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How Inflation is Changing Our Lives and Not for the Better

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Back in 2021, inflation hit its highest point in 40 years, with prices rising by about 7 percent in December when compared to the previous year. Experts project that inflation will ease in 2023, but that doesn’t mean the impact won’t remain well beyond when the rates recede. Instead, they’ll affect the lives of many, mainly for the worst. If you’re wondering how inflation is changing lives, and not for the better, here’s what you need to know.

How Inflation is Changing Lives

Inflation typically pushes prices up, including on everyday goods and household staples. While some inflation over time usually isn’t avoidable, extreme increases create substantial financial hardships for many people, particularly lower-income households. Inflation to this degree dramatically reduces buying power and, if you’re already struggling with a tight budget, it may seem like your ability to make ends meets evaporates overnight.

Even middle-income households can feel the pinch. Often, rapid inflation isn’t coupled with corresponding wage growth. As purchasing power falls, households that were once reasonably comfortable can end up on the brink.

Retirees Are Burdened As Well

Retirees are similarly burdened. Since many older Americans live on fixed incomes, falling buying power can be catastrophic, especially if it happens quickly.

In all of those cases, quality of life diminishes. Households have to make tough choices. For example, they may have to decide between buying gas to get to work or getting a critical prescription medication. They might end up debating between buying food and covering an electric bill.

While those examples may seem extreme, they can reflect reality for a surprising number of Americans. Additionally, even if inflation rates fall, prices will remain high if inflation is part of the equation at all. While there may be some balancing, some product may keep their bigger price tags for a while, particularly if companies are trying to recoup lost profits that they experienced due to inflation.

Other Sectors That Are Impacted

There are other sectors that also see the impact of inflation. With rapidly rising home prices, first-time buyers may have a difficult time competing in the market. They may be forced to delay homeownership or might take on loans that stretch their budget too thin.

If borrowers have variable rates on loans or credit cards, the interest they pay may be heading upward. When inflation is running rampant, variable rates usually increase, resulting in larger financing charges.

Ultimately, inflation has a significant impact on most people. And, in most cases, it isn’t for the better.

Should You Worry About Inflation?

Generally speaking, worrying about inflation isn’t going to reap any dividends. However, being aware of its presence and potential impact is wise. By knowing when inflation is having an effect, you can make decisions before your budget is stretched too thin. Thus, giving you the ability to better weather the storm. Additionally, you can look for income-boosting opportunities. This could include a side gig or part-time job, allowing you to increase your earnings to compensate for lower buying power.

Ultimately, inflation won’t remain this high forever. As supply chain issues resolve, wages shift, and other changes occur, the situation usually calms notably, even if it doesn’t go away completely. Ideally, you simply want to adapt as much as possible, ensuring you can preserve your buying power until inflation becomes less of an issue.

Have you or your household been personally impacted by inflation? How did it affect your budget and financial wellbeing? Have you found a way to limit its effect on your finances that you’d like to share? Share your thoughts in the comments below.

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In Defense of Financial Advisor Fees

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I was a fee hater.

Like a younger, more handsome John Bogle, I would rail on fees. I’d stand on every rooftop screaming about avoiding fees at all cost.

For this reason, when I was a financial advisor, I provided what I thought was top-notch service and undercharged for it every day.

How much did I charge? My minimum fee was $500 per year.

Undercharged? There is no such thing, Joe! Less fees = better. Duh! You should have charged $300!

Think so, do you? Sit close, young padewan, while Uncle Joe tells you a story:

My Experience With Fees

Early in my career I lucked into the opportunity to give speeches on behalf of one of the top advisors in the country. I’d fly wherever he wished and spoke to rooms full of people about good planning. In exchange, he allowed me to move my offices into his suite.

Awesome! What a break for a new advisor; I’d get to see the inner workings of a well-honed operation and maybe glean some tips.

At first I was disappointed. All I saw was what looked like a cookie-cutter assembly line of advice and deliverables. Many clients received offshoots of similar advice. The firm never stuck their neck out. They avoided complex situations at all cost.

That lead me to believe that he was among the best in the country only because he could “sell” people on ways he’d jack up their fees.

…and jack he did. I rarely saw him charge less than $2,500 for planning, then garner asset management fees on top of that. He was a fee-based selling machine.

