Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.
When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.
One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.
There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.
Tom says no.
Tough decisions and zero-sum situations
Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.
For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.
Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.
For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.
Three ways not to make tough decisions as a couple
First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:
Mistake #1 – Trying to convince your partner they'll be better off
The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there?
No one likes to be told they’ll be happier if they just do things your way.
Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."
Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing
The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.
Mistake #3 – Appealing to your partner's love
The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.
Marnie is no exception.
“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”
“The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”
I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want.
A better way to make tough decisions as a couple
The good news is there’s a much better method. There are three steps involved.
Step One: Let’s make a deal
In business, this would be a no-brainer, right? You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.
In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?
Let’s see what happens when Marnie tries this approach.
One night in bed, just before they turn off the lights, Marnie turns over to face Tom.
“Tom, what can I give you to make you agree to move?” she asks.
Tom is silent.
“A promise to never complain ever again about you watching TV?”
Tom smiles. “It’s going to cost a lot more than that,” he says.
Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”
Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.
“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."
Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.
Time for Step Two.
Step Two: The $64,000 Question
The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?” Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.
To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.
Marnie thinks for a minute.
“Let’s see what we can find,” she says.
Step Three: The Price is Right
Now comes the fun part.
The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.
Decision making builds strong relationships
A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.
A good deal will have both of your dreams in it.
One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.
But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.
Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
As Yogi Berra famously said, “When you come to a fork in the road, take it!”
In the long run, how you settle the issue may matter more than which fork you take.
For this podcast about financial planning I sat down with Scott Trent of Skylight Financial. During the podcast we discussed financial planning in general, qualifications to be a financial planner and how a financial planner can benefit homeowners and real estate investors. This podcast is helpful for those who may not be certain what a financial planner does and can learn how they can benefit from working with one.
I hope you enjoy the podcast and find it informative. Please consider sharing with those who also may benefit. Listen via YouTube: You can connect with Scott Trent on LinkedIn.
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About the author: The above article “Podcast #11: Financial Planning and Real Estate” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at [email protected] or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you. Contact me today!
I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.
Paul Sian: Hello everybody. This is Paul Sian Realtor with United Real Estate Connections licensed in the state of Ohio and Kentucky. Today I have with me Scott Trent Financial Planner with Skylight Financial. We’re going to talk about financial planning and add a little bit of real estate information on that. Scott, how are you doing today?
Scott Trent: Do an excellent, how are you Paul?
Paul Sian: Good. Glad to have you on. So let’s get started, tell us a little bit about your background. What do you do and how long have you been doing it?
Scott Trent: Sure. Well, it started in 1999. That’s just wrapping up college and started working for a local retail bank back in the day that was bank one, which of course became chase bank. And uh, for about three or four years with the banking industry, had a couple of different roles started off essentially kind of right on the teller line, cashing checks and making deposits. And then within about a year I was tapped for personal banker role and was able to acquire my insurance and investment license and to be able to expand the services I provided my client. And you fast forward to working primarily in that space and the investments in the insurance space. A couple of different companies such as nationwide in western southern and was right about 2007 then I had an opportunity to expand my role into leadership and management and so from about 2007 to 2017 I’ve trained and developed and recruited and was in a leadership position in the financial services industry. And right about 2017 I just decided to lean back towards my personal practice and spend more time with my clients, which really is my first love is just spending the time with those clients, helping them achieve their goals and seeing their eyes light up when you give them hope that they can actually accomplish the things that they set out to accomplish when they first signed on with that first job right out of college.
Paul Sian: Very nice. You did mention something about licenses and they in your statement there, so like I guess we can go on with that. What kind of licenses are you required to have and what kind of licenses are helpful to have in your line work?
Scott Trent: That’s an excellent question. So at a minimum you want to work with a financial planner that has an insurance license and at least one securities license. And the reason for that is because any financial plan is going to ideally holistically look at the different moving pieces of someone’s life. We’re going to look at cash flow and protection, risk management, wealth accumulation, tax reduction, retirement and ultimately a state of planning. And it’s with those different areas, there’s going to be some, some expertise needed as it relates to saving money, investing money as well as protecting your income and your assets. And so again, at a minimum bar you’re going to work with someone who has an insurance and investment license. On top of that, there are other designations of the industry provides such a CFP or cou chfc is going to emit apple bet soup out there of different designations that you can achieve. But I tend to tell people you want to work with someone. Again, that is looking at from a big picture, looking at both the protection and the wealth accumulation side. And I would say just as important as licenses or designation. Do you want to work with someone that has a rather quit experience?
Paul Sian: Okay, great. What kind of licenses do you have?
Scott Trent: So I have an insurance license in Ohio where where I reside and also uh, about a dozen other states that I conduct business said on a regular basis as well as uh, a series six license, the series 26 license, a series 63 license. And I’m also approved for financial planning through my broker dealer.
Paul Sian: Okay. So it looks, sounds like some of the licenses to our state restricted just like real estate or are all of them state restricted or though some of their general that you have licensed you can work anywhere?
Scott Trent: That’s a great question. So typically what happens is any insurance side of the house, once you are licensed in the state that you reside, you can fairly easily become what they call non-resident license in other states that you wish to do business and which is essentially filling out a background report, paying a fee and they kind of stamp stamp off and approve it. And so then in that way you’re able to conduct the insurance transactions in those states that you have clients that are, you know, for example, I have clients in the west coast and east coast ever where in between and I, I need to be licensed in the state that they reside as well as my own. On the security side or the investment side, you have one set of licenses that determines what type of business that you can conduct for your clients. And then the series 63 that you might’ve heard me mentioned that says that I can service the clients that reside outside of Ohio or I do, but you also need to be registered and approved and those surrounding states as well. So there’s a bit of administration that needs to take place, but at the end of the day, as long as you have filled out the proper forms and you’re mindful of your continuing education, just like you are as a real estate professional, you should have no problem servicing clients anywhere in the country.
Paul Sian: Okay. And we did a, you did kind of talk about, you know, one financial planner does coming, explained it in the light detail and through your intro, can you boil it down to us, boil it down to somebody who’s never met a financial planning before. We never talked to a potential central planner. What, you know, what exactly you do and how can you help somebody?
Scott Trent: That’s a great question. So you’re, from a bullet point standpoint, I would say it’s really about the why, how, and why and the what speaks to goal clarity. What I find working with our clients, Paul, is that mom and dad or partner’s, they’re getting up every day. They’re going to work and they’re doing their job. Then they’re coming home and will oftentimes doing mom things and bad things and catching their breath and then we get the little ones off the bed and next thing you know, we’re waking back up doing it all over again. And you know, kind of big picture. Intuitively we’re working to provide for our family and we’re working to have a great lifestyle. But you’d be surprised that most often people aren’t actually having a good conversation about what they’re really trying to accomplish and setting benchmarks for things like we want to have x amount of debt paid off in three years, or we want to save up for a great family vacation.
We’ve always wanted to go overseas. But yeah, we ended up just going to Florida every year because we don’t take the time to plan it through. And next thing you know it’s summertime. And so it’s about that clarity that the conversation that needs to happen between the partners in a hole, the spouses often let’s say, hey, where are we really getting up and working for a day to day basis? And so goal clarity, what do we want life to look like? If we wake up 20 years from now looking at a rear view mirror, what things would we have wanted to accomplish, make, make it feel like we’ve made some progress. So that’s a lot of it. The houses, the strategy or the roadmap. So once we identify what a client wants and help provide, help them have that conversation of clarity among all interested parties, then it’s how do we get there? And that’s where our expertise comes in and that’s looks like cash flow design that looks like different vehicles or products sometimes. Sometimes it’s as it’s a matter of saving, saving the right amount and the right kinds of buckets. And so again, that’s that more technical roadmap piece of it and it ultimately the why of it is this, the accountability, it’s, it’s part of my job is to keep the, why are we doing this in front of them? It’s what, what do we want to feel, what do we want to experience? And so if we, we’ve looking to the future and we can see our future selves waking up with the confidence of knowing that, that all of our financial lives are in order, that all the moving pieces are fitting together like a, like a perfect puzzle. There’s total efficiency there. It’s, it’s making sure that we keep that in front of our coins to say, Hey, this is why we’re saving this much. On a monthly basis. This is why we have that insurance in place. This is why we are investing in these types of instruments and vehicles. It’s all about, it’s about the experience that we want to create for ourselves and for the people that we love the most. So I guess that’s a little bit more than bullet points fall, but in a bullet point, it’s the why, how, and why. Otherwise it’s the goal, clarity of strategy and accountability that we provide.
Paul Sian: Actually that’s, yeah, that’s very well said. So it’s not just long term planning, it’s not just you know about retirement. It’s also about your short term. If you want to go, like you mentioned the vacation plan or even then you know, my case, I deal with a lot of real estate investors. So somebody who wants to set up a plan for investing in real estate, you can help out with that too. Correct?
Scott Trent: Oh absolutely. And so, you know, the time frame, it has a lot to do with what their client has going on in their life and this season that we meet them in. So, you know, for example, and we hear a lot about, I’ve really liked to get in to real estate investing. And then we say, well, when do you see yourself doing that? And sometimes they’ll say, well, you know, in the next two to five years. And sometimes they say, well, like right now I can’t. And so we’ll take a step back again, kind of coordinate all the moving pieces of their financial world and letting math and math have a seat at the table and not just intuition and not just kind of what we want and, and you know, let things that, you know, sometimes we see something on the internet or hear a friend talk, we’re like, Ooh, I want that. And so then we just go do it. And so again, that’s a big part of it. But also its let’s, let’s have the emotions have a seat, but also led logic and math and rationale habits. Have a seat, the tables.
