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4 Money Mistakes Millennials Are Making

Re-posted from MSN.COM

The crushing weight of student debt and the Great Recession have shaped millennials’ relationship with money, for better or worse. In some, it has created enough anxiety about financial security that they save as much as they can and avoid any type of credit agreement that could cause them to take on more debt. Others become so preoccupied with their present expenses that they fail to save for the future.

Unfortunately, both approaches have their drawbacks. Here are a few of the most common money mistakes millennials are making — and what you can do to fix them.

1. Not preparing for the unexpected

About 46% of millennials don’t have any money set aside in an emergency fund, according to a 2017 survey by GOBankingRates. This can pose a problem when an unexpected event like a home repair, a costly medical bill, or a sudden job loss puts an extra strain on your budget. Without any savings to cover these financial emergencies, you may have no choice but to take on debt or fall behind on your rent or mortgage payment and other bills, which can have a serious impact on your creditworthiness.

Most experts recommend keeping at least three to six months’ worth of expenses in a savings account to help cover unexpected expenses. Look at your monthly bills and calculate how much you would need to cover them. Then multiply that number by three (or six if you want to be extra safe) and create a weekly savings goal to help you reach it.

2. Avoiding credit

Only 1 in 3 millennials owns a credit card, according to a recent study by Bankrate. While it’s wise not to overuse credit, avoiding it entirely can pose problems, especially when you go to buy a home or finance another big purchase.

Just about everyone will apply for a loan at some point in their lives. When you do, your lender will pull your credit reports to assess how responsible you’ve been with your money in the past. Your credit reports contain information on all active credit accounts in your name, but if you don’t have any, you’re not giving lenders anything to go on. This can make them hesitant to work with you, and they may deny your loan application or charge you a higher interest rate than someone with a well-established credit history. If you’d like to become a homeowner someday, then a nonexistent credit history will be a major obstacle.

You don’t have to use credit cards, but it is important to build up your credit history in some way. Paying off student loans can help, and if you take out an auto loan or personal loan, these will appear on your credit report as well. But for many, credit cards are the ideal credit-building tool because you can use them regularly, and as long as you pay the balance in full each month, you won’t have to pay any interest at all.

3. Not saving for retirement

For many millennials, paying off student loans is a much more pressing concern than saving for retirement. After all, they have 30 to 40 years left to work, so what’s the big deal if they put off retirement savings for a few years?

The trouble is that your most valuable retirement contributions are the ones you make while you’re young. The sooner you put funds in a retirement account, the more compound interest can make them grow. When you get a late start, your money has less time to gain interest before you need to start using it.

Say you put $10,000 in a retirement account when you’re 25 years old. Assuming your investments earn 8% per year, that $10,000 will have grown to $253,000 by the time you’re ready to retire at age 67. If you waited until age 35 to put that money in, it would only grow to $117,000. And if you waited until 45, you’d end up with only $54,000.

Waiting to start saving for retirement may not seem like a big deal, but it can mean a difference of hundreds of thousands of dollars. If you have any extra money left over after you’ve paid your bills each month, put it into your 401(k). If your employer doesn’t offer one, then open an IRA.

4. Spending frivolously

Millennials are more likely to indulge their immediate wants than baby boomers and Gen X-ers are today. In a survey by Schwab, 60% of millennials admit to spending more than $4 on their coffee (though it doesn’t specify how often), and they’re more likely to eat out and spend money on clothing and electronics they don’t need. While it’s healthy to indulge these wants occasionally, doing it frequently can take a large chunk out of your budget, leaving you less money to put toward retirement and your emergency fund.

Take a good look at how much you’re spending on the non-essentials each month and look for areas where you may be able to cut back. Making your coffee at home, rather than purchasing it at your favorite chain, will save you over $1,300 a year on average. This assumes that an average cup of Joe from a cafe is $4, while the cost of making a cup at home is $0.17, and you are drinking one cup per day. Dining in and curbing your shopping could free up even more money.

