Money – Page 6 – mardihumphreys.com

Nest Eggs

When her grandchildren were little, my mother-in-law hosted annual Easter egg hunts. She loved hiding candy-filled eggs in her yard for them to find. There was one egg bigger than all the others that she filled with cash instead of candy. She called it the money egg. Every child wanted to find it, break it open, wave the cash around, and speculate on how they would spend it. If they’d saved the money in those eggs instead, how much would they have now? You can help your children, grandchildren, godchildren, nieces, nephews, or any youngsters you love, begin good money saving habits this Easter.

Littles

In addition to candy, put a wallet in their Easter basket. A child as young as kindergarten can be taught it’s a safe place to keep the contents of their money egg. This gift implies valuables (money, gift cards, library card, driver’s license, etc.) should be kept organized, somewhere they can find it, and safe. A wallet is something they can keep in their room and periodically check to see how full it is. When a significant amount is accumulated, it’s time to open a bank account.
We’re still in our bubbles for a little while, so, if you’re buying for children who are at least five years old, how about a new board game? Monopoly has several junior versions that help teach concepts like buying, selling, and paying rent. The dollar designations are smaller than the adult game and the properties you can buy (e.g., an arcade) are more age appropriate.
You can use Easter baskets for some not so obvious financial lessons like delayed gratification. For example, if your little ones want to eat their Easter candy before breakfast, offer them a choice. They can either have one little solid chocolate egg before breakfast or half of the big bunny after breakfast. In other words, would they rather have a little now or wait for a bigger reward? When they are older and want to spend their work bonus on the latest iPhone now instead of putting it in their 401(k), this lesson should come in handy.

Bigs

If you’re giving an Easter present to a juvenile with a job, whether formal (e.g. bagger at a grocery) or informal (e.g., mowing lawns), how about opening a Roth IRA for them? There are several companies that don’t charge for opening an account. Which is not the same as no minimum investment, btw, so read brokerages’ terms and conditions before choosing one. If the child is a minor, the account will have to have an adult custodian. If that won’t be you, check with the receiver’s parent first. This gift plants a few seeds for learning about investing. As they get older and the money grows, they can evaluate available saving options for a long-term goal. It also accustoms them to habits like contributing to their future employers’ 401(k) plans. The earnings from a Roth IRA can be used to pay for higher education (at an eligible institution) without penalty for early withdrawal. Every little bit a young person is willing to save now will pay off big time when they graduate high school.

While these probably won’t replace chocolate bunnies, Reese’s eggs, or jelly beans, finding some money-wise goodies in their Easter baskets communicates that you care about their happiness beyond today.

Were money eggs included in Easter egg hunts when you were little? Did you save or spend them? Please share your story in the comments.

Let the Sun Shine

Daylight Savings Time is upon us and I am not a fan. The pessimist in me thinks, “What’s one more hour of lost sleep after all the hours I’ve lost thanks to COVID-19?” The optimist in me thinks, “Yay! Spring!” Since we can’t control time, let’s concentrate on saving something we can control: money. Our financial goals fluctuate with the seasons of our lives, but we sleep better if saving is always one of them. Here are three rules of thumb that give me financial peace of mind: live within your means, fund your future, and be generous.

Live Within Your Means

I’ll state the obvious. Make more money than you spend. Having said that, there are some maybe not-so-obvious ways to save more of your means. Do you use a cell phone? Internet? Cable TV? Satellite TV? Can you live without one of these? If not, are you getting the best plan for your budget? You can check and adjust accordingly. Finding a cheaper plan doesn’t necessarily mean you have to switch providers. You can contact your current one and ask them to match their competitor’s rates. Do you use a travel rewards credit card? If earning points for travel no longer fits your lifestyle, switch to a card that does. For example, while you may not be traveling as much right now, you’re still buying gas and groceries. Switch to a credit card with cash back rewards for those purchases.

Fund Your Future

If you’re getting a tax refund of more than $2000 (the average refund for 2019 was $2535), consider filling out a new W-4 with your employer to have less tax deducted. Some tax payers I know purposely overpay income tax so they’ll receive large refunds. They use the money to pay for big ticket items, and that is a choice. Another choice is a short-term savings strategy for big ticket items. For example, direct depositing that extra amount into a high-yield savings account instead of overpaying income taxes. A tax refund check seems like free money. It’s actually money you give the government every month, it uses for a year (interest free, btw), then finally allows you to have what’s left. If that money stays in your paycheck, you have the option to invest it in your employer’s 401(k) plan, or your personal IRA, or another long-term savings option. This both removes the temptation to spend the money, and invests it for your future.