One day the operations manager and I were talking. I asked a polite question about how redundant their process management workflow seemed. To give you an idea of what I thought about this guy: I’m sure the term “cocky smartass” wouldn’t be far off the mark.

He said, “Have you noticed that we charge five times what you charge?”

I smiled. “Yes.” What a loser. I could never charge what they did! They were just leeches, skimming off of their client’s blood.

He said, “We charge five times more because we’re five times better than you.”

I took it personally.

I shouldn’t have.

Three months later, we were in agreement:

he was five times better than me.

Why He Was Better

This planner was so good, I’d worked right under his nose and hadn’t noticed his skill. The systems were sublime. Where I’d seen cookie-cutter assembly lines before, now I saw a brilliant asset allocation arrangement. Where I’d believed he was charging excess dollars to put boring plans in place, he was dotting every “I” and crossing every “T” for clients…mostly doing the boring stuff that usually was swept under the rug.

In short, he had a proven system of asset management and plan building. If you wanted that service, he covered his costs with his fees. If you didn’t want it, you should probably look elsewhere.

He didn’t try to be everything to everyone.

What You Can Learn

You don’t have to pay $2,500 or more to some advisor if you’re willing to perform the critical tasks that this advisor captained for his clients:

1) Design a plan that covers the six areas of financial planning and rigorously maintain the plan according to a set schedule. Make sure everyone involved is up-to-speed with the details.

2) Build a system to check and maintain your assets against your plan. He had systems in place to notify him when assets deviated too much from the plan. Build your own set of alarms.

3) Carefully guard against taxes and excess fees. This seems like an oxymoron, because this advisor charged a ton of money, but his fees were largely performance based. To increase his fees (and his client’s net worth) he had to ensure the plan was a lean-mean-return-gathering-machine. The only way to do that was to develop a comprehensive tax strategy (example: tax efficient investments outside of IRAs while tax-eaters inside shelters) and low-cost investments.

4) Scour insurances for opportunities. This advisor would review all of his client’s insurances regularly (every two years) to find wasted money. He’d also use insurances wisely to plug holes. One place he nearly always recommended: disability coverage.

5) Build legacies. He was the adamant that everyone either had a family or charitable organization they’d want to have flourish if they couldn’t use their own money. He’d make sure that the estate plan was air-tight and (as with insurance) review these plans every two years.

6) Set communication systems. Clients received a newsletter every six weeks. There was a conference call scheduled for two quarters of the year, along with two face to face meetings. Generally, the face to face meetings were comprehensive and the phone calls were “just checking up.” While he “allowed” only one member of a marriage to take part in phone calls, he was adamant that both spouses attend meetings. He’d become especially irate if one didn’t understand finances and didn’t want to participate. His thinking: if the knowledgeable spouse passed away, the other was screwed.

He also wasn’t afraid to call every client when markets imploded. During the 2002 and 2008 crisis, his whole team was on the phone non-stop, sharing information and passing along strategies. Usually, he wasn’t changing course, because his asset allocation model was already designed to weather downturns. However, clients loved hearing from him.

Was some of this overkill? Maybe. Often insurance and estate planning needs didn’t change. However, when something did, the advisor was on top of it fairly quickly.

It’s a Choice

During my 16 years as an advisor, there were many clients who refused to pay fees even though they would have been far better off had they paid this advisor. It’s fine to accomplish your financial goals without an advisor (in fact, if you’re willing to complete the six steps above, I’d recommend it). But if you decide not to, make sure you’ve designed systems for success and aren’t just being cheap.

Financial planning is just one example. Are there areas of your life where you’d be better off paying a fee and you just can’t do it? Are you cheap?

(Photo credit: Hands Clenching Dollars, Muffett, Flickr; Couple and Advisor, Jerry Bunkers, Flickr)

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What Should You Do with a Lump Sum of Money?

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A financial windfall can come from many places, and in many instances, you may not know you have the money coming to you. When it does come, you may not know how to deal with it. If you do receive a lump sum of money, it’s a good idea to put it aside without touching it so you can think about your finances. There are a few things you should consider doing with the funds before taking that once in a lifetime vacation.

