The Free Financial Advisor

You are here: Home / Archives for Tamila McDonald

Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.

What Causes People To Have So Much Anxiety Over Finances

by Leave a Comment

Anxiety and Finances

If you’re worrying about money, you’re not alone. Financial anxiety is incredibly common, and it’s often quite difficult to manage. But even knowing that it’s widespread, many people don’t understand the causes of financial anxiety. Here’s a look at anxiety and finances, and why they so often seem to go together.

Why People Have So Much Anxiety Over Finances

Overall, the causes of financial anxiety are surprisingly varied. In some cases, the concerns are based primarily on a lack of assets. For example, living paycheck to paycheck and struggling every day to make ends meet can lead to significant worries about money. Essentially, not feeling that you have enough cash to live comfortably or safely potentially leads to anxiety.

Another cause of financial anxiety is concern that you can’t handle a financial emergency. These worries can occur even if you’re able to pay your bills and address your various needs. In this case, the issue is primarily that your financial situation is a bit tenuous, as a single major incident could functionally derail your financial life.

In some cases, people get anxious about their finances because they don’t feel they are well-informed about money. Not knowing what moves are smart or right can lead to a substantial amount of worry, especially when a significant financial decision lies ahead.

Others may experience financial anxiety based on what they want for the future. For example, even if you’re making ends meet today, concern about whether you’ll be able to afford retirement when that time comes could lead to anxious feelings.

A sense of a lack of control can also lead to financial anxiety. Worrying about where every dollar goes, being hypervigilant about household spending, and being concerned that a single misstep can cause everything to fall apart can lead to anxiety, even among people who are living comfortably from a financial standpoint and are prepared for the unexpected.

Finally, some people end up with anxiety about their finances because their parents were worried about money. In this situation, the person is incidentally taught that finances are hard to manage and worth worrying about, essentially causing them to develop the habits their parents showed as they grew up.

How to Deal with Anxiety About Your Finances

If you’re experiencing anxiety regarding your finances, then addressing the root cause is typically essential. Here are some approaches based on a range of situations.

Education Yourself on Personal Finance

When it comes to personal finance, knowledge is power. If you’re not overly familiar with the world of money, spend time learning the fundamentals to improve your skills. Dig into how to write a budget, plan for the future, and use various financial products without getting yourself into trouble. Look at how compound interest can work for and against you. Read about smart credit card use and how to avoid missteps.

Often, learning about your finances can do a lot to relieve anxiety. It removes some of the mystery about how money works, and that can quell fears that are stemming from a lack of understanding.

Create a Budget

In some cases, concerns about money are based on not knowing where your money is going or if you have enough to address your needs. In this situation, having a budget can potentially relieve your anxiety. It allows you to allocate your income to specific purposes, creating a plan that will enable you to make ends meet and manage savings goals.

When you begin, start by examining your spending patterns, preferably your activity over the last six to 12 months. See how much you’re spending in various areas. Then, use that information to identify categories where you’re overspending and establish baselines for certain expenses. Once you do that, you typically have enough details to put a realistic budget together.

Talk to Someone Trusted

Money is often a bit of a taboo subject, so it’s common for people to bottle up their feelings about it and not discuss it with others. However, speaking with someone you trust about your concerns is often beneficial. It gives you a source of support – and potentially guidance – which can make moving forward easier.

Additionally, it’s often critical for spouses to talk about their finances regularly. By doing so, it’s easier to get on the same page and plan together effectively. Plus, it ensures that one spouse doesn’t end up in the dark and prevents spouses from taking financial actions behind the other’s back, which can avoid feelings of resentment or distrust.

Remain Future-Focused

In some cases, people experience financial anxiety because they’re dwelling on a financial mistake that created hardship. While it’s wise to spend a little time looking into what went wrong – as that can help you avoid similar missteps down the road – it’s best to quickly transition to a future-focused mindset.

Concentrating on how to fix the problem can relieve anxiety. It helps you focus on solutions instead of errors, which can spur forward progress that improves your financial situation. As the issue improves, that can often lead to a sense of relief, making it easier to keep moving forward.

Create a Safety Net

A financial safety net can do a lot to relieve anxiety about money. When you have an emergency fund, you know you’ve got a cushion for handling the unexpected, and that makes your financial situation seem less precarious. Similarly, saving for retirement can relieve concerns about your financial future, which may reduce anxiety.

Precisely what the financial safety net should look like will vary based on your situation. However, aiming for at least three months of living expenses in a savings account is a reasonable goal. Additionally, contributing to a retirement account as soon as possible gives you the benefit of time, allowing smaller deposits to grow and making it easier to stay on target.

See a Counselor

If your financial anxiety is problematic to the point of it disrupting daily life, seeing a licensed mental health professional is a wise move. Finding one that focuses on finances is potentially the best option, but choosing a specialist that concentrates on anxiety isn’t a bad choice either. In both cases, the counselor can help you learn about the origins of your anxiety and can provide insights that make managing your feelings easier.

Can you think of any other reason why anxiety and finances often seem to go together? Do you have any tips that can help someone reduce anxious feelings when figuring out how to manage their money? Share your thoughts in the comments below.

Read More:

6 Reasons You Should Cancel Amazon Prime Now

by Leave a Comment

Cancel Amazon Prime

In most cases, people initially sign up for Amazon Prime because they believe it provides enough value to make the cost worthwhile. Free shipping, access to services like Prime Video, and events like Prime Day are all very enticing on the surface, making the membership fee seem like a bargain. While it’s true that some people are excellent at leveraging their Prime membership, that doesn’t mean everyone’s getting enough value. If you’re trying to decide if Prime is right for you, here’s a look at six reasons you should cancel Amazon Prime now.

