Word of the Month: Savings Account

father and daughter counting change

Kyle’s friend Ashley was always buying new things with her own money.  Today, she’d come to school with a brand-new glittery case for her laptop.

“How’d you pay for that?” Kyle wondered out loud. “You must get a really big allowance each week!”

“Not really,” Ashley said. “My parents give me just $6 each Sunday.

“Six bucks? That’s all?” Kyle’s parents gave him $8 each week. “But that costs a ton of money! How did you pay for it?”

Ashley smiled. “I saved up for it. I put away a little bit of my allowance each week in a special place. I also saved up my birthday cash and the money I earned helping my aunt out during the summer. It all adds up!”

Kyle was interested. His allowance never lasted more than a few days but he really wanted to buy a new Wii game. His mom had told him he’d have to pay for it himself.

The next Sunday, when Kyle’s mom gave him his allowance, he carefully put all eight dollars in his sock drawer. He’d have that Wii game in no time!

On Monday afternoon, Kyle’s friends decided to make a Slurpee stop on the way home. Kyle followed the group into the 7-11 store and started reaching for an extra-large cup when he stopped. His spending money was at home in his sock drawer. He wasn’t wasting his allowance on Slurpees!

He hung back and watched his friends fill up their cups with icy treats. He was surprised to see Ashley joining the line at the register with her own small Slurpee. Didn’t she know there were more important things to spend money on than a slushy drink?

***
That afternoon, he went with his mother on a trip to Mutual Credit Union.

“What’s that?” he asked his mom as she slid a small pile of checks across the counter to the Teller.

“This is some extra money I earned this month from a side job,” Mom answered. “I’m going to put them into our Savings Account.”

She held up another check. “And this,” she said. “Is going to go into our Checking Account.”

“But why don’t you put all of the money into savings?” Kyle wondered.

“Because we need money to live on now,” Kyle’s mom explained. “Savings Accounts are for money we will probably need sometime in the future, but we need to keep some money for today.”

Kyle nodded. That made sense.

On Saturday, Kyle and his friends met up at the pizza store for lunch.

After they finished eating, Kyle’s friends started digging out quarters and dollar bills and heading towards the arcade games at the back of the store.

Kyle stayed in his seat, watching them. His mom had given him enough money for pizza, a can of soda, and fries, but none for extras like arcade games.

“Hey, Kyle!” Ashley called from behind him. She jangled a small pile of quarters in her palm. “Want to race me in the car game?”

Kyle looked at her. “I don’t have any money on me.  I’m saving it all up for something really big.”

Ashley shrugged. “So am I. But that doesn’t mean I can’t keep anything for now. If you put all your money into savings, it can get really hard and you might give up quickly.”

“So how do you do it?” Kyle asked.

“I put 2 or 3 dollars into my savings jar each week, and the rest I spend on stuff like Slurpees and ice cream.”

“That sounds easy,” Kyle said.

“It is!” Ashley grinned. “Come on, I’ll lend you some money. Are you going to race me or not?”

“Nope,” Kyle smiled. “I’m not going to race you. I’m going to win!”

Talking Points:

Why do you think Ashley bought a small Slurpee?
• Why is it important not to put all of your money into savings?
• Why does Kyle’s mom put most of her earnings into her Checking Account?

9 Ways For Kids To Make Money

Lemonade stand

The best way to teach a child financial responsibility is by encouraging her to earn and manage her own money. As the weather warms and summer nears, there are many ways for your kids to pull in extra cash. 

In honor of Youth Savings Month, let’s take a look at 9 easy ways your kids can earn money.  

1. A lemonade stand 

It may be old-fashioned, but kids can bring in good money by selling America’s favorite hot-weather drink. For optimal exposure, let them set up near a local yard sale or another neighborhood event. 

2. Help a senior 

Your pre-teen can be a huge help to a local senior while earning money on the side. Let your child run some errands, take out the trash, clean the litter box or just chat with a lonely senior. 

3. Hold a yard sale 

Spring-cleaning season is the perfect time to host a yard sale. Let your kids be in charge by having them choose the items to feature, set prices and run it. You’ll want to be available to oversee things, but let them make most decisions on their own. 

4. Do yard work 

If your children are old enough to handle a gas-powered mower and can be relied upon to trim shrubs and weed gardens, let them offer yard work as a service. 

5. Help with pets 

Let your kids walk dogs around the neighborhood and offer to pet-sit. If your child is truly a budding entrepreneur and has the skills, they can set up a pet-grooming station out in the yard. 

6. Be junior tech-support 

Generation Z kids are practically born holding smartphones. Let your kids use those skills to help older folks who may not be as tech-savvy. They can offer to organize digital photos, assist with data entry or help set up a Facebook page. 

7. Help a mom 

Your child may be too young to babysit alone, but he can offer services in assisting a neighborhood mom while she’s at home. 

8. Collect recyclables 

Help your child gather empty bottles, cans, cardboard boxes and newspapers to bring to a recycling plant. You’ll be keeping the planet green and helping your child earn pocket money at the same time. 