Be Generous

You feel good when you help others. Think about how good Ebeneezer Scrooge felt when he was generous with his money. But you don’t have to give money to be generous. For example, when your grocery has non-perishable items on sale and you have coupons, buy the limit, keep a couple for yourself and donate the rest to a local food pantry. Do you have clothes you haven’t worn for two years? (Not wearing them in 2020 doesn’t count.) Bag them up and donate them to your local thrift store. When you don’t have a lot of money, you still have something to give; even if it’s just giving a smile to a stranger; with our eyes, because, you know, mask. Our abundance isn’t always measured in money.

What do you do to maintain financial peace of mind? Please share in the comments.

Spread the Love

Sure, Valentine’s Day is a Hallmark holiday, and you can choose to spend it drinking your favorite adult beverage and watching The Notebook. AGAIN. But, consider using the occasion to spread love outside of your circle. We’re programmed to give back to our communities around the holiday season, but people are in need all year round (especially 11 months into the pandemic). We can still spoil those closest to us, but what can we do to spread some love to the rest of the world?

Friends

If you’re purchasing a gift online, consider using Amazon Smile. They donate 0.5% of eligible sales to the charitable organization you choose without adding that charge to your bill. Does your town have locally owned small businesses like: a coffee roaster, chocolatier, florist, locally-themed speciality gift shop, bakery, and/or book store? You can fill gift baskets with goodies purchased from some of these shops and drop them off on your friends’ porches. If you’re pressed for time, you could send them valentine cards with gift cards from locally owned restaurants enclosed, or memberships to a local art museum, science museum, zoo, or historical park. If you have the option to do this online and save a tree in the process, bonus love!

Neighbors

Since giving your time is still complicated right now due to COVID-19 restrictions, it’s difficult to spread the love in your own hometown by serving meals to guests at a homeless shelter, helping students with homework at a public library, or playing checkers with residents at a nursing home. Instead, you can give money to a local charity that feeds people, one that provides online homework help, or one that cares for senior adults. You could order a few dozen donuts from a local donut shop and use a food delivery service to take them to your local fire station. You could donate money to a local natural disaster relief fund. You don’t have to spend money to give back. You can smile and say thank you to the mail carrier, the driver who delivers your food order, the grocery employee who puts your pick up order in your trunk, the barista who hands you your latte at the drive-thru. Unless your mask is transparent, they won’t see your mouth smile, but they will see it in your eyes.

Strangers

Remember exchanging valentines in elementary school? You brought in tiny cards, candy, pencils, etc. to give everyone in your class. Kids in the hospital can’t exchange valentines. Check with your local Children’s Hospital. Candy, pencils, and trinkets are probably prohibited, but would they accept unopened boxes of Valentine’s Day exchange cards? They may have volunteers willing to observe COVID-19 protocol and distribute them. Looking for other ways to give to strangers? Send a care package to a military service member. Donate blood. Register to become an organ donor. Drop off unopened bags of pet food at your local animal shelter. Create a fundraiser on Facebook.

How do you plan to be generous this Valentine’s Day? Please share in the comments.

Keep Your Eye on the Money

We’re celebrating our daughter’s 24th birthday. The occasion makes me ponder both her life’s journey so far and how adulting is going. Things sure have changed since I got my first significant job, and it made me wonder: You have your first full-time job and regular paychecks are rolling in. What’s the best use of that money?

Budget

Pick a plan and stick to it. Pay attention to money both coming in and going out. Make more than you spend and plan your savings. Most banks allow you to have multiple accounts and your employer likely can direct deposit your paycheck into these accounts for you. In addition to your debit account, set up an account as an emergency fund. Unexpected expenses like job loss can bankrupt you if you live paycheck to paycheck. Setting aside three to six months worth of living expenses is a good rule of thumb. Also, direct a percentage of your income into a long-term savings account for future big-ticket expenditures (e.g., car, house, MBA). Revisit your budget at least once a year. Are you saving enough for emergencies, a long vacation, professional development? Remember to set a little money aside to reward yourself for reaching your savings goals.