Paul Sian: Well, yeah. And you mentioned long term plan, also short term plans, looking at things. So, I mean just uh, and we can go a little situations or specific, basically you have to look at everybody’s individual situations and how they’re, you know, what they’re doing and what their goals are. Let’s say we have somebody who’s a, you know, there were w two income earner, they make x amount of money per week, per month, what have you, and so they’re interested in, in a real estate investing. What kind of general advice would you give to that person and you know, maybe they don’t have a full down payment saved up yet and they need 20-25% for whatever they’re trying to buy. What kind of suggestions would you have for them.
Scott Trent: Paul What I would say with someone who’s looking to take their first step into the financial independence or looking at that opportunity to, to start a real estate investment portfolio, it is always looking at it through the filter of what we call our four pillars of financial security or the value system, that value system that we use when it relates to financial planning. And those things are going to be making sure that you’re protected against major financial risks, that you are becoming a world class saver, saving upwards of 15 to 20% of your income on a monthly basis, making sure that you have a life events fund. We have says that I have upwards of a year’s worth of my income in places that I can access outside of my qualified plans such as his Iras so that I’m able to deal with not just rainy days in emergencies, but I’m also able to take advantage of great opportunities like I ain’t a great property for a great price and also taking a look at the debt that I have on my balance sheet that already exist and so we would do with a client is to say, Hey, let’s take a, let’s take a holistic look or three 60 look about how a purchase of a real estate property, what impact these other creek cake, key critical areas of financial planning and your overall wealth strategy.
Paul Sian: Okay, great answer. You had mentioned a debt in there. Let’s go talk about that a little bit of an most people are buying real estate using that, you know, your mortgages, commercial mortgages, residential mortgages. What are your thoughts on debt? I mean a good, bad avoiding to some that’s good, bad. What do you think?
Scott Trent: That’s a great question too. I think that it is difficult especially you’re right up in the Midwest to ever say Ted is good. However, when it comes to that, when I, when I’m, what’s an easier answer to give is the what, what is the fat kind of debt and so bad debt is higher interest rate, unfavorable terms, excessive fees, consumer base that such as credit cards or retail store cards, things that we, that that we acquire just for lifestyle. Because a lot of times what that represents on someone’s balance sheet is that they have let their once supersede their actual needs.
And so what lending institutions are happy to do is to say, hey, if you want an extra money to be able to keep up with the Jones’ is it will give us a call or come see us on credit card.com and so I always caution against that kind of debt because it speaks usually to a bigger problem on the other side of things. Acquiring that for the purpose of acquiring assets like real estate, like vehicles, that can be very wise decision because it helps you leverage your own cash flow and leverage your own opportunity to earn income and your own savings and oftentimes, particularly as it relates to real estate for home purchases for example, there are, there’s some tax favor ability to be found with those kinds of debt. And so what I’ve, what I’ve loved the, the good debt, Paul, the best debt is low interest rate, tax deductible kind of debt.
That’s good debt. But again, this kind of summarize, I would say the bad debt is usually represented by death that we were required to just improve our lifestyle, close trinkets in the house, furniture, things like that. That’s usually about ego, about lifestyle as well as just as much to do with our neighbors and our neighborhoods. What does ourselves or the people that we care about the most.
Paul Sian: You had mentioned the taxes in there too. I do. I guess Texas do come into play as a financial planner when working with your clients.
Scott Trent: Yeah, absolutely. And so one of the things that we’ve helped the client with recently is to help weed through the confusion of the current tax situation because of the tax cuts that will were implemented in 2018 and so as an example, all you brought up about, it’s not just long term planning, it’s not just retirement plane that we help our clients with.
It’s also short term goals. And so taxes is a great example of that because what we do know that unless there’s some overall legislation that gets passed, what we can expect is that in December 31st, 2025 the current tax cuts are going to that. So another way to think of that is come January 1st, 2026 everyone’s taxes are going to go up if they’re earning the same income of the art today. And with that creates opportunity. It’s one of the things I’m working with a family right now on is this idea of exploring, does it make sense to take advantage of after tax investing rather than what most people focus on kind of cause they told to just what they see their neighbors and their friends and family doing, which is maximizing their pretax dollars is what could happen without getting too far into the weeds fall is because of the current tax environment.
We might be deferring taxes at 20 or 24% all the way to wake up and later in life and find that we’re now paying taxes on those same dollars at a higher rate, 30% 32% 36% and higher. So we just have to be careful about that. And so taxation is a area of emphasis that is necessary working with any financial planner. And I would just caution folks that if their financial planner is not having a meaningful conversation about long term impact of taxation, then they might want to seek out a higher authority on the matter or maybe it might be time to start interviewing other financial planners. I think the asterisk that I would add there fall is that that’s also why we partner with local professional CPAs so that they can have the kind of final say so in these matters as it relates to wealth building in financial planning in the in the area and Ronald Taxation, we are very familiar with that have very powerful tools that speak to taxes.
However, what we are not as certified public accountants and so as you can imagine, we want to make sure that we always work with someone who, who is that when it comes to crossing those ts and dotting those I’s. Also, I think with the financial planner, bigger picture is working with a successful financial planner also should give you access, favorable preferable access to the financial professionals that they network with. Such as personal make herself a professional real estate agent as well as an attorney as well as a property casualty specialist to CPA, a benefits consultant if it’s a business owner on and on. And so it’s really working with the right team, but ultimately working with someone who is going to be that can symphony conductor or that quarterback of their team, who’s going to take the responsibility to make sure that all the orders are running in the right direction.
Paul Sian: Great answer. Actually that wasn’t, that answers my, uh, it wasn’t going to answer my next question, which is a financial planner is not a solo person. They work with, uh, with a team as you mentioned, you know, working with the accountants, the attorneys, CPAS, what have you. So that’s a great answer. We had discussed earlier you had discussed about building up an emergency savings fund. Then you mentioned a year, which is great. And that’s the idea was the year, you know, we’ve heard online from anywhere from three months up to six months. I mean, what’s, how do you suggest people go about building that savings funds? I mean, especially for somebody who thinks they’re living paycheck to paycheck, I mean, where do they find that, that room, that gap to start, start that savings fund?
Scott Trent: SoI guess it would clarify first the difference in an emergency savings fund in a life event. It’s fun. So for an emergency savings fund that’s best suited typically at the local bank, and that’s going to be in the form of a savings account on or maybe even a and no fee checking account. And that’s going to be where you want to have about three months, maybe six at the most. A lot of it has to do with the comfort level, the individual client. But typically three months is more than fine to have on hand at the local bank. That’s money that I’m an ATM card or a debit card swipe away or uh, a dash over to the local branch away from getting access to my funds. Outside of that, the next six to nine months that we talked about from a life events that doesn’t necessarily have to be in cash at the bank, but it just needs to be somewhere outside of a qualified plan.
Because as you probably know, and your listeners know, Paul, money that’s inside of a qualified plan is largely inaccessible until I’m 59 and a half. And last I want to jump through hoops, pay interest rates to access my money or God forbid pay taxes as well as IRS penalties. And so when we talk about life events, fun big picture, we’re talking about braces for the kids. We’re talking about a $2,000 car repair emergency that jumps out the bushes on us. We’re talking about, um, the vacations that we want to go on. So it’s the experiences that we want to have in life for the people that we care about most, but it’s also the things that life is inevitably going to do, which is getting, throw those curve balls. Dot Us good and bad. So as far as how do we get there, take baby steps, it’s just sometimes it’s as simple as going to your HR coordinator, your payroll director and saying, Hey, can I split my direct deposit between two counts right now?
This is kind of hitting the checking account. And then from there it’s, it’s um, you know, all bets are off and it’s a feeding frenzy. And ultimately, uh, fortunately for the bills and the lifestyle expenses and gas money and everything else, uh, the best way to say fall, no matter how you do it or what vehicles you use is systematically and consistently. So it’s those things that you don’t have to pull ever go online, go to the local branch and things that just happened. That’s why good and bad, most of Americans well is in their qualified plans are the 401k because it comes out before it ever hits our bank account. It’s out of sight, out of mind. It just piles up. You know, the, the, the tough part about that is, again, that’s a qualified account. So there’s some heavy restrictions that keep us from being able to access our funds when we might need them most.
So just like the 401k if for example, I talked to a college student this afternoon and it was as simple as go to the HR director happens, split your direct deposit into two separate accounts and just start taking out $25 a pay check and having that diverted to a secondary account just so that it starts to pile up and the idea that the money’s there but really need it, but it’s just that extra layer that helps reinforce the discipline to say, okay, I’m not supposed to touch that. That’s for future purposes. That’s for rainy days, real emergencies and not frivolous spending. And so start with baby steps. And next thing I would look at is working with an advisor who has tools to help you analyze your spending. Your cash flows ideally will help bring awareness to where those dollars are going. What I find fall is that what most of our clients, there might be 10 to 15% of their monthly income.
That just seems to just disappear. It’s not accounted for it. And so using the tools such as, uh, we use a tool, Claudine money for example, and we’re personal financial view that will really electronically analyze someone’s spending habits so they can say, oh, I wonder how much money we’re spending out spending on a monthly basis eating out. Well, click, click, click. This is exactly how much that is. And we can set short term goals on what we think that should be and we can keep, we can track our progress through these financial tools. The other thing that we look at in a financial planning process is we want to analyze the cost of the services that you’re currently receiving. So for example, when we work with our lending and credit specialist or real estate professionals or CPAS or attorneys or property and casualty specialist, we’re making sure that our clients are getting value, not always looking for cheap.
In fact, the chief is not a word that I tend to use or any of the professionals and network with. We’re making sure that we’re getting the best value since we have a finite amount of dollars coming in. We want to make sure that those are being used, maximized and leveraged the most appropriate way. So it is taking the baby to start somewhere. It is working with an advisor to find the awareness of where the money’s actually going as well as taking a look at the cost of service for the services that we’re currently enjoying as well as I. Lastly, I would say looking for ways to minimize the impact of interest rates wherever possible, whether that be through right refinancing or creating a debt payoff strategy so that we are avoiding those excessive interest rates in feet.