9. Wash cars 

Let your child try out her car-washing skills on the family car. Once she’s got the technique down, have her offer car washing services to the neighborhood. Your neighbors will cross another weekend chore off their list and your child will be learning that hard work can pay off. 

Your Turn: How do your kids earn money? Tell us about it in the comments.

 

SOURCES:

https://www.moneytalksnews.com/10-ways-for-preteens-make-money-this-summer/

https://www.thebalancecareers.com/how-can-kids-make-money-2085398

https://selfsufficientkids.com/how-to-earn-money-as-a-kid-elementary-age/

5 Ways To Spring Clean Your Finances

5-Ways-to-Spring-Clean-Your-Finances-studying your PC

Q: Spring is here! I’ve cleaned out my house and now I’m ready to take on my finances. I’d love to give them a thorough cleaning, too. Where do I start? 

A: It’s wonderful that you’ve decided to clean up your finances. Springtime is months after the holiday squeeze and still a while away from the pricey summer season, making it a prime time for whipping your finances into shape. 

So, let’s get cleaning! 

1. Dust Off Your New Year’s Resolutions 

We get it: New Year’s resolutions get stale as soon as the calendar hits February. But this was the year you were really fired up and ready to conquer the world. Why sell yourself short when your goals are actually within reach? 

Use the fresh energy and renewal of spring to revisit the list of resolutions you penned back at the end of 2018. What were your budgeting goals? What were your savings dreams? Have you achieved any of those goals? If not, what’s holding you back? 

Take stock of where you are financially and get back on track, moving forward and toward those goals. It’s not too late to make it happen this year! 

Do it today: Dig out that paper with your New Year’s resolutions and go through your financial goals one at a time. Did you overreach? Were you irresponsible? Tweak and adjust as necessary, create a new tracking system if the existing one isn’t working, and then get out there and own those goals! 

2. Sweep Out Your Monthly Budget 

Now that you’ve taken stock of your resolutions, take a good look at your monthly budget. 

Review your spending habits of the last few months. What are your weak spots? Where can you cut back? Have you been allotting too much money for one category and not enough for another? It’s time to take stock! 

Do it today: Review your monthly budget and choose one area to trim. Create concrete and realistic steps to make that happen. For instance, try the money envelope system to keep you on track, or stick to cash-only so you don’t slip up. Your budget will thank you! 

3. Freshen Up Your W-4 

You might be celebrating a generous tax return this year, but that only means the government has been handling some of your money all year long instead of it earning more for you. It’s almost like giving the government an interest-free loan! You could have used those funds to start investing, add to an existing emergency fund, launch a business or to save for your dream summer getaway. 

Take a closer look at your W-4 so you don’t overpay in taxes again this year. 

Do it today: Spend some time researching your best withholding options or ask your accountant to help you work out the numbers. Adjust your W-4 accordingly and submit it to the payroll specialists at your workplace. 

4. Pile Up Your Savings 

Once you’re cutting down on your spending habits and taking home a larger check each payday, why not use the extra money to bump up your savings? You can add to an existing fund, build a new one, open a Savings Certificate or start investing. You have many great options! 

Speak to a Mutual Credit Union representative today to find out about our fantastic savings options. 

Do it today: After choosing a savings option, stop by any Mutual Credit Union branch to set up a direct deposit. Each month, your money will be automatically transferred from your checking account to your new account. It’s the ultimate in set-it-and-forget-it! 

5. Toss Your Debt 

This spring, while you try on old, scratchy sweaters and make piles of junk to toss in the trash or sell for cash, why not get rid of your debt, too? 

Debt is ugly on you. It holds you back from moving forward, keeps you in a spending trap that only gets stronger with time and clings to you like caked-on mud. Wash it all off this spring with an actionable plan to get rid of that debt for good! 

Do it today: We know that paying down debt is easier said than done. But, you can do it! All you need is a plan. Review your debts and pick one to pay off first. It can be the debt with the smallest amount of total owed or the one with the steepest interest rate. Find a way to double down on your payments toward that debt. You can do it by taking on a side hustle, seeking a promotion at work or trimming existing expenses. After you’ve paid down this debt, move onto the next one. Accelerate its payoff by applying the total payment amount from your first debt to the new one – in addition to the regular payment you were making on it. Keep going until they’re all gone. It might take until next spring, but eventually, you’ll kick all of your debt to the curb! 

Spring is here—it’s time to freshen up your finances so they’ll be in tip-top shape for summer! 

Your Turn: How do you clean out your finances in the spring? Share your best tips with us in the comments.

 

SOURCES:

https://www.thebalance.com/spring-clean-your-finances-2385567

https://www.moneytalksnews.com/13-tips-for-spring-cleaning-your-finances/

https://www.google.com/amp/s/amp.kiplinger.com/article/retirement/T065-C032-S014-3-ways-to-spring-clean-your-finances.html

 

 

 

 

9 Steps to Buying Your First Car

CC_July_GettyImages-183212513-768x576

Congrats—you’re ready to purchase your first real car! 

