For Richer or Poorer: Financial Tips for Engaged Couples & Newlyweds

This week, one of our very own advisors posted as a guest blogger on StJoeWedding.com.  Laura Price, Investment Advisor and Chief Compliance Officer, covered the always relevant topic of finances for engaged couples and newlyweds.

Quite often, couples make the mistake of waiting until after marriage to discuss their money situation.  Although financial circumstance is not the easiest of conversations, it is one of the most crucial for any successful and long-lasting relationship.

Click here to read the guest blog Laura wrote, titled "For Richer or Poorer: Financial Tips for Engaged Couples & Newlyweds".

Make the Right “BIG” Decisions – Earn More Money (pt. 4 of 5)

By Olivia Sandham
 
Last week, we took a look at how renegotiating rates could be a “BIG” decision to improving your financial situation.  This week, we will conclude our discussion on “BIG” decisions by covering the final financial “BIG” and summarizing the lifestyle “BIG” decisions you could make.
 
E A R N   M O R E   M O N E Y
 
If your wallet has been feeling light or you look at your financial accounts at the end of every month and see less than you would like, you may want to consider trying to earn more money.  Here is a compilation of some of the many ways you could earn more money on a regular basis:

• If you are paid hourly, ask your boss how you can earn more hours or overtime or what you can do to earn a raise.
• Find a part-time job or become a temp.
• Rent a spare room in your house.
• Offer your own services such as  dog walking, babysitting, house sitting, running errands for the elderly, cleaning, landscaping, maintenance, carpentry, tutoring, coaching, photo/videography, graphic/web design, and more.
• Sell your own products such as handmade crafts/jewelry, up-cycled garage sale items for resale, and fruits and vegetables from your garden.
• Sell direct sales products such as Avon, Mary Kay, Scentsy, Tupperware, and others.
• Become a blogger, mystery shopper, write product reviews, or complete surveys.
• Get paid to wrap your vehicle in advertisements.
• For more ideas on how to make money, check out this fairly comprehensive article I found while doing some research, titled “52 Ways to Make Extra Money”.

Benefits:  Obviously everyone wants to earn more money so they can have more money to spend right now, so they can worry less about expenses and bills, and have a better current lifestyle.  But many of these particular methods to earning more money also include other underlying benefits, such as:

• You could invest more money toward your savings/investments, which could mean having a better lifestyle during retirement.
• Since you will be working a little more for your money, you may be inclined to make better decisions with how you choose to spend/invest it. (cue music “You work hard for the money, so hard for it honey!”).
• Using your free time wisely to earn more money might keep you from filling your free time by spending it.
• Many of these activities may result in broadening your professional and social network, which could lead to even more opportunities to earn more money.
• Many of the ways to earn more money could be intellectually and emotionally exciting and rewarding, since you could challenge yourself, learn something new, explore your creative side, help others, and more.
• Some of the methods could also increase your level of physical activity and wellness, such as is the case with dog walking, landscaping, etc.

Effort:  Yes, earning more money takes a little more time and energy than some of the other financial “BIG”s explained in this blog series, but depending on how you go about earning the money can determine if the benefit is worth it.

1. First, decide which method(s) of earning more money seem most appealing and get started on a plan for each.  For instance, if you’re going to talk to your boss, set up a meeting and prepare what you are going to say; if you want a part-time job, update your resume; if you’re going to offer products/services, make sure you have all the necessary supplies.
2. Next, implement your plan of action by applying for jobs, notifying others of your available services/products (by using word-of-mouth or online sites like Craigslist, Etsy, Ebay, Fiverr, Facebook), signing up for direct sales programs, mystery shops, surveys, or whatever it takes to get your method actually started.
3. Finally, when it comes time to get out there and “earn that dough”, give it your best effort.  For example, perform better at work than you ever have; impress your boss and co-workers at your new part-time job; be the best dog walker, baby sitter, landscaper, or graphic designer you can be; push yourself to sell more products; explore new and creative ways to earn more money.  When it comes time to actually earning the money, if you (as they say) “hit the ground running”, then you will be well on your way to earning more and more money as time progresses and your endeavors continue to succeed.

Stay tuned for tomorrow’s post which will wrap up our series by summarizing the three lifestyle “BIG” decisions you could make!

Could Your Tax Refund Be Costing You Money?

Time Business & Money posted an interesting article earlier this week titled “This Simple Tax Error Is Costing You $2,800”.  The article covers the relevant topic of tax refunds and discusses how having a large tax refund could actually be detrimental.  Read below to review key points of the article, or click here to read the article in its entirety.

Did you know?  Over 68% of Americans prefer to pay more taxes than they owe so they can receive a larger tax refund.

