OK. If you and your partner disagree here, once again, the answer might boil down to a compromise.
Let’s say your partner wants to buy a home that comes with a $400,000 mortgage, but you’re not comfortable borrowing beyond $300,000. You could meet in the middle at $350,000. Or, if it’s that important to your partner to have a nicer home that costs more, they may be willing to work a side hustle for several years to keep up with those higher mortgage payments. That’s pretty reasonable.
It’s easy enough to let financial matters ruin a relationship. Instead of doing that, be open about all things financial. Also, work with your partner to create a system of managing money, debt, and goals that both of you can get on board with.
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