Category

Money Management

Feb 26
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5 Ways to Fund Your Savings Account When Living Paycheck To Paycheck

By Money Management, Saving No Comments

With a tight budget, it can be a challenge to add to a savings account on a regular basis. And while the world is busy buying stuff and spending money, many people are looking for ways to fund their emergency / opportunity savings accounts.

So, here are 5 ways to take BREAK the traditional ways to save and build up your emergency / opportunity savings fund with ease.

B = Be a DUALpreneur (Monetize Your Talents)

If you are a full-time or part-time employee and still need extra cash; instead of getting a 2nd job, consider being a DUALpreneur (Employee and Entrepreneur) by monetizing your talents. Whether you can cook, clean, teach, tutor, fix things, etc., you can turn your talents into cash with an entrepreneurial venture. Despite what most people think, getting started doesn’t take a lot of money. Some people start off with Network Marketing, while others sell their products using etsy, pinterest or Instagram. Once you start making extra cash, save most of it or as much as possible to build up your emergency / opportunity savings fund.

Related Article: 3 Money Tips When Starting a Side Hustle

R = Refund (Tax Refund That Is)

If you are one of the lucky ones that get a hefty Tax Refund each year, put most or at least half of it in your savings account. I’m not telling you not to spend any of it. Just spend a small portion, pay off a few bills and stash the rest of the cash in that emergency / opportunity savings fund.

E = Evaluate Spending

One of the reasons why many people have minimal or no savings is because they spend it all. However, evaluating spending, using apps like MINT, will help identify where we the money is being spent and areas where spending can be reduced and transfer to the savings account. Starting off with ten dollars a week can eventually turn into stashing $100 or more a month to the emergency / opportunity savings fund.

A = Automate Savings

Sometime we just forget to transfer money into our savings account. Set up a direct deposit of a specific amount to the savings account through your employer or use apps like Digit or Qapital to automate your savings. This is the best way to consistently build up your emergency / opportunity savings fund.

Related Article: 4 Mobile Apps To Help Manage Your Money With Ease

K = Keep the Change

Many banks offer a simple way to add money to your savings account by transfer the difference between what you spend to the nearest dollar. For example, if you spend $1.65, it will round the transaction up to $2.00 and transfer the 35¢ to your savings account. This is a great way to automatically add cash to your emergency / opportunity savings fund.

Using these 5 strategies will help you increase your emergency / opportunity savings fund faster and with stress free, even if you are living paycheck to paycheck.

Feb 25
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3 reasons the Roth 401(k) is better than the Roth IRA

By Money Management No Comments

         While most people are justifiably upset over the most recent tax law changes under H.R.1, I’m reflecting on more advantageous tax bills of ages past. In 2001, Congress passed EGTRRA which created the Roth 401(k), the best thing to happen to retirement. Unfortunately, this gem is often overlooked by employees or hidden in a stack of new hire paperwork. To understand the magnitude of this account, let’s go through the evolution of the individual retirement accounts before it.

         Most people don’t know the world without the IRA or 401(k), but they are both relatively new creations. The IRA, individual retirement account, was created as a part of the Employee Retirement Income Security Act of 1974 (ERISA). The Revenue Act of 1978 enabled the creation of the 401(k). However, the Revenue Act did not explicitly create the 401(k), and the story around its inception is a bit of financial folklore. Folklore says that Ted Benna, nicknamed the father of the 401(k), was sitting in his office pouring over the Internal Revenue Code which he “discovered” Section 401(k).  But Benna tells a different story, during the two years between the passage of the Act and its effective date, “[m]any people, including me, were aware of the portion of the IRS Code that I used to design the first 401(k) savings plan. Because this provision was added to the Code for an entirely different purpose, no one had considered using it in the manner that I was about to propose.”

         The 401(k) plan that Benna created is
now known as the traditional 401(k). Generally, the traditional 401(k) is what
we think about when we think of a 401(k). 
The plan is characterized by an employee’s pre-tax contributions which
reduce her taxable income while simultaneously saving for retirement.  As a bonus, the employer has an option to
make deductible matching and profit sharing contributions. Because the
contributions and earnings are not taxed until withdrawal, traditional 401(k)s
are also referred to as tax-deferred accounts.