The average tax refund for 2012 was $2,803, which means an overpayment in taxes by about $54 per week per individual.

It seems many people use overpaying into their taxes as a sort of “forced-savings plan”.  Over 2/3 of those who receive a tax refund choose to either save/invest it, or they use it to pay off their debts, rather than simply spending the money.

Unfortunately, nearly 50% of people who pay the correct amount in taxes throughout the year, and thus have more take-home pay, actually end up spending the extra money rather than saving or investing it.

So what is the recommendation?  Pay the correct amount of taxes throughout the year and set up an automatic monthly withdrawal for the additional money.  The funds can either be transferred into a savings account or it can be used to pay down debt.

In a savings account, the money will earn interest, whereas sitting in Uncle Sam's pocket until tax-time earns you nothing.  Also, these funds will be accessible if needed for big expenses or an emergency situation, which will also help to avoid increasing debt (with high interest) to pay for these occurences.

Another option is to transfer the funds to pay down debts, and thus lower interest charges.  This maneuver could actually add up to an average savings of almost $200 a year, which can make a huge difference over time.

Secrets from the Top: How to be Fearless about Money and Life

Earlier this week, Forbes.com published an article titled “6 Leaders Share their Secrets for How to be Fearless about Money and Life”.  After reaching out to several business leaders, including successful entrepreneurs and courageous investors, the authors of this article discovered that much of the leaders’ points of view on money and investing were also reflections of their personal life mantras.  Read below for their 6 tips, or click here if you would like to read the full article.

1.  Don’t let the unknown throw you off your game.

2.  Make sure your passions pay off.

3.  It’s okay to take a risk, it just might be worth it.

4.  Never make uninformed decisions.

5.  Plan early so you can pursue your future with confidence.

6.  Giving back should be part of your plan.

HOW TO: Save Money and Pay Off Debt

By Olivia Sandham

Although the two don’t seem to logically go hand-in-hand, saving money while also paying off debts is certainly possible.  With a few simple adjustments to your lifestyle and budget, you can create a comfortable and debt-free future.

 

The first step to saving while paying off debt could be to create a household budget that trims unnecessary expenses.  This budget will only be feasible if it allows for some discretionary spending to avoid feeling trapped or “broke”.  Examples of areas that could easily be trimmed without too much lifestyle shock include eating out one less night a week, consuming one or two less high-priced beverages (such as cutting back on a latte or cocktail), and switching groceries to generic brands.  Think about how much you could save each week by making these changes, then multiply that by 4-5 times per month!  These small changes can certainly impact the amount of additional money you will have to put toward paying off debts and increasing your savings.

 

The second step to saving while paying off debt is to consider designing a debt payoff strategy that best suits your needs.  Paying off debts utilizing the “snowball” effect is a popular method of paying your debts in a specific order.  You could choose to either 1) Pay off the smallest balance first, which can be motivating in a short period of time because you see the number of debts you owe drop, or 2) Pay off the highest interest rate first, which makes the most sense from a pure financial approach, since you will keep more of your money in the long-term.  Choosing the best debt payoff strategy will be a personal choice so that you find a strategy that you will want to maintain over the long-run.

 

The last step to saving while paying off debts is to build your emergency fund and future investments.  Once you have designed a trimmed budget and chosen your debt strategy, you can plan to have additional money placed into an easy-to-access emergency savings account.  Although this account will not produce much (if any) interest, there will be no penalty for taking the money out should you absolutely need it.  However, once you are able to build your savings to a sufficient amount (three to six months of expenses is typically recommended), you can then start to invest part of your monthly additional money into accounts that will produce higher return rates, such as an investment account or an IRA holding diversified mutual funds.

FIC Double Puzzle

 

Click here to view the Answer Key!

Quiz: Do You Know the Keys to Financial Security?

The following quiz has been designed based on economic journalist Knight Kiplinger’s “8 Keys to Financial Security”, an enlightening publication with Kiplinger’s own personal financial wisdom.  The article was first introduced in 1997 in the 50th anniversary of Kiplinger Magazine, and again in both 2002 and 2008.  Along with being an economic journalist and active philanthropist, Kiplinger is the Editor in Chief of Kiplinger Washington Editors in Washington D.C.

1. Where should your money be spent or invested first?
a. Giving money to my children
b. Investing in myself
c. Paying off debts
d. Increasing my investment portfolio

ANSWER: (b) Investing in myself.  Developing and increasing your knowledge and skills through continuous education and training should be considered your most valuable asset, since this will ultimately determine your overall earning power.