Consider Future Opportunities

Think about how you can invest your money to better yourself in the future. If you don’t have an emergency fund, creating one should be the first thing you do with some of your money. If you are not already a homeowner, you may want to use some of the lump sum for a down payment on a home so you can start building equity. If you are already a homeowner, you could use some of the money to pay off part of the mortgage.

You may want to use some of the money to invest in yourself as well. If your current job pays only average, you may want to consider taking some classes or even getting a degree so you can advance in your career or enter a higher-paying field. You don’t have to use the entire lump sum to pay for your education. There are lots of scholarships that you can find financial opportunities online to pay for some of your degree.

Consider Your Debt Situation

Part of increasing your net worth is decreasing your debts. If you have debt, look at the overall situation. Do you have enough money to pay off some of the debt? It’s important to start with the debt with the highest interest. If you can, try to pay it all off. Even if you can’t pay off the entire amount, try to pay off as much as you can. This prevents the debt from spiraling out of control and negatively impacting other areas of your life.

Come Up with a Plan

Make sure you take care of any taxes you owe. You don’t want to find you have to come up with fees and penalties after you have already spent your windfall. Consider working with an accountant to get your taxes in order. Your income tax rate may be different, so make sure you take that into account. You should also set aside some money to enjoy. When you allow yourself to treat yourself, you won’t feel deprived about putting the rest of the money into long-term savings.

Thinking of the future is smart, but it isn’t a good idea to only think of the future without considering today. Create a plan to deal with debts as well. You might want to talk with your creditors about coming up with a repayment plan for things like personal loans or credit card bills. When you have cash on hand, you may be able to negotiate with you. They may be happy to lower your total bill if it means they receive the amount right now.

You Can Get Your Finances In Order-How to Deal With Financial Distress

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Financial Distress

Financial distress is highly common. Often, it occurs when unexpected money problems arise or ongoing challenges start making it increasingly difficult to make ends meet. At times, a simple lack of proper planning could be responsible. Even with solid planning, financially difficult events like divorces or unemployment can wreak havoc on your finances. Fortunately, regardless of the reason, it’s possible to move forward. Here’s a look at how to deal with financial distress.

How to Deal with Financial Distress

Identify the Root Cause

Before you can start moving forward, you need to identify the source of your financial distress. This means examining the situation to look beyond the basics. For example, simply knowing that your income isn’t enough to cover your expenses may not be sufficient if you want to solve the situation. You need to determine why you’re falling short, how long that shortfall will remain an issue, and if there are any patterns or financial moves you’re making that are causing the situation to become more challenging.

Ultimately, you need to determine precisely what about where you stand is causing discomfort. Are you turning to credit cards to handle basic expenses because you don’t have enough income? Were your debt payments once manageable, but the end of an introductory APR or special promotion is now causing problems? Did an adjustable APR cause your required payment to become too challenging to cover? Are rising food prices throwing off your budget?

By asking questions like those above, you can figure out why you’re experiencing financial distress. Once you know, it’s easier to use a targeted strategy to move forward.

Determine Your Priorities

When you’re dealing with a challenging financial situation, spending time outlining your priorities is a must. This is especially true if you currently don’t have enough income to handle all of your obligations, but it’s valuable for anyone experiencing financial distress.

For those who can’t afford all of their bills, spend time identifying the ones you simply can’t let fall behind. Generally, that includes housing, utilities, transportation, groceries, and similar must-haves that ensure your survival and are necessary to keep earning an income.

By doing that, you can see how much the essentials are costing every month. If there are opportunities to cut back in these areas, that’s potentially wise. However, if you’re already in low-cost housing based on your location, don’t have an expensive vehicle or use public transit, and have a barebones grocery budget that you’re sticking with, you’ll know exactly how much the essentials cost.

After that, you can review your remaining expenses to determine which ones are more critical than others. While it’s again wise to reduce your other bills as much as possible, cutting back wherever the opportunity arises, it also helps you see where a sacrifice can occur. Then, if you need to miss a payment, you’re ensuring that the critical bills are covered first, allowing you to choose a less-crucial one to skip.

For those who can pay all of their bills and those who can’t, this exercise helps you see what matters to you most. Then, you can choose costs that aren’t as vital in your eyes for drastic cost-cutting. Essentially, it ensures that any short-term sacrifices are in areas that cause you the least amount of discomfort, letting you prioritize your spending based on what matters to you.