The process can be daunting, but our certified financial counselors and loan officers here at Mutual Credit Union will walk you through it. Follow our guidelines for a stress-free ride! 

1. Determine if you really need a car 

OK, you weren’t expecting this, but it’s important to take a step back to review your actual transportation needs. Lots of college towns have a great bus system in place, which can save you loads on car costs. If you have a car-owning good friend you’ll be riding into town with each weekend, it may not pay for you to have your own set of wheels. Also, if your campus has everything you need within walking distance, it can be cheaper to rent a car when you need it instead of buying one now. 

2. Know your budget

If you’ve determined that a car purchase is necessary at this point in your life, don’t start hunting for your dream car until you’ve worked out a realistic budget. Take a hard look at your other monthly expenses to see how much you can spare for a new set of wheels. Don’t forget to include some cash for auto insurance, gas and maintenance. 

3. Create a tentative wish list 

This is your first car, so it doesn’t need to have all the bells and whistles it does in your dreams. Sit down and make a list of all the “must haves” and “wants” you’re looking for in a vehicle. Determine how much each feature would cost you in a car and decide which are really important. 

4. Obtain financing 

If you’ve been saving up cash for your first car all through high school, you’re set! Otherwise, visit any Mutual Branch location or visit our web-page at  mutualcu.org to learn about your auto loan options and to get your pre-approval. 

5. Research your options 

You’re ready to start looking for a vehicle that will satisfy your needs and wants. You can research ratings and user reviews on sites like Cars.com and create another list that contains your top three choices of car makes and models. 

6.    Look up listings 

Start scavenging for listings of your car choices online and in your neighborhood. Once you’ve found several that might work, research their histories on Carfax.com and then contact the seller to set up a test drive. 

7.    Take it for a spin 

If a car checks out and everything looks good, you’re going to want to take it for a test drive. Pay attention to details like legroom, acceleration, brake functionality and more while you drive. 

8. Have it inspected 

If you’re purchasing a used vehicle, it’s best to have it inspected by a mechanic before signing on the deal. 

9. Make it official 

If your car has passed the test drive and inspection, you’re ready to make it official! Be sure to read all documents before signing and obtain insurance before your first joyride. 

Enjoy your new set of wheels and drive safely! 

Your Turn: Have you recently purchased your first set of wheels? Share your tips with us in the comments!

 

SOURCES:

https://www.carbuyingtips.com/first-time-buyer.htm

https://www.edmunds.com/car-buying/10-steps-to-buying-a-used-car.html

https://www.carbuyingtips.com/used.htm 

Spring Cleaning Hacks

spring cleaning.jpg

The sun is shining, the birds are chirping, the flowers are blooming—and your cluttered closets are calling. Time to roll up your sleeves and whip your home into shape. And yes, this means you! It’s been a long winter and you’ve let the clutter grow, all over your garage, across your basement and up into your attic crawl space. And your bedroom closets? We’re not even going there. 

As always, Mutual Credit Union is here to help! Use this handy list of creative cleaning hacks to banish those dust bunnies without spending a fortune on organizers and cleaning solutions. Plus, you’ll be doing your part to help keep the planet green by skipping over those toxic cleansers this year. 

Let’s get cleaning! 

Schedule smart 

Before you get started, create a master list of every part of your home that you plan on attacking. It’s best to make this an old-fashioned physical list so you can post it somewhere you’ll see often—like the door of your fridge. 

Once you have every area listed, divide the chores according to the amount of time you estimate it will take to clean them. Make smaller sub-lists of 3-hour jobs, 1-hour jobs and 15-minute jobs. This way, when you have large chunks of time, you can find a larger job to do at a glance. And when you have smaller pockets of time, like those 10 minutes in the kitchen when you’re waiting for the water to boil, you can quickly tackle a smaller job, like straightening out the catch-all drawer in your kitchen. 

Once you’ve got it all written out, it’s time to roll up those sleeves and get to work! 

DIY cleansers 

Why blow your budget on pricey, toxic cleansers when you can make your own for so much less at home? Try these DIY solutions and hacks for all those hard-to-clean places around your home: 

  • Use a lemon for cleaning stainless steel sinks and faucets.
    Slice a lemon in half, and rub the fruit against hard water stains and rust spots in your kitchen and bathroom. You can also sprinkle on some baking soda for the really stubborn marks. The stains should now lift easily. Plus, instead of chemical fumes that make you gag, you’ll leave behind that springy, lemony scent.
  • Steam-clean your microwave.
    Is your microwave plastered with hardened food stains? It’s time to make your appliance shine! Grab a microwave-safe bowl, fill it with 1-2 cups of water, 2 tablespoons of white vinegar, plus a few drops of your favorite essential oil. Nuke it for five minutes and then wipe those stains right off!
  • Wash your windows with 1 teaspoon of mild dishwashing soap added to several gallons of water.
    Pour your homemade solution into an empty spray bottle and use old newspapers to wipe away the grime. Leave this job for a rainy day—literally. Sunshine can make your windows dry too quickly and leave unsightly streaks behind.
  • Use coffee filters for your monitors and screens.
    Get rid of those fingerprints and itty-bitty dust mites on your computer monitors and TV screens. Let the gentle fibers in coffee filters leave your screens squeaky-clean!
  • Clean your shower heads with white vinegar.
    Fill a sandwich bag with white vinegar, and then use a rubber band to secure it around your showerhead. Let it soak overnight. The water stains and calcium buildup should wash right off in the morning.