Paul Sian: Yeah, it takes a, an overall, you like you’re, you’re saying you have to look at the budget, get to look at the incoming money, outgoing money as well, and kind of build that plan. So I mean that’s, that seems you to be your specialty. Very much. So. Moving on, let’s go back to the topic of real estate. And I go over one of the controversial statements made by Gary Vee, Gary Vaynerchuk. I mean he had, he had say stated, uh, rather than buying a house, it’s better to go, you know, go rent and I don’t know that upset a lot of real estate agents too. I mean that’s kind of our bread and butter. We’re, we’re buying and selling real estate. I’m of the opinion though. I mean I, I help a lot of buyers and sellers with the investment real estate too. So it’s not that, you know, I have to own a house personally, but I can own an investment property and I’m helping somebody else, you know, live in a place. What are your thoughts on the ownership of a house or renting, renting the place to live.
Scott Trent: Interesting and not, I read an article last week that talked about the difference in buying and renting or leasing in different pockets of the country. And as I said, it’d be four people. I work with clients all across the country and in some markets it’s really hard to justify a home purchase as it, as it compares to renting a home. You know, for example, a lot of clients on the west coast where housing market is very tight and there’s certainly a premium for home homes costs there in that part of the country. And so what we find is that the monthly cost of leasing a home can oftentimes when you consider the fact that with home ownership, I also am now responsible for property taxes, homeowner’s insurance, as well as the upkeep of the property that that can sometimes more than double the living expenses as it relates to housing. Whereas compared to here in the Midwest where sometimes it can actually be much more cost effective to own a home rather than rent a home from a monthly cash flow outlay. Even when you add in insurance and taxes and the kind of monthly maintenance, if nothing else, it’s oftentimes a break even when you consider all factors. So I think that would go back to as you say, Paul, you know, or Scott does it. Does it make sense to own or rent when you think about Gary V’s advice way I would look at that is again, just like any other decision that our clients would come to us and ask our feedback on. We would take a, at the basics we’d say, okay, before pillars of financial planning or financial security or these value system that we use to build our clients’ financial plans on the perfect protection, the become a world class save or having the life events fund to be debt free or have a, have a plan to get us there.
If a, if home ownership or home purchase would get in the way of us living out those values or achieving those financial objectives then and renting would, then we’re going to say it. We should think about writing for another year or two. However, if, if our clients can own a home and be protected well and be a great saver and be building their life events fun and have a handle on the that that’s already existing on their financial balance sheet, then by all means we’ve been encouraged folks to take, take ownership of a home so that they have acquired an asset. They’re building a liquidity in the form of equity and they’re also able to take advantage of the things we talked about earlier, which is having the tax deductibility from interest payments on the mortgage and so on and so forth. And so the other astronauts that I would have there is the sense that if someone comes to us and says, yeah, you know, my job, we’re an up and coming or a rising star and you know, are two of the five year goals are too.
And we want to, we want to be really nimble because we’re very likely to be transferred across the country, maybe Chicago or San Diego here in the next two to five years. Again, why would attend to encourage those folks is and can be consistent with say, nimble homeownership home purchase, maybe a terrible idea. This is because it’s, it’s easy to, it’s much easier to give a landlord a 60 day notice that you’re moving out than it is to be able to sell a home in 30 to 60 days regardless of the market. Also the fact of course you gotta be careful that we’re not holding an asset that we’re going to look to sell or relinquish in the next 12 to 24 months or even three to five years. Knowing that it’s not often, but every so often the housing market can regress such as 2007 and eight and we have to be careful that we didn’t make a 30 year decision based on 24 to 48 months factors, if that makes sense.
Paul Sian: Yeah, definitely makes sense. And it’s a a great point. I mean just like real estate, you know, when you brought up earlier the cost differences, you know, living in California versus living in Cincinnati, Ohio, it’s location, location, location is agency. So, I mean when you get over here for you know, $250,000 you know, in California you can easily do the, be able to get 1.2 million depending on the location you’re at. So same, same thing for the individual person. I mean it’s the, it’s the individual that matters. What’s your life goal? What’s their life plans? And you know, somebody who’s going to be here in Cincinnati for two years, it doesn’t make sense. It might not make sense. The, you know, there are high transaction costs, you know, where they’re from, your, your real estate closings, closing costs, your, your mortgage closing costs. So I mean that that kind of adds in and you might not get that pay off in two years. Especially if value state stay flat or decrease.
Scott Trent: That’s an excellent point perspective. If I could leave your listeners with one nugget of wisdom for what it’s worth, I would say the sooner that you can let go, other people have expectations of you and let go of what other people might think of you and the perception others have of you, the better off you’ll be. We find so often that the pressure to keep up with the Joneses that use that expression again or to to everybody else is doing it just kind of like kids in grade school. That same peer pressure exists with hardworking families, grownups, parents here in adulthood and the idea that we’ve got a finite amount of time and a finite amount of resources and at the end of the day being able to look in the mirror and have satisfaction about the progress you’re making it for yourself with people that you love, making sure that you have a plan that works and offer seen circumstances, good days, bad days, sunshine or rain.
Knowing that you’ve prepared a path for yourself and for your family. That is a general one that reaps benefits for generations and that we’re teaching the generation coming behind us about financial responsibility. I think if we can find joy and peace in those principles and those ideas and the visions of that kind of a future rather than making sure that, you know, we look good when we pull up to the company picnic or the family or a union or making sure that we form to the right neighborhood with the right car and the right toys in our garage. No, I think we’d be much better off as Americans because sadly enough, the statistics say that the average American to saving 5% or less of their income or an overwhelming majority of folks are not even prepared to deal with a thousand dollar emergency if it were topics that out of the bushes.
And so I think that what I’d like to leave your listeners with this idea of we can do better and one of the best ways to start doing better is to think a lot less about the perception and approval of others and really start thinking about the idea that the stakes are high and when, when we consider the magnitude of the impact of our financial decisions, not just for our lives but the lives of the generations that follow, I think we can make the best well informed decisions and whether that includes home purchase or renting or if it includes real estate and investing or for or not. I think that working with myself and my team, we really work very hard to make sure that we keep the main thing, the main things and minimize the distraction of other things I’ve mentioned.
Paul Sian: We’ve talked today, plan for now and plan for the future. All very great and solid advice. Thanks Scott. Appreciate you. Haven’t you on the show here and I will chat with you soon.
Scott Trent: Thanks Paul.
A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:
Concurrently: Saving for two or more financial goals at the same time.
Sequentially: Saving for one financial goal at a time in a series of steps.
Each method has its pros and cons. Here’s how to decide which method is best for you.
You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.
Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.
Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.
Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.
Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.
Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.
The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.
Based on the findings from the study mentioned above, here are five ways to make better financial decisions.
1. Consider concurrent financial planning
Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.
2. Increase positive financial actions
Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.
3. Decrease negative financial habits
Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.
4. Save something for retirement
Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.
5. Run some financial calculations
Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.
What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!
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This article is from Barbara OâNeill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:
How to Manage Your Money â No Budgeting Required
5-Minute Finance: Create Financial Goals
How to Pull Your Small Business Out of a Cash Crunch
Are you looking for the best money books for young adults?
Today, I want to talk about the best money and life books for new high school graduates, college graduates, and other young adults. These would be great for graduation gifts, or just for yourself!
I wasn’t always good with money when I was younger. I bought more clothes than I needed, financed a new car, spent a lot going out to eat, and spent a lot of money on things I didn’t need. It took me several years to realize how my spending habits were affecting the rest of my life.
I think this is fairly common when you’re younger, and there are lots of great financial books for young adults that can help you understand how money works and how to prepare for the future.
The best money books for young adults explain personal finance topics like saving, investing, making more money, and more. And, reading them when you’re young can help you get on the right track with your money from a young age.
Rather than spending years playing catch up with your money, you can get started on a great path now.
I often get questions from young readers who are looking for help with their money, and I also get questions about how to help a young person with their money. These books are a great gift for yourself or someone you know.
For me, I love to give books as gifts, especially personal finance books for high school and college graduation gifts. And the best money books for young adults on this list make for great gifts – I’ve even given some of these books as gifts.
If you want to change your life, then I recommend that you start reading personal finance books. Yes, money is not everything, but improving your financial situation can help you gain control of your life.
Related: 6 Simple Steps That Will Teach You How To Write A Check
There are many different books listed below, so you will be sure to find at least one or two that meet your needs.
The best personal finance books may help you learn how to:
Understand basic financial concepts in an easier way
Reach financial independence or retire early
Take on your own yearlong shopping ban
Deal with and pay off debt
Better manage the 168 hours a week you have
Become more confident
Invest for your future
Choose your own dreams and adventures
Find the best path to pay off your student loans
Here are 15 of the best money books for young adults.
1. Broke Millennial
Broke Millennial was written by Erin Lowry, and is a must-read for young adults. She makes the topic of money entertaining, fun, and relatable for young adults. You won’t be bored with this money book!
Erin gives readers a step-by-step plan to stop being broke, and she discusses many topics, from tricky ones like how to manage student loans, how to discuss money with your partner, and more.
Please click here to check out Broke Millennial.
Another one of the best money books for young adults is Broke Millennial Takes On Investing. Erin recently published this one and it’s a great read, as it covers the topic of investing without making you feel dumb.
2. Work Optional: Retire Early the Non-Penny-Pinching Way
Work Optional is another one of my top picks for best money books for young adults, as it was written by one of my favorite writers, Tanja Hester. This personal finance book will show you how to reach financial independence so that you can live the life you want.
