Money Management

Need financial advice? Read on to see why you may want to start working with a financial advisor. 

When you’re relatively new to adulthood, it can be difficult to navigate certain financial choices. What assets should you invest money in? How large of an emergency fund do you need? And what’s the best home for your retirement savings — an IRA, a 401(k) plan, or both?

It’s therefore not so surprising to learn that 55% of Gen Zers have turned to family for financial advice, according to a recent Bank of America report. But while your family members may be pretty knowledgeable about financial matters, there’s an even more optimal solution worth pursuing if you could use financial advice.

It pays to work with an advisor

You might assume that you’re too young to work with a financial advisor, or that you don’t earn enough to warrant hiring one. In reality, this is false.

It doesn’t matter what your age is or what your paycheck looks like. Enlisting the help of a financial advisor can help you work toward your financial goals and make the most of your money while you’re earning it. And while your family members may be generous with the advice they’re willing to give you, they’re also not necessarily experts like a financial advisor is.

Also, it may be hard for your family members to give unbiased advice since they care about you and only want what’s best for you. As such, emotions might guide the answers they give you. A financial advisor can look at things more objectively, while using their knowledge to put you on a solid path.

How to find the right financial advisor

If you’re ready to enlist the help of a financial advisor, it’s important to find the right one. And that’s one area where you can turn to family members and ask for some help.

If a family member of yours has a trusted advisor who’s able to take you on, you get the peace of mind of having that person already vetted. You could of course also ask friends to recommend an advisor. But if you’re all fairly young, you might all be in the same boat of needing to find one.

You can use NAPFA’s Find An Advisor page as a starting point if you have no idea how to find a financial advisor. It will point you to some professionals in your area.

But if you’re going about the search process on your own without a recommendation, then it’s important to ask key questions to make sure you’re signing up with the right advisor. Those questions should include:

What initial recommendations do you have for me based on our first meeting?How often do you meet with and communicate with clients?What is your fee structure?Are you a fiduciary?

That last one is important, because a fiduciary is obligated to put their clients’ needs ahead of their own at all times. This means that if your advisor has two investments to recommend, they have to go with the one that’s better for you — even if it means getting paid a lower commission.

It’s OK to turn to family members for financial advice on occasion. But if you feel that you generally need help working toward goals and managing your money, then your best bet may be to find a financial advisor to work with. And if you ask the right questions, you’re more likely to find someone who truly meets your needs.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

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Don’t wait to add to your 401(k). If you do, you might run out of time. Read on to learn more. 

Maxing out a 401(k) is a lot harder than maxing out an IRA account. You can contribute up to $22,500 to a 401(k) this year if you’re under age 50, or $30,000 if you’re 50 or older. By contrast, the limits for IRAs are $6,500 for savers under age 50 and $7,500 for those 50 and over.

But even if you can’t max out your 401(k) for the year, you may be in a position to bump up your contribution from where it currently sits. Maybe you’ve been having $300 a month taken out of your paychecks and put into your 401(k). If you realize you can afford to part with $600 in December for your 401(k), then you might as well. That’s extra money you can save and invest.

Plus, if you’re putting money into a traditional 401(k), and not a Roth, then the more you contribute, the more tax savings you reap. Bumping up your contribution for the year by even $300 means not paying the IRS taxes on $300 more of earnings, so it’s worth it for that reason alone.

But if you want to increase your 401(k) contribution for 2023, you’d better move quickly. Wait too long, and you might miss the chance.

You need to get moving this month to boost your 401(k)

Unlike IRAs, 401(k) plans are funded via payroll deductions. At the end of each year, you’ll usually tell your payroll department how much you want to contribute to your 401(k) for the following year. Those contributions will then be deducted from your paychecks off the bat so your 401(k) is funded seamlessly and automatically.

This is actually a good thing, because it helps savers stay on track. But it also means you can’t just snap your fingers and decide to change your 401(k) contribution rate. Rather, you’ll generally need to fill out some paperwork and submit it to your HR or payroll department so they can process that change and run it through their payroll software. And that could take time.