Loans

Do you have student loans? Typically, you have six months after graduating from college before you’re required to start payments, but interest accumulates during that grace period. Starting repayment right away saves six months worth of interest charges. Are the loans federal or private? For federal, can you consolidate them? For private, can you refinance them at a lower interest rate?

Credit

Build your credit history by paying your bills on time and don’t miss or skip monthly payments. Try not to carry a balance on your credit cards, but if you do, pay more than the minimum listed on the statement. Set up alerts for your bank to notify you if weird amounts (e.g., less than a dollar) are charged to your account, or if the charge originates far from your location (btw, alert your bank when you travel more than 200 miles from home). Check your credit score annually.

Insurance

You’re young and healthy, but what if your body gets busted up in a car accident? Here are some things to think about.

Retirement

Yes. It’s a long way off, but if you begin saving now, you don’t have to put aside very much and it has years to grow. Take advantage of your company’s 401(k) plan especially if they offer matching contributions (e.g., if you invest 3% of your annual salary in the company’s 401(k), they contribute another 3% to your account). Also, open an IRA. If you can arrange direct deposits for these measures, you won’t even miss the money you’re saving.

Give

Whether you support your local PBS station with a financial contribution, donate your gently used clothes to Goodwill, or volunteer your time at the Humane Society, set aside time or money (or both) to give back to your community. You now have the power and responsibility to make a difference. When you help others, you get more than you give.

How did you adjust to the money you made from your first full-time job? Please share in the comments section.

It’s Complicated

B2B holiday gift giving was tricky without the constraints of COVID-19. Now, it’s practically a minefield. Does your company have the budget to give corporate gifts nine months into a pandemic? If teams are mostly working from home, will your gift end up at an empty office? Will your clients accept a gift when they can’t possibly know how many unaware-coronavirus-carriers have touched it? When choosing gifts for clients this year, here are five things to consider.

Surprise And Please

Don’t buy people stuff they don’t want just to buy them something.They’re your clients, part of your job is finding out what they like. What have they joked about in meetings? What does their website say about them? Has your sales staff left clues in your CRM? What is on their LinkedIn profiles interests lists? Strive to give gifts that both surprise and please. For example, you could send a gift-wrapped case of quality toilet paper. They won’t be expecting it (surprise) and it gives you the opportunity to make them laugh (please). Hopefully 2020 will be the only holiday season where toilet paper is considered a gift.

Set Reasonable Expectations

Even if your business is growing during COVID-19, it’s counterproductive to flaunt that happy circumstance with an expensive corporate gift. If you give your clients an over-the-top gift this year, what will they expect next year? You are not trying to buy their loyalty. An extravagant gift leaves the impression you’re blissfully ignorant of the current economic climate. The easiest thing for you to do is to give all your clients the same gifts, but they don’t all pay you the same amount, right? (Helpful hint: if they paid you $1000 this year, a $90 gift is appropriate.) Your goal is twofold. One: demonstrate appreciation. Two: emphasize your relationships with these clients are important to you. The same goes for not spending enough money on client gifts. A coffee mug with your logo on it may daily remind them of you, but not in a good way. This is the year to scrutinize your list and decide which clients will receive a gift and which clients will receive a season’s greetings thank-you note.

Think Small

We’re all in this pandemic together. Buying gifts from local small businesses is a win-win-win. You acknowledge the importance of small businesses to the community in which you and your clients work. You remind your clients what a great community you both live and work in. You and your clients help sustain another business in your community. Most retail small businesses offer gift cards, home-town themed gifts, and some even offer contactless delivery.

Donate To Their Favorite Charity

Give in accordance with both your company’s and your clients’ company values. Your clients are people. They will remember who supported the community during these hard times. This gesture declares you appreciate the relationship your businesses have so much that you want to support the charitable organizations they care about; especially during the pandemic.

Wait For It

Your clients may be receiving lots of holiday gifts right now and yours could get lost in the pile. Think about waiting until January and giving a New Year’s present. This would set you apart, and, thanks to the pandemic, you have a great angle: “Good Riddance 2020!” or “Wishing You a New Year of Both Hope and Growth!”