2. What is one of the most important items to acquire as you move forward in life?
a. Stocks/bonds
b. A house
c. 401K
d. Insurance

ANSWER: (d) Insurance.  Prior to investing in financial assets, make sure you have enough insurance to cover the big risks in life such as serious illness, disability, or early death.  If an emergency arises, insurance will take care of it and you will not have to dip into your financial investments as much.

3. What items should you purchase using borrowing methods (credit)?
a. Everything should be purchased with credit
b. Low price, short-term items that you can pay off quickly, such as clothing, travel, and entertainment
c. High price, long-term items such as education courses or a car or home
d. You should never borrow or use credit

ANSWER: (c) High price, long-term items.  Use your borrowing methods wisely to purchase investments of lasting value, and make sure to pay off as much as possible as quickly as possible to avoid interest fees.

4. In what order should your payments take place?
a. Investments, savings, bills, credit card
b. Credit card, investments, bills, savings
c. Savings, bills, credit card, investments
d. Bills, investments, credit card, savings

ANSWER: (a) Investments, savings, bills, credit card. Trim and prioritize your spending so that you are able to pay into your mutual fund, money market, or brokerage account first so these investments can continue to grow.  Then add money to your savings account/emergency fund and pay all of your regular monthly bills.  Finish up by making a payment toward your credit card or other debts.

5.  What is the best method to investing?
a. Take big risks; the more times you swing, the more homeruns you will hit.
b. Take moderate risks; you hit some and you miss some.
c. Take a risk and swing only when you think the time is right.
d. Don’t take any risks at all; you can’t lose if you don’t play.

ANSWER: (b) Take moderate risks.  Use dollar-cost averaging to invest regularly in markets whether they seem good, bad, or indifferent, and maintain the patience to wait out the occasional bear market.

6. What should be included in your investment portfolio?
a. Strictly liquid assets, such as savings and cash accounts
b. Only safer investments like bonds and CDs
c. Only high return assets such as stocks and high-yield bonds
d. All of the above

ANSWER: (d) All of the above. Successful investors know that each asset category will perform at some point, and on the reverse, each category will also have a time of lull.  Having a diversified portfolio with all of these types of assets will ensure the best performance over the long-haul.

7. Which famous quote should be your personal money mantra?
a. “We are what we repeatedly do; excellence, then, is not an act, but a habit.” –Aristotle
b. “I’d like to live as a poor man with lots of money.” –Pablo Picasso
c. “You only live once, but if you work it right, once is enough.” –Joe E. Lewis
d. “A penny saved is a penny earned.” –Benjamin Franklin

ANSWER: (a) Aristotle said it best.  Saving money is always a good idea (Franklin), but making investments allows for growth you wouldn’t otherwise experience.  Also, you shouldn’t have to feel as if you are living in poverty (Picasso), but living beyond your means (Lewis) is not the right concept either.  Instead, get in the habit of making consistent and informed financial decisions on a daily basis, and you can lead an agreeable lifestyle while keeping your long-term goals achievable.  If you need to, look closely at your current lifestyle and budget, trim back dispensable spending, and invest and save on a regular basis.

8. How generous should you be when giving your time and money to others.
a. I should occasionally give a small amount to others
b. Giving to others should come first
c. I shouldn’t give anything to others
d. I should give what I can afford to give, when I can afford it

ANSWER: (d) I should give what I can afford to give, when I can afford it.  You own financial security is connected to the financial, physical, and spiritual health of others in your community, in our nation, and in our world.  Sharing your good fortune by donating your money, time, and talent helps to create a stronger economy and a healthier, safer world, which benefits us all in the long run.

Are You Making Smart Money Moves?

A recent post under Personal Finance on the U.S. News & World Report website listed 50 Smart Money Moves. We have taken our top 30 from this list and created a "Financial Check-Up" for our blog readers. Check each smart money move you believe you follow on a regular basis, and see where your money-moves rank with our results below.

 

( ) Decide on financial goals.
( ) Create a spending plan.
( ) Resist retailers' enticements.
( ) Track your own spending.
( ) Don't accept posted prices (i.e. price-matching).
( ) Research products online before visiting stores.
( ) Earn money from more than one source.
( ) Negotiate your salary.
( ) Don't shy away from all debt and make sure to choose the best credit card or loan for you.
( ) Pay off high-interest-rate debt quickly.
( ) Check your credit report and build a solid credit history.
( ) Track and review account statements.
( ) Take advantage of rewards cards.
( ) Adopt a hands-off approach to investing (consider a professional).
( ) Remember the risk-versus-reward rule.
( ) Start early, invest often.
( ) Don't try to time the market, and don't follow the market every day.
( ) Check your Social Security statement online and calculate your own retirement number.
( ) Take baby steps.
( ) Save even when you're not earning.
( ) Live with family members.
( ) Look for non-financial ways to help family members.
( ) Prepare to help aging parents.
( ) Avoid sharing credit accounts.
( ) Live more simply, use fewer products, and find cheaper hobbies.
( ) Plan weekly meals.
( ) Insure yourself.
( ) Make sure you're ready for X (house, baby, retirement, etc.).
( ) Cancel/avoid catalog subscriptions.
( ) Find ways to lower your utility bills.
 