Cutback and Create a New Budget

After determining your priorities, it’s time to identify appropriate cutbacks and create a new budget. As mentioned above, work to scale back spending in all lower-priority areas where reductions are possible. Usually, this starts with lifestyle adjustments that aren’t connected to essentials. Reducing eating out and entertainment spending are both solid starting points, but it’s also wise to examine other areas where you may be able to find savings.

Once you finish reducing costs where you can, it’s time to create your new budget. List your expenses based on your priorities and allocate your income to them. As you work down the list, identify the point where your costs exceed your income if that occurs. Then, you can determine how much you’re short.

If you’re not short, assess how much money you have remaining. After that, determine if you can direct those funds to areas that result in less financial stress. For example, building an emergency fund could give you peace of mind. Similarly, reducing your credit card debt may relieve some anxiety.

Speak with Your Creditors

If you know that you won’t be able to make a scheduled debt payment, speak to your lender as soon as possible. Many creditors have programs that assist those with challenging financial situations, allowing you to avoid – or limit the impact of – missed payments and similar issues.

Precisely what’s available varies by lender and your situation. In some cases, you might be eligible for forbearance, interest rate reductions, term extensions, or other adjustments that can reduce your financial stresses. Ultimately, you won’t know what’s available until you ask, and the sooner you find out, the easier it is to find suitable arrangements with one or all of your creditors while you work to get back on your feet.

Find Opportunities to Increase Your Income

While getting a second job or starting a side hustle can potentially add some stress, the extra income may make solving your financial concerns easier. If you’re currently employed, ask about overtime. If you’re performing well and haven’t seen a pay increase recently, you could also see if you’re eligible for a raise.

Otherwise, start exploring part-time jobs, freelancing, or gig opportunities. Generally, genuine part-time employment is the least risky. Otherwise, stick with other side hustles that have a reputation for being safe options, making it easier to avoid scams.

You could also sell household items you no longer need for a quick injection of funds. Whether it’s listing items online or holding a yard sale, it’s a way to earn a bit from things you own but don’t have a clear reason to keep. Just make sure that you remain security minded if you sell online, only agreeing to meet buyers in safe locations like police department parking lots.

Get Outside Help

Getting outside help can reduce feelings of financial distress in many ways, primarily depending on the approach you use. Speaking with trusted loved ones or a counselor could give you an outlet for your concerns. Plus, you might get advice that can make dealing with any stress or anxiety easier.

If you’re not able to make ends meet and your financial situation seems insurmountable, turning to a credit counseling organization could bring some relief. They can provide advice to move you toward financial recovery, and they may be able to arrange a debt management plan to simplify paying down your debts.

Just make sure you choose a reputable nonprofit credit counseling organization that offers the service, taking time to research it carefully, as there are scams operating in this area. Looking for options through the National Foundation for Credit Counseling or the Financial Counseling Association of America is typically a good starting point.

It’s also wise to look for community services or nonprofits that may offer financial or others types of support to those in need. States typically have agencies dedicated to helping low-income individuals, and there are many nonprofits that operate programs that provide various types of assistance. Again, just make sure to research them carefully, as there are scams that masquerade as charities.

Track Your Progress

In many cases, seeing that your efforts are leading to positive results can alleviate stress and help keep you motivated. Without appropriate tracking, you may not realize that your approach is working. As a result, it’s wise to monitor your progress toward your various financial goals and give yourself some kudos every time you get closer to the finish line.

Tracking how your financial situation changes also lets you know if a strategy that you thought would work isn’t making the difference you expected. Plus, monitoring your spending allows you to identify budget leaks you didn’t notice previously. As a result, it’s far easier to take quick corrective action, making it easier to get on the right track and ensure you’ll make appropriate progress in time.

Do you have any other tips to help someone deal with financial distress? Have you tried some of the options above and want to tell others how they impacted your financial anxiety or stress levels? Share your thoughts in the comments below.

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5 Tips For Improving Financial Reports 

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Modern companies today are focused on keeping their operations as transparent as possible to their stakeholders. And one of the ways to maintain this is to create successful financial reports to earn investors’ trust. But when there are too many elements in this complex reporting, it can get pretty messy and disorganized. 