6 Reasons You Should Cancel Amazon Prime Now

1. Not Shopping at Amazon Often

In most cases, people sign up for Amazon Prime to take advantage of free shipping. The issue is that it only works in your favor if it genuinely saves you money. If you don’t use Amazon regularly, the odds are decent that the membership costs exceed any shipping savings you’re receiving. That’s particularly true since you can qualify for free shipping on Amazon without being a Prime member.

Look at your order history to see how many purchases you made that were below the threshold for free shipping without Prime. If the total doesn’t justify the cost of the membership, then canceling is potentially a wise move.

2. Not Using Other Amazon Prime Benefits

As mentioned above, the main reason many people sign up for Prime is for free shipping, a feature that doesn’t necessarily provide value if your purchases would qualify for free shipping without the membership. However, this is potentially offset if you’re accessing other Amazon Prime benefits regularly. For example, if you’re a regular user of Prime Video, Prime Music, or the Kindle Lending Library, then you might be getting a decent amount of value.

However, if you never or rarely access the other perks you get with Prime, there’s a decent chance you’re paying for a service you don’t need. Take a close look at the value you’re getting, and if it falls short, it might be time to cancel.

3. Amazon Doesn’t Always Offer the Best Deals

Even if you shop at Amazon regularly, that doesn’t mean Prime is worth it. Many retailers work diligently to keep pace or beat Amazon in various areas. For example, Aldi could be more affordable than Amazon Fresh, and Costco might offer better deals on many electronics.

Plus, there are retailers that price-match Amazon. As long as the brand, model, size, color, and similar details match, that essentially lets you get the Amazon price without having to sign up for Prime or even have an account on Amazon.

4. Free Shipping Is More Common

While Amazon was one of the first companies to launch broad-scale free shipping, it’s far from the only company that offers it today. Plus, many other retailers provide it without any kind of membership requirement. Instead, they may require a specific minimum purchase, and that isn’t usually hard to hit.

Additionally, with a variety of stores offering free ship-to-store regardless of the amount you spend, you can get a very similar deal even with small purchases. The only difference is that you have to head to your selected store location to pick the product up. If it’s a store you use regularly, or the store is on a route you travel frequently, that likely isn’t a huge inconvenience.

5. Prime Day Isn’t Always What It Seems

Prime Day – where Amazon hosts a massive sale – looks like it’s brimming with bargains on the surface. However, that isn’t always what you’ll find. Many of the discounts are on third-party items that aren’t selling particularly well, effectively making Prime Day a mass liquidation from brands that aren’t household names.

While that doesn’t mean the occasional bargain doesn’t come around, the likelihood that it beats what you’ll find during larger sale events – such as Black Friday or Cyber Money at other stores – is often pretty slim. As a result, if you’re only holding onto your membership because of Prime Day, consider letting it go.

6. Prime May Lead to Impulse Shopping

Amazon is home to nearly any type of product imaginable, which is beneficial in some cases. However, since it’s constantly bombarding you with strategically placed product images and sponsored listings, it may lead to some impulse shopping that wasn’t part of your original plan. If you struggle to bypass the highlighted products even if they aren’t what you came on the app to buy, then relying on Amazon could be hurting you financially. If canceling your Prime membership prevents you from turning to the app so often, it could be just what you need to avoid impulse purchases.

Can you think of any other reasons why a person should cancel Amazon Prime? Did you cancel your Amazon Prime Membership and want to tell others why you made that decision? Are you a fan of Amazon Prime and think that canceling isn’t a wise move? Share your thoughts in the comments below.

Read More:

 

 

Is 50 Too Old To Change Jobs?

by Leave a Comment

Should I Change Jobs At Age 50

 

While the general hope is to find a career that you can stick with until retirement, that isn’t always how things play out. Typically, people associate job changes with younger professionals, mainly assuming that their motivation is based on them not knowing exactly what they want. In turn, there’s some trial-and-error before they settle down. However, that doesn’t mean workers of all ages might feel the urge to do something new. If you’re wondering, “Should I change jobs at age 50?” here’s what you need to know.

Is 50 Too Old to Change Jobs?

No, 50 isn’t too old to change jobs or take your career in an entirely new direction. There are plenty of legitimate reasons that could make switching positions or fields the right move.

For example, burnout can happen at any age. Similarly, you can discover a new passion at any time in life. Additionally, shifts in an industry could make a once-viable professional less stable moving forward, making a career change a wise move to ensure your financial future.

You may also want to head in a new direction to secure better work-life balance, as that’s harder to achieve in some sectors than others. Changing careers due to a shift in your health can also be a completely justifiable reason for switching things up at age 50.

Ultimately, you’re never too old to change jobs or careers. What matters is that you make a change for a reason that ensures you’ll remain motivated and engaged after the switch.

Should I Change Jobs at Age 50?

Even knowing that 50 isn’t too old to change jobs, that doesn’t mean you’ll automatically know if it’s a move you should make. Ultimately, whether it’s the right choice for you is a personal decision. It’s wise to consider what you have to gain from heading in a new direction, as well as review the potential risks. That way, you have a solid idea of what the road ahead may look like if you move forward.

Understanding your motivation is also essential. The “why” behind your desire for a new position can let you know where you might need to go in the future. Ask yourself whether your current issue is with your employer, the role you’re holding, your field as a whole, or something else.

If your employer is the problem, remaining on your career path but looking for opportunities at other companies may be a sound solution. If you’re no longer passionate about your entire field, then a career change is potentially the better choice.

The idea is to determine why you want to make a change and then identify the type of change you need to restore your motivation. That way, you can find the best possible path forward as soon as possible.