Tips and tricks 

Cleaning is easy with these helpful hacks! 

  • Use a lint roller to dust.
    Instead of sticking brushes and feather dusters into every little corner and cranny in your home, use a lint roller. Run the roller over your light fixtures, mantels and shelves. It’ll pick up all those tiny dust mites and leave you with clean surfaces in just minutes! For corners that are super-dirty, use a strip of duct tape for stronger pickup power.
  • Use your dishwasher for more than just dishes.
    Stop scrubbing those teeny-tiny pieces of Lego and load up your dishwasher instead. You can also throw in your hair brushes, pet dishes, refrigerator shelves, soap dishes, tweezers and drawer knobs. When the cycle is through, it’s best to clean your dishwasher by placing a cup of white vinegar on the top shelf and running it through its hottest cycle.
  • Use a window squeegee to scrape pet hair off your carpet.
    The rubber edge of the squeegee is perfect for gripping and removing pet hair from your rugs and carpet.
  • Use a hair dryer to get rid of water rings.
    Is someone forgetting to use coasters? Let your coffee table look beautiful again by blasting a hair dryer over the water rings until they start to fade and disappear. You can also rub olive oil over the area to return the wood to its original shine.

Let’s get organized! 

Banish the clutter for good with these tips. 

  • Create a space for clutter.
    When you’re deep in the throes of spring cleaning, you’re convinced your home will never see clutter again. But all it takes is one art project, a stack of unread mail and one lone toy truck to give your home that cluttered look again. Be proactive and create a place for every bit of clutter that passes through your door. You can pick up perfectly functional organizers and storage bins at the dollar store. Consider investing in a storage ottoman for favorite toys and hanging a shoe organizer in your foyer closet for unsorted mail, keys and gloves.
  • Use Velcro to keep drawer organizers in place.
    Those adorable organizers are no use if they’re slipping and sliding all over your drawers. Fasten strips of Velcro to the bottom of your organizers to keep them in place.

Happy cleaning from all of us here at Mutual Credit Union! 

Your Turn: What’s your favorite spring cleaning hack? Share it with us in the comments!

 

SOURCES:

https://www.google.com/amp/s/www.forbes.com/sites/capitalone/2018/02/21/spring-cleaning-tips-for-saving-time-and-money/amp/

https://money.usnews.com/money/blogs/my-money/articles/2017-03-23/5-ways-to-make-and-save-money-with-spring-cleaning

http://mentalfloss.com/article/62170/15-brilliant-life-hacks-speed-your-spring-cleaning

https://www.google.com/search?q=spring+cleaning+hacks&rlz=1CDGOYI_enUS753US753&oq=spring+cleaning+hacks&aqs=chrome..69i57j0l3.8546j0j7&hl=en-US&sourceid=chrome-mobile&ie=UTF-8

ATTENTION TEACHERS: ENTER OUR APRIL BULLETIN BOARD CONTEST

You Could Win $200 for Your Classroom!

CONTEST BEGINS APRIL 8, 2019 AT 8:00 A.M

Five Educators will be selected as winners of the $200 for their classroom. To be eligible to enter and to win you must teach children in grades Pre-K thru 12th in either Warren, Hinds, Yazoo, Issaquena, Sharkey, Claiborne or Copiah Counties.

To enter, simply submit a photo of your decorated door or bulletin board in your classroom to marketing@mutualcu.org. Please supply us with your name, your grade, and your school. If you would like to say anyBulletin Board Contest 2019thing about your bulletin board you may do so in the email. Once your entry is received, it will be compiled into one album on the Mutual Credit Union Facebook page labeled “2019 Mutual Credit Union Bulletin Board Contest.” Please encourage your friends to vote for your entry by “liking” your submitted picture located in the photo album. Entries are due to marketing@mutualcu.org by April 6th at 8:00 p.m.

The Facebook Contest begins on April 8th at 8:00 a.m.

As a bonus, eligible Voters in the contest will randomly be selected to win a Mutual Credit Union Prize Pack! To be eligible for the Prize Pack, you must follow the Mutual Credit Union Facebook page and “like” a picture in the contest.  Random prize packs will be awarded throughout the contest month (April).

Our Bulletin Board contest is just one part of  many celebrations planned during the month of April – Youth Savings Month. Look for us out in the community bringing Financial Literacy Tools to our Youth!

At Mutual Credit Union “Our Focus is You!”

Bulletin Board Contest 2019

 

FAQ’s

Does my door/bulletin board have to be a youth savings theme? No, your door or bulletin board can feature any subject area or topic.

What file format is acceptable to email? Please email your image in either a jpg or png file format. Please contact us at marketing@mutualcu.org if you are having issues emailing your image.