I know retirement feels very far away when you’re younger, but this book explains how early retirement is a possibility if you start saving money now. Yes, retiring before the traditional age of 65 can happen, and it starts with the kind of guidance you’ll get in this book.
Please click here to check out Work Optional: Retire Early the Non-Penny-Pinching Way.
3. The Year of Less by Cait Flanders
If you’re looking for one of the best financial books for graduation gifts, check out The Year of Less by Cait Flanders. In this book, Cait writes about her yearlong shopping ban which will inspire you to simplify your own life and address your relationship with material possessions.
Cait talks about how for a full year, she only bought groceries, toiletries, and gas, and how it impacted her life. This is a great read for young adults as it is so easy to get into a spending cycle when you get your first real job and start earning larger paychecks.
Please click here to check out The Year of Less by Cait Flanders.
4. Dear Debt
Dear Debt was written by Melanie Lockert and focuses on people’s relationships with debt in a funny and endearing way.
Dear Debt is a must read for anyone who has debt or is taking on debt. Melanie shares her personal experience paying off $80,000 of student loan debt, how it affected her mindset, and more. This is one of the best money books for young adults because it’s a personal story about overcoming debt. There’s also tons of great money advice that will help others overcome the debt that may be holding them back.
Please click here to check out Dear Debt.
5. 168 Hours: You Have More Time Than You Think
Do you ever wish that you had more time in your week?
This book, written by Laura Vanderkam, focuses on helping people manage their time better so they can focus on what really matters.
Laura writes about tips and tricks to live a more efficient life. She teaches you how to prioritize things in your life, from how to get enough sleep every night to finding time for hobbies you’ve been wanting to try. You will learn how to use your 168 hours a week to make your life better, as you’ll learn many great life-changing strategies.
Please click here to check out 168 Hours: You Have More Time Than You Think.
6. How to Win Friends and Influence People
How to Win Friends and Influence People was written by Dale Carnegie in 1936 and has sold over 15,000,000 copies worldwide. This is one of the most best-selling books ever, and for good reason!
This book will show you how to approach situations differently, become more confident, and get people to like you. This is one of the best money books for young adults that people of all ages will benefit from, because this book is all about living a happier and more successful life at any age.
Please click here to check out How to Win Friends and Influence People.
7. Quit Like A Millionaire
Quit Like A Millionaire was written by Kristy Shen and Bryce Leung, who are well-known people in the FIRE community. And, if you’re not familiar with FIRE, it stands for Financial Independence Retire Early. Everyone approaches FIRE differently, but the point is to stop letting money hold you back from living the life you want.
Kristy retired early at the age of 31 with a million dollars, and has a very inspirational story. In this book, she explains how that was possible and how it can be a reality for you too. This is a great guide on how to save more money, retire early, and live the life that you want.
In this book, you’ll learn a step-by-step guide on how to reach success, whatever that may mean for you. This is a fun and inspirational book that will open you up to new possibilities and opportunities.
Please click here to check out Quit Like A Millionaire.
8. Get Money
Get Money is a book by Kristin Wong, and it’s an engaging read that will teach you how to manage your money.
Kristin gives you a step-by-step personal finance guide that will show you what you need to do in order to stop letting money control your life. You will learn how to create a budget, pay off your debt, build a better credit score, negotiate, and how to start investing.
Please click here to check out Get Money.
9. Financial Freedom: A Proven Path to All the Money You Will Ever Need
Financial Freedom was written by Grant Sabatier, who decided that he needed to change his life by learning how to make more money.
Here’s a bio I found about Grant to show you how awesome he is!
“In 2010, 24-year old Grant Sabatier woke up to find he had $2.26 in his bank account. Five years later, he had a net worth of over $1.25 million, and CNBC began calling him ‘The Millennial Millionaire.’ By age 30, he had reached financial independence. Along the way he uncovered that most of the accepted wisdom about money, work, and retirement is either incorrect, incomplete, or so old-school it’s obsolete.”
In his book, Grant writes about how to reach financial freedom through steps such as building side hustles, traveling the world for less, building an investment portfolio, and more.
Please click here to check out Financial Freedom.
10. The Simple Path To Wealth
The Simple Path To Wealth was written by JL Collins, and it’s one of the most popular and best money books for young adults that’s available.
Collins writes about many important financial topics in his book, such as how to avoid debt, how to build wealth, what the 4% rule is and how to use it to your advantage, and more.
This is an easy book to read, and it makes complicated personal finance topics much easier to understand. Many people have said that JL Collins is the reason why they were able to retire early, thanks a lot to his website and book.
Please click here to check out The Simple Path To Wealth.
11. Student Loan Solution
Student Loan Solution was written by David Carlson, and it’s a great book for anyone who has student loan debt.
Student loans can be extremely difficult to understand, as there is so much different terminology as well as different ways to pay them back (such as loan forgiveness, consolidation, and so on). This book explains a 5-step process that will help you to better understand your student loans, the best ways to pay them off, and more.
Please click here to check out Student Loan Solution.
12. The Millionaire Next Door
The Millionaire Next Door is another classic personal finance book, and it was written by Thomas J. Stanley.
In his book, he writes about the common traits of those who are wealthy, and how the wealthy can be even someone such as your neighbor, even though you might not realize it. This book shows readers that anyone can retire with wealth, not just your traditional multi-millionaires living in huge mansions with airplanes.
This is one of the best finance books for graduation gifts because it will make you rethink what it means to be rich, which is important to understand from a young age.
Please click here to check out The Millionaire Next Door.
13. The Infographic Guide to Personal Finance: A Visual Reference for Everything You Need to Know
The Infographic Guide to Personal Finance, written by Michele Cagan, is one that I learned about from my readers. What’s great about this book is that it gives you a visual guide to important personal finance topics, and many people learn better from visuals.
This book is different in that it is full of infographics, which make it fun and easy to read. You will learn how to find a bank, build an emergency fund, how to pick health and property insurance, and more.
Please click here to check out The Infographic Guide to Personal Finance.
14. Choose FI
Choose FI was written by Chris Mamula, Brad Barrett, and Jonathan Mendonsa. These guys are behind one of my favorite Facebook communities, Choose FI, and they explain how to reach financial independence and retire early.
While retiring early may seem out of reach if you’ve just graduated, this book teaches you how to “choose your own adventure” and improve your financial situation.
Please click here to check out Choose FI.
15. I Will Teach You To Be Rich
I Will Teach You To Be Rich was written by Ramit Sethi and is a excellent book for beginners. It would make a great gift for a recent high school or college graduate.
Ramit’s I Will Teach You To Be Rich is packed full of great lessons, and it is written in a fun way. He covers the basics of personal finance such as budgeting, saving money, investing, and more.
Please click here to check out I Will Teach You To Be Rich.
What do you think are the best money books for young adults?
The post 15 Of The Best Money Books For Young Adults â Learn How To Live The Life You Want appeared first on Making Sense Of Cents.
Hey everyone! Michelle speaking for a moment. Today, I’d like to introduce you to my friend Amanda Holden. She runs one of my favorite financial blogs – Dumpster Dog. Below is a guest post from her on why investing for retirement is important for women – and how you can start. Enjoy!
Play along with me for a moment: Imagine a deliciously styled woman in her 70s.
She is having a sip of her morning espresso at a sidewalk café in Paris. She’s perusing a big, beautiful novel alongside her (much younger) Parisian lover, who is bringing her a third croissant for before 10 am (because why not).
This woman is you.
Or at least, this woman could be you.
Whether or not your retirement dream includes croissants and a Parisian lover, you’re going to need to save and invest to make it happen.
We’re so accustomed to thinking about retirement in terms of an age—age 65—when in reality, retirement is an amount of money saved.
Because young people will not have access to the pension plans of our parents and grandparents, retirement is entirely our responsibility.
After spending six years workin’ in a fancy investment management job, I quit.
Helping the rich get richer just wasn’t going to be “it” for me. So, I created my own business, called Invested Development (Invested Development is great for beginners and for those looking to step up their investing game. My favorite part of this work is that “ah-hah moment” when students realize that investing is absolutely within their capacity.
Part of this work is addressing the specific hurdles that women face and finding solutions to those problems so that my students can live out their Golden Years in style.
Here are four reasons women need to save and invest for retirement—and how to do it.
1. Retirement is the single biggest lifetime expense for everyone, not just women.
Can we real-talk for a hot minute? It’s hard as hell to get motivated to save for retirement. Retirement is so frickin’ far away and you’ve likely got more immediate financial goals you’d like to achieve, like a down payment for a home or building a luxury palace for your collection of rescued street cats.
But, here’s the rub: Retirement will likely be the single-biggest expense in your lifetime. That’s right: Bigger than a house (at least, for most of us), and bigger than kid’s college. Take a step back, and simply think about what retirement is: You’re living for 20 or 30 years with no working salary.
Ask yourself: How much money do you need to spend in one, single year? How about for twenty or thirty years?
Without getting too caught up in the numbers, you get the idea: That’s a heckuva lot of money to save. Saving money is going to be the foundation to achieving retirement—but investing is the secret sauce.
2. Women live longer than men.
The job of saving and investing for retirement is already big. And for women, it will be even bigger.
In 2019, women have a life expectancy of 81.6, while the average for men is 76.9. That’s nearly five more years to account for. And the tough truth is—these years aren’t usually cheap or easy or healthy.
This means that women need to plan to be alive for longer than men, which means they need more money for retirement. And really, we should all plan to live to be at least 90 or even 100.
The worst thing you can do is make a plan that assumes you’ll live to be 81.6, and then live to be 100 with nothing in the bank. (This is especially important as life expectancies are expected to rise over the next several decades.)
3. Women need their own money.
Hey! Would you like to feel very angry right now? Well then allow me to introduce you to: The National Institute on Retirement Security!
