Category Archives: Everyday Financial Tasks

What Your Mother Said…about Money

I don’t always quote other people’s mothers, but when I do, it’s usually about money.

My last work conversation on a recent day ended like this. Me to former colleague: Are you in the 401(k) plan in your new job?

Him: “I know, I know, I should be, my mother keeps reminding me!”

Me: “Well?”

What else did your mama say to you? She may not have said “a penny saved is a penny earned”, a la Ben Franklin, but I bet she had a few words to say about money over the years.

Taken in Philadelphia, Pennsylvania, in April ...

Taken in Philadelphia, Pennsylvania, in April 2006. Sculpture of Benjamin Franklin at the University of Pennsylvania. (Photo credit: Wikipedia)

Whether Mom gave you advice or not on your retirement savings, she probably would agree that you should not overlook free money. And many people do. If your boss offered you a 3% raise-in addition to anything else, you wouldn’t turn it down, would you?

Here’s the benefit my colleague is currently passing up:

100% match of 401(k) contributions of up to 3% of your gross income

Now this company has some other wonderful benefits, but let’s focus on the extra 3% of compensation that I allude to above.  This is the same number as the predicted average raise in the US for 2013.

Some numbers:

  • 3% of $75,000  = $2250 each year
  • 3% of $50,000  = $1500
  • 3% of $40,000  = $1200

This will become your money quickly. Usually you are fully vested in employer matching contributions in three years. Plans do vary, so ask your 401k administrator:
When do the matching contributions vest (or when will I own these contributions?) 

Money - Black and White Money

Money – Black and White Money (Photo credit: @Doug88888)

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Filed under Corporate Retirement Plans, Everyday Financial Tasks, Family Lessons About Money

America Saves Week Begins February 25th

"WE ARE SAVING THROUGH PAYROLL SAVINGS&qu...

“WE ARE SAVING THROUGH PAYROLL SAVINGS” – NARA – 516067 (Photo credit: Wikipedia)

In Washington state, there are multiple activities this week to help citizens “Build Wealth, Not Debt”.

From our Governor’s Office:

“Understanding that having emergency savings, retirement funds and being able to manage one’s debt are crucial to Washington residents’ personal financial security, Governor Jay Inslee has proclaimed Feb. 25-March 2, 2013 Washington Saves Week.” www.dfi.wa.gov/financial-education/wa-saves/pdf/2013-proclamation.pdf

“The campaign theme “Set a Goal. Make a Plan. Save Automatically.” is aimed at reminding consumers to utilize the automatic payroll deduction options at their place of employment to begin building an emergency fund, create a retirement fund or develop a targeted savings fund for their future.”

This ties in with my business philosophy, and using the automatic options available to you is a refrain my clients hear often. We all need a little boost to get the money in the right place, whether you call it a jar, an envelope or a savings or retirement account. In the past, many people were encouraged to use payroll savings to buy US Savings or War bonds.

Right now, your choices can include:

  • your savings account linked to a checking account,
  • a savings account at the  “First National Bank of Inconvenience” * [location varies],
  • a stock mutual fund
  • or even a charitable destination.

One well-known financial writer [and former wealth manager] David Bach trademarked the phrase “The Automatic Millionaire”.

Here is one way to begin: Set up an automatic transfer to from your paycheck to an account. It can be a savings account and the transfer can begin at $5 per paycheck. The habit is the first priority. After you have saved some emergency funds (everyone’s number is different), from $100 to $500 to a minimum of three months expenses, then you can set a new goal.

You might be surprised at how accommodating your HR department can be. One company that I work with will send funds to as many as ten different destinations on your behalf.

America Saves has programs on homeownership, surviving a financial crisis, and free tax assistance offered this week in our state. For an event near you, check this calendar.

*No disrespect for banks here, just a label created for keeping your funds in the bank or credit union.

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Filed under Be Prepared, Everyday Financial Tasks

Clean One Refrigerator Shelf at A Time

English: Self taken pic.

Maybe you can see the connection now. There are a couple of ways to look at the personal finance “refrigerator”, if you will.

Is your fridge full of beer, mustard and party leftovers [from last month]? (Lots of party, no emergency fund)

Is it full of impulse buys like pizza (short-term pleasure) , four types of sauce for chicken (too concentrated), or very few vegetables (not enough diversification), or just not enough real food to make a meal?

Refrigerator

Refrigerator (Photo credit: nickfarr)

Or are you the fussy parent who makes sure that the fridge only has healthy, organic, locavore stuff in it?

Enough with the food analogies-let’s get to work.

Empty Personal Finance Plan? 5 things to do immediately

Check your credit at www.annualcreditreport.com

Get Social Security questions answered here:  http://bit.ly/tTkcoK

Check the status of your emergency fund-how many months of income/expenses are in there?

Add up your debts (yes, all of them) Need a worksheet-check here .

What’s in your retirement plan? How much do you need?

Is your Personal Finance Plan too cluttered, too complex?

Find your old, left behind, retirement plans-assemble statements and account numbers to prepare for transfers

Rebalance portfolio asset classes and match up to your remaining years of work (aggressive, moderate, or conservative funds?)