Tips for Changing Jobs at 50

Update Your Resume and LinkedIn Profile

Before any job search, it’s wise to update your resume and LinkedIn profile. However, the approach you need to use varies depending on whether you’re looking for a new role in your field or are planning on changing careers.

With the former, make sure your work history shows recent accomplishments that highlight your skills. It’s also wise to update your professional summary to represent where you stand today as a professional.

With the latter, you may need to reposition more of the content. Make sure you’re highlighting transferable skills that are relevant to your new target industry. Additionally, consider whether different achievements align better with the type of position you’re hoping to land next and adjust the content accordingly.

Enhance Your Skills

Whether you’re looking for a new position along your current career path or are changing careers entirely, enhancing your skills works in your favor. For a different job in your current field, consider what skill gaps exist currently within the industry and see if you can acquire those capabilities. By doing so, you position yourself as an incredible asset, allowing you to find a new role with greater ease.

For a career change, you need to determine if you don’t have capabilities or experience that are viewed as must-haves for the job you want to land. If so, work to cover those areas. You can take classes, volunteer to gain experience, learn on your own, or try side projects to boost your resume. That makes it easier to transition, as you have the capabilities hiring managers may focus on when making hiring decisions.

Be Reasonable About Pay

While you likely won’t have any issues receiving a comparable salary if you’re remaining in your field, you need to look at things differently if you’re changing careers. Often, a career change means taking a step down on the career ladder, as you’re less proven in that field or industry.

As a result, it’s wise to examine salary averages for individuals working in positions similar to those you’re currently qualified for in your new field and accept that your income may dip initially. However, as you prove your value, you can typically move up, so keep that in mind.

Explore Your Options with Temp Jobs

Temporary jobs can help you explore new fields, industries, and employers with greater ease. The roles are inherently short-term, so you don’t have to worry about committing to something that may not work for you. Plus, it lets you earn an income while you check out options, and you’ll get chances to build your network along the way.

Essentially, you can use temp jobs to support some trial-and-error. Additionally, the barrier to entry is often lower, as companies are more willing to take a chance on a candidate who’s changing careers with short-term opportunities. Finally, if a job is an excellent fit and you impress, there’s always a chance it will turn into a permanent position.

Did you battle with the question, “Should I change jobs at age 50?” and want to tell others about your experience? Do you think 50 is a good time to make a career change, or does it make more sense to stay the course? Share your thoughts in the comments below.

Read More:

 

 

Is Lifestyle Creep Ruining Your Financial Future?

by Leave a Comment

Lifestyle Creep

As you progress in your career and receive a raise or promotion, or you finish paying off a debt, one thing usually occurs; you suddenly find yourself with more money in your bank account. Typically, it’s an exciting moment, particularly if your budget previously felt tight. However, the higher bank balance might also lead to some unwise financial decisions, particularly in the area of lifestyle creep. If you’re wondering how lifestyle creep can ruin your financial future, here’s what you need to know.

What Is Lifestyle Creep?

Lifestyle creep is a scenario where your spending increases when your income rises. Essentially, whenever you have more room in your budget, you use those funds to improve your lifestyle.

Often, lifestyle creep is discrete and seemingly innocuous. It typically plays out as a series of small lifestyle improvements, many of which aren’t immediately noticed by members of the household. Minor luxuries are purchased more frequently, or versions of regularly purchased items – like groceries – elevate slightly over time. It’s the slow nature of the shift that led to the use of “creep” in the term.

How Lifestyle Creep Harms Your Financial Future

On the surface, lifestyle creep doesn’t seem overly harmful. In many cases, an improving lifestyle is simply viewed as a reward for hard work, allowing a household to make purchases that weren’t previously within reach.

However, lifestyle creep can harm your financial future. For example, if you were previously living paycheck-to-paycheck, a raise or paying off a debt could let you escape that cycle. But if you allow lifestyle creep to occur and increase your spending, you could end up living paycheck-to-paycheck again. As a result, you’re functionally in the same financial place as you were previously.

In many cases, the signs of lifestyle creep are reasonably clear. After seeing your income increase or your debt obligations reduce, a stagnant savings account balance typically means you are spending more. Using more of your money on outings or social events is another red flag. The same is true of an unshakeable feeling that you can’t get control of your budget no matter how much you earn.

Tips to Avoid Lifestyle Creep

Generally speaking, avoiding lifestyle creep requires some vigilance and planning. Fortunately, it’s not difficult to head in the right direction. Here are some tips to help you avoid lifestyle creep.

Know Your Financial Goals

Lifestyle creep is more likely to occur if you don’t have any well-defined financial goals to guide your actions. Spend time considering what you’d like to achieve to ensure your financial well-being. Be specific when you outline the targets, assigning dollar amounts, deadlines, and more to help you stay on target.

Once you have your goals defined, find ways to keep reminders on you. For example, putting a picture of your dream house in front of your debit card could give you pause when you’re about to make an unnecessary purchase. It gets you thinking about how your behavior could negatively impact reaching your goal, and that’s often enough to slow down excessive spending.

Update Your Budget

The moment your income rises, take the time to update your budget. Consider how the extra cash in your account can make reaching high-priority goals easier, then work to direct your money in those directions.

When you update your budget, make sure to allocate some cash toward discretionary spending. That essentially lets you have a little spontaneous fun while preventing you from going overboard.

Track Your Spending

Another critical tip to avoid lifestyle creep is to continuously track your spending, at least initially. By doing so, you’ll notice if you’re starting to spend more than you planned, making it easier to nip any newly forming bad habits in the bud.

Automate Your Savings

Generally, it’s harder to succumb to lifestyle creep if you don’t leave the money in your checking account. If you have savings goals you’d like to achieve, take advantage of the automatic transfer features offered by most banks and credit unions. That way, when your paycheck is deposited, the designated amounts automatically shift to the specified savings account, preventing you from accidentally seeing that money as spendable.