If your internal finance department is currently struggling to make ends meet in their financial reports, you know some things need to be changed and get done. If there are too many inconsistent figures, lost spreadsheets, human errors, and data disorganization, it’s crucial to rethink your financial reporting strategies. 

Consider the following tips for improving your company’s financial reports.  [Read more…]

How Oil Rig Companies Can Save Money

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If you have an oil rig company or you’ve been employed by one to keep its finances and other affairs in check, it’s important to know some money-saving techniques. This is crucial for companies that need to cut back on their expenses and save money by maximizing their profitability. Read on to see how you can save money for an oil rig company and put these tips to practice for a positive outcome.

Leverage Technology

The first thing you should do is leverage technology. If you haven’t already done so, it’s good to put modern technology to work on as many levels as possible for your operations. This includes using drones to conduct inspections of places that are high-risk or hard for staff to reach. When you do this, it may help you make considerable savings as far as time and additional safety measures go because you won’t have to put people at risk. Keep in mind the employment of ground maintenance workers, as calculated by the Bureau of Labor Statistics, will grow by 10% between 2019 and 2029. That said, you can hire people for lower-risk positions and fine-tune their safety to a higher degree.

Improve on Safety

When you improve the safety of your oil rig bases, whether that is through introducing new body harnesses for workers or the installation of coshh cupboards, you will inadvertently be saving money. This is because when there’s a lower risk of people suffering injuries while at work, you lower the chance of having to pay settlement fees and the expenses of downtime. This is important because offshore platforms are generally located anywhere from a few hundred meters to 250 miles off the coast. Also, some rigs drill as far down as two kilometers beneath the surface and so it’s easy to appreciate that anything can go wrong. When you make your working environment safer, you also minimize the chance of having to replace workers due to injury, which is something that can cost you a tidy sum.

Train Staff Thoroughly

Next, make sure your entire team is well-trained on the procedures to follow and they know all relevant safety measures. This is because, while you can take steps to ensure the workplace is safe, it’s every worker’s responsibility to uphold their personal safety at the end of the day. For this reason, take onboarding very seriously and carry out drills as often as it’s necessary. This will ensure there’s no chance of someone forgetting the steps to take in case of an emergency, a very big deal when you consider the fact that every 23 seconds, there is a fire somewhere in the United States.

Secure Your Workspace

Finally, make sure your workspace is secured, not just on the physical level but digitally. This can save you a lot of time and money since cyber security is constantly evolving. Note that cyber criminals are getting smarter and getting more resources as well, so security systems that may have worked a few short years ago are currently all but obsolete. That said, enlist the services of a professional team to make sure you don’t risk your data or any of the systems that run your workspace. This will be a way of securing your finances in the long term, which is something you’ll be glad for in the future as your operations grow. With a safer digital workspace, it’s going to be easier to make plans for the future and get the most out, even as far as improving staff safety goes.

Take note of these suggestions and you may save money for the oil rig company you are managing. It may take some time and resources to implement some of these measures, but in the end, they will be worth everything you spent on them.

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The Best Piggy Banks That Can Help Teach Kids Money Management Skills

5 Every Day Things That Cost More Than You Think

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Getting your finances in order can be an eye-opening experience, especially if you start listing all of your daily expenses. Most people move through life and do not really pay attention to how their daily spending is affecting their finances until they decide that they need to improve their finances. There are five everyday things that you are paying more than you think for. Learn about the real cost of these five things.

1. Your Daily Cup of Joe

How many people stop and grab a coffee on their way to work? Probably millions of people stop every day and grab a cup of coffee. We are going to lowball this cost and say you are paying $3.00 for your daily cup. That is $15 a week if you work a five-day work week, $60 a month, and $720 a year. When you look at it like that you can see how that one cup of coffee every work day can really add up.

Imagine if you invested that $720 a year or saved it for ten years at 0% interest you would still be able to take a great vacation, buy a decent used car, or contribute to your kid’s college fund. Can $720 a year improve your finances?

