Money Management

If you want to spend less time managing your money, Ramit Sethi’s technique could help you make that happen. Find out how it works. 

Spending time managing money is fun for some people — but probably not for most. If you don’t enjoy checking your bank account obsessively, then reducing the time spent on financial tasks may be important to you.

If you’d rather not devote your days to poring over spreadsheets or keeping regular tabs on your brokerage account balance, you may want to check out how finance expert Ramit Sethi has taken steps so he can spend less than an hour monthly on his own finances.

Ramit Sethi’s system for streamlining money management

Finance expert Ramit Sethi explained on Twitter that he spends under an hour managing his money each month because he’s made one simple move: He’s automated everything.

Sethi explains that you can simply allocate your spending into different categories and arrange for everything to happen automatically. For example, you could set up a system so 90% of your salary goes into your checking account, while 5% goes into a 401(k), and another 5% goes into your Roth IRA.

Once the money is in your checking account, you can devote another 5% to savings for things you’ll need to do soon like putting money down on a house or saving for a vacation. Then, you should pay as many of your bills as possible on a credit card and use your card for guilt-free spending, and then pay miscellaneous bills directly out of checking if they can’t go onto your card.

Should you automate your finances?

Sethi’s proposed system for money management is one of the absolute best approaches you can take. In fact, the more things you set up to happen automatically when it comes to your finances, the better off you’ll be.

The key is getting the percentages right in the first place. Most people should be saving about 20% of their income, including 15% for retirement savings. And, ideally, you will keep fixed expenses (your housing costs, car payment, etc) to about 50% of your income so you’ll have 30% left over for discretionary spending on things that don’t have fixed monthly costs.

Once you’ve decided on the right way to divide up your money, try to make as much of the process automatic as you possibly can. Set up automated transfers of your money into checking, savings, and brokerage accounts. Set up automated payments of your credit card bills so they are fully paid off every single month.

Automating the process does a few things for you. First, you’re very likely to stick to the status quo. So, if you have money sent automatically to savings, it’s going to actually get into savings — unlike if you have to make the decision to transfer money manually to savings every month. Second, you won’t have to spend much time managing money. And third, you will know where your money should be going at all times so you’ll know how much you can spend guilt-free.

If you want to simplify your life and maximize your chances of building wealth, you should follow Sethi’s advice and get your automated money-management system in place right now. It will take you a little time to get it set up, and then your money management should be pretty effortless going forward.

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Selling your house on your own can help you save on commission for a seller’s agent, but you’ll likely still have to pay a buyer’s agent. Read on to find out why. 

If you have decided to list your house for sale, you’ll want to make sure you set the right price and hopefully walk away with enough of a profit to pay off your mortgage loan in full. You will also need to make a decision about whether to hire a real estate agent to help with the sale or handle it on your own.

Hiring a real estate professional has some benefits, as you’ll get expert advice from your agent. But, you will have to pay a commission to your seller’s agent, so this means less money ends up in your bank account. If you want to avoid paying this fee, you may decide to sell your home yourself.

Just be aware that even if you do sell your home without an agent, you are likely going to get stuck paying at least some agent’s commission. Here’s why.

You can’t usually eliminate the buyer’s agent’s commission

When you enter into a real estate transaction as a seller, you do not just have to pay commission to a seller’s agent if you use one. You are also typically expected to pay commission fees for the buyer’s agent who represents the people who purchase your property.

If you list your house yourself, you will very likely end up selling it to a person who has employed a real estate agent to help them find a house. Most people use buyers’ agents, so it’s very unlikely that you’ll find an unrepresented buyer who comes to the home with no agent. Their agent is going to have to be paid, and you are most likely going to be the one that has to do it.

There are two reasons you’ll likely get stuck with commission fees for a buyer’s agent. First, even if you listed your house yourself, you’d likely need to get it onto the Multiple Listing Service (MLS). The MLS is the key database used to populate the data on home listing websites and used by buyers to find houses. You can use a flat-fee service to get your house on the MLS. But whenever a home is listed on the MLS, you have to offer at least some commission to a buyer’s agent.

The second reason you’ll have to pay the buyer’s agent is because that’s what is customary. A buyer is not going to want to pay their agent out of their pocket. And they will likely not make an offer on your home if they would be expected to pay their own agent instead of you doing it as a seller.

How much commission should you offer to a buyer’s agent?

When you list your home on the MLS, you have a choice of how much commission to offer to the buyer’s agent. Typically, however, it’s a good idea to offer a minimum of 2.5% and perhaps even the customary 3%. If you offer too little commission, agents may try to deter buyers from purchasing your property.

This is undoubtedly a lot of money to pay, but you don’t want to lose out on a sale just because you’re unwilling to pay the customary fees to an agent representing potential buyers who could be interested in your place.

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You need savings to get by in retirement. Read on to see why they must take priority. 