Time to break up with some financial institutions? http://sm.wsj.com/QD4MwE    or   http://bit.ly/nbNn1W

(Be a financial locavore)

Check your beneficiaries, account titles and make sure that someone else knows where your records are http://bit.ly/tTkcoK

As it said in the blog post that inspired this one:

“Clean off one refrigerator shelf each week so you don’t have to do it all at once.”

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Filed under Everyday Financial Tasks, Learning About Finance

Personal Budget or Plan? Words Matter

Words matter.

A picture is worth one thousand words.

It has been said that it takes from 4-7 positive comments to overcome 1 negative one.

How can we use these three statements to improve our spending habits?

If you made a visual spending plan and tried out new self-talk each month, would that make a difference? Might that keep you from derailing yourself? I challenge you to make it so.

For example, you could find a photo of your financial goal and place it in a prominent position-where you can see it every day.

  • Try a sign that says $500 savings balance/emergency fund. (save this in one year<$10/week!)
  • Take a photo of your full refrigerator-for someone trying to cut down on eating out.
  • Post an image of your public library card-so you have the visual trigger for downloading music, book reading or borrowing a movie from the library instead of purchasing  any of those items online. Or send yourself a text message to that effect!

I have three points here that go beyond the usual budgeting tips.

  1. How you talk to yourself about your spending matters
  2. Use visuals as well as words to make the point to yourself (and your family, if need be)
  3. Use affirming language, praise and encouragement to support your behaviors.

Instead of, “I wish I could pay my bills on time”, say to yourself, “When I pay my bills on time, I feel good and I will have more money to spend, because I won’t be paying late fees.

Instead of, ” I must have that new song from iTunes right away”, remind yourself of your online music spending plan, and figure out if you have the funds this week. When you match up your plan with your spending, it is a powerful feeling and you can reinforce it. Oh-“I don’t have more money in that bucket this week, I’ll place this song on the top of the list next week”.

iTunes

iTunes (Photo credit: ʇhamin – free lancer)

Instead of saying to yourself, “I’ll add to my emergency savings account at the end of the month, or at the next pay period”, say,”I will send a sum each pay period to my emergency fund via direct deposit, so that I am able to meet small unexpected expenses without using my credit card”. Doesn’t that feel more powerful?

Save Money

Save Money (Photo credit: 401(K) 2012)

When you do something right, affirm that behavior in your head and heart to reward yourself. It is important to acknowledge these smaller steps as you build new habits.

Say, “Wow, I did that”; or “It will be so cool to see my savings account grow”; or even, “I didn’t know that homemade sweet potato fries would be so tasty”.

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Filed under Everyday Financial Tasks, Women and Finance

In the Mood: Music for your Money “Workout”

What gets you in the mood…for money management?

Money Money Money Mooooney

Money Money Money Mooooney (Photo credit: Ahmed Rabea)

Blues for budgeting?
Polkas for planning?
Rap for retirement funding?

Jason Zweig has a great list here .  My personal list also includes a few titles not on Zweig’s list.

  • For a calm session of financial sorting, filing and shredding, how about “To Everything There is a Season” by The Byrds?   
  • When thinking about the Great Recession, there are many versions of “Brother, Can You Spare a Dime?” I enjoyed the late Daniel Schorr’s impromptu version on NPR, and am also fond of the song as sung by Broadway and TV star Mandy Patinkin. Here’s a link to a  rendition on David Letterman .
  • This lively song “Money, Money, Money” (I prefer the Meryl Streep video) reminds us despite the movies, a rich man may not be the best solution.
  • Last but not least, listen to some classic Aretha
Aretha Live at Fillmore West

Aretha Live at Fillmore West (Photo credit: thejcgerm)

to remind us it is good to:

spend your money in line with your values,

respect the hard work of others

and above all, respect yourself with  your spending.

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Filed under Everyday Financial Tasks, Just for Fun

Bright Shiny Objects, #1

Earlier this month I visited some friends at their house. Their mail was delivered while I was there and I noticed that several credit card solicitations sat in the large pile of envelopes.

Credit Cards

Credit Cards (Photo credit: 401(K) 2012)

Besides not being the kind of mail that you look forward to receiving; these solicitations bring out the magpie in some people. Hence my reference to bright shiny objects. Not are only are these offers going straight to your shredder (NOT the recycle bin), they could represent a distraction from your financial planning by luring you into a glimpse of their promised riches, such as:

  • 40,000 “free” airline miles
  • free night at (insert hotel name here)
  • you are pre-approved (stroking your self-esteem)
  • credit limit of 5x your monthly earnings!

By visiting the website www.optoutprescreen.com or call toll-free 1-888-5-OPT-OUT. For more information on this topic, the Federal Trade Commission has an informative page here.

Disclaimer moment: I would also recommend completing this task on a private, closed computer, wi-fi network, or telephone landline. So not at the library or your neighborhood bar for security reasons.

Time to Complete: Ten Minutes (at most)

Benefits: Save trees, save time, and remember to use credit by choice, not by chance, and not due to a bright, shiny object dangling tantalizingly close to your face-or your wallet.

Opt-out

Opt-out (Photo credit: brr.kevin)

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Filed under Everyday Financial Tasks