Can my students decorate/plan the board or is only teacher created? It can be the Teachers creation, combination of student and teacher lead or completely student driven. Be sure when you submit your entry that you let us know so we can mention in your entry.

How do I know if my entry was received? You will receive a confirmation email back from lsimmons@mutualcu.org once your submission is received. If you do not, please email lsimmons@mutualcu.org with your concern or call 601-636-7523 ext. 1220.

When will the winners be announced and awards presented? The contest concludes on April 30th. Winners will be announced by the end of that week (May 1-May 3) on the Mutual Credit Union Facebook page. Arrangements will be made after that to present to each of the five (5) winners at their school location.

If you have any additional questions, please feel free to email marketing@mutualcu.org or give us a call at 601-636-7523 ext. 1220.

Best of Luck to All 🍀

Financial Importance of Protecting Yourself Online

Online financial purchase

Why you should keep financial information private

There’s no denying that financial information is some of the most sensitive data we deal with every day. Because of the sensitive nature of financial information, it should be a priority for all individuals and businesses to do everything in their power to protect it. In order to protect all financial information, encourage your friends, families, coworkers, and employees to protect their Personally Identifiable Information (PII). This type of information includes names, personal ID numbers such as social security, driver’s license, taxpayer and credit account numbers, addresses, biometrics, vehicle IDs, phone numbers and technology asset information such as IP addresses. If these identifiers are kept private, hackers will have a more difficult time breaking into your larger systems and accessing financial information once inside.

 

Prevent identity theft

Identity theft occurs when an unauthorized individual gains access to personal information online and impersonate a said person with malicious intent. Those who gain access to personal accounts can retrieve all login information, personal data and commit cyber crimes such as tax fraud and theft. Identity theft can have repercussions that last for years following the attack and can negatively affect your finance, digital reputation, and privacy. In order to avoid identity theft, precautions can be taken that increase your security online and lock down confidential information on various levels.

 

How to protect financial information

The first step in ensuring your information is safe online is implementing a few new practices into daily digital activity. A few of these practices include:

  1. Using strong passwords – One of the most important things you can do to keep your systems safe is to lock down systems with strong passwords. The use of weak passwords makes all internal accounts easier for cybercriminals to hack and is something that can be easily avoided with a quick update. When you go to update passwords from weak to strong, be sure to include both lower and upper case letters, at least one special character, and avoid using personal information such as qualifiers, which include names, home addresses, and birthdates.
  2. Enabling 2-factor authentication – To further keep financial information secure, utilize a two-factor authentication security process for all internal systems. The addition of this second step provides an extra layer of security to limit who can access your information. With this form of authentication, simply knowing the password is not enough to gain access to private accounts. Rather, anyone trying to break in will go through multiple forms of security checkpoints, such as a fingerprint scan or facial recognition, before successfully logging in. Many of these second checkpoints require the use of multiple devices as well, making it even more challenging for hackers to penetrate the system.
  3. Never save payment information online – According to a study conducted by CreditCards.com, approximately 100 million American individuals currently store their credit card or debit card information within apps or on websites to make future shopping experiences more convenient. While it may seem helpful at the time, storing your financial data on these kinds of sites actually makes it easier for hackers to access your information. Not only could this site be hacked, but your personal device might be stolen. In either scenario your personal information would be at risk.
  4. Making purchases from only trustworthy sites – A pro tip to ensuring you are browsing on and entering financial information on a safe site is to look for the “S” after “HTTP” in a website’s address. This “S” signifies that the site you’re visiting is protected by Secure Sockets Layer (SSL) encryption. You can also double check for a trust icon (which looks like a padlock symbol) on the site with the words “Secure” or “Verified”. Click this icon to see if you are taken to a verification page and if you aren’t, you’ll know that it’s a fake, unsecure site. This can help you avoid filling purchase orders or fulfilling other financial activities on sites that could easily open your system up to hackers.

 

Protect your company’s reputation

Research shows that a single data breach can cost American businesses an average of $7 million, considering the firm’s direct monetary loss along with business disruption, fines, and credit monitoring and identity theft repair efforts. On top of these costs, failing to protect your customers’ and employees’ sensitive personal data can destroy their trust in your brand. To avoid these repercussions, consider implementing these practices for your whole enterprise:

  1. Using secure applications and tools – Some of the most important things to lock down within your systems are the tools your employee base use every day. From messaging systems and call center software to the email platform you send all important data through, ensuring these tools have adequate security measures is critical. One simple way to keep these tools in sync is to streamline them all through a cloud-based unified communications platform with built-in security measures. Not only does implementing the cloud ensure the safety of all tools your employees are using, but it also makes it simple to track that security by being hosted in one, unified system.
  2. Encrypting data – These days, most correspondence between professionals happens via email, which increases the need to protect data by utilizing email encryption. Not sure what encryption is? Email encryption is the process of using an authentication mechanism to prevent unauthorized personnel from accessing private email messages and information. Most well-known email platforms come with a form of built-in encryption, but that often isn’t enough for sensitive financial data. Instead, consider upgrading to a more secure form of encryption and require all individuals within your network to do the same.