Increase Your Retirement Contributions

If you want to use your boosted income to secure your financial future, increase your retirement contributions right away if you aren’t currently maxed out. Make sure you’re capturing your full employer match if you receive one through your work plan. Otherwise, plan your contributions to get you closer to the maximum contribution limit.

Use the 72-Hour Rule

The 72-hour rule is a strategy for limiting impulse purchases that you may later regret. When you see a product or service and feel the urge to buy right away, make a note of what it is and then wait to take any action for at least 72 hours. In many cases, the impulse to buy will diminish during that time.

However, if the urge doesn’t go away, you are still giving yourself time to consider whether moving forward works with your budget. At a minimum, that helps you avoid splurges that would harm your financial well-being, which is still a win.

Pay Down a Debt

If you have a solid emergency fund and your retirement contributions are relatively high, use the extra money in your budget to speed up debt repayment. By doing so, you’ll pay less in interest over the life of the debt. Plus, you can eliminate the obligation sooner, allowing you to get even more room in your budget. In some cases, this strategy may also boost your credit score, which is always beneficial.

Don’t Make Big Changes Immediately

If your income increases significantly, it may encourage you to make certain big changes, like moving into a larger home or buying a nicer car. While there are situations where that could make sense, don’t make these adjustments to your lifestyle right away.

Instead, spend time reviewing the short and long-term implications of those changes, as the financial impact is often significant and lasting. That way, you can ensure you aren’t getting in over your head or putting yourself back in a position where you’ll struggle financially.

Be Cautious About Automated Spending

Subscription-style services may seem convenient, but they’re often costly. Additionally, most people don’t have the same level of awareness when it comes to subscription-style services as they do with other types of spending.

Whether it’s gym members, streaming services, meal kits, automatic product deliveries, or anything of that nature, make sure you’re tracking those activities. Additionally, review your subscriptions every month to determine if they’re worth keeping in place. That way, if something you’re paying for automatically stops providing value, you can end the subscription promptly.

Did you struggle with lifestyle creep and encountered financial hardships because of it? Do you have any tips that can help others avoid lifestyle creep to ensure their financial lives stay on track? Share your thoughts in the comments below.

Read More:

 

 

How To Ensure Your Budget is Working For You

by Leave a Comment

Is Your Budget Working

 

When it comes to personal finances, the most common recommendation from experts is to have a budget. However, many people create an initial framework for their spending only to continue struggling. Often, that’s a sign that your budget isn’t quite where it needs to be to serve you well. If you’re wondering, “Is your budget working?” here’s what you need to do to figure it out.

Do You Feel Overly Restricted?

In many ways, budgets are inherently restrictive, as they’re designed to ensure your money is going to the right places. However, if it’s restricting what you do to the point where it leaves you feeling miserable, that’s an issue.

Ideally, your budget needs to have some room for spontaneity and enjoyment. Otherwise, the rules you’re placing on yourself are challenging to follow over time. Essentially, your budget starts seeming like a punishment or burden, and that can leave you frustrated, unmotivated, or even angry.

While it’s wise to ensure you’re handling all of your financial responsibilities, try to designate some of your money for activities you genuinely love. By doing so, you’re giving yourself an outlet for fun, and that can positively impact your well-being. In turn, following the rest of your budget isn’t as difficult, as you’re still getting some joy from your hard-earned money.

Are You Being Too Idealistic?

When many people sit down to create a budget, they outline their perfect spending plan. The issue is that budgets drawn up in that manner don’t always align with reality. Instead, they’re overly optimistic based on how household members typically act and spend or don’t account for realistic costs for needed goods and services.

Overly idealistic budgets are incredibly common during periods of economic uncertainty, particularly issues like high inflation. They don’t provide enough room for rising prices, which causes households to bust their budgets even if they’re trying to be responsible.

Additionally, not accounting for actual spending patterns means missing the mark more often than not. As a result, it’s critical to take an honest look at your typical spending and set realistic targets in discretionary categories. That helps you mold your budget to your preferences and priorities, ensuring you aren’t being overly idealistic.

Do You Have an Emergency Fund?

Even the best-planned budget is quickly derailed if you can’t cover the cost of an unexpected event. Whether it’s medical bills, car repairs, or anything else, being able to cover those expenses without harming your budget makes a difference.

By having an emergency fund, you’ve got a stash of cash you can tap when the unexpected happens. As a result, the rest of your spending can simply align with your usual budget in most cases.

Make saving money in your emergency fund part of your monthly budget, allowing you to build up the account and recover the cash you had to spend to handle the unexpected. Ideally, you want to make your initial target at least $1,000. Then, work your way up to three months of living expenses, and then try six. That way, you get a sizeable cushion in place.

Did You Factor in Everything?

Common advice is to review your spending over several months as you create your budget. That lets you see where your money is going, which can make it easier to choose reasonable targets.

The problem is that only looking at a few months means you aren’t seeing irregular expenses that occur during the year. For example, you might overlook how much you usually spend on gifts for holidays and celebrations or miss routine expenses that don’t occur monthly, like vehicle maintenance.

If you don’t factor in everything and plan for it correctly, you’ll encounter months where your budget just won’t work. Instead, examine all of your spending during a year. Identify those irregular expenses, and break them down to see how much you need to set aside for them each paycheck or month to ensure they’re covered. Then, shuttle the cash to a designated savings account during the year, allowing you to tap that money when it’s time to cover those costs. That way, you’re planning for those expenses while keeping your monthly budget consistent.

Can You Actually Afford Your Lifestyle?