Their data shows us year after year that women are significantly more likely to live in poverty than men in retirement, and it’s worse for women of color and single women. Any of us could be single, divorced, or widowed. I’m still single IF YOU CAN BELIEVE IT!
It’s rare that life ends up the way that we expect it to.
Planning for a scenario where no one gets sick and no one gets divorced is more than just dumb, it’s dangerous—especially for those of us living in countries with waning social safety nets.
We all know, in theory, that a partner is not financial plan; the hard part is making a plan into reality and doing the work now, and not waiting until disaster or heartbreak strikes.
(Because really, I can think of no worse time to learn about Modern Portfolio Theory, expense ratios, AND THE DAMN BANK PASSWORD than after a messy divorce or the unexpected death of a spouse.)
4. Women Earn Less Than Men
Think of what investing is: Investing is using your money to make even more money.
That’s right, ladies: Let’s make money do some of the heavy lifting around here! Putting our money to work is especially important for women, who are likely to earn less than men over the course of a lifetime. Women will have less money to work with, making it critical that we make the most of the money we do have.
I do not think this is fair.
My absolute first choice would be to close this wage and opportunity gaps and for moms to have support at work. While we are working towards the cultural shift and legislative changes necessary to leveling the playing field for women, women must work within the system we’ve got.
And that means learning about investing and prioritizing her future self, even when it’s so hard.
How to Invest for Retirement
Your first step is to understand your options for retirement accounts. Where should your investments go?
Are you already covered by workplace retirement account, like a 401(k) or 403(b)? Or are you self-employed?
If so, that you’ll need to open your own at a brokerage bank of your choosing—think Fidelity or Charles Schwab. Depending on your needs, you could open a Roth IRA, SEP IRA, and/or Solo 401(k).
Next, you’ll have to decide how to invest within your retirement account.
A 401(k) is not an investment—a 401(k) holds investments. Just like your checking account holds cash, but a 401(k) holds cash, stocks, mutual funds, and so on. You can think of your 401(k) or Roth IRA as a glorified adult Caboodles (with special tax treatment)—it just holds your investments.
The treasures held inside are the investments.
Many people will opt for a mix of stocks and bonds appropriate to their goals and risk tolerance. You may find it easiest to invest in stocks and bonds using mutual funds. A mutual fund bundles together some other investment type—you can think of them as big ol’ suitcases. And just like a suitcase, what is packed inside is the most important part, and will say a lot about the type of trip you’re about to take.
Many money experts prefer index mutual funds or index ETFs which are funds that aim to return the average of whatever market they “mimic,” with very low fees. Basically, you’re just along for the ride.
No matter which strategy you choose, you’ll need to minimize what you pay in fees. Any fees you pay to an advisor, plan administrator, or broker, are fees that will come directly from your potential investment returns—so you’d better be damn certain of the value you get out of that service. Remember, the goal here is to make you rich, not to fund some overpaid mutual fund manager’s Viagra-blue sportscar.
Finally, Become Confident in Your Saving and Investing Plan
Are you ready to learn how to invest, make the most of your money, and make your badass granny dreams a reality?
Take Invested Development, which is a live, virtual, four-part Investing 101 course taught by me. (That’s right, you can take the class from the comfort of your home—popcorn, sweatpants, greasy topknot and all!) I’m committed to helping my students learn by making them laugh and providing a judgment-free place to ask questions. You will walk away with a plan of action you’re confident in.
Feeling in charge of your money and investments: It’s a powerful place for a woman to be.
And often, learning requires the right teacher: I’m a writer and educator specializing in teaching women how to invest. Through my business, Invested Development, I’ve taught thousands of women to invest, revolutionizing what they think is possible for themselves and their financial futures. I take women who are unsure of their knowledge and turn them into confident, wealth-building badasses.
I also write a blog called The Dumpster Dog Blog, which has been nominated for Money Blog of the Year and Women’s Money Blog of the Year for two years running.
Invested Development has upcoming classes in January and February. Because it is live, virtual, and classroom style, spaces in the class are limited. Invested Development will show you that investing is something that is absolutely within your capacity: don’t put it off for one day longer. Your future granny depends on it.
Are you saving for retirement? Why or why not?
The post Why Investing for Retirement is So Important for Women (and How To Do It)Â appeared first on Making Sense Of Cents.
Meal Planning Can Help Save You $1,600 a Year on Your Grocery Budget!
Hmmm… donuts, pizza & mojitos OH MY! Isn’t it amazing how one stray sentence can totally take over your mind! Food is tasty, a treat, and can be downright mesmerizing! It can also be one of our biggest budget busters! We want what we want and when we want it (sometimes we hate wanting it (I’m talking to you brownies!) This gets us into trouble with our waistline as well as our wallet!
I have my fingers crossed that one day there will be a resurgence in renaissance body love, all curvy & pale Yet, I know that eating healthy needs to be a top priority. I know this because I tell myself this almost daily. You too? We want to do what’s best for our bodies and our wallet, yet sometimes those two things don’t always align. I mean, 1 lb organic strawberries in February can be $8.99! (don’t choke!)
So how do we align saving money on food while eating healthy? The answer is simple, yet kind of intimidating at first glance. It’s meal planning on a budget! DON’T WORRY and don’t get overwhelmed; it can be a lot easier than you imagine. I’m going to walk you through the main points to nail this piece of the grocery budget puzzle. So you never have to worry about hearing, “Mom, what’s for dinner?” ever again!
This post may contain affiliate links. Please read my full disclosure for more info
Feeding our body healthy foods has been a long time passion of mine. Previous to Money for the Mamas, I taught kids how food grows at combo learning farm & CSA. For 90 minutes, we talked about soil, farm animals, water quality, and most importantly, how our food grows and why fruits & vegetables are so important. I also did a stint with the State of Oregon and the national level, Farm to School movement, which helps schools create programing around healthy foods. Fantastic work, which is both heartbreaking and hugely rewarding!
With that experience, I know that meal planning can be a great solution, as moms, I know how we want to do our best to provide healthy foods for our family. Yet, rising food costs do not make this easy for us.
The Street reports that in 2018, the average American household spends $7,729 per year on food, which is about 12.8% of our after-tax income. Yet, with our current situation (August 2020), costs are rising. “April of this year food prices had the largest monthly increase in 46 years!” says ABC News.
There are many different ways that you can save money on groceries, but today we’re just going to talk about one specific element, meal planning on a budget! Which can still be healthy family meals, you just need to plan things out (and plan for the days when you “just can’t even” think of cooking)!
Now, I’m not going to say that an occasional frozen pizza doesn’t sneak into my freezer (and my belly), but I try really hard to balance those not so healthy items with better for you options.
Meal planning to save money on groceries
Let’s get down to specifics on exactly how meal planning can save you money in your grocery budget.
Saving money by not buying foods that you won’t eat
I cannot even tell you how many times I’ve bought veggies with the best intentions of eating them! And then that sad and guilt-ridden sound of the “thunk” as the jicama falls into the trash. Arg!
When you meal plan, you decide what you are cooking and eating and when, there is a “plan”, not some vague intention. When you know that on Tuesday it’s spaghetti squash & meatball night, you can be dang sure that the veggies are getting eaten and will not go to waste!
Speaking of food waste, you all know the squishy, greeny brown scenario at the bottom of the produce drawer. But what does this look like to our wallet? According to Marketwatch, “As much as 40% of food goes uneaten in the U.S! Americans throw away $165 billion in wasted food every year.” According to Harvard Law School’s Food Law and Policy Clinic and the Natural Resources Defense Council, some 160 billion pounds of discarded food also clogs up landfills.
What that means is roughly, “219 lbs of food per person is wasted a year” quotes RTS (waste experts), and that’s $1,600 a year for a typical sized family!
Think of taking your grocery budget, pulling out 40% of the money, and just throwing it in the trash! Oh. Hell. No.
That’s crazy! Yet, we don’t intend to do; it just happens. And meal planning is one of the best ways to combat this by buying only what you know you will use for that week (or however often you go to the store).
Know your food costs
You can still buy most of the same foods but know which of your local stores have the best prices. For example, there are two stores of the same chain, maybe 4 miles apart, and one of them has consistently lower prices than the other. So I always go to the cheaper one.
Also, when you sit down to do your weekly menu, you can look at store flyers to see who might have chicken breasts on sale, or who has digital coupons for your favorite brand of cheese.
You may go to a Kroger store for chicken and then go to Target for sale on frozen burritos (a favorite late-night snack of my husband). Yet, for this to be a genuine savings, you need to consider the cost of your time & gas driving to multiple stores. If you’re spending 45 minutes driving to a store to save $.40 per pound on beef, that’s not saving! Your time is valuable, so absolutely count that into the equation.
Many times stores will have loss leaders (items they sell at a loss just to get people into their store”. Did I mention that I worked in a grocery store for six years? No? Well, I did. It is a fantastic, socially conscious store (B-Corp certified) that helped bring healthy and local food to the communities they serve.
Yet, they weren’t cheap. Even with a staff member discount, I was paying a lot for my groceries. Yet I knew that certain times of the year, they would offer boneless skinless chicken breasts at $2 off the regular price (that was basically at cost for the store), $4.99 vs. $6.99. I bought enough chicken to last a long time. We’re talking like 20 breasts. Then I would take them home, portion two breasts into a freezer bag and boom, chicken for months!
I knew about these times, so I planned it into my budget. Other times of year stores have a sale is their anniversary day (or founder days), or holidays. Each chain is a little bit different, so don’t be shy. Ask them when their big sales are!
Go the extra mile and ask them which days they mark their items down. For example, canned goods may go on Tuesday, boxed goods on Wednesday. Or they may go by the department, dry grocery on Monday, and perishable grocery (dairy and such) on Friday. Ask them what time of day they start and when they finish. Then see if you can go in near to the time that they are wrapping up.
