Category: Tip of the Month

Keeping tabs on what you spend isn’t hard. It just has to become a habit. But here’s the good news: Studies show that it only takes an average of 66 days to form a habit. A little over two months. With these easy ways to track your monthly expenses, you’ll be a regular money manager in no time.

Add Up Your Monthly Income

We’re talking about your regular paychecks – and extras from any side hustles. Have irregular income? No problem. Look at what you’ve made in the past few months and list the lowest amount as this month’s planned income. When you know how much you have to work with, you’ll be ready to dive in.

Calculate Your Monthly Expenses

Open up your bank account and start dividing your expenses into buckets, e.g., rent/mortgage, food, utilities, etc. The numbers may surprise you. Think about your needs and wants. What’s really important? What can you live without? Where can you cut? Or if you have a surplus, where should this money go? Regardless, here’s a good way to categorize your income:

•  Four walls (food, utilities, shelter/housing, and transportation)
• Other essentials (insurance, debt, childcare, etc.)
• Extras (entertainment, restaurants, etc.)
• Giving (10 percent of your income)
• Savings (varies based on your resources)

Create a Budget

Now that you know how much you make and what you spend, do a little mat,h and you’ll have a sum total. Dave Ramsey recommends a zero-based budget, where you give every dollar a job to do, such as spending, saving, or giving. But in these categories, you’ll want to get more detailed. For instance, under Food, you might list Dining Out and Groceries. When you get specific, it’s easier to track where you spend.

Track Any Money You Earn and Spend

When you get paid, enter the amount. When you spend, enter the amount. This repetition contributes to forming a habit. If you need a bit more immediacy and structure, get a handy budget app for your phone. Mint (it’s free!), YNAB (You Need a Budget), and Simplifi are a few of many others. It might well be a fail-safe idea, given how much we humans love to be on our phones.

While tracking is super important for those who have a regular income, it’s even more important if you have an irregular income. As mentioned above, the recommendation is to plan around the lowest amount of money you make. If you happen to earn more in any given month, adjust the number and your current money goals. This way, you can cover some extras in your budget.

Tracking also applies to the money you spend. Enter every single transaction, then do that math. Whether your expenditure is coming from your bank account or piggy bank, keeping up-to-date on outflow is key to not overspending.

Create a Regular Rhythm for Tracking

This cadence is totally up to you and what works best for your life. It might be daily or weekly – or before you leave the gas station or grocery store. When you enter the amount of what you spent right after you do it, chances are you won’t forget about it. (Nod to the budget app!) If you’re married and/or have a partner, having a central location for money management increases communication and accountability. Neither one of you can say, “Oh, I didn’t know you were going to spend all our fun money on pickleball lessons. I wanted to sign us up for bridge at the community center.”

Having a handle on monthly expenses (tracking them) means being more aware of what’s going on, avoiding surprises, and being in control. And that’s a good thing for everyone.

Sources

How Long Does it Take to Build a Habit?

How to Track Your Monthly Expenses – Ramsey

Here we are in yet another new year. The obligations and celebrations are over. Chances are, you’ve spent a fair amount over the holidays and might need a plan to help kickstart 2025 with some actionable financial goals. Here are a few ideas.

Create a Budget

This one never gets old. Why? It’s one of the keys to successful budgeting. You can set up a budget for the year that includes essentials, entertainment, and nice-to-haves, aka your Wish Farm. Then place it in your planner or app – there are many good ones out there. In fact, there’s a TikTok trend called loud budgeting, where people openly discuss their financial goals on social media – why they do or don’t want to buy something. If this is your thing and it helps you stay on track, go for it! If not, a good old-fashioned planner works just as well.

Bucket Your Money

This is the next step after the aforementioned. Split your money into categories: food, rent/ mortgage, utilities, medical, entertainment, vacation, etc. Apps can help you parse out these groups. You might also set up separate banking accounts for some of the necessities so you’ll know to leave them alone and not dip into them, tempting as it may be.

Set Up Auto-Drafts

Let’s say you’re saving for your child’s college fund or a down payment on a car. When you create an auto-draft for a certain amount, you’ll never miss that deposit. If you need to tweak the amount during the year, do it. Here’s the bottom line: 1) You’ll learn to live on less, and 2) you’ll be on the way to making your dreams come true.

Look for Savings Deals

Don’t just settle for the interest rate your current bank is offering. There are many options out there to grow your money. But first, do you want to lock into a fixed rate? This can be useful for long-term goals, such as buying a property. Or do you want an easy-to-access account with the ability to withdraw cash for emergencies or short-term needs like birthday or wedding gifts? Shop around.