In some cases, the reason your budget isn’t working is your trying to maintain a lifestyle that you genuinely can’t afford. If your expenses and spending exceed your income, all you’ll do is rack up debt if you keep pushing toward a lifestyle you can’t support. In turn, the cost of your debt repayment usually rises, potentially to the point of becoming entirely unmanageable.

While it’s hard, it’s critical to get a grip on a situation like this quickly. Examine your spending across every account, including bank accounts and debt-related ones, like credit cards. Then, see if your outgoing money exceeds what you’re bringing in, and if it does, find ways to scale back. Otherwise, you’ll need to boost your income to cover the difference.

Are You Making the Right Adjustments?

Budgets aren’t a one-and-done document. Instead, they need to live, breathe, grow, and change. If you aren’t adjusting your budget regularly, what’s currently in place may not match your reality, as it’s based on old information, out-of-date costs, and other irregularities.

Make a plan to review your budget at least quarterly. See if the categories and allocations make sense for where you are today. If not, change your budget to fit what’s happening now, allowing it to grow and change with your circumstances and ensuring it’s easier to follow.

Do You Genuinely Want to Follow a Budget?

While creating a budget is an excellent first step when you want to get control of your financial life, writing one down won’t magically change how you act and spend. Instead, you need to actively commit to sticking with your budget. If you don’t, then the work you put into creating one won’t improve your situation.

Consider what you hoped to accomplish when you created your budget. Think about how adjusting your habits help you reach important goals and what it would feel like to achieve them. Use that as ongoing motivation, regularly reminding yourself of what’s most critical to you to keep yourself focused on the target.

 

Do you have any other tips that can help people answer the question, “Is your budget working for you?” Have you ever discovered that your budget wasn’t working and want to share details about how you got back on track? Share your thoughts in the comments below.

 

Read More:

 

 

Top 7 Financial Resolutions For 2023

by Leave a Comment

Financial Resolution for 2023

The start of the year is a classic time for creating new goals, giving you direction for the months to come. With inflation and a possible recession on the horizon, many people are focused on their finances. Fortunately, there are plenty of suitable objectives that can help you get your money in order. Here are the top seven financial resolutions for 2023.

1. Build an Emergency Fund

One of the most critical steps you can take to secure your financial well-being is building an emergency fund. By having some cash set aside for the unexpected, you give yourself a safety net that doesn’t rely on debt.

If you’re just starting out, set your initial savings target at $1,000 or the total cost of your vehicle and homeowner’s or renter’s insurance deductibles, whichever is higher. If you already have that set aside, work to increase your emergency fund to cover three months of living expenses, giving you a cushion in case of sudden unemployment.

Once you have three months of living expenses, six months of expenses is the next target you should go after. Then, work your way up to a year. That way, you’re covered against emergencies big and small.

2. Create a Workable Budget

Having a functional budget gives you a framework for your financial life. The issue is that many people are overly optimistic about how they’ll handle their money. As a result, it’s smart to focus on being realistic.

The easiest way to create a workable budget is to start by writing down information about your debts and recurring expenses, such as utilities and insurance. Next, review your spending over the last three months to see how much you commit to groceries, fuel for vehicles, and other cost areas that typically fluctuate.

By seeing where your money is going now, you can identify areas for adjustments. Start with minor tweaks, making it easier to adapt to stricter spending limits and focus on other financial goals, like saving. Then, if that first month is a success, see if other minor adjustments are viable. That strategy lets you take a slow and steady approach, making it easier to stay realistic while making positive changes.

3. Capture the Entire Employer Match

If you’re employed at a company that offers an employer match on retirement contributions, make sure you’re contributing enough to qualify for the full match offered. The employer match can significantly impact your financial future by giving you more funds for retirement. Plus, it’s essentially free money, so it’s an employee benefit that’s worth maximizing.

Just be aware of any vesting rules in place at your company. Usually, you can only keep the employer match if you remain employed at the organization for a minimum time period. By knowing how long it takes to become vested, you can make sure that you’re fully capturing this financial benefit before leaving for opportunities elsewhere.

4. Pay Down One High-Interest Debt

If you’re carrying any high-interest debt, choose one account and make it your focus for 2023. It’s ideal if you can aim to pay it off during the year. However, if the balance is high, simply work on paying it down as much as possible.

Begin by ensuring that you’re making the minimum payment on it and every other account as required, as well as handling your recurring expenses. Then, send any extra cash to the chosen debt that you can without completely derailing the rest of your budget. Every little bit more helps chip away at the principal faster. As a result, you’ll pay less in interest over time.

If the debt you’re focused on is a credit card or other revolving account where the minimum payment shrinks as the total owed declines, keep your monthly payment the same, using the current payment as the guideline. That creates consistency in your budget and helps you make progress faster. Additionally, don’t add to that debt along the way, as that undoes your work.

5. Adopt the 72-Hour Rule

Using the 72-hour rule can curb unnecessary spending significantly. Essentially, if you see a non-essential item you’d like to purchase, make yourself wait at least 72 hours before actually buying. By using this strategy, you’re delaying splurges that are potentially motivated purely by the emotion of seeing the item in the moment. When you revisit the idea of buying the product in 72 hours, that initial feeling is typically gone, making you less likely to purchase anything you don’t actually need.

If you still feel strongly about purchasing the product after 72 hours, take a moment to reflect on why. By considering your motivations, you can understand more about what’s driving you to get the item. At that point, if you have a legitimate reason and the money in your budget, you can potentially move forward. However, if you still have doubts, wait another 72 hours to see if the picture becomes clearer.

6. Try a No-Spend Challenge

No-spend challenges involve not spending any money on anything aside from bills and certain living expenses you can’t cover in advance – such as refueling a vehicle or fresh foods that won’t last for the entire time – for a specific period. Many people try no-spend February since it’s the shortest month of the year. However, if that idea is intimidating, try a no-spend two weeks as a starting point.

