Shaping up your finances in 2017 may seem like a big goal, perhaps even too daunting. But if you take one small step at a time, these small steps will add up. Here are suggestions. * Shift out of automatic. Have you established automatic bill pay at your bank or service provider, or automatic charges to your credit card? Small step: Look for payments for goods or services you no longer use, such as recurring monthly subscriptions, and cancel them. Big goal: Reduce total expenses and increase savings.
* Take the urgency out of emergency. Sure, you know that having an account with enough funds specifically earmarked for emergencies is a good idea. But the amount you need to save seems overwhelming. The good news is you don’t have to immediately fund six months of living expenses. Small step: Set up a separate account with automatic deposits of $5 or $10 per paycheck, perhaps with funds you’ve redirected from those unused recurring monthly subscriptions. Big goal: An emergency fund with enough cash to cover six months of expenses.
* Give yourself credit. Maybe you intend to pay off your credit card debt. But do you have a plan? Knowing where you stand is the first step in getting to where you want to be. Small step: Make a list of your cards, the balances, the minimum payments, and the interest rates. Big goal: Eliminate finance charges by being able to pay off your balance each month.
* Retire your excuses. Does your employer offer a retirement plan? If so, you may be leaving money on the table. Small step: Find out what amount is on offer as “matching” funds. That’s money your employer will add to your account when you make contributions. Big goal: Maximize your retirement contributions.
Small steps can lead to big improvements in your financial well-being. Contact us for more tips.
Scam artists are relentless in finding ways to take your money. But some old-school methods are still effective for protecting yourself. Here are suggestions.
Fortify your computer and your phone. Install anti-virus and anti-spyware programs and update your protection regularly. Consider firewall software to prevent unauthorized access. Change the password on your computer router from the default, enable and set up the router firewall, and keep your router software up-to-date.
Clean out your wallet. Make sure you’re not carrying personal identification numbers for debit or credit cards on a scrap of paper. If you do, anyone stealing your wallet will have open access to your checking account. Sign all your cards. Another old tip also bears repeating: Don’t carry your social security card with you.
Delete all spam emails immediately without opening them. Never click on an attachment or follow a link to a web page unless you know the sender. List your telephone number on the national “do not call” list. If a telephone solicitor calls, ask to be put on the company’s “do not call” list and then hang up.
Obtain a free copy of your credit report. Go to http://www.annualcreditreport.com and order a free copy of your credit report from at least one of the three major agencies. Review it for mistakes, accounts you don’t recognize, or unknown credit inquiries. If you find something wrong, report it immediately.
Prepaid debit cards, also known as stored-value cards, can be useful when you lack a traditional checking account. In an increasingly plastic-dependent world, these cards can be substituted for cash, and you can use them to pay for airline tickets, hotel stays, electronics, and groceries. Money is transferred, or “loaded,” to the card and is yours to spend until the card runs out of funds or is reloaded.
Prepaid cards have several advantages over traditional credit and debit cards. For example, if you’re traveling and the card is stolen, losses are limited to the amount on the card. In addition, because your personal banking information isn’t on the card, thieves and con artists can’t extract that data to steal your identity. Another use: Teaching kids how to budget. Some issuers offer instant alerts that monitor card activity, which is a great way for parents to see what their teens are purchasing in real time. If you’re the one who’s prone to overspending, prepaid cards offer a built-in safety net: you can’t spend more than the amount that’s loaded onto the card.
But be aware of the lack of regulatory constraints on the cards. Issuers have great latitude over fees and prepaid cards can get expensive. Depending on the card issuer, you might be charged a fee to activate the card, use it at an ATM machine, check your balance, add more money, or talk to customer support. You might be charged a monthly maintenance fee as well. Before you buy, read the fine print.
Financial literacy is a vital skill in today’s world. Will your children be able to handle their finances when they became adults? Here are tips to help ensure the answer is yes.
Shave spending. Take the weekly allowance to the next level by helping your child develop a budget. Review the results to reinforce good habits.
Stress savings. Even young children can grasp the power of compound interest. A simple example is asking your child to put a dollar in a piggy bank. Offer to pay five percent interest if the money is still there in a week or a month. Make the same offer at the end of the first time period, and pay “interest on the interest” as well.
Introduce investments. Create a portfolio, either real or paper, consisting of shares of one or more stocks or mutual funds. Make a game of charting the investment’s progress on a regular basis.
Cover credit. Take on the role of lender and let your child request an advance on a weekly allowance. Charge interest.
Talk taxes. Use word search or crossword puzzles to teach tax terminology. Consider creating a “Family Economy” game using examples from your own budget.
Lessons in financial responsibility can benefit your children now and in the future. Get them started on the right path.
A December 2015 survey by a consumer financial services company showed that 36% of the people who participated said they dealt with their most recent unexpected expense by using savings. Would you be part of that group?Here are tips for starting your “rainy day” fund.
Define how much emergency savings is enough. A good starting point is to plan for your emergency fund to cover three to six months of expenses. Another good starting point: Ask yourself how much you’ll need to cover minimum monthly expenses without resorting to credit cards or lines of credit. Your assessment of an adequate balance will vary based on your financial situation, including the vulnerability of your income. For example, a one-earner household is more vulnerable than a two-earner household when it comes to paychecks, so the one-earner family generally will need to set aside more for emergencies.
Track how much you already have set aside. Include all sources in your accounting. For instance, some companies provide payment for accrued vacation and/or sick leave to laid-off employees. If your company provides this benefit and you maintain significant balances, you may not need as much in an emergency fund to help you weather an unexpected layoff.
Decide whether to pay off bills first. Putting excess cash toward high interest credit card balances might make more sense than funding a savings account that earns a much lower rate of interest.
Keep your funds liquid. Emergency money should be easy to get at. You don’t want to have to sell investments at a potential loss or pay withdrawal penalties in order to cover an unexpected hit to your finances. Look into savings or money market accounts as places to accumulate cash.
We can help you estimate how much to stash away in your emergency fund. Give us a call for help establishing a savings goal for those stormy days.
The IRS has launched a new campaign to encourage you to protect your tax and financial data, both digital and paper. As part of the campaign, the IRS plans to release videos and consumer friendly tax tips, and sponsor local events across the country.
Even if you’re covered by a credit monitoring service, you may want to keep an eye on your credit report – and you can still do that for free at http://www.annualcreditreport.com. That’s the only official website, so don’t be fooled by other “free” claims.
At the site, you can get one free report annually from each of the three major agencies. Why bother? Identity theft is a multi-billion dollar industry, and checking your credit rating is one of the best ways to protect yourself. You might also be surprised at the number of mistakes on credit reports. Relatives or even non-relatives with the same (or similar) last name could have their credit information jumbled with yours. Individual companies could have incorrectly reported a negative credit occurrence (in the form of a delinquent payment or nonpayment) to the reporting agencies. Reviewing your credit report is a way to find and fix those issues.
If you find an error, both the credit reporting company and the company that provided the information about you are responsible for making corrections. You’ll have to submit a written report and you’ll get written results when corrections are made.
Give us a call if you’re having problems with your credit reports. We’re here to help.