Monthly Archives: December 2015

Financial Planning Tips for College Students

American college freshmen might as well look at it as a rite of initiation. They enter college completely free of personal debt; by the time they finish college four years later, they’re going out with an average of $4000 in unpaid balances on their credit cards. Almost always, they have no idea how it came to this. College degree programs, no matter that they be in medicine, philosophy, history or language, should always include a course on personal finance. If they were given this knowledge, young people would actually be able to use it to improve their lives right then, standing on the brink of financial catastrophe as they are. Seeing that college courses don’t see fit to do this though, this set of financial planning tips should help.

When parents ask their college graduate children to explain how they could rack up thousands of dollars in credit card debt, they frequently hear one answer: “Well, I did make the minimum payment each month – why did they charge me interest then?” Well, they charged interest because no matter what, after the grace period is done with, everyone wants interest on the money they are owed. This is about the first thing that college freshmen need to learn about – what those credit card terms are actually all about.

There are lots of things that young people need to learn about credit cards. For instance, young people sign up for a credit card often, just for the cool sign-up bonuses – like a free phone or something. Unfortunately, cards like these come with high interest rates and very high spending limits. Young people look at those spending limits and they are psychologically influenced into thinking that the limit they are given is somehow permission to spend that much. A college-goer needs to know that under no account is he to hold more than one credit card; and that credit card should have nothing higher than $1000 as the spending limit. One also needs a real education on what an APR is, what an annual fee is and what penalty fees are.

But let’s get to the financial planning tips right away. It isn’t enough to just tell young people that they need to be careful with that credit card. If they burn through their monthly allowance by visiting the ATM as often as they want, of course they’ll be left with no option but to raid their credit card. The only way to make that bank account money last as long as it should is to budget closely. Free software tools like Quicken make budgeting very easy. You’ll even find the Quicken among the tools offered by your bank’s Internet access service. If you don’t want to land yourself in hot water before long, you’ll have to work on your budget very closely and make sure you stick to it – no matter how drunk you are on a Friday night with a girl on each arm that you need to impress. You need to make sure that you don’t use the ATM too often because of the fees, and you need to make sure that whatever bills you need to pay each month, you have a text message alerts set up. Missing a date means big penalties.

One way to save on everything would be to take advantage of all the student discounts that are going everywhere. Airline tickets, entertainment, meals – all of these are often offered at discounted rates to students. You need to take advantage of these. And keep looking for those financial planning tips.

Financial Planning Tips For Couples About To Start A Family

Couples, especially newlywed ones, would usually enjoy a bit of financial windfall for the first few months or years of their marriage. This is mainly due to the fact that two people are now sharing the expenses on food, utilities, and other expenditures. There are also more opportunities for couples to save money since they have lesser expenditures to pay for.

This happy situation can easily turn sour though when couples are expecting their first child. With this new bundle of joy come various additional expenses that parents will sometimes find it hard to cope with their financial needs and even adjust their lifestyle.

Couples, though, don’t need to find themselves broke simply because they are expecting or already have their newborn baby. Below are some useful financial planning tips couples about to start a family can follow:

Start living a simpler lifestyle. It is not unusual for newlywed or childless couples to have date nights once or twice a week wherein they have dinner at a fancy restaurant and give each other lavish gifts. They will also go on vacations abroad once or twice a year because they want to get some rest and relaxation and because they “deserve it”. Unfortunately, all of these will have to change or even stop once a couple is expecting a baby. All the money you will save from these activities or events can go to something more important like payment for the hospital bills, medicines and vitamins, diapers, and other expenses that come before and after the baby’s birth. The last thing you want to happen is to be covered in debt just because you are expecting a baby. You can avoid this problem by living a simpler lifestyle once you know that you are expecting.

Anticipate your expenses. Make a list of all your anticipated expenses. These include hospital bills, doctor fees, maternity clothes, birthing classes, and necessities for the baby (a crib, stroller, feeding bottles, blankets, etc.). Then, calculate the total. You now have to rework the budget you and your partner are currently on to include this cost. Expect that there will be expenses that have to be added in the future but don’t fret; you will be able to figure them out as you go.

Increase your emergency fund. If you already have a safety financial net, you and your partner or spouse should now work on increasing it. Financial advisors recommend having six-to-nine months of living expenses set aside in case of job loss, which can become more of a problem if one spouse is at home on childcare duty. Look at your budget again and figure out how much you can afford to put into an emergency fund after all the basic necessities are covered.

Financial Planning Tips For a Better Tomorrow

Are you satisfied with your financial planning or do you think that there is a good scope for improvement? Proper planning of finances and execution of plans will actually help you to improve your lifestyle. Additionally, it will also relieve you off a lot of stress. You might want to ask yourself a few questions on financial planning tips mentioned below:

Are you earning more than what you normally tend to spend?

If you are spending more than what you are earning, obviously it means that you will need to evaluate your earning capabilities. You might want to first analyze your market value and see if you are getting paid for what you’re really worth. If you do not see much growth coming, you might want to reconsider your employment status, or maybe even take up a part time job. This really is very basic, but cutting down on unnecessary expenditures would also help the cause.

Is your cash outflow going according to your budget?

Budgeting will give you a clear picture about how much you’ll need to spend on a monthly basis. It also paves the way for more savings as you’ll also be able to identify the needless expenses.

Are you debt free?