Before your no-spend period, you have to make sure that you plan your groceries for that entire period. Use a frugal approach by taking advantage of bulk items, sales, freezer meals, and similar strategies that can reduce your costs and make the experience less stressful. Just make sure you don’t go on a spending spree to compensate for a no-spend period before or after it happens, as that doesn’t positively impact you financially.

After the no-spend period, you should have some extra cash available. Take that and put it toward a specific goal, such as paying down debt or beefing up your emergency fund. That way, it has a positive impact on your financial picture.

7. Start Investing Outside of Retirement

While many people have company-sponsored retirement plans, investing outside of them can make it easier to ensure your long-term financial security. Whether you have access to a 401(k) or similar program at work, consider opening an IRA – either traditional or Roth, depending on your financial situation – to shore up your retirement savings. If you have children, you may want to explore 529 plans to put money aside for their college education.

However, even if you only have general saving goals, investing is still worth considering. You can open an account at a brokerage and start putting money into the market, potentially letting you capture better gains than if you put the cash into a savings account. Just make sure that you diversify. In many cases, going with index funds or ETFs makes that easy. Do a little research to find funds with solid track records and align with your risk tolerance, creating a personalized portfolio that meets your needs.

Did you decide to have a financial resolution for 2023? If so, what did you pick and why? Do you think resolutions are helpful or not? Why do you feel that way? Share your thoughts in the comments below.

Read More:

 

 

How To Save On Your Electric Bill In The Winter

by Leave a Comment

How To Save On Your Electric Bill

During the winter, many households spend far more on electricity. In many cases, this is due to needing to heat their homes. Whether you use wall heaters, central heat, or anything in between, it can cause your electric bill to rise. Fortunately, there are steps you can take to save on your electric bill this winter. Here’s what you can do.

Have Your Heating System Serviced

Routine maintenance ensures that your heating system is operating efficiently. At the start of winter, check your filters and replace them if needed. Then, consider replacing them monthly or as needed, as buildup on the filters strains your heating system.

Also, have a professional service technician come in and go over your system. They can make sure that it’s in good shape or make repairs to increase your energy efficiency.

Lower Your Temperatures

One of the simplest ways to save money on your winter electric bill is by lowering the temperature on your thermostat. Even a few degrees can make a difference, so find the lowest temperature that you can deal with and keep your thermostat there.

If you have a programmable thermostat, you can also make other changes. For example, you can reduce the temperature a little more at night while you’re sleeping. You could also set it up to keep your house cooler when you’re at work, suggesting it’s high enough to keep any pets comfortable.

Lowering the temperature on your electric water heater can also make a difference. If yours is set to 140°F, reduce it to 120°F instead. Generally, that still keeps baths and showers comfortable, but it costs far less.

Warm Your House with the Sun

Opening up curtains on windows that are hit with direct sunlight can warm your home, even during the winter. When you wake up in the morning, make sure to open the curtains on any south-facing windows, as those typically get the most sunlight. Then, as the sun starts getting low, close the curtains to keep the heat inside.

Improve Your Insulation and Windows

Home insulation and the quality of your windows impact heat transfer. If there isn’t enough of a barrier between your interior and the outside world, you’ll spend more heating your home.

Check your attic insulation to see if it’s suitable. If not, consider refreshing it to improve your home’s energy efficiency. Having double-pane windows also helps. However, if you can’t afford to upgrade your windows, putting on insulating window films can make a difference.

Install Insulating Curtains

Insulating curtains are designed specifically to help maintain your home’s temperature. By installing them on your windows, you get an extra barrier against the cold air outside. By making sure they fit close to the window, they can also combat drafts.

Turn on Your Ceiling Fans

While it’s counterintuitive, turning your ceiling fans on can actually reduce your heating costs. Most ceiling fans have switches that change their direction. By reversing the spin, the ceiling fan pushes hot air down, keeping you more comfortable. Just make sure to clean off any dust first and use the lowest speed setting available.

Do you have any tips based on what you did when figuring out how to save on your electric bill that would help others? Have you tried any of the options above and want to discuss your results? Share your thoughts in the comments below.

 

Read More:

 

 

Take These 5 Steps to Recession Proof Your Savings

by Leave a Comment

Recession Proof Your Savings

Currently, the economy is in flux. Inflation remains high, but there’s also a strong chance that a recession is on the horizon. Many of the steps that were taken to curb inflation make a recession more likely. As a result, experts generally believe one will occur this year. As a means of protecting your well-being, protecting your savings is a must. Here are five steps you can take to recession proof your savings.

1. Have a Separate Emergency Fund

While an emergency fund is a type of savings, it’s different from the money that’s set aside for specific goals, such as buying a house or securing your retirement. With an emergency fund, you have cash available that you can tap into when genuine financial emergencies occur. Plus, by separating it from your other savings, you won’t accidentally tap into those funds.

At a minimum, strive to have $1,000 or enough money to cover your insurance deductibles – whichever is higher – in an emergency fund. Once you have that, aim for three to six months of living expenses. That ensures you have a cushion that you can use during legitimate emergencies, making it easier to protect your retirement and other goal-oriented savings.

2. Take Advantage of Higher Interest Rates

Due to steps taken to reduce inflation, interest rates are on the rise. While this isn’t ideal if you’re looking to open new debt accounts, it works in your favor if you want to recession proof your savings. By keeping any stashed cash in a high-yield online savings account with a higher interest rate, the money you set aside grows more quickly. Plus, it doesn’t come with the risks associated with investing.

Look at your current interest rates on your savings accounts and compare them to what’s offered by other institutions. If your current rate is notably below what’s available elsewhere, consider moving the cash to a savings account at a different bank or credit union. That way, your money grows faster, giving you a bigger cushion during a recession.