2. Meals and Snacks

On average Americans spend about $44 a week on snacks and a whopping $80 a week on take-out food. Let’s look at that math. In total, according to the USDA, that adds up to $124 a week on average. That is $496 a month, and $5,952. That money is a huge drain on your finances. With that amount of money, you can plan your own funeral and fully fund it in two years. According to the FTC, you can snag a coffin for around $2,000. You would still have almost $4000 left if you cut out snacks and take-out food for one year.

3. Legal Fees

Getting in trouble with the law can really put a dent in your finances. Legal fees are largely underestimated because most people do not look at legal bills as a daily expense, but if you get a DWI charge in Texas (and other states) you should look at it as a daily expense. In Texas, a first-time DWI can mean anywhere from three to 180 days in jail. That means you lose income for those days which you can look at as an expense. Of course, fines can be upwards of $2500 which means you are paying about $7 a day.

When you add it all up a DWI charge (and other legal fees) can cost you about $20 a day for 365 days. That is a ton of money.

4. Sometimes, the Money That You Don’t Spend Will Cost You Plenty

If you’re a homeowner and do not pay for pest control services you can find that your finances are going to take a huge dent. According to the EPA, termites cost homeowners about $5 billion in damages every year. Professional pest control can cost on average $1.33 a day. Pay it you will be glad you did.

5. The Cost of Gas for Your Vehicle

The cost of gas is on the rise and most people are complaining at the pump but you likely do not realize how much you are actually paying on a daily basis. Protecting your finances when gas prices are high can mean making some lifestyle adjustments and condensing your driving.

On average an American driver spends about $9 per day on driving costs. That is $252 a month and over $3,000 a year. If you want to conserve your finances consider public transportation or condensing your trips. Try to get everything done that you can on one trip out.

Getting your finances in order starts with figuring out where the money is going in the first place. Keep a spending journal for a week or two to find where your money is going, and then start trimming the fat. Your finances will thank you.

Five Financial Questions Women Should Ask About

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It’s no secret that women face unique financial challenges. From the gender pay gap, to managing household finances, it can be tough for us to make informed decisions about our money. To empower ourselves and make sure we’re on the right track financially, we need to ask the right questions. Here are some of the most important ones.

What Insurance Should I Have?

Insurance is a big (and often surprising) topic for women: we live longer, are more likely to experience a disability that impacts our earnings, and are more likely to support children or elders. We have a stronger need for a safety net.

As a high-level guide: max out any employer-sponsored coverage (like through your job) and then get an individual policy for the remainder of your need, as your budget accommodates.

Life Insurance

Life insurance is a tax-free gift you give the next generation, and term life insurance is inexpensive. Buy what you can afford, on the private market or through your employer.

Disability Insurance

Disability insurance is so important for women – it will replace a portion of your income if you can’t work, and you want to target 60% and 70%. Especially if you are a single mom or supporting family. To achieve this target, you will probably need a private policy in addition to any coverage from your employer (if available).

Long-Term Care Insurance

And finally, if you’re approaching retirement, long-term care insurance is important if you want to make sure you don’t have to spend all of your savings on health care in retirement. It can be very expensive, so don’t purchase this til you’re older and approaching the need for it.

These are just general guidelines – there’s no one right answer when it comes to insurance. It’s important to talk to an expert (like a financial planner) about what kind of coverage makes sense for you given your unique circumstances.

What is the Best Way to Budget?

There’s no one right way to budget your money – find the method that works best for you and stick with it! Consistency is much more important than perfection.

The Envelope Method

Some people use the “envelope system” where you put a certain amount of cash into an envelope for each category (like groceries, entertainment, and transportation). That’s all you get for that category for the month. This is great if you have to be very careful and want to stay away from credit cards entirely. It’s also a great system if you like using a physical planner over software/apps.

Budgeting Apps

If you prefer using technology to manage your finances, there are a number of great budgeting apps out there that can help you track your spending and set goals. Some popular options include Mint, You Need a Budget (YNAB), and EveryDollar.

Spreadsheet Budgeting

For those who like having more control over their budget (and who are comfortable with Excel or Google Sheets), creating a budget in spreadsheet form can be a great option. This method gives you a lot of flexibility to track your spending in the way that makes the most sense for you.

Pay Yourself First

One of the best ways to make sure you’re saving enough money is to “pay yourself first.” This means that as soon as you get paid, you put some money into savings before you spend any of it. This can be difficult at first, but if you make it automatic (i.e., set up a direct deposit from your paycheck into your savings account), it will become easier over time.

