5 financial fitness habits to begin in the new year


(BPT) – While many people focus on personal health goals in the new year, the beginning of the year is also a great time to check your financial fitness. So how can you whip your finances into shape?

South University College of Business, Virginia Beach faculty member Dr. Alan Harper says everyone should adopt these five financial habits in 2015:

Establish a budget

Harper says the first step in taking control of your finances is to establish a budget. “It is extremely important to know how much money is coming in, where it’s going, and allocating it appropriately,” he says. “Having a budget allows you to gain a broader understanding of your spending habits.”

Make sure your budget includes allowances for food, clothing, gas, and even entertainment, Harper advises.

Start saving

Your budget should also include money set aside for emergencies. Harper says the old rule-of-thumb that three month’s salary is enough to have in your bank account no longer applies in our current economy.

“We found in the last recession that people who lost their jobs tended to stay out of work much longer than three months,” he says. “You should have six months to a year’s worth of income in savings, just in case.”

Harper says you should also try to put away 15 percent of your take-home income toward your retirement. Many retirement savings options are available, including 401(k)s, Roth IRAs and individual retirement accounts. It is important to do your homework before deciding on a long-term investment strategy so that you are aware of terms, conditions and any fees associated with your options.

Manage your credit

The beginning of the year is a perfect time to check your credit history, and to look for any mistakes on your credit report, Harper advises. Mistakes on your credit report can cost you large sums of money in interest rates, or even keep you from being approved for a loan.

“The law requires the three major credit reporting agencies to provide you with one free credit report a year,” Harper says. “Pull those reports and look for discrepancies. If you find one, file a dispute with the credit reporting agency and they will remove the item if it is incorrect.”

Harper also says to check your FICO score on the report, make sure you have an understanding of what the score means, and how to improve it if the score is low.

Shop smart

Make it a priority to save money while you shop, Harper says. He encourages clipping coupons, and says purchasing membership cards to discount stores like Sam’s Club and Costco can help you save money over time.

“Those stores will save you money in the long run on purchases like food, gas, and even personal care items.”

Check your insurance

Setting aside time at the beginning of the year to check your insurance policies can also save you money. Harper advises that you should review your auto, home and life insurance to make sure you have the proper coverage.

“You want to make sure you aren’t paying for coverage that you may no longer need, but you also want to make sure you have adequate coverage in case there is an accident or you need to make a claim,” he says.

Many companies also offer discounted rates if you hold multiple policies with them. So, if your auto, home and life insurance policies are with different companies, you may want to explore the benefits of choosing just one company.

“It’s also important to make sure your life insurance policies are sufficient to protect your family from a financial crisis in the event that something happens to you,” Harper notes.

“Establishing a budget, saving, staying on top of credit and insurance, and shopping smart all take some work,” Harper points out. “But the rewards to your personal and household bottom line are well worth the effort.”

Brown bagging potentially leads to $1 million retirement nest egg

Brown bagging potentially leads to $1 million retirement nest egg

(BPT) – Here’s a $1 million idea: making breakfast and lunch at home every day instead of dining out can potentially yield seven figures in retirement savings.

A 25-year-old who eats breakfast at home and bags her lunch can save an extra $10 a day. Invested in a retirement account earning an 8 percent average annual rate of return, those savings could generate more than $1 million by age 67.

This hypothetical example shows how making small changes in behavior may ultimately yield big results, according to Elaine Sarsynski, executive vice president of MassMutual Retirement Services. It’s especially instructive when it comes to retirement savings, she says, as many Americans maintain they don’t have the money to contribute to their employer’s retirement plan such as a 401(k), 403(b) or 457.

“Many of us never think twice about how much we really spend on expenses such as dining out, the interest we pay on credit cards, or even cable channels that we no longer watch,” Sarsynski says. “If you track your expenses and think about what you really need, many of us can find money to save and invest.”

Farnoosh Torabi, best-selling author and financial planning coach, agrees with Sarsynski’s assessment and recommends several personal and household expenses to examine for potential savings:

* Reign in big expenses. If your monthly rent or mortgage is eating up more than 25 percent of your take-home pay, look at ways to reduce this big expense. If you have a mortgage, refinancing might be an option. Renters can sometimes renegotiate a lower rent as good tenants are hard to find.

* Trim smaller costs. Brown bagging is one way to save. Track all your expenses to determine where else you might cut back. It’s amazing how extra expenses such as $3 lattes and $10 iTunes down-loads can add up.

* Stick to cash. Using cash instead of credit can save you up to 20 percent. Not only do you incur fewer interest charges, you may ultimately defer some expenses until you have the cash.

* Attack high-interest debt. Credit cards typically represent the most expensive debt so pay off this debt as soon as possible. When you’re debt free, continue paying the same monthly amount to your retirement plan instead.