That’s why it’s so important to talk to your payroll department this month if you want to increase your 401(k) contribution before the end of the year. It could take a pay cycle or two for that change to go through.

So let’s say you get paid twice a month — at the midpoint and at the end. If your employer needs two pay cycles to process a change to your 401(k), putting in that change before the end of November is crucial.

You don’t get extra time in the new year

With an IRA, you have until the following year’s tax-filing deadline to finish funding your account. But that’s not how 401(k)s work.

If you want contributions to your 401(k) to count for 2023 purposes, then that money needs to be sitting in your account by Dec. 31. If you can afford to boost your savings rate before the end of the year, act now so you don’t miss the chance to invest more cash for retirement.

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Costco is my go-to source for certain holiday buys. Read on to see what my list looks like. 

I shop at Costco regularly. As such, there are items I tend to buy over and over again, from produce to milk to cold cuts, and doing so frees up money for my savings account. But there are certain Costco products I always make a point to pick up during the holiday season. Here’s what my list looks like.

1. Gift bags

Some people have the patience to sit there wrapping holiday presents for hours on end. I’m not one of those people. Heck, I barely have the patience to go out and search for presents, let alone wrap them.

That’s why I don’t feel bad about buying gift bags in bulk at Costco. It’s an easy and relatively inexpensive way to make the process of handing out gifts go smoothly without spending a fortune.

Right now, Costco has a 20-count of holiday gift bags for $24.99 online. But prices in stores tend to be cheaper, so visiting your local Costco warehouse could result in a lower credit card tab.

2. Kirkland chocolate chips

Chocolate chips aren’t a holiday item per se. But since I tend to do a lot of baking during the holidays (for gift-giving purposes as well as home consumption), I find that I need a bulk supply to complete all of my recipes.

You can buy a 4.5-pound bag of Kirkland semi sweet chocolate chips online for $13.99. That’s just $0.20 per ounce. But chances are, you’ll spend even less at your local Costco. At my neighborhood grocery store, I’m looking at spending $0.25 per ounce, and that’s when chocolate chips go on sale. And when you’re baking in bulk, you want to pay attention to that sort of savings.

3. Kirkland peppermint bark

When I think of winter, I think of all things peppermint, whether it’s hot cocoa, soap, or chocolatey goodness. And one of my favorite things to consume during the holiday season is peppermint bark.

If you’re not familiar with it, it’s usually a layer of dark chocolate topped with a layer of white chocolate with crushed peppermint pieces interspersed throughout. And while it’s not particularly difficult to make, Costco’s version happens to be delicious and inexpensive. A giant tub of it at my local store sells for $9.99.

By comparison, at Williams Sonoma, you’re looking at spending $29.95 for a one-pound box. I’ve had both, and I can tell you that Costco’s version is just as good. I highly recommend a tub of Kirkland peppermint bark as a gift idea for those people who are otherwise impossible to shop for.

You might have special items or specific products you buy around the holidays. And it pays to see if Costco carries any of them on its shelves.

My advice, though, is to visit Costco in the evening during the holiday season, because that’s when the store tends to be the least crowded (at least in my neck of the woods). I find that it’s easier to walk the aisles and scope out the deals when there aren’t tons of people around to get in my way. And no matter what you do, do not enter a Costco during a holiday shopping weekend. It’s pretty much guaranteed to be a nightmare.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s important to manage your nest egg wisely no matter how much money you have. Read on to learn more. 

The average 60-something American today has $112,500 in retirement savings, according to Northwestern Mutual. So if you’re retiring with a $1 million IRA or 401(k), you’re clearly well ahead of the game.

A $1 million nest egg could make it possible to enjoy the lifestyle you’ve always dreamed of for your retirement and do things like travel and pursue fun hobbies. And with a savings balance like that, you may find that you don’t have to stress so much when your home needs a sudden repair or you have a month with a lot of medical bills.

But even with $1 million in savings, it’s important to manage your nest egg wisely. If you’re not careful, you could end up depleting it despite starting out with such a large sum.

Don’t just take retirement withdrawals at random

Many people worry about running out of retirement funds. That risk exists whether you’re retiring with $100,000, $1 million, or $10 million.