What is the best way to save money?

Again, there is no one right answer to this question – it depends on your goals and financial situation. But the upshot is that you can build an emergency fund or improve your generational wealth. Here are some general tips that can help you get started:

Increase Your Income

It can be very challenging, but to save money, you need to bring in more money than you spend. You can lower your costs and watch your spending, but you can also increase your income through a side hustle, a raise at work, or a promotion. You could sell extra things around your house. You don’t need to make a huge commitment – even small improvements in your earnings can make a big difference.

Automate Your Savings

Set up automatic transfers from your checking account to your savings account so that you’re automatically putting away money each month. This is a great way to make sure you’re always saving something, even if you don’t have a lot of extra money.

Join a Savings Challenge

A savings challenge is a great way to encourage you to save more money and get some community support. There are all kinds of challenges out there (like the 52-week challenge, where you save $52 in week one, $51 in week two, and so on), but the important thing is that you find one that works for you and stick with it. Dasha Kennedy at the Broke Black Girl runs a great year-long savings challenge to help women save $1000.

How Much Do Women Need to Save For Retirement?

As much as you can.

Women retire disadvantaged: we generally receive lower social security benefits due to lower earnings. We also tend to live longer (which means more years in retirement), and we’re more likely to experience a period of disability. All of this points to the need to have a larger retirement nest egg.

Target 20% Savings

Controversial opinion: I encourage all women to target 20% of pre-tax household income for savings. That is a lot. But most of us are playing catch up, and starting from lower earnings. Build up to it by increasing your savings rate little by little, and remember that even small amounts add up over time.

Invest Your Savings

You want to make sure your money is working hard for you, and one of the best ways to do that is to invest it. Investing can be intimidating, but on average, female investors outperform by 1% because we are less likely to panic. 1% is what professional investment advisors charge. Set up auto investment, choose low fee index funds and increase your contribution little by little. Like saving, successful investing is about consistency and patience.

What Biggest Money Mistake Should Women Avoid?

The biggest mistake you can make is to hand your finances off to a partner and ignore them. Women are socialized to do this (and it’s changing, slowly) but we pay for it. If you are widowed or experience divorce, you will be adding a terrifying and steep learning curve to a personal crisis.

Additionally, and I say this as Chief Financial Officer of our family, financial decisions will be better with your input! Even though I do this for a living, my husband often has great insight and our decisions benefit from his involvement. Don’t discount your ability or perspective, especially given that women are better investors.

Retirement Bill in Congress

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Congress has a new retirement bill in the works. They’re calling it Secure 2.0 and it has a few transformational pieces to it that will change retirement saving and retirement income planning. Before we get too far into what this new bill looks like, let’s take a look at what the original Secure Act did.

Secure Act 1.0

The Secure Act was enacted on January 1, 2020, and was the largest retirement reform bill since the Pension Protection Act of 2006. The full title is Setting Every Community Up For Retirement Enhancement (SECURE). And it passed through Congress with a 417-3 vote.

The beginning age to which to start taking required minimum distributions (RMD) from retirement accounts (excluding Roth accounts) was moved from 70 ½ to 72.

People can make retirement contributions no matter what age, as long as they have earned income. The previous limit was 70 ½ when RMDs would begin.

Inherited IRAs (non-spouse beneficiaries) have to have the entire account withdrawn within 10 years of receiving it. This means that if someone passes away and their beneficiary is someone other than their spouse, that beneficiary needs to have the entire account withdrawn and closed within 10 years of receiving the inherited IRA. However, there are exceptions, including a surviving spouse, a minor child (the 10-year rule starts when a child reaches the age of majority), a disabled individual, a chronically ill individual, an individual who is not more than 10 years younger than the IRA owner.

Employees who work part-time, at least 500 hours per year, are now eligible to contribute to their employer-sponsored retirement plan.

Secure 2.0

What’s different with this new law?

For one, the vote passed 414-5. Not as lopsided as the previous one, but still an incredibly convincing tally. “Secure 2.0 is fundamentally designed to make it easier for people to save” – Susan Neely, American Council of Life Insurers President and CEO.