Social Security pays the average recipient around $22,000 a year. Now, that figure has the potential to rise over time. But either way, it’s generally not a great idea to plan to retire on Social Security alone. Rather, your goal should be to enter retirement with a nice amount of money socked away in an IRA or 401(k).

But many people struggle to build retirement savings during their careers. For some, it’s a matter of other bills, like an expensive mortgage, getting in the way. But if you’ve been shorting your retirement savings because you’ve been helping to support your adult kids financially, you’re in good company.

In a recent survey by Retirement Investments, 19% of respondents say they’ve sacrificed their retirement savings to help their children. But that’s really not a good thing at all.

Don’t neglect your savings

As a parent, it’s natural to want to help your adult kids as best as you can. And if you have plenty of money to give out, then sure, why not help them pay their bills if they’re having a hard time keeping up?

The problem, though, is that many pre-retirees need all of the help they can get when it comes to building a nest egg. And so if you’ve been sacrificing your retirement savings to give money to your grown kids, it’s time to break that cycle.

If you retire without a large enough nest egg, not only might you end up struggling financially, but you might then end up having to go to your kids for help. And that’s probably not what you want.

You can help out in non-financial ways

If your retirement nest egg needs a serious boost, then you should really get yourself on a tight budget and do what you can to carve out more room for your savings. And you should also stop handing money over to your grown kids to help them pay their bills.

That doesn’t mean you shouldn’t try to help them get on their feet financially, though. One option that may be worth considering is allowing your grown kids to live at home rent-free for a period of time. That way, they can build some savings, pay down debt they may have incurred during college, and move out once they’re settled into careers that are paying them a decent wage.

You may even want to go as far as to allow your grown kids to live at home if they’re partnered up, married, or have kids of their own. Will that be the easiest living arrangement for everyone involved? Maybe not. But it also might benefit all of you financially.

Having your grown kids under your roof might mean getting more help with home repairs and maintenance, thereby saving you money. And your kids will save money by virtue of not having to rent or own a place of their own. For a limited amount of time, it could end up being a win-win situation that allows you to focus on your retirement savings and avoid ultimately falling short.

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Want to make sure your money in the bank is safe? Read on to see what essential feature your bank needs to have. 

In early March, Silicon Valley Bank collapsed, and that situation sent shock waves across the banking industry and broad economy. After all, it was the biggest bank failure since the Great Recession. In its wake, a lot of people are now worried about the cash in their savings accounts.

If you have money in the bank, whether in a savings account, checking account, or CD, you may be concerned about your bank failing and losing all of your cash. But if your bank has this key feature, that’s not something you have to lose sleep over.

Is your bank FDIC-insured?

The purpose of FDIC insurance is to protect consumers in the event of a bank collapse. With FDIC insurance, your deposits of up to $250,000 per bank are fully covered. So if you have $30,000 in savings at a bank that fails, you won’t be out a dime.

You can also double your FDIC insurance limit by opening a joint account with another depositor. In that situation, you’ll have protection against losses for up to $500,000 in deposits. (Just make sure that your joint account holder is someone you trust fully, like a spouse, parent, or child, since they may be getting access to all of your savings.)

That $250,000 per person limit also renews, so to speak, when you open an account at another bank. So if you have $250,000 in one FDIC-insured bank and need to move another $50,000 into savings, all you have to do is open an account at another FDIC-insured bank. You’ll then have another $250,000 worth of protection there.

Now the good news is that most major banks are FDIC-insured. But if you want to see if yours is, you can use this FDIC tool to check on its status. If your bank is not FDIC-insured, you’ll definitely want to move your money into a bank that is.

You deserve peace of mind

The whole point of saving money and keeping it in the bank, as opposed to in a box under your mattress, is to protect your cash reserves and give yourself peace of mind. And if you keep your money at an FDIC-insured bank, you really shouldn’t have anything to worry about provided you’re sticking to that $250,000 limit per institution.

Of course, if you have cash beyond that point, you may need to spread it out. You may also want to think about investing some of that money in a brokerage account or retirement plan, where you could generate a much higher return than what a savings account, or even a certificate of deposit (CD), will pay you.

But if you have money earmarked for emergency expenses, that cash should stay at an FDIC-insured bank so you don’t lose out on principal. Since the FDIC was established in 1933, no depositor has lost any amount of money in an FDIC-insured account. And that statistic alone should make you feel better about keeping your money in a covered bank.

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Inflation has been surging. Read on to see how much you should be relying on your emergency fund at a time like this 

Inflation has been surging since the latter half of 2021. And at this point, many consumers are beyond frustrated with it — and understandably so.

In March, the Consumer Price Index, which measures changes in the cost of consumer goods and services, was up 5% on an annual basis. And that’s not even so bad compared to where inflation sat for much of 2022.

