Author Archives: GW

Your Young, But You Should Still Start Planning For Retirement

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2016_0408-InvestForRetirementHere’s a question for you. What’s the most expensive purchase you’ll make in your life? A car? Nope. A house? You might think so but you would be wrong. Actually, it’s your retirement. Bet you didn’t think about that answer.

I know you’re young. Retirement is a long way off. Not even in the horizon. Well, there’s some good and there’s some bad with that kind of thinking. Since you do have 30 to 40 years before retirement, investing starting right now will pay off in huge financial dividends down the road.

But you have to do your homework with investing, matching 401k’s, having a set amount from your paycheck automatically deposited into your savings and so much more. Matching money from your paycheck from your employer is actually free money – and who doesn’t like free money? As for retirement not even on the horizon, unless you’re planning to be flipping burgers at 65, Talkin’ Money strongly suggests you start looking beyond the horizon.

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

Peer Pressure Can Effect
Your Spending Habits

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2016_0407-PeerPressureAs if millennials don’t have enough challenges today to secure their finances, there will always be pressure coming from all sides including your friends, co-workers and even the media that will affect the way you spend your money.

Let’s say you’re still in college and worked all summer to cover some of the cost during the first semester such as, food and your share of the rent and utilities. But on the first night out back at school with your friends, you decided to pick up the tab. It left you short for your first month’s bills and had to dip into your savings that was meant for books.

Or how about that new ultra high-definition TV or subscribing to the NFL Red Zone? And ladies, putting that expensive pair of “must have” shoes on an already maxed-out credit card is not the way to manage your spending effectively.

Best way is to simply walk away from the temptation. Make up a list of financial goals that you can realistically keep. Don’t let outside influences pressure you into forgetting your goals. Your friends will understand.

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

Loving That Compounded Interest!

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2016_0406-CompoundedInterestThe prettiest two words you ever want to hear when investing are: Compounded Interest. A perfect example comes from the one and only Benjamin Franklin.

Franklin decided to leave about $4,550 at the time of his death each to his native hometown of Boston and adopted hometown of Philadelphia on the condition that it gather interest for 200 years. Franklin believed 200 years was the maximum length of time any person should be able to control assets from beyond the grave.

It could have theoretically reached well over $78,000,000 if the two cities had never spent any and had managed it well.

The point of Franklin’s experiment was trying to illustrate the tremendous power of compound interest for future generations. The longer you keep your money invested, the more amazing the power of compound interest. So start saving today, and put your money to work for you!

Want to read more about Franklin’s amazing gift? Here’s a NYTimes article: http://www.nytimes.com/1990/04/21/us/from-ben-franklin-a-gift-that-s-worth-two-fights.html

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

Understanding Your Paycheck Deductions

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https://www.youtube.com/watch?v=w-Aw8CB3a5M&index=3&list=PLlbslWWQNsnVQNuMerA1M1Pq9EcQX-PwT

Click to Play Talkin’ Money Video

Getting your first paycheck is an exciting thing. Then you look at the actual amount of the check and you think there must have been a mistake! It’s because they take out taxes and employee benefits from you pay. You should take the time to understand what they deduct from your paycheck, and why.

High school students usually first become aware that the money you make per hour, multiplied times the hours they worked each week, did not add up to the amount they actually received in their check for the pay period. Gross pay is the amount you are paid, before taxes are taken out, Net pay is the actual amount of the check, with all of the taxes and benefits deducted.

Here are the different items they deduct from an average paycheck:

Federal Tax – also known as income tax. it can range from 15 to 39.6% of the total. The more you make, the more you pay. Here’s a basic table of income tax rates for 2016:

2016-IncomeTax-Rates

State Tax – this is the State Income tax paid depending on which state you live in. Currently seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

FICA – This is the social security tax. You pay 6.2% of your income to FICA. In addition, your employer pays and additional 6.2% for you. It provides you with a guaranteed retirement benefit when you are in your 60’s.

MEDI – This is for Medicare. You pay 1.45% of your income to Medicare. Your employer also pays an additional 1.45% for you.  It provides you with health care benefits when you are in your 60’s.