Cancel Seldom-Used Subscriptions

Scour your bank statement. Do you need all those online magazine subscriptions? How about newsletters you pay for – the ones you rarely read? Purge your subscriptions, then see how much you’ll save. If you’re so inclined, you could put these dollars toward a gym membership. January is when all the specials appear: zero joining fees, if not a seriously cut rate.

Start a Savings Challenge

Try putting away a small amount every month. Get in the habit of emptying your pockets or coin purse. Safeguard your coins in a mason jar, and then transfer them monthly into your savings account. The next month, increase how much you contribute. Pennies, nickels, dimes, and quarters add up! After a year, you might be surprised how much you’ve saved.

Decide on Goals

These can be small or large. It’s up to you. Spend some time thinking about what’s important. Do you want to remodel your house? Contribute to a beloved charity or cause? One resource you might want to consider setting up is an emergency spending pot. This is essential and sometimes overlooked. Regardless of what you decide, figure out your parameters: how much to set aside, how often, and by when. Having financial targets gives you something to look forward to. Best of all, when you achieve your goal, it’s an awesome feeling.

More often than not, New Year’s resolutions center on getting physically fit. But if you stay the course with your finances, you’ll most definitely be, wait for it … fiscally fit!

Sources

10 things you can do right now to start 2025 with fresh finances

https://www.msn.com/en-us/money/personalfinance/10-things-you-can-do-right-now-to-start-2025-with-fresh-finances/ar-AA1vnhyg

Yep, it’s the end of another year! Chances are, you didn’t keep every resolution you made last year, for example, those goals about working out. (No shame here; we all do this!) However, the good news is that your fiscal goals can be a bit easier to achieve. Here are a few financial resolutions that are no-brainers, simple, and, best of all, no sweat.

Get a snapshot of your net worth. This is critical. Sit down and calculate this. When you know how much you have in terms of assets and liabilities, you can more easily determine where you need to make changes to your budget. For instance, this might be spending less on dining out and stocking more away in savings and investments. Understanding how much you have to work with is the first step to reaching your goals.

Pay off credit cards. This might well be an ongoing task, but the end of the year is a great time to take a breath, make a plan, and hit the ground running in the new year. If you have high-interest cards, look for limited-time, lower-interest and/or zero-interest cards. Some lenders will even give you as long as 21 months without interest. If you find yourself using credit cards more than you like, another way to get a handle on this is to use cash when you’re out at stores and restaurants. Seeing the dollars actually leaving your hands as opposed to just swiping your plastic might give you a needed dose of reality.

Update your savings goals. If you want to easily increase your savings, choose an amount and have it auto-drafted from your paycheck or checking account into your savings every month. This way, you’ll learn to live on the amount you have left. When you never see the amount you’re tucking away, you won’t miss it.

Review and reset your investments. Take some time to pull together all your assets: IRAs, retirement accounts, and employer 401(k) plans. If you can contribute more to any of these, all the better. For 401(k)s, the IRS just announced a cost-of-living adjustment for retirement plans and IRAs – the 401(k) contribution limit for 2025 is $23,500, up from $23,000 in 2024. However, individual retirement account (IRA) contributions will continue to be $7,000 in 2025, the same as in 2024. If you’re over 50, here’s some good news: You’ll be able to make even larger catch-up contributions than other workers because of a provision in Secure 2.0, a federal retirement law. Beginning in 2025, employees aged 60, 61, 62, or 63 who participate in workplace retirement plans can make catch-up contributions of up to $11,250.

Take a look at your credit report. This is key. You’re entitled to one free credit report a year from each of the three credit agencies, so doing this is easy peasy. Pull up your report and give it a look-see. If you see anything negative, take action to repair it. If there are any errors, correct them asap. To get started, go to AnnualCreditReport.com.

While there are many other money-related resolutions you can make, starting with ones that take minimal effort while yielding maximum results is a good place to begin, not to mention, a great way ease into the new year.

Sources

https://www.investopedia.com/articles/pf/06/newyear.asp

https://www.investopedia.com/the-irs-revealed-2025-changes-to-retirement-401k-and-ira-contributions-8738507

It’s that time of year again. Halloween has just come and gone – and now we’re hurtling headlong into Thanksgiving and Christmas. For holiday shopping, it’s tempting to turn a blind eye and put everything on your credit cards. However, if you don’t want to have a financial hangover in January, February (and so on), you might want to take a look at these tips.

Create a Budget and Stick To It

The earlier you sit down and do this, the better. Decide on a financial cap per gift per person, then shop. Then, get creative. For instance, what if you bought a pre-loved item for someone? Made something for someone? You might also decide on a gift, then shop around and compare. So, when Black Friday and Prime Days raise their heads, you’ll already have made your selections. More on that below.