Shutterstock

         Unlike the 401(k), the Roth IRA was
created entirely by legislation and not by a creative interpretation of the tax
code.  The Roth IRA was included in The
Taxpayer Relief Act of 1997 as “Nondeductible Tax Free Individual
Retirement Accounts” named for its sponsor Senator Bill Roth.  Contributions were the opposite of the
traditional 401(k)—contributions were made after tax, so a taxpayer was not entitled
to a tax deduction, but are withdrawn tax-free. The downside of this account
was that contributions were limited to $2,000 and only those making less than
$100,000 were eligible to contribute. The contribution and income levels have
been increased to account for the cost of living.

Now
that we have a background on the individual retirement account, here are three
reasons why the Roth 401(k) is your retirement’s BFF.

Your Income doesn’t matter

 Over 20 years later, the Roth IRA still has
significant income restrictions.  For
single taxpayers, the income limit is $137,000. 
Married taxpayers can make up to $203,000 before being wholly excluded.  The Roth 401(k) is the option for those who
are excluded from Roth IRA contributions.

You can contribute three times as much.

         In October or November, the IRS
releases the Cost of Living Adjustment (COLA) increases for retirement plans
for the next tax year.  The contributions
for the 2019 contribution for IRAs (traditional and Roth combined) was raised
to $6,000 from $5,500 for the first time in five years. Taxpayers over the age
of 50 are eligible for an additional “catch up” of $1000. 

         Employees can contribute a maximum of
$19,000 to their 401(k) in 2019, up from $18,500 in 2018.  If the employee is over the age of 50, they
are entitled to an additional $6,000 as a “catch up provision.”

         In
plans with the Roth 401(k) option, an employee has the potential to contribute
significantly more pre-tax and after-tax money to their retirement.

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You have creditor protection

 401(k)s are generally safe from creditors
because ERISA covers them.  This
protection extends to 401(k) rollover. But 401(k)s are not protected from child
support and divorce obligations. 

 If a Roth IRA is not funded by a rollover, it is a contributory IRA.  Unfortunately, contributory IRAs are not entitled to the same protection as 401(k)s. Although they are protected once a person files for bankruptcy, they are not completely protected from creditors. States have various levels of protection from being completely exempt to partially exempt. For example, California only exempt IRAs to the extent “necessary to provide for the support of the judgment debtor when the judgment debtor retires and for the support of the spouse and dependents of the judgment debtor, taking into account all resources that are likely to be available for the support of the judgment debtor when the judgment debtor retires.”

         Some advice…

Not all employer plans have a Roth 401(k) option. In those instances, the Roth IRA is probably the best option for tax-free retirement savings. But if you make too much money to contribute, consider meeting with your tax professional and financial advisor to discuss a “backdoor Roth.”

Many are concerned about 401(k) fees and the lack of investment options. Thankfully, 401(k) options have greatly expanded with more plans offering Self Directed brokerage accounts.  These accounts provide access to common stocks, bonds, and ETFs which triple your plan’s investment options. In terms of fees, over the last five years, increased litigation has incentivized employers to find a way to drastically reduce fees as a way to insulate themselves from litigation. Ultimately, the Roth 401(k) enables more people to benefit from the joys of tax-free retirement savings with additional legal protections. 

The post 3 reasons the Roth 401(k) is better than the Roth IRA appeared first on The Ivy Investor.

Feb 25
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5 Simple Steps to Save Successfully

By Money Management, Saving No Comments

By Tammy Greynolds, America Saves Communications Coordinator

America Saves Week (February 25 – March 2, 2019) is an annual opportunity for individuals to assess their savings and take financial action. America Saves’ mantra – and the focus for America Saves Week – is simple: Set a Goal. Make a Plan. Save Automatically. When you know what your current financial picture looks like, you can be more proactive in setting yourself up for future success.

Try these four simple steps during America Saves Week to help yourself save successfully:

  1. Assess Your Savings.

Like your health, you should assess your savings annually to make sure you’re savings priorities are on the right track. Complete this simple 12 question assessment to find out your current standing and help you plan for the future.

  1. Evaluate your Savings Preparedness.

Check off your savings accomplishments on the Saver Checklist to further evaluate where your savings habits need strengthening for your future goals.

  1. Take the America Saves Pledge.

Those with a savings plan are two times as likely to save for emergencies and retirement than those without one. Join the nearly 400,000 American Savers who have already committed to save. When you make the pledge, you can choose to receive text message tips and reminders to help you save towards your goals.