* Get professional tax help. If you’re middle-aged or older, rely on a certified public accountant to make sure you’re taking advantage of all of the various tax credits and deductions that come from having children, owning a home or contributing to IRA. Put your tax savings or rebate in your retirement account.

* Dump unnecessary baggage. As we get older, we tend to accumulate more things than we need or can reasonably use. Consider saving by downsizing to a smaller home, selling an extra car you no longer use, and clearing out your basement, garage or attic by selling unneeded household items in a tag sale.

* Cut the cable. Re-examine your roster of cable TV channels; you may find you are paying premium prices for channels you rarely watch.

* Spend time rather than money. It’s always tempting to spoil grandkids, nieces and nephews with gifts. You can save money by cutting back on the presents and giving the kids what they really want: your time and attention.

“We all spend more money than we realize on things that don’t necessarily contribute to our happiness or quality of life,” Torabi says. “By taking a hard look at our spending, most of us can find money to contribute to our retirement plan and, ultimately, improve our quality of life when we are no longer working.”

For more information about planning your retirement, go to www.RetireSmart.com.

6 simple ways to make your bank account work for you

6 simple ways to make your bank account work for you

(BPT) – Are you making your bank account work for you? These days, checking accounts come with a variety of features, such as mobile alerts, that can help you take control of your finances and better manage your spending and saving. Are you taking advantage of them?

The recent Bank of America Trends in Consumer Mobility Report found that while consumers are widely adopting online and mobile banking, less than one-third are using the mobile alerts feature for their finances.

Follow these tips to ensure you’re getting the most out of your banking relationship:

* Stay in-the-know with mobile alerts. Many banks offer banking alerts via email or text that notify you when your balance is low, if a bill is due, when your paycheck is deposited and more. Alerts are a great way to keep track of the funds in your account and help avoid overdrafts and late payments.

* Set up direct deposit. One of the easiest ways to get the most out of your checking account is by setting up direct deposit. With direct deposit your money is quickly and securely deposited into your account, and banks often use this feature as a qualifier to avoid monthly maintenance fees.

* Track your spending using online and mobile banking. Online and mobile banking are simple and easy ways to keep an eye on your account balance and spending. With your computer or smartphone, you can securely bank almost anytime, virtually anywhere. Many online and mobile banking services also enable you to transfer funds from your savings account to your checking to ensure purchases are covered.

* Use a debit card. Debit cards allow you to access your checking account conveniently and securely, without having to carry a lot of cash. You can use a debit card at a variety of locations worldwide or at ATMs for deposits, withdrawals or transfers between accounts. What’s more, debit cards offer security if your card is lost or stolen or if fraudulent transactions occur.

* Pay your bills online, write fewer checks. Online bill pay provides an easy and convenient alternative to writing checks. Whether you’re paying the phone bill or paying back a friend for dinner, doing so with online banking keeps an electronic record of your balance, and eliminates the uncertainty of writing checks and waiting for them to be cashed.

* Learn how to help avoid overdrafts. It can be easy to lose track of your money when you’re busy balancing everyday life. You can help avoid overdrafts and the fees that come with them by keeping a close eye on both your account balance and the money you plan to spend. Some banks are directly addressing this challenge by offering new accounts that specifically help protect customers from overdrafts, such as SafeBalance Banking from Bank of America.

“Some customers are seeking more predictability in the way they bank, and that includes preventing overdraft fees,” says Titi Cole, retail products and underwriting executive for Bank of America. “It is important for customers to know that there are accounts available to help you spend only what you have.”

Using these convenient account features can make your life and your relationship with your money much simpler and more productive. To learn more, visit www.bankofamerica.com, Member FDIC.

Parents: School is back in session, time to teach kids vital financial lessons

Parents: School is back in session, time to teach kids vital financial lessons

(BPT) – The first months of the school year are full of new lessons and experiences for children. While subjects like history, science and math aim to prepare kids for college and careers, there’s one vitally important educational goal that falls to parents to fulfill – financial education.

Parents are kids’ number one resource for learning about money. Fifty-one percent of Generation Z children report they were taught financial lessons from their parents, according to a recent survey by TD Ameritrade Holding Corporation (NYSE: AMTD). Only 10 percent said they learned financial lessons from a teacher or school course, and only 7 percent gained their information from websites and blogs.

“According to the survey, the average age when children begin learning the importance of savings is 15,” says Lule Demmissie, managing director of retirement for TD Ameritrade. “But there’s no need to wait. Even younger children can benefit from early conversations about credit cards, retirement planning, saving and investing. Our research shows that children whose parents talk to them about financial responsibility at an early age are more likely to see saving as important, and develop good budgeting habits as adults.”

The TD Ameritrade survey found children need a little extra guidance when it comes to managing credit card debt, saving for retirement and understanding the best ways to invest:

* Older members of Gen Z are accruing credit card debt, with just 43 percent of Gen Z respondents saying they pay off their credit card bills every month, down from 59 percent in last year’s Gen Z survey.