If you’ve been dipping into your savings account to cope with inflation, you’re certainly not alone. But should you be using your emergency fund to handle higher bills? Or should you be reserving that money for a true emergency, like a home repair or a period of unemployment?

It’s okay to dip in here and there

The purpose of your emergency fund is to help you cover unplanned expenses. And you can argue that inflation is an unplanned expense, to a degree. As such, it’s not a terrible thing to be hitting up your emergency fund on occasion to pay for groceries or cover your utility bills if they’re much higher than usual.

In fact, if you have enough cash in the bank to cover several months of living expenses, you’re better off dipping into your emergency fund than racking up debt on your credit cards. The latter could cost you a lot of money in interest, so if you already have the money, you might as well use it.

That said, if you’ve had to take an emergency fund withdrawal every month for, say, the past seven months in a row to cover basic bills like food and utilities, then it may be time to try to break that cycle by revisiting your budget and making some changes to your spending. You want your emergency fund mostly intact in case you wind up out of a job, or in case your car stops running and you need $2,500 in a pinch to get it back out on the road.

Take a look at your various bills and flag those that aren’t essential. That includes things like subscriptions and streaming services. If you’ve been taking $100 out of your emergency fund every month to cover your higher costs, you should try to find ways to cut $100 in spending every month instead.

Another option? Try to find a side hustle that allows you to cover your bills without having to raid your emergency fund month after month. That way, you may not have to cut back on any spending at all.

When will inflation cool down?

We’re already at a much lower level of annual inflation than we were in mid-2022, so in time, living costs might drop to a notable degree. But that’s not looking likely anytime soon. So if you want to preserve your emergency savings, try to break the cycle of dipping in every month to cope with inflation, and instead address the problem via more mindful spending and boosted earnings from a side hustle.

You want to leave your emergency fund as loaded up as possible, especially since there’s still a chance a recession could hit later this year. So if you can avoid those small, consistent withdrawals, you’ll be better off for it.

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We’ve purchased Disney’s Genie+ service on several recent trips to Disney. Here’s what I’ve found about whether the service is worth the money. 

In recent months, my family and I have taken several vacations to Walt Disney World in Florida, visiting several parks including Magic Kingdom, Epcot, and Animal Kingdom.

We’re Florida residents with passes, so this hasn’t done as much damage to our checking account as it would if we were out-of-staters visiting just for the day. But, we have broken out the credit cards to purchase Genie+ on several of these trips, which is a big added expense.

We wanted to try out Genie+ to see how the new paid service worked after Disney discontinued FastPass in 2021. But, the big question is, did it end up being worth it? Here’s what I think.

This is what we got for Genie+

Genie+ is Disney’s service that allows you to sign up for Lightning Lanes for most, but not all, rides. When you sign up for a Lightning Lane, you can jump into a different line than the standard queue. It’s a much shorter line and, for some rides, you can get on within a few minutes in the Lightning Lane rather than waiting 30 minutes or more in the standard line.

Genie+ doesn’t allow access to every ride, as there are certain rides in each park where you would have to pay individually per ride for a Lightning Lane entry. But, since I have small children who do not go on most of the rides that require you to pay for individual Lightning Lanes, it gave me access to pretty much every ride I wanted to go on, including Ratatouille, SmallWorld, Winnie the Pooh, Figment, the Na’vi River Journey, and more.

We were able to make our first Genie+ lightning lane reservation at 7 a.m., two hours before the park opened. We used that reservation to claim a spot at Ratatouille at 2 p.m. While this tied up our Lightning Lane since we could initially only reserve one, we were able to make another reservation two hours after park opening at 11 a.m. — and then to make additional reservations either every two hours after that and/or when we’d used an existing Lightning Lane.

By the time we got to the parks and had our breakfast, we could make our next reservation and walk right onto a ride. And we did that all day at Magic Kingdom one day, and all day at Epcot and Animal Kingdom the next.

With the ability to continually reserve Lightning Lanes, we never had to wait more than about 10 minutes for a ride — and we enjoyed our day a whole lot more than on previous trips when we’d had to wait 30 minutes or more.

Here’s why I think buying Genie+ was worth the money

Genie+ is not cheap. On the day we went, it cost $25 per person so it was $75 for our family of three (my daughter is under 2, so we didn’t have to buy a pass for her). That’s a lot of money.

However, without Genie+, we would have maybe been able to get on about five or six rides in a full day — and with it, we were able to get on dozens. It both made the day more fun and more importantly, enabled us to complete all the rides at two parks in one day instead of two. Since buying Genie+ is cheaper than buying another full-day ticket, it may make particularly good sense for people who pay by the day to opt for the service.

Ultimately, if you can swing it, it’s worth trying once to see if it’s valuable for you. For us, on crowded days, it’s almost not worth going without it because the day is miserable when you have to wait in line for 30 minutes or more with a preschooler and a toddler for every single ride.

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