  1. Make Your Savings Social.

Are you on Twitter or Facebook? Join America Saves in encouraging your friends, family, and colleagues to save this week. Better yet, join one of the five – yes, five! – Twitter chats that America Saves will be a part of this week to get real-time savings tips and advice.

 

 

America Saves Week is coordinated by America Saves and the American Savings Education Council. Started in 2007, the Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

Feb 14
Love0

Stop Overspending in the Name of Love For Valentine’s Day!

By Love and Money, Money Management, Saving No Comments
(Image: iStock.com/belchonock)

(Image: iStock.com/belchonock)

Valentine’s Day is the official holiday for celebrating love. However, because it’s almost exclusively a commercial holiday, it is also about spending money. This combination often leads to bad money decisions, because it encourages emotional spending out of love, obligation, and even guilt.

Before you get caught up, listen up: Love is not a legitimate excuse for irresponsible spending. So, choose to avoid these unloving financial behaviors for Valentine’s Day:

Do Not Spend More Than You Can Afford

Being overly generous when money is tight does nothing good for the giver or the receiver. More importantly, don’t get caught up in trying to impress your friends and relatives. Honesty, including financial honesty, is key to any healthy relationship. So, don’t pretend to have money you don’t have by playing the “big spender” role.

Do Not Use Love as a Justification for Emotional Spending

Love is not about making financial decisions with your heart, instead of your head. Even though emotional spending can give a temporary high, it can also lead to guilt, buyer’s remorse, and even resentment between partners. Many a relationship have been destroyed by this cycle.

Do Not Blackmail Your Sweetheart Into Spending

Never pressure anyone to purchase financially irresponsible Valentine’s Day gifts, in order to “prove” their love to you, or worse, to impress your friends and family.

Giving and receiving as an expression of love is not about price tags, but about meaning. The most meaningful gift does not have to cost an arm and a leg, and an expensive gift without meaning will be soon forgotten, on top of being a waste of money.

To be financially responsible without coming off as cheap or insensitive, take my advice:

Do Not Wait Until the Last Minute!

Desperation or impulse spending nearly always results in spending more money than intended, or getting a less than ideal gift—or worse, both. People can tell when you didn’t put thought into their gift, no matter how much you spend at the last minute. The key to getting the best products and services for the lowest prices is to plan your purchases and shop for them in advance. This also gives you more options, including shopping online, with enough time to order items for arrival before Valentine’s Day, without incurring hefty shipping charges.

Budget for Valentine’s Day, as You Would for All Gift-Giving Occasions

If you can, take the time to get buy-in, and manage the expectations of your Valentine. Openly discuss what you can and can’t afford in advance, and set mutually agreed upon spending limits that fit into your respective budgets.

Use the Most Powerful Aphrodisiac: Your Imagination

Instead of a big expensive purchase, think of a thoughtful, affordable gift, along with romantic ways to make the day special. Invest your time and attention instead of more money. Often, overspending is really just an expensive cop-out to avoid investing genuine emotion and true meaning into Valentine’s Day.
Focus on four areas:

  1. Things you can personally do for your sweetheart.
  2. Things you can do together.
  3. Things you can make for your Valentine.
  4. Places you can go together.

For example, gift your partner with a spa day, with you personally giving the mani/pedi, massage, shampoo, and several hours of your undivided attention. If you are artistically inclined, compose a song, or dedicate a handmade book of poetry or an original painting to your Valentine. How about enrolling in a class together, such as ballroom dancing, which could enhance your sense of teamwork and ensure you are in each others arms at least once a week. Of course, this kind of stuff will take thought, planning, preparation, and time (see “Do Not Wait Until the Last Minute!” above) to pull off.

The Bottom Line: Spending irresponsibly is no way to say “I love you,” even on Valentine’s Day. No one who really loves you would want you to do it. With advance planning and communication, you can have Valentine’s Day romance without blowing your finances.

 

Originally appeared on BlackEnterprise.com.

Written by Alfred Edmond, Jr. 