For millennials, it’s all about maintaining a balance between what you need now and what you’ll need later. By remaining mindful of how your present decisions are impacting your future finances, you’ll be able to make smart choices that will serve you well today and in all of your tomorrows.

three graduates in cap and gown with diplomas

8 Things Every High School Graduate Should Know About Money

Re-posted from Moneytalksnews.com

If you know and love a young person, pass on these life-changing lessons that can put anyone on the road to prosperity.

Teresa Staker
Teresa Staker
Administrative Assistant
p // 801-494-6047
Change Jar

6 Money Saving Tips You Can’t Afford To Miss

Re-posted from AICPA.ORG

6 Money-Saving Tips You Can’t Afford to Miss

Those fun, light-hearted GEICO commercials that ask if you are tired of paying too much for car insurance hone in on the idea of wasting your money –– paying too much for something or not getting enough.

As a CPA who is passionate about making my hard-earned money work for me, it’s important to take time to critically analyze what my cash is doing. Busy lives often lend themselves to costly complacency in one’s personal finances. Basically, we want bill paying done and our retirement planning intact with as minimal effort as possible.

At least once per year, I do a serious deep-cleaning scrub on my family’s finances. I look at what we’re paying and why, and I see where we need to do better. This “scrub” saves us thousands of dollars and I suggest each of you take a few hours each year to review your finances critically. Don’t let your money run itself; it needs you to keep it on track.

Here are six tips to make your money work for you (consider sharing these with your clients):

  1. Carefully review your credit/debit card auto-drafts.

Did you join Consumer Reports to get insight on what car to buy and forget to cancel it after your purchase? Or sign up for other subscription services that you haven’t used in months? Review your statements for these $10-20 no-value bills. Though small, they add up quickly.

On the flip side, auto-draft anything you can to your credit card. You’ll consolidate bill paying, and get paid to pay your bills. Often, electricity, water, cable, etc., can be auto-drafted. One can easily earn hundreds of dollars each year (in points and rewards) by effectively using a credit card. But, don’t forget to pay off the balance each month! Interest on credit cards is extremely costly. I suggest setting up another auto-draft to pay your credit card bill directly from your bank account.

  1. Bundle your insurance (home, automobiles, etc.), and scrutinize rate increases.

These bills can significantly fluctuate each year as your insurance carrier offers new incentives or changes its rates (sometimes arbitrarily). This year, I noticed our home and auto insurance went up by about $1,500. After calling my agent, I learned that there was an explanation for some of it (insurance regulation hiked up the price), but there was no excuse for the bulk of it. After asking my agent to price shop, I decreased my bill and increased my coverage. My agent wasn’t going to do this price shopping without my nagging, but a five-minute phone call saved me over a thousand dollars.

  1. Review your investments.

Make sure you are deferring appropriately to your 401(k), taking advantage of company matches and profit sharing plans. Also, ensure you’re planning for retirement with other investment vehicles (IRAs, etc.). Review your portfolio, making sure it’s well-balanced. Consider contacting your 401(k) or brokerage adviser to confirm your investments (as a whole) keep your plans on track. Consider making serious adjustments the older you get; the closer you are to retirement, the less risk you may want to take.

  1. Know the market rates for cell phone plans, cable, internet, etc., and don’t be afraid to negotiate.

Cell phone rates have actually gone down recently as more competition enters the market. If you bundle plans with family members, you may be able to save even more. Plus, many employers offer their employees discounts for certain carriers.

Cable/internet, for example, is a bill that I need to renegotiate each year. Otherwise, they go up significantly. Call your cable/internet company and ask about promotions, and let them know you’re not happy that your bill went up. Talk to someone in their customer retention group. They usually have more flexibility to keep your rates lower (or offer you freebies like premium channels) to keep you from switching to a competitor. If it doesn’t go well the first call (and you have time and patience), call back. A different representative may give you a better deal.