Put a Lid on Impulse Buying

This is a tough one. As mentioned above, Prime Day and Black Friday are hard to avoid. They scream at you on your TV and phone scroll, so it’s easy to get off track. If you want to avoid runaway spending, here are two ways to approach these retail spectacles. First, you can keep an eye on which item you want – then plan and research. Buy it when the price is crazy low, and walk away from all the frenzy, all the while tracking your spending. Second, you can dive right in, browse all you want, then put some things in your cart. But don’t buy it then. Come back a day later and decide if the purchase is really necessary. At this moment, you might also imagine the pain you could feel in 2025 with a bunch of debt hanging over your head. Employing this mindset could make all the difference.

Use Your Credit Cards Wisely

According to Jennifer Ellis, senior consumer manager at BOK Financial, credit card debt is on the rise. And with high interest rates, if you do have a balance, you’re going to pay more for your items. Before you set out to buy gifts, try to pay your credit card balances in full to avoid big fees. This way, you won’t carry the burden of a lot of debt into the new year.

Try Envelope Stuffing

This is an old trick, but a good one. Get envelopes, put the name of your giftee on the front, then put the amount of money you’re going to spend in it. Once you’ve used up the cash in the envelope for said person, you’re done. Also, using cash is more startling – you see the money go bye-bye! It’s so easy to gloss over the actual cash amount when you’re using plastic, as it almost doesn’t seem real. Working with real moolah is a tried-and-true technique, a wake-up call that you’ll appreciate.

Plan Early for Travel

Buy your tickets early for Thanksgiving and the December holidays. Monitor airline, bus, and train websites. Set alerts to notify you when the prices go up or down. All it takes is a little time and elbow grease. In the end, it’s worth it.

Most importantly, having a financial plan during this time of year is key. Yes, life is busy, but if you want to step into the new year without carrying the shackles of debt, using some of these ideas might be your saving grace.

Sources

https://thestatement.bokf.com/articles/2024/10/the-spookiest-trend-spending-too-much-on-the-holidays 

 

Annuities are one of many products that folks have in their nest egg. But first, what exactly is an annuity?

Simply put, it’s a contract with an insurance company that promises to pay the buyer a steady stream of income in the future. It can be either a fixed or variable income stream. The term “annuity” can also refer to a sum of money payable yearly or at other regular intervals.

There are some things to know before you charge headlong into putting your assets into an annuity. So, here are a few watchouts to consider before you head in that direction.

Ask the Right Questions

First up, what kind of annuity is it? What about the fees and optional riders? Is there a Market Value Adjustment, aka MVA? What is the AM Best rating and Comdex rating? How long is the rate guaranteed? How much can you take out penalty-free? How is the gain calculated for index annuities? Is there a surrender charge assessed if I die? How long is the contract term? How is their service? Lots of questions, yes, but the more you ask, the better.

Learn About New Features and Products

Here’s something interesting to ponder: Did you know that 99 percent of index annuities don’t include dividends? Or that 99 percent of index annuities only lock in the rates for 1 to 2 years? In fact, there are new products that include dividends and lock-in rates for the length of the term. Who knew? Here’s a list of the 10 best annuity companies as of September 2024 you might want to check out.

Vet the History of the Company

This is key. For instance, how long have they held their AM Best rating? How long have they been operating under their current name? And finally, did you know that start-ups buy shell companies formed 75+ years ago to advertise they’ve been around since then? Yep, make sure you do your research.

Watch Out for Fees on Variable Annuities

Here’s the thing: Variable annuities have lots of different layers of fees. Make sure you secure an itemized breakdown of all of the fees before you commit. If your variable annuity earns 7 percent to 9 percent gross and you pay 3 percent to 4 percent in fees, you might be better off in a fixed-rate product.

Check Out Long-Term Care Riders

Believe it or not, some annuities offer 200 percent to 300 percent of your initial deposit in long-term care benefits with an optional rider. In fact, long-term care riders on life insurance policies can be more affordable than standalone long-term care policies. However, should you not utilizeyour long-term care benefits, your heirs will get the full death benefit from your life insurance policy, less what you owe on any of your policy loans.

Take a Look at All Types of Annuities

Typically, most banks sell only five to eight annuity companies. So don’t rely on just your bank. If you do, you’ll miss out on 95 percent of the products that are out there. And this is important to know: Lots of insurance agents and “advisors” focus on selling a few index or variable annuities. Make sure you shop around before buying. 

Annuities are just one of many diversified assets you might want to include in your investment portfolio – as you know, diversity is crucial. But when it comes to annuities, there are specific questions and things to think about. Make sure you do your due diligence before you invest.

Sources

11 Annuity Tips You Should Know (annuityresources.org)

Long-Term Care Rider: What It Is, How It Works (investopedia.com)