The catch-up contribution provision got a facelift. 401k account owners that are 50 and over are eligible to contribute up to $10,000 more than the maximum for those under 50.

The beginning age for required minimum distributions (RMD) also went up, from 72 to 75. The Yahoo Finance article noted that some reps took it a step further. “ My goal is to get rid of it completely.” – Representative Kevin Brady (R-TX).

The bill would also push employers to automatically enroll new employees into the company-sponsored retirement plan.

Small businesses that stare down the, sometimes, daunting expense of establishing and maintaining a company-sponsored retirement plan can receive assistance. They can receive credits for matching contributions.

One very progressive part of the bill that is sure to garner a lot of attention is the ability of people paying down student loans to save for retirement. The bill would allow employers to “match” a students’ loan payment as a retirement contribution. For example, if the student made a $100 student loan payment, the employer would contribute $100 to their retirement account on their behalf.

The bill introduces a SAVERS credit, which would give lower-income individuals a tax break if they save for retirement.

This is another transformative retirement bill. I’m very pleased society is taking steps to encourage individuals to plan and save for the future.

Related reading:

Ensuring Financial Security Throughout Retirement

5 Solutions for Managing Your Money After Retirement

401k Withdrawal Taxes and Penalties

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Investment Risks in the World Today

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The world is crazy right now. The war with Russia and Ukraine has created investment risks and opportunities with commodities, specifically. Inflation is also an issue. What do you do with all of these moving parts in the global economy?

Gold

Gold has only gone up since the war began, up over $2,000 for the first time since 2020. The reason being is that gold is a store of value and is often seen as a safe asset during times of uncertainty, like war, inflation, or a pandemic.

Gold isn’t the only asset that’s used in times of uncertainty. Cash, bonds, and other precious metals have also seen a massive inflow lately.

Crypto

Cryptocurrencies have also seen a run-up in recent weeks, for two reasons. One, some people do see cryptocurrencies as a store of value like gold. And two, cryptocurrencies have played a role in this war. Because Russia has been cut off, financially, from the rest of the world, they’ve used crypto to finance operations. Ukraine has done the same, but for the reason of being able to raise money from different channels.

Oil

The price of oil has been on a roller coaster since the war began. Russia supplies a lot of energy to the world. It supplies the U.S. with just 3% of oil, but it supplies Europe with most of what they use. That said, the price of oil went up very fast to about $125/barrel because the US and other countries blocked them off to further disrupt their finances.

It’s come back down since then thanks to OPEC+. They pledged to increase production to make up for the loss in supply.

Inflation

Inflation is off the charts right now. The most recent reading came in at 7.9%. There are quite a few things that are seeing the effects of it. Food is getting more expensive. Gas, obviously, due to supply constraints and inflation is getting more expensive. Property is also getting more expensive. Interest rates are going up as well. My wife and I refinanced late last year and locked our rate in at 3%. The most recent reading came in at 4.5%.

The FED is going to make some moves as well. Because of the war with Russia and Ukraine, they will take a more measured and conservative approach, so it’s possible that inflation is a problem for longer because the FED won’t hike rates as quickly as they may have previously intended.

Commodities

There are some other commodities, besides gold and other precious metals, that are feeling a pinch due to the war between Russia and Ukraine. Wheat is the biggest example of this because between Russia and Ukraine, they produce and ship a third of the world’s wheat.

Unintended consequences

Even though the war is between two countries, it’s affecting everything (though differently than how it’s affecting Russia and Ukraine). There are logistical problems that are delaying shipments of things. The air space above the scuffle is off-limits, so flights around the area are taking longer than they previously would have. Longer flights = more fuel and reduced volume on flights = increased costs.

There are a lot of investment risks and opportunities due to the moving parts in the world right now and the market will continue to be volatile until things settle down. If you have time to ride out some ugly markets, stick to your plan. If you’re in retirement or close to retirement, reducing your risk might not be a bad idea.

Related reading:

How to Invest in Gold: 5 Ways to Get Started

How Inflation is Changing Our Lives and Not for the Better

Weekly Wrap: Crypto Aids Ukraine Putin Aids Inflation and Russian Investments Tank

Safeguarding Your Future: A Comprehensive Review Of Augusta Precious Metals

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com