Meal planning saves you time
As a super duper busy mom (aren’t we all?), one of the things I hate most is standing in front of the fridge trying to decide what to fix. When this happens, my mind immediately goes blank; nothing in the refrigerator looks good to eat. In the past, I would waste maybe 10-30 minutes a day just trying to decide what to make. What a waste!
By meal planning, you always know because you posted the weekly menu on the fridge! And what’s better is that your family never needs to ask you, “what’s for dinner?”
Resources to meal planning on a budget
Luckily, many women have masted the art of meal planning (hey, no reason that we need to reinvent the wheel!). So let’s dive in to see how others have meal planned on a budget.
The Healthy Meal Planning Bundle
If you’re a one-stop-shop kind of mom (me!), then you’re going to love this fantastic resource! It’s a bundle of 58 products all around meal planning, tied up in one neat package! You just buy it once (for a crazy low price), and you have access to all 58 items! You need to act fast, as it’s only on sale for the week of August 17th – 21st!
There are 11 Cookbooks, 15 Meal Plans, 11 eBooks, 9 eCourses, 10 Printables, 1 Membership, and a Summit. (Plus some great free bonuses and an early bird buyer special thank you gift!)
The Healthy Meal Planning Bundle is a great option because it’s all around this very specific topic of healthy meal planning (not all are low cost specific). Still, the bundle as a whole is very cost-effective, so you can meal plan on a budget (and there are a few resources around being budget-conscious).
Here are the main categories that the bundle covers…
How to get started meal planning
Quick & easy
Real food & nutrition
Now, you may be wondering why you would ever need 58 items all around the same topic? Totally fair question by the way. Let’s just say it like it is; we won’t vibe with everyone we meet or learn effectively from one particular teaching style. So in the bundle, some information may overlap, but that’s a good thing!
So many times, I read about a topic that I already know a lot about. Yet, one person says something in a specific way, or in a particular tone where it just “clicks” for me! The lightbulb goes off, and I suddenly “get it”! I am thrilled when this happens as it could have something that I didn’t quite understand, or never really knew why it was a big deal.
The great thing about this bundle is that they are giving everyone a free jumpstart by hosting a free Meal Planning Bootcamp starting August 11th. Yes, that’s coming up soon! Here, you can get a taste of some of the information, and get geared up to start your own meal planning journey.
The best part is that it’s a challenge, so you are participating right alongside other women just like you! Going through things together, so you can bounce ideas off of each other, learn from those who tried XYZ, and help others with your own experiences. Don’t forget that it’s free! Yup, zero cost to join in and participate!
Now don’t worry, if you’re reading this after August 11th. The bundle still exists, but it’s only available for a limited time. However, they bring it back annually, and sometimes they even do a flash sale after a few months (no guarantees though). So still sign up with your name and email, and then you will be on the list to get notified once it becomes available again!
Ultimate Bundles also offers a phenomenal resource on learning about all things personal finance! Check out their Master Your Money Super Bundle right here!
If you haven’t watched Frankie work his magic in the kitchen, then you are missing out! He doesn’t do meal prep, per se, but his expertise is in cooking cheaply, using leftovers, AND he’s damn entertaining too! Check out one of my favorite video’s down below (hint – save this video for after Thanksgiving!)
Grab some meal planning printables to help meal plan on a budget
Oh, organizing… did you ever know that you’re my hero? Everything that I would like to be? For you are the wind beneath my wings. Or something like that. Yup, organizing makes my heart happy!
That’s why I am such a huge fan of my Organized Home printables, and I created one specifically for meal planning! This packet has…
weekly menu planner
food inventory tracker (so you never lose steaks under the frozen spinach again!)
family favorite meals list (that are easy go to’s when short on time & energy)
grocery shopping list, broken up by department (no circling back to aisle 7 five different times!)
Let me at ’em!
This meal planner & grocery list is an instant download so you can print it in just 2 minutes from now! (save it to your hard drive so you can print as many copies as you want!)
Freezer meals are essential to meal planning on a budget
One of the very best things that you can do is plan on failing!
Yup, I freely admit that somedays I am a Hot Mess Mom! I am frazzled, I am running 54 errands, going to the eye doctor and end up getting my eyes dilated for what seems like forever, and on and on the tragedy of life turns into a comedy! And I am DONE!
That means I need to plan on things not going great, so on those days, I need something up my sleeve because I know that going to the drive-thru isn’t all that cheap, nor is it healthy!
There are two options for us Hot Mess Moms…
One – Frozen Meals – pizza, burritos, corndogs & tater tots (yum), etc. Now, these aren’t the healthiest, but they are cheap. Besides, who doesn’t like tater tots! So I am fine with doing this a few nights here and there.
Two – Freezer Meals! These are my secret weapon for when times are tough. For example, before I gave birth, I did a whole day of nothing but freezer meal prep, as I knew once the baby came, I would need all the help I could get!
A great resource that I have found is My Freeze Easy! It’s a freezer meal planning & prep plan, where you get access to new monthly freezer recipes! There are some great customizations too; gluten-free, dairy-free, paleo, instant pot, etc.!
Now not only are these designed to save time, but they stem from the $5 Meal Plan program, so all the recipes are budget-friendly!
If you’re not quite sure about diving into freezer meals, Erin (the founder) has a great free workshop to introduce you to freezer cooking, so you can feel it out and see if it’s something you might like. Again don’t worry, it’s not a 90-minute life or death training. She’s a mom; she knows you’re busy! It’s three videos for a total of approx 20 minutes. easy peasy, right! (Pssst… you get three free recipes & shopping list, nice!)
Some of you may be a bit wary of freezing meals, especially produce. I mean, does freezing take away all the good vitamins & nutrients? Answer: Not at all! According to Healthline, “Frozen fruit and vegetables are generally picked at peak ripeness (while fresh is picked before it’s ripe). They are often washed, blanched, frozen, and packaged within a few hours of being harvested. Frozen produce is nutritionally, similar to fresh produce. When nutrient decreases are reported in frozen produce, they’re generally small.”
They mentioned that most of the nutrient loss happens with extended periods of storage in the freezer, like two years or more. So generally speaking, frozen fruits & vegetables are a great way to get your vitamins!
The Healthy Meal Planning Bundle does have a freezer meal cookbook, but it’s not as customizable as My Freeze Easy plan! BUT, I know that the thought of buying 58 items, like the bundle, can cause your brain to shut down from overwhelm. So here’s one great resource. Easy Peasy!
Look to Pinterest for inspiration
So this is a love/hate relationship. Everything looks great, yet it can be overwhelming. Simply put in the search bar “Meal planning on a budget”, or “easy dinners”, “crockpot dinners,” or “frugal foods”. So many options will come up.
I have a secret board just for “dinners to try”, and then maybe once a month I’ll go in and pick a few to try during the next month, and I work those into my meal plan. I may find a new favorite, or it may be a dud.
Oh, and don’t forget while you’re on Pinterest checking out meals, head on over here, and follow me for lots of budget-friendly inspiration!
Know your grocery budget (and stick to it)
If you want to do meal planning to save money, you need to know your grocery budget! Better yet, if you’re stocking up on things at a low price, then you need to know how much of your grocery budget is for regular food, and how much is for stocking up. You can’t blow everything on your stockpile, and you can’t spend every last dime on your weekly veg.
A good place to start is 75/25 split. So 75% of your grocery budget is for everyday shopping, while 25% of your grocery budget is for stocking up. Initially, you may find you’re spending a bit more on your stockpile, but it will taper down as you go on and build up your pantry.
Some things that I stockpile when the prices are good…
Cereal (I only buy if it’s $1 a box)
Meat (buy in bulk and divide into 1 lb portions then freeze)
Paper goods (paper towels, TP)
Health & beauty – soap, shampoo, deodorant, etc
In talking about budgeting did your stomach do a little flip? I know you’ve been meaning to get back to budgeting, so here’s a great resource! It’s my Ultimate Guide on How to Budget Series, and it goes through everything you ever wanted to know about it!
Tip for Meal Planning on a Budget – Leftovers are your friend!
Don’t forget to plan on having a leftover day for dinners! Make it one day at the end of the week to clean out your fridge before the next week’s shopping trip.
Make it easy!
Have Leftover Day be as easy as possible for your family by getting some great clear glass meal storage containers! That way, you can easily see what’s in there to eat, and by buying glass containers, you can reheat these directly in the microwave without worry. It’s known that microwaving food in plastic containers isn’t the best choice.
Harvard Health states that “When food is wrapped in plastic or placed in a plastic container and microwaved, BPA and phthalates may leak into the food. BPA and phthalates are believed to be “endocrine disrupters.” These are substances that mimic human hormones, and not for the good.”
Now, I’m not a scientist, nor am I a fearmonger. But if I don’t need to take a risk, and can easily avoid it, I will. So I bought glass containers for my family.
I love these Pyrex containers. They are a perfect size (3 cup) and stack great in the fridge! So after dinner is over, if there are leftovers, I immediately portion the items out into meals in the containers. So all my husband has to do is grab one, take off the lid and heat it up and BAM, full dinner/lunch!
Pyrex 3-Cup Rectangle Food Storage
pack of 4 or 6
Glass is pre-heated oven, microwave, fridge and freezer safe, & dishwasher safe
Non-porous glass won’t absorb stains or odors
Make leftovers new & different!
If your family doesn’t love the idea of leftovers, then you can easily shake things up! All you need to do is change how it’s served. For example, get some tortillas to make items into a wrap, or add on soup & salad to make small amounts of leftovers stretch into a full meal.