  1. Review your debt financing and interest rates.

Prioritize what to pay off quickest based on which item has the highest interest rate. Explore where you may be able to decrease interest rates by re-financing or consolidating debt. Make an extra payment that goes directly to principal. You can save significant money by paying off your debt sooner.

  1. Know what you’re worth (net equity).

Annually, prepare a financial statement. Add up your assets (cash, investments, property, etc.) and subtract your liabilities (loans, etc.) to yield your net worth. Are you too heavily in debt, or saving enough for retirement? These are important questions to know your true financial health.

I use Mint.com (a free application) to track our family’s progress, but a simple spreadsheet or other system works. The point is: don’t let your finances be a surprise to you.

The AICPA is committed to helping us achieve financial security. Visit feedthepig.org for additional tips and resources to help you budget, invest and reduce debt.

Susan C. Allen, CPA, CITP, CGMA, Senior Manager, Tax Practice and Ethics-Public Accounting, Association of Certified Professional Accountants

Joshua Tree

Adaptation Devaluation: Why A U2 Concert . . .

Re-posted from Forbes.com

Personal finance is more personal than it is finance.

Opinions expressed by Forbes Contributors are their own.

My favorite discovery in the field of behavioral economics confirms what we already knew deep down, even if it contradicts “common sense”–that experiences are more valuable than stuff. I recently put this finding to the test:

Concert of a Lifetime

“You’re crazy.”

Those were my wife’s words when I called her from the road, rushing to discuss what I termed “the concert of a lifetime.”

I’d just learned that living legends U2 were touring in support of the 30th anniversary of their most celebrated album, “The Joshua Tree.”

Joshua Tree

The greatest live band of a generation playing the soundtrack of my youth from start to finish.

Andrea was on board with going to the show–she’s a big fan, too. But what invited her claim of insanity was my insistence that we take the whole family to Seattle to see the show. We live in Charleston. South Carolina.

But the Seattle show promised to be superior to almost all others along the route. In the Emerald City, the Emerald Isle’s most melodic export would be supported by Mumford and Sons as the opening act, playing only the first three West Coast stops.

The two best live bands performing in one of the world’s greatest cities in a single concert.

(In case you’re wondering, music is not subjective, but objective. These are all facts.)

I insisted that we had a moral obligation to go as a family–assuring my wife that it would result in a lifelong memory soon to be deemed priceless.

Reality Check

Now, we’re a family of four (and a half) with two boys–13 and 11–in youth sports (and an adorable puppy). One could argue that every piece of furniture in our home is a candidate for replacement.

If you are in–or remember–or tried to forget–this phase of life, you know that, regardless of your income, every dollar seems to be pledged even before it is earned. Even when you’re occasionally surprised by a surplus inflow, it feels like the money has already been spent (if it hasn’t) on the necessity du jour.

Experiences > Stuff

But a mathematical fact remains: There are only two ways to dispose of our money–on experiences or stuff. Even if we save, invest or give, we’re just deferring when and where the money will be spent on experiences or stuff.

Our eyes tell us that stuff is worth more because we can see it.

But our hearts know what has now been proven in numerous studies–that we derive more joy from [insert experience] than by purchasing a [product of comparable price].

For our family, going to see Mumford and U2 in Seattle was simply more valuable than something like … replacing the battered couch, maybe the bedroom furniture.

WHY?

But why?  It’s not necessarily because it’s obvious from the start. Initially, the experience worth $X gives about the same amount of joy as the stuff worth $X. But as we adapt to the stuff, as it literally depreciates in value, our joy in its utilization also decreases. Or as Cornell psychologist Dr. Thomas Gilovich puts it, “One of the enemies of happiness is adaptation.”

But while stuff devalues, the recently elapsed experience can actually increase in value.  “Even if it was negative in the moment,” writes James Hamblin in the The Atlantic, “it becomes positive after the fact. That’s a lot harder to do with material purchases because they’re right there in front of you.”