If you’re not careful about taking withdrawals from your savings, you might whittle your balance down at a faster rate than expected. And that could put you in a tough position later on in retirement.

Remember, the tricky thing about retirement is that there’s no way to know how long yours will last. If you wrap up your career at age 65, you may need your money to last another 20 years, 25 years, or longer — you just don’t know. But if you’re careful with taking withdrawals, you can hopefully set yourself up to make that money last as long as you need it to.

How much should you take out of your savings each year?

For years, many financial experts supported a 4% withdrawal rate for retirement savings. For a $1 million nest egg, that would translate to $40,000 a year.

These days, financial experts have gotten a bit more conservative, and some will tell you a 3% rate is more appropriate so your money doesn’t run out. That would give you $30,000 a year if you have $1 million to start with.

But there are different variables to account for when establishing your own withdrawal rate. These include:

Your age at retirementThe state of your healthYour expensesThe way your savings are investedOther income sources you have available, including potential wages from a part-time job, profits from a family business, and Social Security

It’s smart to sit down with a financial advisor and have them help you establish a withdrawal rate that makes sense for you given all of these factors. You might also have to adjust your withdrawal rate over time as your expenses or needs change. An advisor can help you with that, too.

Generally speaking, retiring with $1 million means having plenty of financial freedom. But it’s still important to manage your money carefully and be mindful of your withdrawal rate. The good news is that you don’t have to crunch those numbers alone. If you work with a professional, running out of money may become less of a concern.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Here’s why you should forecast your expenses and earnings. Read on to find the software that can help you do it. 

November is officially National Entrepreneurship Month, which is a good time to remember that small businesses employ 61.7 million Americans and account for 46% of private sector jobs.

These businesses are a huge part of the country’s economic activity, and when they’re doing well, the broader economy is likely doing well.

But nearly every small business owner will readily admit that running their own business is no easy feat. Elevated inflation, rising costs, finding good workers, and managing all the financial responsibilities of a business can make the job stressful.

If you need some extra help managing your business’s cash flow right now, here are a few tips.

1. Create a forecast calendar

You can’t predict what will happen, but you can put your expected expenses and earnings into a calendar to better manage your cash flow in the coming months.

Many business owners are rightly focused on what’s happening in the day-to-day operations of their business, but creating a calendar of upcoming bills, payroll, inventory expenses, etc., can help you stay on top of what’s coming around the corner.

Additionally, doing a little forecasting of your earnings will allow you to see where your cash flow gaps may be. Calculating the difference between your earnings and expenses in the next few months may feel like something you don’t have time for, but the next time you’re making a daily decision you planned out months in advance, you’ll be glad you did.

2. Get back to budgeting basics

Budgeting isn’t the fun part of a business, but you can do some simple things to make it easier. Leaning on the right expense management software can make mundane tasks like tracking your cash flow a breeze.

Pick an app that you (almost) enjoy using so you don’t avoid opening it when you need to track where your money is going. Take some time to test out a few apps beforehand to ensure you find one that works for your specific needs. For example, evaluating your accounting software beforehand could save you time later by keeping you from switching to another app during tax time.

3. Make your money move faster

It’s not fun waiting for money to come in. Speeding up the process by getting organized with invoicing software can help. Not only will you be able to keep track of what cash flows are coming in, but you’ll also be able to understand the ups and downs of your cash flow by looking at the historical data from your customers’ spending.

And while you’re speeding up your cash flow process, you might as well evaluate how your employees are getting their pay. Payroll can be a headache, but apps make it easier. You can usually scale your payroll software options so you’re only using and paying for what you really need.

It’s a good time to evaluate your business’ financial needs

Before the new year begins, it may be a good time to evaluate whether your business has the right financial resources. For example, is your business credit card working well for the company? With interest rates still elevated, you may want to look closer at your card and how your business uses it.

Additionally, you may want to revisit your business bank accounts as well. Does your current bank provide you with the customer service, software, and account features you need? Comparing a few business checking accounts could help you answer these questions quickly.

Spending a little time to go through your financial needs could help you get organized for the upcoming year, and can be especially beneficial when you’re thinking about your cash flow management.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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