Here are some other ideas to give your leftovers a makeover with a different presentation
make it a wrap
turn it into soup
add a grain and have a buddha bowl
make a frittata or an omelet
use leftovers as fillings for a quesadilla
or as a topping on pizza
Just Google “what to do with leftover ________”, and you should get some fun ideas! Or just go to Big Oven’s Use Up Leftovers feature! You add in your three main ingredients, and it gives you a bunch of tasty options!
At the end of the day
Our Mom List never seems to get shorter, does it? You cross four things off, and then two hours later, you add seven more things! ARG! Yet, there are some things (like meal planning) that can reduce your mental and physical load over time. Meal planning may take a few rounds for you to work out the kinks, but overall you will save so much time and money!
Imagine what you would do with 40% more of that grocery budget? (as you won’t be throwing away rotted out lettuce, or wait, was the broccoli? Yesh, it’s hard to tell now that it’s a squishy stinky blob.
Meal planning on a budget can give you that 40% back! Remember, RTS estimated that it was $1,600 on average, a year per family! What would you do with an extra $1,600 a year? Use it to fund a family vacation? Revamp your back patio living space? Use it to help offset the cost of braces for your youngest? There are so many things!
Articles related to meal planning on a budget:
How to Motivated While Saving Money
Your Ultimate Guide on How to Budget Series
Tell me in the comments, If you started meal planning on a budget, what would you do with the $1,600 that’s back in your pocket?
The post The Frugal Mom’s Guide to Meal Planning on a Budget appeared first on Money for the Mamas.
Whether you have begun working or not, opening a savings account is one of the most important steps you can take toward becoming financially independent and achieving your dreams. Here are five good reasons why you should start a savings account today.
1. To Start Building Wealth
The road to financial freedom begins with a single dollar. Every dollar you can save is like adding a brick to the house you are building. And until you can accumulate sufficient amounts to invest in stocks and real estate, what could be a better place to park your hard-earned money than in a savings account? As the money sits in your account, it will earn interest and keep on growing for as long as you leave it there.
2. For Easy Accessibility
If you need easy access to your money, a savings account can give you just that. Keeping it at home is not a good idea because it may get stolen. On the other hand if you put all your money in investments, you won’t have any when you need it. Money saved in a savings account is easily accessible. You can withdraw it anytime you need it. Just make sure you understand your savings account’s terms — some accounts have a maximum number of times you can withdraw money from your savings account every month without a fee.
3. To Help WithÂ Unexpected Expenses
Life is full of unexpected twists and turns. And when the unexpected happens, such as accidents, sickness or a furnace dying, you need money to pay for the unplanned bills. Having a savings account makes the money easily available to you. Thus, your savings account also serves as an emergency fund. To make sure that there will be sufficient funds to cover unexpected expenses, you should set aside three to six months of your income for emergencies. Having a substantial emergency fund can also help you stay out of debt, or at least reduce the amount you would need to put on a credit card in an emergency. Using too much of your available credit can have a negative impact on your credit scores and, if you have so much credit card debt you canât afford to make the payments, you will definitely hurt your credit (you can see what impact your credit use and payment histories currently have on your creditÂ by checking your scores for free on Credit.com).
4. To Accumulate Capital for Investment
Investing in assets like stocks, exchange-trade funds and real estate is a great way to make sure that your money will grow sufficiently to beat inflation. But to make any meaningful investment, you need quite a large amount of capital. By putting money regularly into your savings account, you can build some significant savings in no time, which will allow your savings account to serve as a launching pad for your investments.
5. To Save Money for the Things You Have Always Wanted
Have you always dreamed of buying an expensive car or vacationing in an exotic destination? Opening a savings account is the first step towards achieving that dream. But to make your dream come true, itâs important to set aside some money every month. Once you have deposited the money into your savings account, itâs best not to touch it until you have saved up enough to meet your goal.
Once you have opened a savings account, one of the best ways to save some money is to automate your savings so you donât have to remember to set aside money every time you get paid. There are many innovative and easy-to-use automated saving tools that can help you save automatically, and can make saving money almost as easy as spending it.
More Money-Saving Reads:
Whatâs a Good Credit Score?
Whatâs a Bad Credit Score?
How Credit Impacts Your Day-to-Day Life
The post 5 Reasons to Start a Savings Account Today appeared first on Credit.com.
The post The 7 Best Stores to Use Coupons appeared first on Penny Pinchin' Mom.
As a budget-conscious shopper, youâre constantly looking for ways to stretch each dollar further. So when you have the time, you might use manufacturer’s coupons. But, it doesnât always seem worth the hassle to look for them, clip them, print them out, etc. That may be because youâre not exactly sure how to use coupons or youâre not shopping at the most coupon-friendly stores.
Couponing can, of course, mean paper coupons, a coupon code, digital coupons, or whatever else grocery stores accept. You don’t have to be into extreme couponing to make money using coupons, coupon codes, or whatever form they may appear in. Sometimes you get a better deal on grocery coupons by joining a loyalty program or downloading coupon apps. In other cases the free coupons that come in the mail or an online coupon might offer the biggest value.
Once you’re ready to shop weâve compiled the seven best stores to use coupons.
This regional grocer has a generous and comprehensive coupon policy. The chain helps you maximize savings by accepting up to 20 double coupons per day. Youâll also save time by downloading the grocerâs coupons from their mobile app to your store loyalty card. Just present your card at the cash register to get the discounts — no clipping required! If you live in Delaware, Maryland, North Carolina, South Carolina, or Virginia, you should give shopping at Harris Teeter a try.
Pro Tip: Try using a grocery store app, like Ibotta, in addition to your coupons. Youâll be flush with savings!
The national wholesaler aims to make saving money super easy for you. While the store doesnât accept manufacturer or competitor coupons, it does offer in-house clipless coupons on items throughout the year. Youâll receive all discounts automatically during checkout. In addition, as a Samâs Plus member, you can earn 2% back when you make a qualifying purchase. If you regularly buy in bulk, it makes sense to check out Samâs Club. (But remember, you do have to be a member to shop at Samâs Club).
This national pharmacy is known for its helpful coupon policy. The chain accepts manufacturer coupons and allows coupon stacking, which lets you use both a store coupon and a manufacturer coupon on the same item. Since nobody likes to clip coupons, Rite Aid offers e-coupons that can be loaded on to your store loyalty card and automatically applied at the check stand. With locations in 30 states, chances are good that youâll be able to give this coupon-friendly pharmacy a try.
This national grocer hooks you up with coupon savings electronically. You can download clipless coupons from the storeâs website or mobile app to your store loyalty card and instantly apply the discounts at checkout. In addition, the chain is piloting a cash back program. Simply register your loyalty card, make qualifying purchases, and watch the cashback roll in. Cashback can be redeemed in-store or deposited into your PayPal account. If thereâs a Kroger in your town, consider making your next grocery run there.
Related reading: Just getting started with coupons? Hereâs what you need to know.
This regional grocer dominates the Southeast and is known for its customer-centric way of doing business. The storeâs liberal coupon policy accepts both manufacturer and competitor coupons. You can even use a competitor coupon on a private label product or a BOGO offer! The grocer will also allow you to stack a manufacturer coupon with either a store coupon or a competitor coupon (not both) to really maximize your savings. As a Publix Club member (free to join), you can send clipless coupons to your personal account and easily apply them at checkout. If you frequent Publix, using coupons will absolutely enhance your experience.
This national budget retailer has a coupon policy designed to foster loyalty with the brand. While competitor coupons are not accepted, manufacturer coupons are welcomed. And, while the retailer doesnât permit double coupons, you can stack a store coupon with a manufacturer coupon. For extra savings, you can also stack multiple store coupons! Dollar General offers both printable coupons and digital coupons on its website so you can clip or click your way to a great deal. If you have a Dollar General in your neighborhood (who doesnât?!), try making your next household supply run there.
This national pharmacy has become known as the king of long receipts. But, the chain is also famous for allowing customers to stack savings! The store accepts manufacturer coupons and grants you access to store coupons (printable and digital) via their loyalty card. You can usually use store coupons in conjunction with manufacturer coupons in any combination as long as all purchase conditions are met. As a loyalty card holder, youâll also receive 2% back on qualifying purchases. With a CVS practically on every street corner, itâs easy to test if the pharmacyâs coupon policy helps your budget.
Coupons donât have to be hard
Using coupons can be a time-consuming pain in the neck. But it doesnât have to be that way! More and more stores are offering clipless digital coupons for instant savings at checkout. And there are plenty of retailers that will compete for your business with lenient coupon policies. Try shopping at some of the stores above and see for yourself!
–By Laura Gariepy
Tell us: What other companies should make the best stores to use coupons list?
The post The 7 Best Stores to Use Coupons appeared first on Penny Pinchin' Mom.
Savings bonds can be a safe way to save money for the long term while earning interest. You might use savings bonds to help pay for your childâs college, for example, or to set aside money for your grandchildren. Once you redeem them, you can collect the face value of the bond along with any interest earned. Itâs important to realize, however, that interest on savings bonds can be taxed. If youâre wondering, how you can avoid paying taxes on savings bonds there are a few things to keep in mind. Of course, one key thing to keep in mind is that a financial advisor can be immensely helpful in minimizing your taxes.
How Savings Bonds Work
Savings bonds are issued by the U.S. Treasury. The most common savings bonds issued are Series EE bonds. These electronically issued bonds earn interest if you hold them for 30 years. Depending on when you purchased Series EE bonds, they may earn either a fixed or variable interest rate.
You can buy up to $10,000 in savings bonds per year if you file taxes as a single person. The cap doubles to $20,000 for married couples who file a joint return. If you decide you want to use some or all of your tax refund money to purchase savings bonds, you can earmark an additional $5,000 for Series I bonds. These are paper bonds, not electronic ones.
When Do You Pay Taxes on Savings Bond Interest?