What is your company gifting your clients this holiday season? Please share your ideas in the comments.

Thank You, Future Self

As the global pandemic drags on and reshapes our economy, I’ve learned a few things. Spending our money on local small businesses is more important than ever, I can make really good coffee at home, and I should not look at my 401 (k) statement right now. What are some things you can do to financially sustain yourself through this seemingly endless crisis?

Reduce, Reuse, Recycle

Reduce – It may be difficult to increase your income right now, but you can find ways to save it. You aren’t driving your vehicle as much as you did pre-COVID-19, so you’re saving money on gas, oil changes, and wear and tear. Working (or not) from home eliminates the need for walking around money (e.g., money spent on coffee shops, lunches out, parking fees, etc.). You’re saving money simply by not being able to spend it. This should have added up fairly significantly eight months into the stay-at-home order. Move that money to your long-term savings account where it will earn interest.

Reuse – Stay away from online shopping. Yes, those yoga pants you found on Amazon are cute, but don’t you already have three pair of cute yoga pants? Cancel automatic renewals. Don’t you have enough goodies from Watch Gang, Trendy Butler, or BREO BOX to last a while?

Recycle – Compare your monthly expenses from February to October. Note any savings and why they happened. Can you sustain any of the circumstances that caused those savings once the world opens up more? For example, you saved money by working from home. Is it possible to make remote work more permanent? You’ve probably already thought about it, so take the next step and make a list of what it would require. Then, you’ll be ready with a plan to present to your manager when the time is right.

Let’s Make a Deal

Credit card companies make money selling debt and counting on you to pay it back with interest. If you have run up over $5000 in charges, (especially if you’ve lost your job) call your lender. Ask them to suspend payments for two months and to permanently lower your interest rate. Do not take them up on their offer to sell you more debt. With so many borrowers unable to repay due to COVID-19, credit card companies are in a bind and willing to work with you now more than ever. Take this opportunity to renegotiate the terms of your credit agreement. A new arrangement will protect your credit score.

You Can’t Touch This

Your assets are low right now, so don’t sell them. If you have a 401(k) and/or an IRA and get scared easily, don’t look at your account statements. If you get another stimulus check, consider putting it in your IRA if you can currently live without it. The people who managed to save money back in the recession of 2008 are still hitting their long-term savings targets. You have more financial support from the government than during the last recession. It’s not a lot, but it’s useful.

It feels like the pandemic will last forever, but nothing does, so resist the urge to live for today and think of your future self and what that person will need: food, clothing, and shelter. Even if you move just $25 a week to your long-term savings account, after one year, that’s $1300 your future self can live on.

How are you resisting the urge to panic over your budget? Please share in the comments section.

Self-sufficient Social Security

The headline in our wealth manager’s newsletter read: “Almost Nine Out of Ten Women Qualify for Social Security on Their Own.” I wondered, “Why is this newsletter worthy?”

Milestone

More women enter the workforce every year. Since most people have to earn 40 credits to retire, you have to work (and pay into Social Security) for at least 10 years to qualify for retirement benefits. The fact that the percentage of women ages 62 to 64 who meet these requirements based on their own work records has risen 24% since 1980, means women are staying in the workforce long enough to earn their own benefits.

How it Works

There are three types of Social Security benefits: retirement, disability, and survivors. In a nutshell, when you are employed by an organization where the Social Security Administration (SSA) takes a percentage of your paycheck in taxes, it uses those wages to fund a program that distributes payments to retirees, the disabled, and their families who qualify. The assumption is eventually most Americans will qualify for Social Security and draw money from it. We’ll stick to retirement benefits for this conversation. To qualify for SSA retirement funds, you must reach your full retirement age, accumulate enough credits, and apply for it. Here is a good explanation of Social Security benefits.