Furthermore, those material purchases aren’t only in front of you. They’re in front of lots of people who have the same thing–or better. My black four-door Jeep was awesome until my buddy pulled up–right behind me–in his black four-door Moab-edition Jeep (with the top down and the doors off).

The intangible nature of experience means that no one has the exact same one. Meanwhile, having shared experiences compounds their value further, as diverse recollections tend to open our eyes to elements we didn’t catch the first time around.

Sadly, despite the conviction in our collective gut and the studies that prove it’s right, “ People do not accurately forecast the economic benefits of experiential purchases.

Where the Streets Have No Name

By now, you know what happened, right? Yes, my loving wife succumbed to my outlandish pledge that “this will be the best memory we’ve ever had as a family!” We scraped together all the respective rewards points and discretionary dollars we could muster, ordered the tickets, booked the flights and reserved the room.

We fought through jet lag to enjoy hiking in a blizzard on Mt. Ranier, having coffee at the first-ever Starbucks, enjoying breakfast overlooking a bustling Pike Place Market, going up the Space Needle and down the Great Wheel, taking in a comedy show at a vintage theater near University of Washington, running to catch the ferry to Bainbridge Island for lunch and–the best part–watching my boys’ eyes light up as the prelude to “Where the Streets Have No Name” rumbled through our bellies.

On the plane ride home–gloriously exhausted–my wife turned to me and said, “You were right. It was worth it. But you’re still crazy.”

She’s right. About all of it.

I’m a speaker, author of “Simple Money” and director of personal finance for Buckingham and the BAM Alliance. Connect with me on Twitter, Google+, and click HERE to receive my weekly email.

Senior woman with a piggy bank isolated on white background.

Want to Be Rich?

Reposted from www.msn.com

Money Talks News

Stacy Johnson 9 hrs ago

I’ve been offering financial advice professionally for nearly 40 years. I’m also a millionaire several times over.

During my decades in the trenches, I’ve heard every conceivable piece of financial advice, acted on many and offered some of my own. Here are the best of the best, a few simple sentences you can follow that will absolutely, positively make you richer.

  1. Never spend more than you make, ever.

When I was 10, I started cutting grass to earn money beyond my meager allowance. Minutes after earning my first buck, mom was stuffing me in the car for a trip to the bank to open my first passbook savings account.

Fifty years later, priority one is still to put something aside from every paycheck and send out less than I bring in. Of course, life being what it is, it hasn’t always worked out that way. But in general, getting richer every month is as simple as spending less than you make and getting poorer is as simple as spending more than you make.

  1. Avoid debt like the plague.

Most people treat debt as if it’s a normal part of life. They divide it into categories like “good debt” and “bad debt.” They discuss it endlessly, as if it’s some mathematical mystery.

Debt’s not complicated. Paying money to temporarily use other people’s makes you poorer. Charging money to temporarily let other people use yours makes you richer.

Since paying interest makes you poorer, you only do it two situations: first, when you have to in order to survive;  second, when you’ll earn more on what you’re financing than what you’ll pay to finance it.

Unless borrowing is ultimately going to make you richer, don’t do it.

  1. Buy when everyone is freaking out and sell when everyone thinks they can’t lose.

Rich people ring the register when the economy is booming, but that’s not when they created their wealth. You get richer by investing when nobody else will: when unemployment is high, the market is tanking, everybody’s freaking out, and there’s nothing but fear and misery on the horizon.

The cyclical nature of our economy all but ensures bad times will periodically occur, and human nature all but ensures that when bad times happen, most people will freeze like a deer in the headlights. But it’s downturns that are the time you’ve been saving for.

If you think the world is truly ending, buy canned food and a shotgun. If not, step up. As billionaire investor Warren Buffett famously advised, “Be fearful when others are greedy and greedy when others are fearful.”