 

Feb 11
Love0

How To Deal With A Mate Who Overspends

By Love and Money, Money Management No Comments





black-couple-and-stack-of-moneyLove of money is not only the root of all evil, as the saying goes, it’s also the number one thing couples fight about. According to a 2014 Time magazine survey, 70 percent of couples argued about money more than household chores, togetherness, sex, snoring, or what’s for dinner. Delving deeper into the findings, it seems the money issues couples fight over most are frivolous purchases, household budgeting, and credit card debt.

Keeping tabs on their money is a top priority for couples. The survey found that “60 percent of husbands and wives said they check their bank accounts more than they have sex and 22 percent said they hide purchases from their spouses,” reported Huffington Post.

Obviously, it’s important to be on the same financial page as your spouse, but this can be difficult to do, especially when you have different spending and saving philosophies. If you like to save and your husband likes to spend, this can cause a great amount of friction in your relationship. That also signals it’s time to talk money with your mate, especially if he or she is spending more than you like.

“Realize that your spouse is not your enemy,” personal finance blogger Cherie Low of Queen of Free and author of Slaying the Debt Dragon, told MadameNoire. “My husband and I learned so many lessons about effective communication when paying off our $127,000 debt. Money fights and problems often lead to divorce. It’s easy, especially for a frugal-minded person, to begin to demonize the actions of their significant other. Being married is difficult and involves laying down our own opinions and expectations daily. You need to begin by realizing your spouse’s overspending it’s their method of attacking you. More than likely, they come from a good place in their purchasing patterns or are battling a legacy of money mismanagement.”

Ask any couple what the key is to a good relationship and they’ll likely say communication, so why leave finances out of the discussion? “Talking about money can promote happiness in your relationship,” James Capolongo, head of Consumer Deposits at TD Bank, told us. “In fact, According to the second annual TD Bank Love & Money Survey, nearly 80 percent of the survey respondents who talk about money at least once a week said they are happy.”

As with many things, timing is everything when it comes to talking about money with your partner. “The when and where of having a serious conversation about spending needs to be well planned,” noted Lowe. “Throwing a receipt in your husband or wife’s face while belittling them in front of the kids won’t be productive. Choose a time to have a talk that can make a real difference. If you aim only to hurt the other party’s feelings, no change will occur.”

Here are four more tips on dealing with a spouse who’s an overspender.

Decide together on big purchases.

“Couples can prevent possible arguments by agreeing ahead of time that purchases over a set amount should be discussed first. That way you are managing spending as a team sport,” suggested Capolongo.

Tackling debt should be a joint effort.

“In our relationship, I was the spouse who didn’t really want to jump into the journey of paying off debt immediately. I wasn’t a wild spender but I definitely have a more spontaneous money attitude than my husband. He thinks long-term and I think short-term. But the beauty is that every relationship needs both participants to balance each other out. One of the biggest switches we threw was to begin to dream big together about what we would do once our debt was eliminated. As we shared that vision, we grew stronger in communicating about our finances,” shared Lowe.

Set spending limits.

“My husband and I have agreed to a set dollar amount that we don’t spend if we haven’t talked to each other first for non-budgeted expenses. Almost every single time, we both agree the purchase is necessary. But the limit helps us to check in with each other and stay in contact with what is being spent,” explained Lowe.

Communicate and communicate often.

“It’s wise to meet regularly to discuss your finances and upcoming expenses. At least once a week, you should have a more formal talk, looking over the budget for the month and year ahead. Talk about long-term goals–retirement, college, and paying off debt or mortgage. But also think through short-term expenses–birthdays, holidays, vacation, and school expenses for the kids. If you can, check in daily together over the checking account and clear up any confusion about purchases,” advises Lowe.

Originally appeared on MadameNoir.com.
Feb 10
Love0

Why People Don’t Use Financial Advisors

By Investments, Money Management, Relationships No Comments

Many people just do not want to meet with a financial adviser despite the fact that using one may provide numerous financial advantages. Financial advisers provide objectivity of financial situations and give advice to help establish a more secure financial position.

A few personal finance professionals, authors, teachers and bloggers, from the Elevate Community, dedicated to uplifting people of color financially, shared their perspectives:

“JUST NOT READY”

Just like weight loss, financial wellness is one of the top three new year resolutions and personal goals. Most people generally know what to do to improve their financial situation, but some are just not ready to do it.

“We like comfort!” says Andre Albritton of The Millennials Next Door. “A financial adviser will give recommendations outside of our comfort zone which can be a frightening experience.”