What Women Should Know

Almost 55% of people receiving Social Security retirement benefits are women. Not only do women earn their own benefits, they can qualify for a spouse’s benefits. This is significant because women tend to live longer and earn less than their spouses. Social Security will not be as much money as your current paycheck. You can expect it to be about 40% of what you’re currently earning. Social Security should only be part of your retirement plan. You can use it as a foundation to build on. If your employer offers a 401(k) (or a 403(b)) plan, you should participate. If your employer contributes to it as well as invests a percentage of your paycheck for you, contribute at least as much as they do and increase your percentage beyond their contribution every year. It would also be wise to open an Individual Retirement Account (IRA). The current rule of thumb is saving 15% of your income for retirement. Three sources of retirement income seems like overkill, but a quick Google search indicates a nest egg of $1,000,000 will only last 19 years in retirement. Social Security benefits last until you die, but you won’t receive the same amount throughout your retirement. Payments are made monthly and usually by direct deposit. Every year, the SSA considers adjusting retirees’ payments for inflation and decides whether or not it will increase them to reflect the cost of living. The SSA has explanations for how changing your name, becoming disabled, or divorced or widowed affects your social security benefits. You can read about it here.

The increase in women who earn their own Social Security benefits means more people are paying into the program. It also means more people intend to be paid from it. Could this be an incentive to prompt thinking on how we can empower more women to stay in the workforce so Social Security can sustain funds?

What do you think? Please share your opinion in the comments section.

Shop Smart

Another stimulus check may (or may not) be coming. Stores are reopening and we’re bored in the house. This combination is dangerous because it gives us opportunities to spend money we either don’t have or can’t afford to waste. With the end of the pandemic nowhere in sight, the impact on our finances is really just beginning, yet we want to support the economy. What can we do to be smart shoppers?

Food

Make a grocery list and stick to it. If the store’s displays are just too tempting, shop the store online and use their pickup or delivery service.
Download the store’s app and activate their loyalty card.
Download the store’s coupons, but only for items we regularly use.
Wait for sales on the items for which we’ve downloaded coupons.
Eat before grocery shopping. This makes a huge difference for me. Walking through the bakery (or the valley of the shadow of death, as I like to call it) isn’t nearly as tempting on a full stomach as it is on an empty one.
Recognize some food manufacturers are playing sleight of hand with us. For example, the brand of chicken wings we buy used to put a dozen hot wings in a bag. Now, the price is the same, but there are nine wings in the bag.

Clothing

Shop Goodwill, Salvation Army, and local thrift stores.
Opt for classic pieces instead of trendy. I found this suit and loved it in cobalt blue, but it was also available in black. Guess which color I purchased. Yep. I’m more confident a black suit will still be in style next year than I am about a cobalt blue one.
Wait to purchase until the end of a season. Swimsuits are cheaper at the end of July; winter coats are cheaper in March.
Leave items in our online carts for 24 hours. This cooling off period allows us to contemplate whether we really need the merchandise. When I do this, some retailers email me a reminder I still have items in my cart and offer a discount to entice me to finish the transaction.

Shelter

Borrow maintenance equipment we need for one-time only use; think a ladder or steam cleaner.
For items we’ll use more often, check a price comparison app before purchasing.
Think about how often we use something. For example, when it’s time to replace my coffee pot, I go for quality because we use it every day, then, I look at the price. It’s cheaper to invest in a well-made product than frequently replace an ill-made one. Since I don’t drink tea every day, I purchased a cheap electric kettle.

When in doubt, we shouldn’t spend money right now. If we can live without the items, let’s do. There will always be fun stuff to spend money on. Self care: yes, Treat yo self: not right now.

How do you practice shopping smart these days? Please share your tips in the comments section.

Financial Infidelity

Back in March, we discussed financial fidelity. In the section on transparency, I alluded to the fact that hiding money from our spouses is cheating, but that was a whole ‘nuther post. Well, here it is.

As of January 2020, 44% of Americans with joint finances, cheated on our spouses with money. Anything hidden is considered cheating. For example: secret bank accounts (savings or checking), secret lottery winnings, secret debt (credit cards, loans), lost our job but acting like we didn’t, or spending money on an expensive item without discussion, can all be considered breaches of faith. Here are some behavioral tells to watch for: our spouse insists on paying all the bills, won’t divulge account logins, refuses to discuss money, or argues about spending large sums.

Why the deception?

Control: revenge spending
Guilt: knowing the spending was irresponsible
Fear: afraid of spouse’s reaction if discovered
Conflict Avoidance: we want something our spouse will object to

What’s the harm?