If you checked 0 to 10 Smart Money Moves, you are:
Moving at the Speed of Slow.  Though you may not be where you should be now, there’s still hope!  Which of the above are you doing regularly and which areas do you need to work on?  Consider the ways you can start to implement these things into your life, put them into practice, and monitor as you go.  You’ll be glad you did.  If you need help getting started, don’t be afraid to ask for it!
 
If you checked 11 to 20 Smart Money Moves, you are:
Moving in the Right Direction.  So you’re not quite there, but don’t give up.  Be sure to track your progress and make adjustments when necessary.  If you need advice to reach your goals, contact a professional.
 
If you checked 21 to 30 Smart Money Moves, you are:
Moving toward Financial Freedom...and freedom is fun!  Way to go!  You’ve worked very hard and it’s paying off.  Slip-ups and setbacks can (and likely WILL) happen, so be careful not to regress backward.  Keep up the good work and you can enjoy the fruits of financial freedom!

How To: Talk to Your Spouse About Retirement

DID YOU KNOW?   Only 38% of couples are planning together and 2/3 of couples don’t agree on when they will retire, according to a 2013 study from Hearts and Wallets.  CNN Money published an insightful article this week offering advice on how to discuss retirement with your significant other.

Before jumping into discussion with your spouse, separately sit down and write out a list of all of your own desires for retirement.  This will ensure everything is brought out into the open when you discuss the topic.  Also prepare yourself to overcome the “all-me” attitude.  Plan to listen without interrupting, repeat back responses to make sure you understand and are understood, and avoid criticism.

Once you sit down face-to-face to discuss retirement desires, focus on what will make you both happy.  Ask yourselves, “What are our goals for that stage of our lives, and what will fill our time?”  This will help you figure out what retirement means to both of you, whether it be the time to kick back and relax, spend more time with your families, or travel the world together.

 

Don’t be afraid to openly discuss your concerns, as challenging as this may be.  The toughest topics in this area may be age differences and life expectancy.  Younger partners may want to work for years after their spouse retires, and women should consider the statistic that they tend to live longer and may outlive their husbands.  Repeat your spouse’s points to demonstrate you appreciate their view, and provide your contrasting opinions in a way that feels collaborative. 

Understand the realities of your budget and plan accordingly.  Openly discuss current and future debts and investments.  Some couples may want to sit down with a financial planner who can help serve as an advisor as well as an arbiter to keep emotion out of the discussion.

Focus on the “why” versus the “what” when considering future plans, purchases, and your retirement budget.  Ask yourselves “WHY should we do this?” when considering making special purchases or investments.  Keeping this focus will help push you toward compromises that are in tune with both your heart’s desires, and are within reach of your finances.

Overall, when discussing retirement with your spouse, maintain the emphasis that you are both moving forward toward a happy and fulfilling life together.  Although you may not agree on a few specifics just yet, concentrate on your similarities and keep the focus on your wants and needs as a couple first.

And remember, as with any financial plan, there should always be flexibility.  Nothing is set in stone, so revisit your retirement plans as often as you would your investment portfolios.

To view the full article, click here.

7 Money Mantras To Live By

Check out this new article from the Oprah.com website called "The 7 Money Mantras Experts Live By".  Here are seven tips that can help you save hugely over time (click here to read the full article):

Mantra #1:  Manage your finances like you manage your social life.  For example, place bill due dates on your calendar right alongside your social outings.  This serves as a good reminder.

Mantra #2:  Find the bigger "yes."  Set your priorities.  Make spending cuts in areas that matter.

Mantra #3:  You can't out-frugal your way to rich.  "You don't have to eat lobster every night, but you do have to eat."

Mantra #4:  Sober up your spending for free.  Free (general) financial advice is available if you look for it. 

Mantra #5:  Buy more good times than good things.  We typically don't look back and regret the things we didn't purchase.  Look for experiences instead of material things.

Mantra #6:  Don't do anything smart.  If you're feeling jumpy, relax.  Try not to act out of emotion.

Mantra #7:  Wait a day or two... or three.  Before making a purchase, sleep on it.  It will still be available in a day or two and you'll often decide it's something you really don't need.