Money mantras like “save more and spend less” and “pay yourself first” have been stated by every financial expert. The reality is if a person is not mentally ready, they will not execute any plan.

COST

On television, rich and famous people seem to be the only ones talking about meeting with financial advisers. This creates the perception that it takes thousands or millions of dollars to work with a financial adviser. The consumers living paycheck to paycheck with minimal or no assets (like a home, investments, etc.) may presume it is too expensive to meet with a financial adviser.

Many middle-class Americans are working hard to pay their bills and make ends meet. Paying to meet with a financial adviser may seem premature or unrealistic.

DENIAL

“People put off seeing a financial adviser for the same reason they avoid going to the doctor or dentist” shares Alfred Edmond Jr., BLACK ENTERPRISE Your Money Your Life Podcast host and co-author of Loving in the Grownzone. “They don’t want to deal with the choices, remedies, or lifestyle changes that will likely be necessary to improve their condition.”

People that practice avoidance in the hope that the problems will go away, or correct itself will deny the problem, and chose not to deal with the financial situation. Unfortunately, avoiding the dis-ease in the bank account will leave a person vulnerable to more financial hardships.

“People are embarrassed about their current (financial) situation and believe their choices got them in that predicament” explains Atiya Brown of Live Financially Savvy Podcast. “Since they don’t know the extent, they may tend to ignore and avoid.”

PRIDE

Almost 10 years ago, my pride almost put me in the poor house. I remember being ashamed to admit my major money mistakes and felt like a failure. I locked myself in a self-inflicted private prison of shame.

People suffer in silence because of their pride and the shame they feel because of their money mistakes. Making the decision to let go of the shame and ask for guidance will help to release the guilt.

PRODUCT PUSHERS

Julien Saunders of rich & REGULAR states, “Some financial advisers have a tendency to be pushy. Although well-intended, some (financial advisers) can make a person feel pressured. Consumers must fully understand the implications, alternatives, or cost to them as the investor.”

Some financial advisers are perceived as product pushers. Product pushing financial professionals turn off and scare away many consumers. Even though consumers know that financial advisers sell products, they do not want to feel pressured into purchasing products they don’t understand.

STRANGER DANGER

People do business with people they like, know, and trust. Sharing secret financial skeletons with  someone you don’t know can be extremely uncomfortable. It is even more frightening to give control of your money and assets to that stranger.

Patrina K. Dixon of It’$ My Money says, “Some people have trust issues. Therefore, if they do not trust the financial advisor, they will not be safe to share relevant information the adviser may need to assist the client.

 

SOME ALTERNATIVE OPTIONS TO USING FINANCIAL ADVISERS 

Many are not ready for the financial commitment to meet or work with a financial adviser. Here are some alternative options and resources to help you “start where you are.”

FINANCIAL BLOGS AND PODCASTS

Financial blogs are an excellent resource for free money tips and strategies. Here are a few blogs and podcasts to check out.

Tanya Rapley’s My Fab Finance Blog teaches millennial women of color how to regain control of their finances, overcome financial challenges, and pay off debt.

Talaat and Tai McNeely host the His And Her Money Podcast. Their podcast and blog aim to help married couples reach their financial goals together.

Marsha Barnes’ The Finance Bar Blog connects individuals to their financial wellness. She offers one-on-one coaching and an app that shows where your money is going.

ONLINE FINANCIAL TRIBES

John Hope Bryant, the founder of Operation Hope stated, “If you hang around nine broke people, you will be the tenth.” Connecting with people who have similar financial goals or have achieved the success desired is essential to financial success. Here are a few online financial tribes to check out.

The Live Richer Academy founded by Tiffany Aliche, who is known as The Budgetnista, is a membership-based online platform that offers courses designed to help participants take their finances to the next level.

Founded by Sandy Smith, of Yes I Am Cheap blog, Hustle Crew is a private Facebook group community that provides resources on entrepreneurship and starting a side hustle.

FINANCIAL COACHES

Financial coaches educate clients on the basics of money and credit management. They help their clients establish financial goals and create a customized plan to reach those goals. Financial coaches act as accountability partners to encourage and challenge their clients to success.

Financial coaching services range free through a non-profit programs to a few hundred dollars per hour to work with popular financial coaches privately.

 

 

Originally published on BlackEnterprise.com.