OTHER – Other items that can be deducted from your paycheck are for Life Insurance, Health Insurance, Retirement Plans, Flexible Spending Account Deduction (which is a health savings plan) and Employee Stock Plans. There may be other items deducted as well which are usually part of an employee benefits plan.

BTW, besides Financial Literacy Month, April is also Tax Month, with your personal tax returns due on April 15th. Did you file your return yet?

2016_0405-Paycheck

Attention Millennials!
You Need A Personal Financial Plan!

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2016_0404-PersFinancPlanAttention millennials, now, listen up! It’s important to have a personal financial plan. Here is the top ten list for college-aged folks, that will help you with smart money practices and habits:

1 – Create a Budget – Simply stated, it’s figuring out how much money is coming in and how much money is going out. In fact, click here to download our Budget PDF. https://talkinmoney.org/files/Budget-Mania.pdf

2 – Track how much you spend – For the next seven days, track all your spending – you’ll be surprised on where the money goes!

3 – Live Within Your Means – Every first time college student will tell you how fast they blew through all their money. Don;t spend what you don;t have.

4 – Set Goals for Yourself – Take time to establish goals. Make them realistic and attainable. For example, saving towards a big purchase, or paying down your credit cards.

5 – Credit Card 101 – Speaking of paying down your credit cards, if you have the habit of paying your credit card balance fully, every month, this will go a long way in helping your credit scores!

6 – Student Loan 101 – Don’t take out college loans for anything but educational and living expenses!

7 – Never Be Late On A Payment – Always pay on time. Avoid late fees. This will tremendously help your credit score. If you are going to be late, call and talk to the company, they will always make arrangements.

8 – Create an Emergency Fund – Try to build your savings to three months living expenses.

9 – Be Smart and Save –  Pinch your pennies and be smart about your spending and it will save you $$$. Here’s a resource of money-saving tips http://www.collegescholarships.org/student-living/save-money.htm

10 – Find Scholarships, Avoid Loans – There is free money for the taking in the form of scholarships. Seek those out first, before you go after that easy-to-get college loan.

OohRah! April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

A Career Plan Helps You Plan For The Future

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2016_0403-CareerPlanSometimes stepping back and looking at where you stand can have a great impact on your approach to things. The same can be said for a Career Plan. At various stages of your life, having a Career Plan, and reviewing that plan can keep you on the right path, helping you achieve a higher salary, job security and a rewarding career – doing what you love.

Ask yourself these questions:

What is the marketability of the degree you are pursuing?
Are there steps you might take to add to your potential employ-ability and earning power?

A career plan is simply a step-by-step assessment, finding out the things you need to do, and the order you need to do them in, to get the career you want.  For college-aged folks, taking the time to establish a career plan can act as a blueprint for building your career.

1 – Assess yourself, Take time now to learn how your skills, values, interests, and personality might influence your career choices.

2 – Understand the careers available to your career choice. Do you really know what jobs you might qualify for upon graduation?

3 – Participate in your career choice. Set yourself apart from other recent graduates, participate in internships, mentoring programs, and other work-based learning experiences.

4 – Network. Look for career-related student group, professional associations, or other groups that can help you to network.

Taking the time to organize yourself with a Career Plan helps you take the right steps to your career future.

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

Don’t Use Your
Social Security Number As ID

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2016_0402-SocialSecurityIdentity theft is a big problem. If someone gains control of your personal information they might be able to open accounts, file taxes and make purchases in your name.

The number one thing you can do to help prevent identity theft is to not use your social security number for identification purposes.

If anyone asks for your social security number for identification purposes, tell them you do not give out that number!

Mark Ferris’s cable TV company asked for the last four digits of his social security number to use as a PIN number to access his account. “I told them I do not give out my social security number or any part of it”, said Ferris, “ so they said fine, and asked me to give them a 4-digit number I could remember. If I provide my social security number or any part of it, it just increases the risk I will be subject to fraud or identity theft!”

It sometimes takes detective work, and there are many warning signs that might ‘pop up’ allowing you to discover that someone is using your information. You might notice strange withdrawals from your bank account, get bills that aren’t yours, or get calls about debts that you don’t owe. You might get a notice from the IRS or find unfamiliar accounts on your credit report.