* Most kids anticipate their adult financial priorities will be finding a job, buying a car, paying off student debt, getting married, buying a home and saving for retirement – in that order.

* Just 17 percent say the best way to plan for retirement is investing in the stock market, while 47 percent believe that a savings account is the best way to prepare for retirement.

“Back-to-school time present parents with the perfect opportunity to begin sharing financial lessons with their children,” Demmissie says.

Here are some ideas for parents who are looking to help their children establish good money-management skills now and in the future:

Establish good savings habits early

Explain to children the importance of savings, and how saving money can help protect them when they experience things like job loss or unexpected car repairs. Help them understand how to balance expenses and income, and the difference between a “need” and a “want.” This can help them understand what they can realistically afford. As part of this lesson, it’s important to teach them how to create and follow a budget, so they can avoid getting into debt. Don’t forget technology can also be a valuable tool to help teach those lessons. There are several budgeting and financial apps available that are geared towards kids.

Model the behaviors you want them to learn

Show children how your own family budget shapes up every month – a portion for savings, for investing, for gas, household expenses, etc. When your child asks for spending money, rather than just handing it over, establish a lending arrangement. Agree on repayment terms, including interest, and help your child understand how to make payments and how long it will take to repay. This experience of showing rather than telling can work well when educating kids about money concepts that may be a bit more difficult to grasp like managing debt or budgeting.

Discuss balance

Trade-offs and sacrifices are essential elements of money management. You can help kids grasp these concepts through application. For example, if your daughter wants to buy a $500 tablet but has only $200 saved, help her examine how she can make up the shortfall. Will she work for the money? How long will she need to work in order to get $300? What other purchases or expenses (like a weekly movie) will she need to give up in order to save the money and reach her goal?

Share your experiences

Everyone makes mistakes – such as racking up too much credit card debt in college or waiting until your 30s to begin saving or investing for retirement. Hopefully you’ve learned from your mistakes and can share the benefit of that knowledge with your children early. Be honest with your kids about the financial mistakes you’ve made, what you learned from them and how they can avoid making similar mistakes.

“The more parents can teach their children about money and help them understand things like establishing a monthly budget or the importance of good credit, the more kids will be able use those lessons when making solo financial decisions in the future,” Demmissie says.

For more tips on how to talk to kids about money, visit TD Ameritrade’s Education Center at www.tdameritrade.com/education.page.

Provided by: TD Ameritrade Holding Corporation, brokerage services provided by TD Ameritrade, Inc. member FINRA/SIPC

5 Vital questions to ask your financial advisor

5 vital questions to ask your financial professional

(BPT) – When was the last time you met with a financial professional? Would you be more likely to keep those appointments if you knew some specific questions to ask? These meetings provide an important opportunity for you to ensure your strategy is still on track and ensure your family and finances are protected. You can get the most out of your meeting by asking the right questions.

Whether it’s your first meeting or your 20th, Thrivent Financial suggests you consider asking these questions when meeting with a financial professional:

1. Is my coverage adequate?

Ensuring proper financial protection against death, disability or injury is one of the most important things you can do for your family. Talk to your financial professional about cost concerns, protection options and how you can make sure that your family will be covered financially in the event of an untimely death or disability. If you’ve experienced major life changes like the birth or adoption of a child, purchased a house or gotten married, chances are your protection will need updating.

2. What are some creative ways we can refine my strategy to help maximize benefits?

A financial professional can help you organize your financial strategy in a way that factors in things like taxes and market volatility, and he or she will know what changes are on the horizon that could affect you. A financial professional can also help use primary products, like life insurance, in unique ways – like helping supplement a retirement income stream. These are applications many don’t know about but can offer different advantages to your financial strategy.

3. How are my financial strategies aligning with my values?

Having a financial strategy that allows you to align your finances with your values is another important topic to bring up. If you have charitable causes you want to support, or volunteer trips you want to take, make sure your financial professional knows about them. He or she can help you develop ways to bring your generosity to life.

4. Tell me about the strength and stability of your company or organization.

Insurance is only as strong as the ability of your financial institution to pay out claims when you need to claim a contract. Make sure to investigate the strength and stability of any company you’re working with to ensure it is financially sound enough to make good on its obligations.

5. What should I do differently in the next year?

This seems like an easy question, but you’d be amazed how few people ask it. Your financial professional is often in a unique position to help you stay ahead of the curve when it comes to your future strategy needs. Taking advantage of market volatility and ensuring your future protection needs are just two of the many variables to consider. Yearly meetings with a financial professional can help you hone your financial strategies for the upcoming year and help keep them as healthy as possible.

Your time is valuable, and your financial future is even more valuable to you and your family. Make sure you’re maximizing both and ensure you get the most out of meeting with your financial professional.