  1. You can either look rich or be rich, but you probably won’t live long enough to accomplish both.

When I worked as a Wall Street investment adviser, I quickly learned that people who have tons of money most often don’t look like it. They don’t have to. So who are the big shots wearing the fancy suits and driving the Porsches? Often it’s the people who make a living selling stuff to the rich people.

I can’t remember the last time I wore a fancy suit. I’ve never owned a new car, and I live in a house that’s worth about a third of what I could afford.

Diverting your investable cash into things like cars, clothing, vacations and houses you can’t afford will make you look rich now, but prevent you from actually becoming rich later.

  1. Live like you’ll die tomorrow, but invest like you’ll live forever.

You should always strive to get as much out of life as you can each and every day. After all, you could die tomorrow.

But here’s the thing: You probably won’t. Put something aside so you can continue soaking up what life has to offer for as long as possible.

  1. There are only six ways to get rich.

The only ways to get rich:

  1. Marry money
  2. Inherit money
  3. Exploit a unique talent
  4. Get exceedingly lucky
  5. Either own or lead a successful business
  6. Spend less than you make and invest your savings wisely over long periods of time.

Even as you’re aiming for any of the first five, practice the last one and you’re guaranteed to be rich eventually.

  1. The riskiest thing you can do is take no risk.

Whether it’s money, love or just life in general, if you want rewards, you have to take risks.

When it comes to money, taking risks means investing in things that can go down in value, like stocks, real estate or your own business. Can you get through life without taking risks? Sure, but as my dad was fond of saying, you’ll never get a hit from the dugout.

Invest $200 a month at 2 percent for 30 years, and you’ll end up with a little less than $100,000. Earn 12 percent on the same investment, and you’ll end up with nearly $900,000. Taking a measured amount of risk is the difference between getting rich and getting by.

That being said, making risky bets is simply gambling. Take measured risks. Minimize risk by knowing as much as possible before investing, not putting all your eggs in one basket and learning from your mistakes. Or better yet, learn from someone else’s.

  1. Never make your well-being someone else’s responsibility.

If you need surgery you have little choice but to trust your fate to a professional. But when it comes to your money, don’t ever turn over complete control to anyone.

Seeking advice is always a good idea. But no matter who that adviser is or how smart they are, your money is more important to you than it is to them. So if you’re not doing everything yourself, at least understand exactly what’s going on.

Virtually anyone can learn to navigate their finances. If you can’t be bothered to take responsibility for your own money, just keep in the bank. At least that way you won’t end up ripped off, broke and blaming someone else for your problems.

  1. When it comes to information, less can be more.

About 15 years ago, I put about $2,000 into Apple stock. As I write this, it’s worth about $300,000. Had I been watching financial news all day and reacting to all the pundits and market news, I’d have sold it long ago and been kicking myself today.

If you want to be rich, buy into high quality stocks and hold on to them for long periods of time. If you want to kick yourself, buy into high quality stocks, then sell them at the drop of a hat based on something or someone you saw on air or online.

  1. Time isn’t money; money is time.

Whoever said “Time is money” had it backwards.

Time is the one nonrenewable resource you have. Once your time is up, it’s up. So the trick is to spend as much of your limited time as possible doing stuff you want to do rather than working for other people doing stuff you have to do. Money is the resource that allows you to do this.

If you go to the mall and spend $200 on clothes, that’s $200 you could have invested. If you’d earned 12 percent on that $200, in 30 years you’d have accumulated a little more than $10,000. Ignoring inflation and assuming you could live on $5,000 a month, forgoing those clothes today means retiring two months earlier.

Of course, you must have clothes. But maybe you don’t need $200 worth, or maybe you could have gotten them for less at a consignment shop. It’s your choice: expensive stuff today or free time tomorrow. Those who choose the former often stay poor. Those who choose the latter often get rich.

Which will you choose?

 

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