I made a lot of mistakes when transitioned from a W-2 employee to a self-employed consultant. I wasn’t yet a financial planner and nobody in my life at the time had gone through this process. Here is what you need to know to have a much smoother transition than I did.
Read MoreFinancial steps to take before the wedding.
Read MoreMortgage and auto payments are automatically reported to credit agencies, but rental payments are not. New services, however, are making it easier than ever to report this information. If your landlord gives you the option to report your rental payment history to the three (3) credit agencies - should you opt-in?
Read MoreESOPs are a type of qualified retirement plan. They are not as common as other qualified plans, such as 401ks and 403bs, but you may be offered the option to participate in an ESOP at some point in your working career. Learn how ESOPs are unique and the planning opportunities that come along with them.
Read MoreCouples use a variety of methods to manage their household finances. While some prefer to combine everything from the beginning, others are more comfortable, with separate accounts or a combination of joint and separate. Here are a few methods that may be helpful when having a discussion with your spouse about how you will be choosing to manage your household finances going forward.
Read MoreThe Thrift Savings Plan (TSP) is the retirement plan for federal employees and members of the uniformed services. The G Fund is specifically issued by the Treasury Department for TSP participants and it offers a unique benefit. This is how it works.
Read MoreApple (AAPL) and Tesla (TSLA) were recently in the news as two companies that are splitting their stock. Why would a company choose to do that and how does it affect you?
Read MoreThis video will give you ideas on where to start if you have a cash flow surplus and don't know what to do with the money. From paying off debt, saving for retirement, and building a cash reserve, I walk you through some options in priority order.
Read MoreFIRE stands for financially independent, retire early. The movement continues to grow, with retirees in their 20's through 40's. It has caught on because it is unexpected - we don't picture retirees being so young.
Read MoreSystematic savings is an easy yet powerful concept. It involves setting up an automatic deduction from one account to another at some frequency (weekly, monthly, yearly, etc).
Many of us already experience systematic savings with our paycheck. We have automatic deductions for retirement such as 401(k) or TSP plans. Federal taxes are also automatically deducted from our paycheck. The IRS knows that they are much more likely to get their money if they force you to pay as you go.
The benefits of systematic savings have been so well documented that the government passed a law in 2006 allowing businesses to auto-enroll employees into retirement savings plans. Once people are enrolled, they are much less likely to make a change. Instead, they learn how to adjust to a smaller amount in their paychecks, if they even notice.
We can apply the concept of automatic savings to other things. It doesn’t cost anything to open up a new savings account at my bank. Therefore, I set up separate accounts for various goals and save automatically for these goals each month.
The idea started when we got our dog, Fulton, a few years ago. We looked into pet insurance and, at the time, it didn’t seem to make sense for us. Insurance didn’t cover as much as we thought it would, so it seemed hard to justify the cost. That being said, we didn’t want to dip into our savings account in the event of a health emergency for him.
As an alternative, we decided to self-insure. Instead of paying pet insurance premiums every month, we automatically contribute the cost of a monthly insurance premium to a separate savings account. If we need money for a surgery or medication for our dog, we just take it out of that separate account without touching our other investments. And when our dog passes away, we will still have the savings account to do with it what we want. If we were paying premiums, we wouldn’t get that money back.
The negative side is that if your pet needs a $10,000 surgery, and you do not have even close to $10,000 in his savings account, you are going to have to come up with the money. If you had opted to pay insurance premiums, it may have been covered.
Systematic savings accounts will work for some people and maybe not for others. You have to consider your risk tolerance, self-discipline, and current emergency fund.
I have found the concept to be liberating. We have an account for future cars and car repairs. We also have a travel fund. You don’t stress over purchasing a gift or going out to dinner with friends when you know you are saving each month for things that are important to you, and you can enjoy the rest. Give it a try next time you find an expense that is throwing your monthly budget into a tailspin!
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.
Schedule an initial call to get a personalized quote and speak with one of our CERTIFIED FINANCIAL PLANNER™ professionals.
Join our monthly educational newsletter. We curate interesting articles, tips to protect your money, and books worth reading as your resource for all things financial.
© Planning Within Reach, 2014-2024. All Rights Reserved. Disclosure | Privacy | ADV