Lying about finances causes arguments, distrust, and can end the relationship. If we lie about money, what else will we lie about? Hiding money only delays the inevitable conversation about motive. If concealing debt is the issue, it could affect both spouses’s employment. Hiring managers check credit scores as part of the interview process. We shouldn’t have to tell each other every time we buy a venti at Starbucks, but we can’t run up $50K in credit card bills and keep it a secret. That will undermine the whole relationship. Some states’ laws make our finances our spouses’ finances. If the relationship ends and one spouse is in debt, both live with the responsibility until the debts are paid.

How do we fix it?

If we are the cheated, put aside judgement, and ask about the feelings that led to the deceit. Financial infidelity is a symptom. The real problem in the relationship needs acknowledgement. If we are the cheater, be honest, apologize, and stop keeping secrets. To begin, we can talk about tolerance. Can we spend $500 without asking? Can we divert $100 a week from our joint checking account to a private savings account? Our partner needs to know our motivation for having a separate account. Do we want to save up so we can spend money however we want without asking, or are we secretly saving up for a divorce? (In some states it’s illegal to hide money during a divorce, btw.) We don’t have to give our spouses access to this account, but they should know how much is in it because it’s a factor in our financial decision making. Define long term savings goals together like the children’s education, a new car, or retirement, and both commit to working toward them. When we want something that will impact those goals, it’s time for another discussion. We should revisit savings goals once a year. Maybe during tax season since it’s a logical time to talk about finances. When we get into this habit, as the years pass, it gets easier to talk to our spouses about money.

Money is a major stressor in a relationship and talking about it can quickly turn into arguing about it which makes you avoid talking about it. But keeping secrets is usually a waste of your T.E.A.M. If we don’t talk to our partners about money, we’ll never figure out how to work together to manage and maximize it.

How do you broach the subject of money in your relationship? Please share in the comments section.

How Much Will You Pay for Peace of Mind?

My husband and I are on that step of the parenting journey where we have to explain realities to our daughter like 401k plans, insurance, and taxes. Insurance is a really tricky one. Why pay hundreds of dollars for something you may not need? Because life happens and we have to protect ourselves from financial ruin when it does. Here are a couple of questions we’ve answered.

What Even IS Insurance?

My grandmother used to say, “An ounce of prevention is worth a pound of cure.” Insurance is the ounce of prevention. We buy it before we need it, which is kind of backwards, right? We don’t buy dog food before we adopt a dog, but we do buy homeowners insurance before our house burns down because insurance companies won’t pay for a fire we’ve already had. It’s also weird in that insurance companies decide whether or not they want to insure us and how much they will charge us to do so. For example, when buying car insurance, if we have a crash on our record, the insurance company can charge us more than they charge someone who has never had an accident. Here is a comprehensive article about insurance.

What Kind of Insurance do I Really Need?

There are so many options. We can practically insure everything we own if we want to. Some insurance we are required to purchase. For example, it’s illegal to drive without car insurance. Some is optional; like pet insurance. So what are the essential types of insurance we should buy? It depends on our situations and who relies on our incomes. We work hard for our money and want to keep as much of it as possible. The following are common types of insurance and resources you can use to decide what’s best for your situation.

Health – Premiums, deductibles, and copays, oh my! There are so many variables associated with health insurance, there’s not enough room to go into them in this space. Here is a good article about them.

Dental – It depends on whether or not your employer provides it. Here is a good explanation.

Disability – According to the CDC, 61 million adults in America have a disability. You need long-term disability insurance. You can use your emergency fund for short term (lasting 3-6 months) disabilities, but here is a resource to help you decide.

Life – Should you choose term or whole life? Depends on what you want the insurance to pay for after you’re gone. Here is a good explanation.

Pet – We opt to use our emergency fund or credit card instead, but here is a resource for you.

Homeowners or Renters – Covers property damage (e.g., you get robbed) and liability (e.g., someone gets hurt on your property). Here is a resource for homeowners, and here is one for renters.

Flood – In most cases, yes. Neither homeowners nor renters insurance cover flooding. Here is an article about it.

Auto – It’s the law. Here is an article to help you decide what type is best for you.

Umbrella – Are you at risk of getting sued? Then yes. More details here.

Long-term Care – Probably not. Here is an explanation.

Identity Theft – Probably not. Here is why.

Have you had a circumstance where you were really glad you were insured? Please share about it in the comments section.