When youâll have to pay taxes on Treasury-issued savings bonds typically depends on the type of bond involved and how long you hold the bond. The Treasury gives you two options:
Report interest each year and pay taxes on it annually
Defer reporting interest until you redeem the bonds or give up ownership of the bond and itâs reissued or the bond is no longer earning interest because itâs matured
According to the Treasury Department, itâs typical to defer reporting interest until you redeem bonds at maturity. With electronic Series EE bonds, the redemption process is automatic and interest is reported to the IRS. Interest earnings on bonds are reported on IRS Form 1099-INT.
Itâs important to keep in mind that savings bond interest is subject to more than one type of tax. If you hold savings bonds and redeem them with interest earned, that interest is subject to federal income tax and federal gift taxes. You wonât pay state or local income tax on interest earnings but you may pay state or inheritance taxes if those apply where you live.
How Can I Avoid Paying Taxes on Savings Bonds?
Whether you have to pay taxes on savings bonds depends on who owns it. Generally, taxes are owed on interest earned if youâre the only bond owner or you use your own funds to buy a bond that you co-own with someone else.
If you buy a bond but someone else is named as its only owner, they would be responsible for the taxes due. When you co-own a bond with someone else and share in funding it, or if you live in a community property state, youâd also share responsibility for the taxes owed with your co-owner or spouse.
Use the Education Exclusion
With that in mind, you have one option for avoiding taxes on savings bonds: the education exclusion. You can skip paying taxes on interest earned with Series EE and Series I savings bonds if youâre using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including:
Equipment, such as a computer
You can still use savings bonds to pay for other education expenses, such as room and board or activity fees, but you wouldnât be able to avoid paying taxes on interest.
Additionally, there are a few other rules that apply when using savings bonds to pay for higher education:
Bonds must have been issued after 1989
Bond owners must have been at least 24 years of age at the time the bonds were issued
Education costs must be paid using bond funds in the year the bonds are redeemed
Funds can only be used to pay for expenses at a school thatâs eligible to participate in federal student aid programs
If youâre married you and your spouse have to file a joint return to take advantage of the education exclusion. And any money from a savings bond redemption that doesnât go toward higher education expenses can still be taxed at a prorated amount.
There are also income thresholds you need to observe. For 2020, single tax filers can earn up to $82,350 and benefit from the full exclusion. Married couples filing jointly can do so with up to $123,550 in income. Once your income passes those limits, the amount of interest you can exclude is reduced until it eventually phases out altogether.
Roll Savings Bonds Into a College Savings Account
Another strategy for how to avoid taxes on savings bond interest involves rolling the money into a college savings account. You can roll savings bonds into a 529 college savings plan or a Coverdell Education Savings Account (ESA) to avoid taxes.
There are some advantages to either approach. With a 529 college savings plan, you can continue saving money on a tax-advantaged basis for higher education. You wonât pay any taxes on money thatâs withdrawn for qualified education expenses. And if you have multiple children, you can reassign the account to a different beneficiary if one child decides he or she doesnât want to go to college or doesnât use up all the money in the account.
Contributions to 529 college savings accounts arenât tax-deductible at the federal level, though some states do allow you to deduct contributions. You donât have to live in any particular state to invest in that stateâs 529 and plans can have very generous lifetime contribution limits. Keep in mind that gift tax exclusion limits still apply to any money you add to a 529 on a yearly basis.
Coverdell ESAs have lower annual contribution limits, capped at $2,000 per child. You can only contribute to one of these accounts on behalf of a child up to their 18th birthday. Withdrawals are tax-free when the money is used for qualified education expenses. But you have to withdraw all the funds by age 30 to avoid a tax penalty.
The Bottom Line
Savings bonds typically offer a lower rate of return compared to stocks, mutual funds or other higher-risk securities. But they can be a good savings option if you want something that can earn interest over the long term. Minimizing the taxes you pay on that interest may be possible if you have children and you plan to use some or all of your savings bonds to help pay for college. Talking to a tax professional can also help with finding other college tax savings strategies.
Tips for Investing
Consider talking to a financial advisor about the best ways to manage savings bonds in your portfolio. If you donât have a financial advisor yet, finding one doesnât have to be difficult. SmartAssetâs financial advisor matching tool can make it easy to connect with professional advisors locally in just minutes. If youâre ready, get started now.
Savings bonds purchased on behalf of grandchildren donât receive the same tax treatment for higher education purposes. Generally, the education exclusion only applies if the grandparent is claiming a grandchild on their taxes as a dependent. If your parents are interested in helping pay for your childâs college expenses, you may encourage them to open a 529 college savings account instead, then roll the bonds into it to avoid paying taxes on interest earned.
How to Save Money on Food This Year is a post originally published on: Everything Finance – Everything Finance – Its all about Money!
With the winter months comes less fresh fruits and veggies to choose from. And with that, food costs usually go up. But just because we don’t have as many great fresh options available to us, doesn’t mean that feeding our family has to be expensive. In fact, I have found a few great ways to help save money on food this winter. The foods are not only budget-friendly but delicious and nutritious too!
Use Everything You Have
The first trick when it comes to trying to save money on food costs is to use everything you have. What I mean is to make sure you reduce food waste by getting creative with leftover items. This doesn’t have to mean eating leftovers for multiple nights in a row. Because we all know that the kids will riot when that happens!
But, you can get creative with the leftovers and create a completely different dish. A good example of this is when I made a huge pot of coconut rice in my Multi Use Express Crock-pot. I freaking love this thing because it makes my life so much simpler! I used the rice originally to go with a pumpkin curry that I made. But I usually make a lot of rice at once, so we had a lot of leftovers. I knew the kids didn’t want the same meal again the next night. Instead, I made a casserole out of the rice with black beans, pinto beans, spices, salsa, cheese, and sour cream. It was a huge hit!
Another great way I regularly do this is with pasta sauce. The kids love pasta night, but not all of us eat pasta sauce on our noodles. So, we don’t use a full jar of pasta. Instead of letting it stay in the fridge and go bad if we don’t use it fast enough, I use it as a sauce base for my cassava pizza crusts. That way I can use up the entire jar within the standard 7-day time frame and I don’t have to spend the extra money on pizza sauce.
No matter how you look at it, just get creative with your leftover items and it will definitely help feed your family for less this winter. And save you a ton of time also!
Great Staple Foods
One of the best ways to help save money on food costs, not only in the winter but all year round is to keep staple foods on hand. Staple foods may not be the same items for everybody, depending on the foods you prefer to eat or grew up with. But, overall, these foods have a very little cost associated with them and can be stretched pretty far. Plus they fill you and your family up, so you won’t be as inclined to eat other foods on top of your meal.
Staples I Keep On Hand
Some of the best staple foods I have found, that I continually keep on hand are:
Rice – various types, but preferably whole grain since the fiber helps fill you up and slow down insulin uptake.
Beans – dried are the cheapest and go the furthest, but sometimes you can find a great deal on the canned no sodium added versions also.
Potatoes – Russet potatoes are great for baked potato night, and the smaller versions work great for oven potatoes or mashed potatoes.
Pasta – this is one of the cheapest foods for the amount you get and can be used so many different ways.
Vegetable broth – this works great in soups, making rice, flavoring casseroles, etc.
Canned tomatoes – fire-roasted tomatoes usually have the most flavor, if you can find them.
Coconut water – this is a regular go-to for making rice because it adds so much flavor and keeps the rice tender.
Oats – we use Gluten-Free oats to make overnight oats or oat balls for breakfasts for the kids and they stay full for a long time!
If you can keep even a few of these on hand, it will help make your winter budget stretch a lot further.
Soups and Chili
Winter is the best time for warm, hearty soups and chili. And I love making them almost as much as I love eating them. Most of the time the rest of the family feels the same way. But it’s hard to please everyone all the time, so I try to keep a few options in the freezer.
Ultimately, one of the easiest, and sometimes the most flavorful option is a vegetable soup. I call mine the Kitchen Sink Vegetable Soup because it has everything in it but the kitchen sink. This soup is very simple to make in that you can throw whatever vegetables you have at your disposal in it. I usually add one of my cans of fire-roasted tomatoes and a quart box of low sodium vegetable broth. Don’t forget to add whatever spices strike your fancy to top it off. Then just heat it on a slow simmer so the flavors mix. Since the vegetables always differ and so do the spices, the soup is never the same. Which my family likes because it is always a fun surprise!
My other favorite is a vegetarian chili. Which happens to be the only chili my daughter will eat, for some reason. This is almost as simple as the aforementioned soup. I throw a bag of Beyond Meat Feisty Grounds in the multi-use Crock-pot. Add in a can of fire-roasted tomatoes and 4 cups of beans. I usually use a mix of black beans, kidney beans and pinto beans.
Add a couple of bay leaves (we have a tree in our yard so I just make the kids go and pick some leaves for me). Then add in some chili spices, a pinch of salt and some pepper. To top everything off, add in a quart box of low sodium vegetable broth. Put the lid on and use the “Beans/Chili” option so that it will simmer slowly. It usually takes about 25 minutes and then we have hot, delicious, and nutritious chili. Yum!
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Help Feed Your Family For Less This Winter Summary
Feeding your family for less this winter can certainly be done. And without too much complaining also! Just remember to use everything you have first to offset waste. This will reduce your overall grocery bill since you won’t have to spend as much buying excess food. Next, make sure you have a few staple foods on hand that can be stretched very far and fills up your family.
Lastly, try making a myriad of different soups and chili. Freeze whatever you don’t eat so that you can thaw them and use them at another time. Your family and your budget will thank you!
What are some of the best hacks you have found to help feed your family for less in the winter?
How to Save Money on Food This Year is a post originally published on: Everything Finance – Everything Finance – Its all about Money!