 

Even if you think you are invincible online or have nothing to hide, it’s important to protect privacy from both a personal and professional standpoint. You never know when something completely innocent-seeming could lead to a threat or breach. In order to prepare for these unknown attacks on your data, the best thing you can do is make that information less accessible, starting with these tips laid out before. To also stay up-to-date on the best security practices available, continue to research and update security measures as necessary.

 

Source: https://blog.kasasa.com/2019/02/protecting-yourself-online/

 

How I Learned About Saving For Retirement (And You Can Too)

coins and time clock retirement

Confession time: Finances have never been my specialty. As a creative professional, sometimes what I dream up and what happens in the real world need to come together for a little tête-à-tête. Now that we’ve gotten that on the table, you may ask, “So why are you writing about saving for retirement?” Fair question. Here’s why: in my quest to crack the “retirement savings code,” I resolved many previous unknowns (to me) and ultimately rethought my personal approach to saving for retirement.

 

I will also conjecture that there are a lot of people who are similarly lost when it comes to saving for retirement. In fact, the numbers support this hypothesis: according to an Economic Policy Institute (EPI) study“nearly half of families have no retirement savings at all.” With that in mind, here are some of the major questions that I had while digging into how I should be saving for retirement.

 

How much do I really need to have set aside to coast through retirement?

AKA, what is the magic number? A seemingly innocuous question, right? Not exactly. Turns out it depends on who you ask. This is where I learned there are many schools of thought on how to best approach your number. Below summarizes the three different methods I found, but you can learn more about each at 3 Ways to Calculate Your Retirement Number by money.usnews.com.

 

Income Method

This involves multiplying your income by a factor to determine how much you need to retire. There’s a little more to it than just that, and exactly how much you should multiply it by is debatable, but the article does a nice job of breaking down the different variables and assumptions you should account for.

 

Expense Method

This method asks you to analyze your monthly budget to arrive at your retirement number. You’ll need to think through what expenses you anticipate having then, what gets added, and what falls off, which brings up the subject of a mortgage… I’ll get into that a little later. There are, of course, a few other considerations which you can see in more detail here, but that’s the main idea.

 

Savings Method

This method involves setting aside a percentage of your annual salary in retirement accounts. This might be the most prevalent approach I encountered in my research; however, the “right percentage” to set aside can vary from source to source. My takeaway: 15% is a good goal on the conservative end and 20% on the aggressive end. Anything beyond that gets you gold-star status.

 

That’s a lot to digest. I get it. Luckily, I stumbled upon this article by CNBC with features a more digestible timeline of savings goals from Fidelity that follows the Income Method. And visuals are always helpful.

 

How much do I need to save for retirement?

10X

Fidelity Investments suggests you should aim to have 10 times your salary in savings.

Here is how much to set aside by age in order to stay on track for retirement at 67.

how-much-save-retirement-380x839

Keep in mind this is a ballpark diagram. Consult a financial advisor for exact numbers.

Epperson, Sharon. “What’s the Magic Number for Your Retirement Savings?” CNBC. 11 Feb. 2016. Accessed 8 Feb. 2018.

Where all will this money come from?

Here are the key players. Getting a general sense of each will help you understand how they all work together. This video from CNBC Money also does a nice job of explaining the differences.

 

401(k) – A 401(k) is an employer-sponsored type of retirement plan. It allows an employee to dedicate a percentage of their salary to a retirement account. Contributions are tax-free and taxes are paid upon withdrawal. Putting money into your 401(k) can be a great place to start, as many companies offer a match program up to a certain percentage. Ideally, you should strive to at least contribute up to the full match since that is free money for you!  Learn more about 401(k)s here.

 

IRA – An IRA is an Individual Retirement Account that can be opened up by anyone, whether they’re associated with an employer or not. There are two types of IRAs — a traditional and a Roth — which have a few differences, but the main one being the time at which you’re taxed. (Roth contributions are taxed the year you deposit them, traditional IRAs are taxed upon withdrawal.)

 

HSA – An HSA or Health Savings Account offers a way to set aside money for your healthcare expenses while receiving some tax advantages. Another nice thing is if you don’t use it all in a year, you can hang on to it and, in some cases, invest it!

 

Investments (other) – Whether it be in real estate, stocks, bonds, mutual funds, or any combination of these and more, this is anywhere you’re setting aside money in the eventual hope of reaping a return on top of your initial deposit.

 

Pension –  Employer-provided retirement income (from companies with pension plans) that requires an employee to work for them a certain number of years. The benefit usually increases with the length of time employed at the company. This often applies to government jobs, like military, police, and fire departments. According to The Balance, “Large corporate employers may also offer pension benefits, but it is not as common as it was thirty years ago.”

 

Social Security – It is hotly debated how much longer we should rely upon this as a source of retirement income. Regardless of its endurance, according to CNN Money, “your Social Security benefits will only replace about 40% of your previous income, which won’t cut it even under the most frugal circumstances.” So the best bet is to think beyond Social Security.

 

Do I count my home equity as income?