Should you find yourself a victim of identity theft, the first place you should start is the Federal Government’s Federal Trade Commission’s dedicated website https://www.identitytheft.gov

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

April Is Financial Literacy Month!

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2016_0401-FinLitMonthApril is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

When polled, the vast majority of adults will tell you that they were never taught the things they needed to know about money when they were in school, and,they wished that they had the knowledge to be financially literate at a young age.

Being financially literate means examining your attitudes about money. Talkin’ Money is targeted to millennials, but it’s never too late to do a financial literacy ‘check-up’.

Here are a few financial literacy questions to ask yourself today:

  • Do you make informed financial decisions and understand the difference between wants and needs?
  • Have you meet your credit obligations on time?
  • Do you track your expenses with a budget?
  • Do you plan for the future through savings?
  • Have you establish money goals?

April is National Financial Literacy Month, Talkin’ Money’s favorite month! To celebrate the importance of being financially literate, we’re going to post financial literacy tips every day.

Roth IRA for Millennials = Huge Benefits.

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2013_12-TMTest03Attention Millennial Parents and Grandparents – Want to do something special for your millennial-aged young person? As we approach tax time, you are familiar with the benefits of retirement savings for yourself and your spouse. Savings for retirement defers the taxes you will pay, and in some cases, like with a Roth IRA, you can avoid paying any additional taxes on the money you invest as well as all future earnings.

Well, the same works for your millennial children or grandchildren. After all, they have their entire lives ahead of them. A twenty-something individual has at least  40+ years until they are of retirement age. Who is better suited for benefitting from growth over time?

Say for example you have a grandson who is nineteen years old in their second year of college we’ll call him Nathan.

Nathan is in his second year of college, and works part time earning about $8500 a year. Did you know that Nathan is eligible for a Roth IRA up to $5500 for the (2016) year? Well, the odds are that Nathan himself can’t afford to invest in his Roth IRA at all, after all, he’s a college student and he needs all the extra spending money he can earn. But his parents or grandparents can help him by gifting him the funds.

“We starting doing this with our granddaughter Jessica”, said Maggie S. of Fort Lauderdale, FL, “when she was 17 years old, she worked part-time and earned like under $5000 for the year. We sat down and talked with her about the incredible benefits of compounding interest and dividends and we told her we would do this for her as long as she agreed to not touch the money until she is at least 65. We even had her sign a letter agreeing to this. Now for the last three years, we have deposited between two and three thousand a year in a Roth IRA. We have it invested in a low-cost total stock market index fund.”

If you want to create a real legacy with long-term benefits, getting your millennially-aged kids into Roth IRA’s at an early age can be huge.  For example, if for five years, you invest $2000 each year into a Roth IRA, starting when they graduate from high school – here is an example of the potential long-term growth of this very small initial $10,000 investment.

$10,000 investment’s potential growth over 45 years with all dividends and interest reinvested:

Warren Buffet was recently asked, with his vast wealth of investing knowledge, how would he invest for retirement. He stated that he would keep it very simple. Invest 90% in a low-cost S&P 500 Stock Index Fund and 10% keep in cash or short-term government bonds. You can read his comments by CLICKING HERE

So, keeping it simple, with all the market ups and downs, what has been the historical yearly rate of return of the total stock market since 1966? 11.79%

5 Numbers That Spell Fresh Financial Trouble For Millennials

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From Forbes – Ask 5,500 Millennials about the state of their finances and you’ll get 5,500 reasons to feel a little depressed about the financial security of the largest generation in the U.S.

This is what global tax and consulting outfit PricewaterhouseCooper recently discovered when it surveyed 5,500 people between the ages of 23 and 35 about their personal finance knowledge, the state of their savings, the status of their debt, and their overall satisfaction with their financial lives. The results were not pretty.

Given the relatively derelict state of America’s personal finances, this isn’t altogether surprising. But the study makes the argument that Millennials’ small savings and high debt is compounded by their low personal finance IQ — and that this, in turn, could have a domino effect on other generations.

“Millennials owe a lot. They know too little,” says Annamaria Lusardi, the academic director at George Washington University’s Global Financial Literacy Excellence Center, which partnered with PwC to put out the research. What’s more, she says, Gen Y’s ”struggle with debt may eventually become our problem, too.”

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