People use their credit cards quite conveniently but they fail to make the payments on time. What this means is that they end up paying more money on their purchases than what they are really worth.

Where do you see yourself after your retirement?

It is very important to make contributions for your retirement plans. It is even more important to increase the contributions whenever possible, in order to make sure that you have a beautiful retirement life.

Are you saving for their rainy day?

Obviously, you will be able to save money only if you are able to pay your needs first. You might want to try saving at least 10% of your income in a separate account. While doing this, you will also need to fight the temptations to spend lavishly when the savings grow.

Do you see your surplus money growing tomorrow?

If you are able to still squeeze out some surplus money after your savings and retirement contributions, you might want to think about intelligent investment strategies which are at risk free and credible.

Are you maintaining your records?

Maintaining the records on everyday basis will help you to maximize on the tax rebates, since you will be able to identify the areas to claim for rebates when you file your returns. You will also need to tally your records with your budget plan in order to ensure that everything is going according to your plans.

Have you maximized your employee benefits?

As an employed person, you are entitled for many benefits like dental and medical insurances. Paying out of pocket when the unforeseen health problem arises might prove to be expensive. Additionally, it can also help you with your tax savings.

Are you happy with what your insurance coverage?

If your insurance coverage is too low, it might not really be of much use to you down the line. If you have dependents, you will need to make sure that they are adequately provided in case of disabilities or death. The above mentioned questions and the financial planning tips should give you a good idea about how to go about securing both your immediate and distant future.

Seven Financial Planning Tips for Single Parents

I appreciate the efforts and hard work single parents provide to raise their young children and do whatever it takes to get them ready for a bright and promising future. I lost my father at the young age and was raised by my mother. As I witnessed with my own mother, most of the single parents strive to accommodate their children to achieve success despite all the challenges and curve balls life throws at them.

Here are seven financial planning tips for all the brave and selfless single parents.

  1. Choose a guardian.

It is important to choose the right individual to look after your young children if something happens to you. As part of your estate planning, you should name the guardian of your children and executor for your will. Someone at about your age is preferred since an older person may pre-decease you, an executor should be well organized and have some basic knowledge about personal finance.

  1. Save for emergencies.

There are always rainy days. You need to start saving in a systematic way. First build your emergency fund before investing or spending on your favorite holiday gift and other items. As a rule of thumb, your cash fund should be about three to five times of your monthly expenses. If you spend on average $3,000 per month for rent, mortgage, groceries, clothing, utilities and other basic staples, then you should have $9,000 to $15,000 set aside in a money market or savings account in your bank. In case you are fired or laid off, this fund should help you continue your life style until you find a new job.

  1. Get health insurance.

With the constant rise in medical costs, anyone without health insurance faces an uphill battle against medical expenses. According to a report published in the American Journal of Medicine, in 2007 medical expenses contribute to more than 62 percent of individual bankruptcy filings (1).

Divorce, the death of a spouse, or losing your job is the primary cause for losing health insurance. Learn more about Affordable Care Act (Obamacare) and shop for insurance plans for benefits and costs at your state’s marketplace or at HealthCare.gov.

  1. Get life insurance.

Depending on your finance, life insurance should be among your top priority in financial planning. The minimum coverage and policy you should consider is to see children to finish high school. To determine your life insurance needs you should identify what it should pay when you are gone. It could range from living expenses, paying off a mortgage, college education and anything else you like your child to have in your absence.

A term policy is the least expensive policy you can purchase at a younger age. The rates do escalate as you get older. It is best to lock in a longer term at the youngest age possible.

  1. Get disability insurance.

Your income is the main source for achieving your financial goals and living your dreams. A disability policy insures your income. It may surprise you to learn according to Social Security Administration studies show just over 1 in 4 of today’s 20 year-olds will become disabled before reading age 67 (2). Furthermore, According to Council for Disability Awareness ‘s 2012 Long-Term Disability Claims Review 90% of disability is due to sickness; a prolong sickness could cause you lose your income (3).

Disability policies could be short term or long-term. A long-term disability may pay 50% to 70% of your salary up to age 65 or 67. They could have different waiting periods starting at 30 days or longer before the benefits are triggered. Furthermore, they could include a definition of disability referred to as “own occupation” where the policy will pay a monthly benefit until a limiting age if you are unable to perform the duties of your own occupation. There can be more restrictive definitions of disability such as “any occupation”. It is best to discuss this with a disability income professional.

  1. Save for retirement

Your employer may offer 401(k) or any other employer sponsored retirement plan. Generally, you can contribute up to $17,500 to a 401(k), 403(b) or the federal government’s Thrift Savings Plan in 2014. If you are 50 or older, your contribution is increased by an additional $5,500 to 401(k) in 2014, or a total of $23,000.

You can open an Individual Retirement Account (IRA) that allows you to save tax deferred for retirement. You can contribute up to $5,500 to an IRA in 2014, which increases to $6,500 if you are age 50 or older. However, if you have a workplace retirement plan, the tax deduction for traditional IRA contributions is phased out for individuals with modified adjusted gross incomes between $60,000 and $70,000 in 2014.

Find any means to save for your retirement.

  1. Get Long Term Care Insurance

If you encounter a prolonged illness or disability, you may inflict your children and loved ones with the burden of your daily care. Among a wide array of services, a long-term care (LTC) policy is designed to cover the costs of nursing home care, an assisted living facility or at-home assistance.