You’re right to realize that some of the expenses you have today won’t necessarily be around by retirement age. The amount you’re currently setting aside for retirement is one, ideally your student loans are another, and of course, that brings you to a major investment — your home (assuming it’s paid off).

 

But according to TheBalance, “you’ll also have retirement costs that you don’t carry today, like certain out-of-pocket health and end-of-life care costs. And ideally, you’ll also travel more, enjoy more hobbies, and indulge a bit. As a result, you may want to budget for retirement by assuming you’ll spend roughly the same amount you spend now.” The Huffington Post further supports this outlook in Is Your Home Equity Part of Your Retirement Savings?, saying that “If you don’t plan to sell, then your home equity, while still an important part of your overall net worth, shouldn’t be included in your retirement savings calculation.”

 

Should I focus on paying off debt or saving for retirement?

According to Dave Ramsey, it’s important to start with a firm foundation, and that includes addressing your debt first. In his post on The Truth About Retirement, Mr. Ramsey recommends that:

“You begin investing for retirement after you’ve done two things: you’re debt-free, and you have saved an emergency fund of three to six months of expenses. Three-fourths of the people on Forbes list of the 400 wealthiest people in America say getting and staying debt-free is the most important thing you can do when it comes to handling your money. The full emergency fund ensures you have a cushion in case of an illness or job loss and that your retirement funds stay where they are and keep growing.”

 

When is the best time to start saving for retirement?

The short answer: Now. Or as soon as possible. That’s because there’s also another factor in play that could really work to your advantage — compounding interest — or the interest you can earn on interest. According to Tony Robbins, “by not saving, and by not investing, you are losing out on more money by waiting than you stand to lose by taking a small risk and starting your retirement account.” For a more in-depth breakdown of how compounding interest over time can make a big difference, see Tony Robbins’s article: Create a Money Machine.

 

My final thoughts:

Although I’m no financial guru, I have wised up to a few things over time. First of all: processing your current age never feels any less like an alien/host-type situation; at 7 years old, the coveted teen years felt oh sooo far away, your 20s felt unimaginably grown up (hilarious), and every decade that passes thereafter… more of the same. Second: Seeking the “right time” is futile, because it doesn’t exist.

 

So when you factor in those “constants,” waiting to perfect a master retirement savings plan feels less critical (and daunting) than just getting the ball rolling in the right direction. That’s not to say you should become lax in your research and planning. By all means, get out there and speak to a certified financial advisor (they get paid to do this stuff for a reason). Just try to avoid getting stuck an endless loop of analysis and become your own enemy to progress. That’s not how you’ll make it to that little beach bungalow or another perfect retirement of your dreams.

Source: 

How I Learned About Saving for Retirement (And you can too)

Jaclyn Eickenhorst
Jaclyn Eickenhorst

 

By craft Jaclyn is a copywriter, but she really fashions herself more of an “idea explorateur.” When it comes to working through tasks to arrive at the best solution, she considers herself a purist, aka a compulsive brainstormer. Intervals of staring into space, broken up by a frenetic syncopation of keystrokes — that’s just part of “the process.” No need to call for someone…unless they have cookies. Definitely call then.

3 Questions for Jaclyn:

  1. Favorite hobbies?

    Paying guitar, boxing, finding new ridiculous things to worry about, daydreaming about the next great American novel, and talking to my cat like she’s a human baby (because she is).

  2. What was your very first job?

    A confectionary & culinary artist/customer service liaison within the food and hospitality industry — a.k.a. “counter girl” at Dairy Queen.

  3. Worst financial decision?

    Probably buying a timeshare at the ripe old age of 21. Not only was I gullible enough to attend the spiel, yes, I actually bought into it. Luckily, I read the fine print, found a loophole, and got out within 24 hours! Critical reading skills for the win!

Tax Code Changes 2019

TAXES 2019

The annual tax code changes can be confusing. No worries, though; we’ll walk you through everything you need to know for 2019.  

Though most changes won’t take effect until April 2019, some of them can impact the financial choices you’ll make this year. For that reason, here’s the details on the most important tax changes. 

1.)   Changes to the amounts taxed for each income bracket 

The 7 tax income brackets remain unchanged, but the amounts each bracket is taxed have gotten an overhaul. Here are the new rates for taxpayers filing as individuals. 

Taxable Income Bracket                Tax Due 

10%        $0-$9,700                         10% of taxable income

12%        $9,701 -$39,475               $970 +12% of income $9,700+

22%         $39,476 – $84,200          $4,543+22% of income $39,475+

24%         $84,201 – $160,725        $14,382.50+24% of income $84,200+             

32%         $160,726- $204,100        $32,748.50+32% of income $160,725+

35%         $204,101 – $510,300       $46,628.50+35% of income $204,100+

37%          $510,301+                       $153,798.50+37% of income $510,300+              

You can check out the taxable income rates for couples filing jointly and for individuals filing as heads of households here. 

2.)   Changes in standard deduction amounts

The standard deduction in 2019 will be $12,200 for individuals, $18,350 for heads of household, or $24,400 for married couples filing jointly and surviving spouses. 

