Money Management


  • How Much Will Cutting the Cord Save You?

    The post How Much Will Cutting the Cord Save You? appeared first on Penny Pinchin' Mom.

    Cord-cutting will save you money but for many people, that’s only part of the equation. Yes, you want to spend less on cable, but you want to do that without sacrificing too many shows you enjoy watching. So, before you rip the Band-Aid off, look at the facts, and find out exactly what cord-cutting would … Read More about How Much Will Cutting the Cord Save You?

    The post How Much Will Cutting the Cord Save You? appeared first on Penny Pinchin' Mom.

  • How to Make Better Financial Decisions

    Woman learning how to make better financial decisions

    A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:

    Concurrently: Saving for two or more financial goals at the same time.

    Sequentially: Saving for one financial goal at a time in a series of steps.

    Each method has its pros and cons. Here’s how to decide which method is best for you.

    Sequential goal-setting

    Pros

    You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.

    Cons

    Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.

    Concurrent goal-setting

    Pros

    Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.

    Cons

    Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.

    Research findings

    Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.

    Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.

    The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.

    Actionable steps

    Based on the findings from the study mentioned above, here are five ways to make better financial decisions.

    1. Consider concurrent financial planning

    Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.

    2. Increase positive financial actions

    Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.

    3. Decrease negative financial habits

    Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.

    4. Save something for retirement

    Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.

    5. Run some financial calculations

    Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.

    What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!

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    Want to know how to allocate savings for your financial goals? We’ve got the tips on how to make financial decisions so you can be confident in your personal finance! | #moneymatters #personalfinance #moneytips


  • 10 Ways to Save on College 

    The post 10 Ways to Save on College  appeared first on Penny Pinchin' Mom.

    College is expensive, there’s no debating that fact. The average amount of money borrowed to obtain a bachelor’s degree was $29,000 in 2017/2018, according to the College Board, That’s a whole lotta money (and it’s a number that’s only likely to go up). If you want to avoid years and years of debt payoff after … Read More about 10 Ways to Save on College 

    The post 10 Ways to Save on College  appeared first on Penny Pinchin' Mom.

  • Managing Multiple Financial Accounts in a Single App: Personal Capital

    Personal Capital gives you the tools to understand your financial situation — and you can use that information to reach your goals. Here’s how.Personal Capital gives you the tools to understand your financial situation — and you can use that information to reach your goals. Here’s how.

    The post Managing Multiple Financial Accounts in a Single App: Personal Capital appeared first on The Dough Roller.

  • Mint Money Audit 6-Month Check-In: How Did Michelle Allocate Her Windfall?

    In March I offered some financial advice to Michelle, a Mint user who was struggling with debt, a lack of retirement savings and a bit of family financial drama amongst her siblings. Michelle was anticipating a cash bonus from her…

    Full Story

    The post Mint Money Audit 6-Month Check-In: How Did Michelle Allocate Her Windfall? appeared first on MintLife Blog.