3. Revamp Your Budget Now

In many cases, it’s best to update your budget to address potential financial difficulties that a recession creates well before it’s necessary. By updating your budget now and eliminating unnecessary spending, you can focus more of your energy on building an emergency fund or saving for other purposes.

Then, if a recession negatively impacts your income, your budget might still work based on the new amount you have coming in each month. Essentially, by living below your means now, you’re giving yourself some space and preparing for a time when your earnings may drop, making any future adjustments either unnecessary or easier to manage. In turn, you might not need to turn to your savings as quickly, allowing you to preserve your stashed cash.

4. Reduce Your High-Interest Debt

High-interest debts – such as credit cards and specific personal loans – cost you a lot in interest over time. By working to reduce what you owe ahead of schedule, you’ll pay less in interest over time.

Plus, when you pay off more of your credit card, the monthly minimum payment declines. While you should aim to keep your payments high to tackle your debt, this can give you a bit of a reprieve during financially challenging months. If necessary, you can transition to the lower minimum payment to provide you with more room in your budget, making it easier to avoid tapping into your savings.

5. Don’t Make Dramatic Investment Changes

During a recession, stock market fluctuations are common. However, responding to those dips by pulling your money out of long-term investments isn’t necessarily wise. In most cases, recessions are short-term episodes, and markets ultimately recover (and typically continue to grow). Since that’s the case, it’s best to leave long-term investments in place if you aren’t planning to tap those funds in the near future.

Plus, it’s critical to remember that pulling money out of the market comes with a cost. Barring specific retirement accounts and being of retirement age, you’ll usually owe taxes on any market-related earnings. As a result, selling the investments and taking the cash often comes at a price.

Additionally, market downturns can be great investment opportunities. You may be able to add securities at a lower price, allowing you to benefit from any growth that occurs when the market recovers. Just make sure you research the investments before dedicating any funds, particularly if the company itself is financially at risk of a negative outcome due to the recession.

Do you have any other tips that can help someone recession proof their savings? Have you already taken steps to recession proof your savings and want to tell others why you made the various moves? Share your thoughts in the comments below.

Read More:

This article was brought to you by Dollar Dig – the internets best cash back site.  With great deals on Walmart, Overstock, Ebay and great retailers like myGemma.

What Tax Credits Can I Expect in 2023?

by Leave a Comment

Tax Credits

Now that 2023 is underway, many households are preparing for tax season. Keyboards ablaze with frantic efforts to figure out 2022 tax brackets and estimate tax refunds. As a result, it’s wise to learn about tax credits that may reduce your total financial obligation before you file. That way, you can prepare for how the adjustments impact the broader picture. While there are far more tax credits than an article can reasonably list, some are relatively widely used. Here’s a look at tax credits that a more significant number of tax filers are potentially eligible for, what they’re typically worth, and some initial information on qualifying.

What Tax Credits Can I Expect in 2023?

Child Tax Credit

The child tax credit is one of the most commonly claimed ones in the country. Generally, any household with a qualifying child as a dependent is potentially eligible. During the 2022 tax year – which is filed in 2023 – it’s potentially worth $2,000 per qualifying child. As a result, it’s potentially sizeable.

Earned Income Tax Credit

Another widely used tax credit is the earned income tax credit. Eligible taxpayers without children can receive a credit worth up to $500 when they file in 2023.

Child and Dependent Care Credit

While the child and dependent care credit is worth far less than it was in 2021 – when it sat at $8,000 – it’s still a decent amount. Qualifying households are eligible for up to $2,100 when they file their 2022 tax information in 2023.

Retirement Contributions Savings Credit

Individuals with adjusted gross incomes at or below $34,000 ($68,000 for married filing jointly) are potentially eligible for a tax credit related to their retirement savings. It’s worth up to 50 percent of the total contributions to a qualifying account, with the exact amount varying by income and the maximum value set at $1,000 (or $2,000).

American Opportunity Credit

During the first four years of college at a qualifying institution, students are potentially eligible for the American opportunity credit. This is worth up to $2,500 per student and is refundable up to 40 percent. However, it’s only available to individuals with incomes at or below $80,000 ($160,000 for married filing jointly).

Lifetime Learning Credit

The lifetime learning credit helps offset the cost of qualifying tuition or educational expenses for students at eligible institutions. Typically, that includes colleges, universities, and technical schools beyond high school. However, it’s only available to single taxpayers with income at or below $80,000 (or $160,000 for joint filers).

Premium Tax Credit

The premium tax credit helps offset the cost of purchasing health insurance through the Health Insurance Marketplace. Generally, it applies to lower or middle-income households, though the number of dependents and other factors do alter eligibility.

Clean Vehicles Tax Credit

Individuals who purchased a qualifying “clean vehicle” – typically an electric vehicle – are potentially eligible for a clean vehicles tax credit. The rules are complex, so not all EVs qualify. However, it’s worth exploring if you purchased an EV in 2022.

Federal Adoption Credit

Households that adopted a child in 2022 are potentially eligible for the federal adoption credit, which is worth up to $14,890 when you file your 2022 return in 2023. Income limits do apply, and it starts to phase out at $223,410. This credit is also non-refundable, so those who spend less on qualifying expenses can only receive up to the amount paid to cover eligible costs.

Credit for Other Dependents

The credit for other dependents allows households with dependents who aren’t eligible for a traditional child tax credit to potentially see some relief on their taxes. Generally, that includes individuals living in the household as dependents who are age 17 or older, and it’s worth $500 per qualifying dependent.