3.)   Elimination of personal exemptions 

The personal exemption amount is being eliminated for the 2019 tax year.  

4.)   Changes to itemized deductions 

Some of the itemized deduction changes for 2019 include: 

  • Medical and dental expenses.  For 2019, you can only deduct those expenses exceeding 10% of your adjusted gross income (AGI).
  • State and local taxes (SALT). The new maximum for SALT deductions is a combined total of $10,000 for taxpayers filing jointly.
  • Home mortgage interest. In 2019, home interest payments will be maxed at $750,000 for married couples filing jointly.
  • Job expenses and miscellaneous. In 2019, you can only claim work-related deductions that are less than 2%of your AGI.

5.)   Changes to tax credits 

There have been several adjustments to various tax credits for 2019, including the following: 

  • Child Tax Credit. The child tax credit has increased to $2,000 per child.
  • Earned Income Tax Credit (EITC). The maximum EITC amount for 2019 is $6,557 for married taxpayers filing jointly who have three or more children.
  • Adoption Credit. The maximum adoption credit in 2019 for a child with special needs is $14,080. The ceiling for other adoptions is $13,810.
  • Lifetime Learning Credit. For 2019, the AGI used by joint filers to determine the reduction in the Lifetime Learning Credit is increasing to $116,000.

6.)   Retirement account contributions 

For 2019, you can contribute a total of $6,000 to one or more traditional or Roth IRA(s) if you’re under age 50, and $7,000 if you’re age 50+. For 401(k)s, you can contribute $19,000, and $25,000 if you’re age 50+. 

Your Turn: Which tax credit or deduction helps your finances most? Tell us all about it in the comments.

FREE Tax Prep Resources

SOURCES:

https://www.google.com/amp/s/www.forbes.com/sites/kellyphillipserb/2018/11/15/irs-announces-2019-tax-rates-standard-deduction-amounts-and-more/amp/

https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/18A0A5AE-E9DD-11E8-8F27-5C6847258365

https://www.google.com/amp/s/www.fool.com/amp/retirement/2018/12/23/the-6-best-tax-deductions-for-2019.aspx

https://www.google.com/amp/s/amp.usatoday.com/amp/2207406002

Impulse Purchases

impulse purchase cartoon

Aisha was walking home from school with her best friend, Katie. They chatted about the upcoming Science Fair and the new Phys. Ed. teacher as they shivered in the cold.  

They passed The Coffee House and watched as a bunch of their classmates walked out holding steaming cups of hot chocolate. 

“Hey Aisha. Hi Katie!” their classmates called. 

Aisha and Katie waved back. Aisha grabbed Katie’s arm. 

“Let’s stop here for a minute—they make the best hot chocolate and it’s freezing outside!” 

Katie shrugged. “I don’t want any.” 

“Oh, come on, Katie, you can get a cup with mini marshmallows and a drizzle of caramel—it’s awesome!” 

Katie shook her head. “I really don’t want any, but I’ll come in with you if you do.” 

Aisha pushed open the door, and a few minutes later, she was holding her own cup of chocolaty deliciousness. 

“I don’t know why you never spend your money,” Aisha told her friend before taking a long sip. “That’s what it’s there for, you know.” 

Katie just smiled and they walked the rest of the way home in silence. 

That evening, Aisha was looking through her wallet. 

“Mom!” she called. “My allowance is gone again—and it’s only Tuesday!” 

“You need to be more responsible, honey,” Aisha’s mom said. “Those seven dollars should be enough to last you all week! Are you ready to go?” 

Aisha snapped her wallet shut and ran to grab her coat. She was going with her mom to pick up a some groceries at Target. 

As they passed the front of the store, Aisha turned toward her mom. 

“Mom—look! They have your favorite coffee store right here inside of Target. Why don’t you pick up a latte or a cappuccino to drink while we shop?” 

Aisha’s mom turned toward her. 

“Because that’s not on my list,” she said, pointing at the paper in her hand. “It’s just an impulse purchase, and if I make too many of those, I won’t have enough money to buy the things we need.” 

“What do you mean?” Aisha asked as mom grabbed a cart and started wheeling it toward the grocery section. 

“There are some things I need to buy, and all sorts of things I want to buy just because they look good—like those,” Mom pointed toward a rack of candy bars near a register. “Impulse purchases taste good now, but I don’t really need them. And they cost a lot, too.” 

Mom patted her wallet. “I’d rather save my money for the stuff I really do need and keep those impulse purchases for special occasions that only happen once in a while. Doesn’t that make more sense?” 

Aisha nodded. It did make sense. And she was finally starting to understand why her allowance never lasted long enough. 

Tomorrow, she was going to be like Katie and skip the stop at The Coffee House on the way home from school. 

She also wanted to save her money for the things she really needed. 

Talking points: 

  • Can you give three examples of impulse purchases?
  • How can you keep yourself from making impulse purchases when you shop?
  • What are some impulse purchases that might be worth buying?

Impulse Purchases Worksheet

Impulse Purchases worksheet