Determining Your Eligibility for Tax Credits

While the information above provides an overview of what it takes to qualify for many common tax credits, the rules are often far more complex than what’s outlined above. As a result, it’s wise to research any tax credits you might be able to use carefully, allowing you to ensure you qualify.

If you have doubts, consider working with a tax preparer this year, as they’re often well-equipped to help you determine if you’re eligible for a tax credit. You can also try tax preparation software, as many of those solutions have built-in guides or questionaries that can point you in the right direction.

Ultimately, being confident that you qualify is essential. Improperly claiming a tax credit comes with consequences, including fees, penalties, and potential criminal charges. As a result, it’s best to consult with an expert if you have any doubts about your eligibility.

Can you think of any other tax credits people may want to check out when filing their taxes in 2023? Have you run into issues with tax credits before and want to tell others about your experience? Share your thoughts in the comments below.

Read More:

 

 

8 Of The Best Independent Contractor Jobs for 2023

by Leave a Comment

Best Independent Contractor Jobs

 

Whether you’re interested in breaking away from a traditional day job or are looking for a side gig to boost your income, independent contractor jobs are potentially the answer. There are a surprising number of options available, too, allowing you to find something that’s both lucrative and that suits your skills. If you aren’t sure which independent contractor jobs are worthwhile in 2023, here are eight to consider.

1. Virtual Assistant

A virtual assistant performs the same function as an office assistant, ensuring that a company owner or manager has enough administrative support. Often, primary duties include managing correspondence, overseeing calendars, conducting research, writing reports, and similar tasks.

The main difference between traditional admin assistants and virtual assistants is that the latter work entirely remotely. If you’re interested in virtual assistant jobs, you’ll typically find part-time and full-time positions are available. Additionally, many don’t require working a set schedule, though some may prefer you have availability within a specific window.

Often, all you need to get started is a computer with an internet connection. Having a productivity suit is also essential, as well as the ability to download video conferencing or other communication software.

2. Graphic Designer

Graphic design is a field that lends itself well to independent contractor work. Many professionals choose to freelance, essentially working on a series of projects for a variety of companies. Duties can vary, though many involve activities like creating logos, designing social media ads, and other graphics.

In many cases, graphic designers working as independent contractors are paid on a per-project basis. Additionally, they typically set their own rates and can handle their work at any time as long as they’re able to meet the due dates set by the company.

What you need to get started can vary. Along with the necessary technical expertise, you’ll need a computer with an internet connection and your preferred design software as a starting point. Beyond that, it may depend on the client’s needs.

3. Social Media Manager

Another option for independent contractors is social media manager. These professionals assist companies with their social media accounts, handling tasks like designing posts, updating profiles, responding to comments, answering direct messages, and more. Additionally, they may tackle some research to help boost engagement, such as looking into popular hashtags to find ones that are appropriate for each new post.

Generally, social media managers can handle most of their responsibilities at any time, though comment and direct message responses often need to take place at some point during more traditional business hours. Since there is software that lets you schedule posts in advance, you can create posts at any time and set them up to go live at the desired moment.

If you have social media savvy and access to an internet-connected computer and smartphone, that’s potentially all you need to get started. However, having a marketing background is helpful, so keep that in mind.

4. Accountant

For those with a penchant for numbers and who have (or are willing to get) the necessary education and credentials, working in accounting as an independent contractor is a solid option. You could assist with financial decisions, payroll, tax preparation, accounts payable, accounts receivable, and more. Plus, you may have the ability to work part-time, full-time, or seasonally, depending on your niche.

If you’d like to limit the amount of education required, you could consider freelancing as a bookkeeper instead. While financial know-how is still required, you might not need the same level of degree or other credentials to get started.

5. Translator

If you’re bilingual, becoming a certified translator could be a solid choice. This is another option that lets you work on a project basis, so you can arrange a part-time or full-time schedule based on what you prefer. Pricing is also usually by the project, so you can set a rate that accounts for the amount of time and effort required.

As with many independent contractor jobs, you can typically work remotely. All you need is a computer and document creation software to get started in many cases.

6. Freelance Writer

Freelance writers assist with a wide variety of projects. Some focus primarily on creating blog posts for companies, while others concentrate on website copy. There are many freelance writers who specialize in e-books, as well as those that focus on white papers, grant writing, technical documentation, and other niches.

Generally, getting started as a freelance writer requires little more than a computer with document creation software. Additionally, it’s helpful to have a portfolio of writing samples, ensuring potential clients can see what you have to offer.

When it comes to pay, freelance writers usually charge on a per-project or per-word basis. However, some prefer using an hourly rate, so that’s potentially an option, as well.

7. Housekeeper

If you prefer a more active job, working as a housekeeper is a solid choice for anyone who likes working as an independent contractor. You can focus on homes or businesses, making sure they’re cleaned on a regular schedule based on the client’s preferences.

Often, the startup costs are relatively low. Some housekeepers use cleaning supplies that they provide, while others use what’s offered by the client. You will need reliable transportation, so keep that in mind. However, you can potentially work full- or part-time, which is a bonus if you’re looking for flexibility.

8. Home Daycare Provider

If your area doesn’t have enough daycare centers to support demand in the area, starting a home daycare is a potentially good option. You’ll care for other people’s children in your home, typically beginning a little before traditional business hours and until a bit after the end of a regular workday. Pay rates are potentially quite high, and you can use local daycare rates as a guide.

If you go this route, you typically need appropriate licensing. Additionally, having certain credentials and certifications – including first aid and CPR – is often a must. Make sure to research local regulations before you begin, ensuring you’re able to meet the requirements before you get started.

Do you know of any other independent contractor jobs that people shouldn’t overlook? Have you tried any of the independent contractor jobs above and want to tell others what it was like? Share your thoughts in the comments below.

Read More: