Finance, Money

10 Steps To Rebalance Your Investment Portfolio

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Investment Portfolio

Investing in a well-diversified portfolio is crucial for long-term financial success. Based on this, as the market fluctuates and your investment goals evolve, it’s essential to regularly rebalance your portfolio. Rebalancing ensures that your asset allocation stays aligned with your desired risk tolerance and financial objectives. In this article, we will outline 10 easy steps to help you rebalance your portfolio effectively.

Step 1: Define Your Investment Goals

Before diving into the process of rebalancing, it’s essential to clarify your investment goals. Are you aiming for long-term growth, capital preservation, or generating income? Understanding your objectives will determine the appropriate asset allocation and risk tolerance for your portfolio. It’s crucial to establish a target mix of stocks, bonds, cash, and other assets that align with your goals.

Step 2: Review Your Current Portfolio

To rebalance your portfolio, you need to evaluate your current holdings thoroughly. Start by examining the percentage allocation of each asset class in your portfolio. This analysis will provide insights into any deviations from your target allocation. Look for asset classes that have significantly increased or decreased in value since your last rebalancing exercise.

Step 3: Determine the Ideal Asset Allocation

Based on your investment goals and risk tolerance, determine the ideal asset allocation for your portfolio. This allocation should reflect your long-term investment strategy and should be adjusted periodically as your goals change. For example, a younger investor with a higher risk tolerance may have a larger allocation to stocks, while a retiree may prioritize capital preservation and income generation, leading to a higher bond allocation.

Step 4: Calculate the Rebalancing Adjustments

Once you have determined your target asset allocation, calculate the adjustments required to rebalance your portfolio. Start by identifying the asset classes that are overweighted or underweighted compared to your target allocation. To restore balance, you will need to buy or sell assets accordingly.

Step 5: Execute the Rebalancing Trades

With the calculations complete, it’s time to execute the necessary trades to bring your portfolio back in line with your target allocation. Sell the assets that are overweighted and purchase the ones that are underweighted. Consider the tax implications of selling assets, particularly in taxable investment accounts. Additionally, be mindful of transaction costs and choose a cost-effective approach to minimize fees which is vital when energy costs are high and a recession is a reality.

Step 6: Monitor and Adjust Regularly

Rebalancing is not a one-time event; it’s an ongoing process. After you’ve rebalanced your portfolio, it’s crucial to monitor its performance and make adjustments periodically. Market conditions, changes in your financial situation, and shifts in your investment goals may require you to rebalance more frequently or make strategic changes to your asset allocation. Regular monitoring allows you to stay on track and make informed decisions.

Step 7: Seek Professional Advice

While it’s possible to rebalance your portfolio independently, seeking professional advice can provide valuable insights and expertise. Financial advisors can offer personalized guidance based on your specific financial situation, risk tolerance, and investment goals. They can help you develop a comprehensive investment strategy, review your portfolio regularly, and recommend adjustments when necessary.

Step 8: Consider Tax-efficient Strategies

Tax efficiency should be a consideration when rebalancing your portfolio, particularly in taxable accounts. Selling investments can trigger capital gains taxes, which can impact your overall returns. To minimize the tax consequences, consider tax-efficient strategies such as tax-loss harvesting or utilizing tax-advantaged accounts like IRAs or 401(k)s. These strategies can help mitigate the tax impact and enhance the after-tax returns of your portfolio which is crucial in an economy that’s not growing and inflation is a top concern.

Step 9: Stay Disciplined and Avoid Emotional Decisions

Rebalancing your portfolio requires discipline and a long-term perspective. It’s essential to stick to your investment plan and avoid making emotional decisions based on short-term market fluctuations. Market volatility can tempt investors to deviate from their strategy, but staying the course and adhering to your asset allocation plan will likely lead to better outcomes over time.

Step 10: Educate Yourself and Stay Informed

Finally, continuously educate yourself about investing and stay informed about market trends and developments. The investment landscape is ever-evolving, and staying knowledgeable will help you make informed decisions when rebalancing your portfolio. Keep abreast of economic news, industry trends, and changes in regulations that may impact your investments.

The Final Word

Rebalancing your portfolio is a vital aspect of successful investing. By following these 10 proven steps, you can ensure that your portfolio remains aligned with your investment goals, risk tolerance, and changing market conditions. Regularly reviewing and rebalancing your portfolio will help you maintain a well-diversified and optimized investment strategy, increasing the likelihood of achieving your long-term financial objectives. Remember, seeking professional advice and staying disciplined are key factors in rebalancing success.

Finance, Money

5 Retirement Saving Strategies If You Don’t Have A 401(K)

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Retirement Saving Strategies

More than 42 million Americans don’t have 401(k) or another similar retirement plan. According to federal data, 14% of small-sized businesses don’t offer retirement accounts. While it is difficult to beat the employer contributions (free money) in a 401(k), you can use these tips to build a retirement nest egg.

1. Create your own 401(k)

You should consider setting up a one-participant 401(k) or solo 401(k) through an online brokerage. Make sure your boss changes your status so that the income gets reported on a 1099 form instead of a W-2 tax form. This way you can be categorized as an independent contractor and set up your own 401(k).

Solo 401(k) has the same rules as an employer-sponsored 401(k). You will have contribution limits depending on your age. With that said, you are both an employer and an employee as a self-employed business owner. You can make contributions as per individual guidelines, which will eventually increase the overall limits.

Your spouse is the only other additional employee you can hire and cover through this arrangement.

2. Get solid investment advice

You need pros for financial advice even if you are among the most conscientious savers. There are a few things that only professional financial advisors can grasp. Financial planners can have a look at your income and savings and help you organize your finances. They will carefully review your existing financial affairs to let you know where you stand. Financial pros will also offer recommendations to help you get where you want to be.

Financial planners have the necessary experience and training to make educated projections about the future. This insight allows them to offer solid advice on investments, savings goals, life insurance, mortgages, taxes, and retirement and wills. The best financial planners will take your aspirations and financial goals into account. They won’t try to hold you back from spending your money. But, will ensure that you spend wisely.

3. Consider an IRA

Individual retirement accounts (IRAs) are a traditional yet flexible tax-advantaged instrument. There are several benefits to opening an IRA depending on your income bracket. Any money you stash will grow on a tax-deferred basis, which means you don’t need to pay taxes on your earnings until it’s time for withdrawal.

In addition, your tax rate and gross income get reduced by IRA contributions which is helpful even more during a recession. You may become eligible for certain deductions, including medical costs by having a smaller adjusted gross income. If you expect to be in a higher income tax bracket on retirement, you may want to consider opening a Roth IRA. It’s easy to open an IRA account if you use an automated investing service.

4. Get a health savings account

Health Savings Account or HSA can help you save enough for retirement if your existing health insurance plan has a high deductible. The money in your account can be accessed anytime to pay for copayments, deductibles, and other qualified medical expenses. Moreover, you cannot use it to pay for insurance premiums.

If you don’t use the money, you can always invest it. HSA balance can be carried to the next year and grows tax-free. You can have a nice golden nest egg if you combine your HSA with an IRA. HSA is one of the better retirement savings strategies since any contributions you make are tax deductible. You should ask your insurance provider or banker about opening an HSA.

5. Persuade your employer

If you don’t have a 401(k), you should try to speak to your employer. It never hurts in asking. Moreover, make sure you do your research first. There are several plans available depending on the size and type of business. You may want to zero down on a few plans that are a right fit for you and the business. Make sure you find plans that don’t require a lot of paperwork or time and effort.

You may also want to rally a few coworkers since there is always strength in numbers. Your employer may not readily agree to a plan. But, over a period of time they may come to realize that a retirement plan is important to their workforce. Don’t forget to harp on the employer benefits of contributing to a 401(k). There are tax incentives for employers that sponsor plans which is great during high inflationary times.

Even if you don’t get anywhere with wheedling your employer – it’s worth a shot. Don’t push the issue too hard though in the times of layoffs. You may have to wait until times are better.

Finance, Money

7 Tips To Streamline Your Personal Finances

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Streamline Your Personal Finances

Are you tired of feeling overwhelmed and stressed out by your personal finances? You’re not alone. According to the American Psychological Association, money-related stress is a major source of anxiety for 72% of Americans. And financial stress is something that can affect all areas of your life – mental and physical health, relationships, and even job performance.

With such a widespread impact, it’s no wonder that more and more people are looking for ways to streamline their personal finances and alleviate some of the stress associated with money management. Thankfully, there are plenty of simple yet effective tips you can follow to take control of your money. Let’s take a closer look at them.

Minimize the Use of Cash

While not using cash entirely may not be feasible for everyone, it can be a useful strategy for some people to streamline their personal finances. Even though cash transactions are the most frequently used payment method in the country, they can be cumbersome and less secure than digital payments, as they require you to physically carry and exchange money. In addition, cash transactions can be more difficult to track, which can make it harder to keep track of expenses and create a budget.

By using credit or debit cards, online bill pay, and mobile payment apps, you can simplify your finances and have more control over your spending. Digital payments can also help protect against fraud and theft, as they offer stronger security measures than cash.

Utilize Financial Apps and Tools

A recent survey by Mastercard revealed that nine out of ten of their users across America and Canada use financial apps to manage their finances. Apps like Mint, Personal Capital, and You Need a Budget (YNAB) can help you track your expenses, monitor your investments, and create a budget. In addition to mobile apps, there are also various online financial tools available, such as budget calculators, retirement planning tools, and debt repayment calculators. Consider using these tools to gain a better understanding of your finances and make more informed decisions about your money.

Maximize Your Savings

One of the easiest ways to build a strong financial cushion and prepare for future expenses is to maximize your savings. You can do this by setting up automatic transfers to a high-yield savings account, so money automatically goes into it without you even thinking about it. You can also reduce unnecessary expenses, such as eating out or shopping for non-essential items, to free up more money for savings which is vital during a recession.

Another strategy is to take advantage of employer-sponsored retirement plans or individual retirement accounts (IRAs) to save for retirement. By saving as much as possible, you can achieve your financial goals more quickly and with less stress.

Consolidate Your Debts

Consolidating your debts means combining multiple debts into one payment, typically with a lower interest rate or more favorable repayment terms. This simplifies your finances and can save you money in interest charges. Some common ways to do this include balance transfers, personal loans, and home equity loans.

Balance transfers involve transferring credit card balances to a card with a lower interest rate, while personal loans offer lower interest rates than credit cards. Home equity loans allow you to borrow against your homes’ equity. Consolidating your debts can help you pay off your debts faster and more efficiently, allowing you to get your finances back on track which is even more important in these high inflationary times.

Review Your Insurance Policies

Taking another look at your insurance policies may help your finances by ensuring that you have adequate coverage at the most affordable rates. You can compare policies and premiums from different insurance providers to find the best deals.

You can also adjust your coverage amounts or deductibles to meet your current needs and budget. Doing this regularly can also help you identify any gaps in coverage or outdated policies. This is critical so you don’t end up paying more than you need to for insurance and are fully protected in case of an emergency or unexpected event.

Monitor Your Credit Score

Finally, you can simplify your finances by keeping an eye on your credit score to stay informed of your creditworthiness. This can also help you identify any potential errors or fraudulent activity on your cards. You can access your credit report for free once a year from each of the three major credit bureaus (Equifax, Experian, and TransUnion), or sign up for credit monitoring services to receive alerts of any changes to your score.

A higher credit score can lead to better interest rates and loan terms, potentially saving you money in the long run. Staying on top of your credit score can also help you take steps to improve it over time and ensure your financial health.

Automate Your Bill Payments

The simplest step you can take right away is setting up automatic payments for all your recurring bills, such as rent, utilities, insurance premiums, and other monthly bills. The payment amount will be automatically deducted from your bank account or credit card on the due date. This will not only ensure that your bills are paid on time without you having to lift a finger, but it will also reduce the risk of missing a payment or incurring interest charges.

Finance, Lifestyle

Tips To Boost Your Credit Score Fast

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
credit score

A good credit score is one of the most important weapons in your financial arsenal. It tells loan officers that you are a responsible borrower who can afford to pay off personal debt. The higher your credit score, the better your chances that you will receive favorable loan terms when you apply for personal credit, such as a mortgage or a new car loan. 

Whether you want to buy a house or just need some improvement in your current credit standing, boosting your credit score can be valuable in times of high inflation and high energy costs. To help, we have compiled this list of quick tips for improving your credit score.

Make Timely Payments on All Debts

The first step to building a solid credit score is ensuring you make all your payments on time. If you have multiple credit accounts, making due dates a priority is vital. Adding these due dates to your schedule can help you stay on top of payments and avoid late fees. 

All late payments are counted against you on your credit report, and missing even a single payment can cause severe damage to your credit scores. You should also apply for new lines of credit only when you are ready to use them responsibly—opening accounts without a plan is risky and could hurt your credit score if you’re not careful.

Besides, the best way to maintain a good debt-to-credit ratio is by paying more than the minimum due each month. This not only gets rid of your debt faster, it will also help you avoid late payments and other costly penalties.

Limit New Credit Applications and Keep Old Credit Accounts Open

Banks perform hard inquiries into your credit report when you apply for new credit (i.e., a credit card, a car loan, or a mortgage), and the inquiry can temporarily lower your score. 

This is because the inquiries indicate to lenders that you’re looking to take on more debt, making them leery of lending to you—even if you’re an excellent credit risk. The best way to avoid these inquiries is by keeping old accounts open—the longer you have an account, the more it will positively affect your score.

At the same time, you want to limit new credit applications as much as possible because each one results in another inquiry. Since most people are responsible with their finances and don’t tend to ask for new loans too often, there’s no need to open up too many cards at once. 

If you need a new line of credit, close an old account before applying for the new one so that you have fewer accounts on record. In addition to limiting inquiries when it comes time for a new loan, it’s also important to keep older accounts open for as long as possible. The longer you have an account, the better your score will be.

Consolidate Your Debt

Consolidating all your debts into one single monthly payment will help you save time, effort, and money. Here’s how it works: if you’re paying off multiple loans and/or credit cards each month, having more than one creditor requires more time to track payments and budgets. 

In addition, if one loan starts making late payments, it can have a chain reaction on all other loans. Consolidating allows you to have just one creditor and only one payment due each month. As a result, you’ll save time by no longer having to deal with multiple creditors and the hassle of tracking multiple bills.

Monitor Your Credit Report & Dispute Any Errors

Your credit report is a snapshot of your financial history, and most banks and lenders use it to determine whether you’re someone they want to do business with. That’s why it’s essential to ensure your report is accurate. Not only can wrong information on your report make you look like a higher credit risk than you actually are, but the process of correcting that information can be tricky and time-consuming. 

To protect yourself, you should check your report regularly for any errors affecting your score. If you find anything that looks wrong or out-of-date, or if you’re being charged for something you don’t recognize (like a late payment on a debt that’s already been settled), you can dispute it. 

If you find any errors on your report, you’ll need to contact the credit bureau directly and submit a dispute form by mail or online. You can also submit supporting documentation along with your complaint.

Finance, Money

How To Avoid These 7 Budget Disruptors In 2023?

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice
Budget Disruptors

Budget busters are quite different from your regular monthly expenses. These are extra, unexpected indulgences that get added on top of the essential things you need to get by. Whether you’re new to adopting a cost-conscious lifestyle or hoping to brush up on the latest budgeting strategies, here are some of the notable budget disruptors you should be mindful of and how you can deal with them.

App Purchases

App purchases are easy to make without thinking about how much they cost. And once you’ve spent money on apps, they’re even easier to justify because it’s just a couple of bucks. Of course, who can resist when an app feels like it’s just a dollar? You’ve probably downloaded apps that you thought were free, only to be greeted by the dreaded “Buy Now” or “Upgrade to Premium” button.

Sift through your mobile apps to ensure that your purchases aren’t subject to in-app purchases. If you are on a budget, be mindful of how many apps you upgrade in a month.

Buying Coffee Every Day

While it’s true that coffee can be a delicious, life-giving force, it can also have an insidious way of taking over your life if you’re not careful. For one thing, it’s expensive—at $5 per cup at a typical coffee chain, you might spend $30 or more per week on coffee alone. That’s a hefty amount to be forking over for the privilege of staying awake.

Instead of going down this slippery slope, take advantage of free coffee from your office. You can also invest $20 in an insulated travel mug that keeps your coffee hot for hours. Not only will this save you money by limiting how much you spend on coffee each day, but it can also have positive effects on your health.

Credit Card Interest Charges and Fees

It’s easy to fall prey to an exorbitant credit card bill when you don’t know how to avoid the extra fees. Interest charges are often the most common and least-understood culprit of high credit card bills. Besides, many people don’t know they’re paying thousands of dollars in hidden expenses because credit cards levy extra fees for late payments, returned checks, foreign transactions, and so on. Even if the economy is roaring like it was in 2017 and 2018, for instance, this is not something to write home about.

The easiest way to avoid these charges is to pay off your balances in full each month. If this isn’t possible, try to manage your balance to stay as close as possible to zero. And no matter your situation, be sure to track your credit card activity regularly so that you know exactly what’s going on with your accounts.

Movie Rentals and Streaming Subscriptions

As the cost of cable continues to rise and the availability of content on streaming services increases, more and more people are choosing to watch movies or shows with a digital subscription. The convenience of watching whatever you want from the comfort of your home is hard to beat. Based on this, this change in viewing habits can be costly.

Always return all movie rentals (Redbox) on time. If necessary, set a reminder on your phone to notify you when the due date is approaching. You can also switch to cheaper streaming services for entertainment.

Flash Sales

When you’re on a budget, taking advantage of a flash sale can be tempting. For example, a website offers a product you want at a meager price—such as $40 off an item that normally retails for $200. You might even justify it by saying, “It’s a one-time thing, and I need the product, so I’ll just buy it now.” But then you get home and realize that the budget you set for yourself was actually $100—and now you have to make up the difference.

The best way to combat this is to set your budget before shopping. Don’t let extraneous items squeeze your budget to the breaking point. Think of flash sales as something fun to browse—but always set your budget first. This is even more important in times of high gas prices and runaway inflation.

Eating Out Too Often

Eating out and ordering in can be a way of life for many people, but staying mindful about your spending is essential. Every time you eat out, you’re paying for the labor involved in preparing and serving your food and any costs associated with utilities & maintenance. So even if you’re not eating out every day, it can easily slink into your budget, whether grabbing lunch during your break or treating yourself to a night out with friends.

Reevaluate your habits. Instead of going out for lunch daily, pack a healthy sandwich or salad at home and bring it in a lunchbox. Order a less expensive item from the menu, such as soup or salad—instead of ordering an entrée or appetizer to save money on dinner.

Charitable Donations

The appeal of charitable donation buckets at stores and shopping centers is undeniable, but often you don’t know where that money is going or how much of it will actually get there. While donating a few dollars here and there might feel good, it can add up to a significant amount over a year.

Don’t feel pressured into giving money to charity just because the cashier in the mall wants you to. If you have already budgeted for charitable donations, then that could be enough. You should look at legitimate charities such as The Knights of Columbus or the American Legion, for example.

Finance, Money

Bonds Versus Treasuries: What’s The Difference?

by James Flores|Posted on | 3 minute read | Advertiser notice

Bonds and treasuries are both forms of debt securities, but they have some key differences that are important to understand. Let’s start by breaking down what these terms mean and how they work.

Bonds are like IOUs issued by companies, municipalities, and other organizations. When you buy a bond, you’re essentially lending money to the issuer in exchange for a promise to pay back the principal plus interest at a later date. The interest rate on a bond is known as the coupon rate, and it’s usually fixed for the life of the bond.

There are several types of bonds, including corporate bonds, municipal bonds, and government bonds. Corporate bonds are issued by companies to raise capital for things like expanding operations, financing new projects, or refinancing existing debt. Municipal bonds are issued by cities, states, and other local governments to fund infrastructure projects like schools, hospitals, and roads. Government bonds, also known as sovereign bonds, are issued by national governments to pay for public projects and fund their operations.

Now, let’s talk about treasuries. These are debt securities issued by the federal government to finance its operations and pay for public projects. Like bonds, treasuries pay interest to investors, but the interest rate on a treasury is usually lower than the rate on a corporate bond because the government is considered a safer borrower.

There are several types of treasuries, including Treasury bills, Treasury notes, and Treasury bonds. Treasury bills, or T-bills, are short-term debt securities with maturities ranging from a few days to one year. They are issued at a discount to face value and are redeemed at face value when they mature. Treasury notes, or T-notes, are intermediate-term debt securities with maturities ranging from two to ten years. They pay interest every six months and are issued at face value. Treasury bonds, or T-bonds, are long-term debt securities with maturities ranging from 20 to 30 years. They pay interest every six months and are also issued at face value.

So what’s the difference between bonds and treasuries? The main distinction is the issuer – bonds are issued by companies, municipalities, and other organizations, while treasuries are issued by the federal government. This means the risk associated with investing in bonds and treasuries can vary significantly.

Bonds issued by companies and municipalities are generally considered to be riskier than treasuries because the issuer is more likely to default on its debt. The risk of default is generally higher for bonds issued by smaller, less established companies and municipalities, but it can also be a concern for bonds issued by larger, more established organizations. To compensate for the additional risk, investors typically demand a higher interest rate on corporate and municipal bonds.

In contrast, treasuries are considered to be safer investments because the federal government has a track record of consistently paying back its debts. The risk of default is extremely low for treasuries, which is why the interest rates on these securities are usually lower than the rates on corporate bonds.

Another difference between bonds and treasuries is the duration of the investment. Bond investments can range from a few years to several decades, while treasuries generally have shorter maturities. The duration of a bond or treasury can have a significant impact on the risk and return of the investment. Longer-term bonds and treasuries are generally considered to be riskier because they are exposed to changes in interest rates for a longer period of time. If interest rates rise while an investor is holding a long-term bond or treasury, the value of the investment may decrease. On the other hand, shorter-term bonds and treasuries are typically less sensitive to changes in interest rates and may be considered less risky as a result.

One fun fact about bonds is that they can sometimes be used as a way for companies or municipalities to show off their creativity and sense of humor. For example, in 2013, the city of San Francisco issued a bond called the “Poop Bond” to fund the construction of a new wastewater treatment plant. The bond received widespread media attention and was ultimately successful in raising the necessary capital.

Treasuries have also played a significant role in history. During the Revolutionary War, the Continental Congress issued “Continental Currency” to finance the war effort. These early treasuries were not backed by any physical assets and quickly became worthless due to rampant counterfeiting and inflation. In contrast, modern treasuries are backed by the full faith and credit of the federal government and are considered to be a safe and stable investment.

In conclusion, bonds and treasuries are both forms of debt securities that allow investors to lend money to an issuer in exchange for a promise to pay back the principal plus interest at a later date. The main difference between the two is the issuer – bonds are issued by companies, municipalities, and other organizations, while treasuries are issued by the federal government. Understanding the differences between bonds and treasuries can help investors make informed decisions about which securities are right for their investment portfolios.

Finance

5 Steps To a Financially Strong New Year

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice
Financially Strong

Many people make New Year’s resolutions to become more financially fit. After all, financial fitness is indeed vital to achieving happiness and security in life. But building passive income, investing for retirement, lowering debt — these types of resolutions are harder to accomplish. Here’s a five-step plan to help you develop the habit of creating and sticking to long-term goals and change the course of your finances for years to come.

Reassess Your Budget

As high inflation has forced many households to allocate more for essentials like groceries or gas, it’s imperative to reassess your budget as part of this process. You may be surprised by how much you’ve changed since creating your last budget, or you may find that your current budget is still perfectly suited to your needs. Either way, it’s worth taking some time to evaluate where you are now and what you want to get out of the upcoming year.

First, list all your income sources, including salary, bonuses, and dividends from investments. Next, do the same for your expenses—this will probably include fixed and variable costs. Finally, consider what you want to spend money on in the coming years—it’s often helpful to divide this into goals like saving for retirement or buying a car in the next few years. Remember, you cannot just spend money like the federal government does and worry about paying it back decades from now. We all wish we can print money like the feds do but we simply can’t.

You can create the perfect budget by creating a complete picture of what you have available, where it’s going, and how much you want it to go toward future goals.

Create an Emergency Fund

An emergency fund is an important aspect of any financial plan because it helps protect against unexpected expenses and liabilities. Accidents, illnesses, or other unforeseen circumstances can throw off any household’s balance sheet. Having an emergency fund will ensure that unpredictable circumstances don’t derail your goals. 

Set aside enough money in a savings account or certificate of deposit to cover three months’ worth of expenses—including fixed costs like mortgage payments and variable expenses like groceries. If this seems like a lot to put away every month, start with whatever you can afford—you can always add more as time goes on. Just remember to keep your emergency fund separate from other accounts to avoid dipping into the account for non-emergencies.

Manage Your Debt

There’s no point in waiting to tackle your debt after the holidays. If you carry balances on your credit cards, daily purchases can quickly snowball into long-term debt that could take years to pay off—or even require you to shell out more money in interest than the original sum of the purchases you made. But if you anticipate a year-end bonus or raise, why not use it to pay off your high-interest debt first? 

Next, consider consolidating your remaining debt into a single loan with reduced interest rates. With refinancing, you might get one monthly payment instead of managing several different credit accounts with varying due dates and minimum payments. 

Taking action early in the new year will give you time to make adjustments before the next set of bills rolls around—you’ll have more control over your financial situation which is vital during the era of high costs. In 2018, for instance, we did not have these issues, but they started to be relevant to us in 2021 and they may not go away until 2024. Maintaining harmony in your financial life is critical for more reasons than one. 

Optimize Your Portfolio

If you’re like most people, your portfolio might be split up among mutual funds, retirement accounts such as IRAs and 401K, stock certificates and the like. You may even have a few individual stocks. A well-balanced portfolio, or a mix of investments, does more than just keep your money safe and grow over time which is vital during a time of high gas prices. We may have high gas prices until 2024 when we can start to drill again but this is even more of a reason for you to invest properly and to save money. 

It also ensures your hard-earned cash is working for you at an optimal level to give you control over your finances. Evaluate and reevaluate every asset you own, from stocks to real estate to any other financial asset, for its potential and risks. Get rid of any investments that aren’t working for you. But don’t make any drastic changes to your portfolio until you’ve given yourself enough time and information to feel confident in your decisions.

Prioritize Your Wellness

The rising cost of healthcare because of the lack of competition can make anyone anxious. It’s no longer a small bill at the doctor’s office; it is an enormous debt from healthcare plans, prescriptions, and other necessary treatments to maintain everyday life. While they say good health is priceless, there are undeniable facts that prove that this expensive commodity has a hefty cost as well. So, make sure your insurance plans have been reviewed. 

Having a plan for where you and your family will be covered for healthcare should be a priority. Review your long-term financial health next. This is one area we don’t tend to pay enough attention to, even though it’s probably the most crucial element of our finances. And because we’re living longer and working longer, keeping our minds and bodies healthy is just as crucial to our personal welfare as making money is to our financial well-being.

Finance

Five Financial Tips For The New Year

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
financial tips

New Year brings hope. People make New Year resolutions according to their priorities, and the changes they want to bring in their lives. The coming year can also be the start of great financial success for you. Here are five time-tested financial tips to give a new direction to your personal finances in the New Year.

Set Goals

Set realistic, achievable goals. Think about your priorities. Do you need a new car, or are you better of clearing your existing debts which could be higher now because of inflation? Don’t just will to invest more, but think about how much you can afford to invest. If you want to increase your savings, think what you can do without.

  • Evaluate your priorities: What do you want in the new year; is it important? Can it wait?
  • Set your goals: Think of what you want to achieve; what you may have to forego.
  • Assess the time: How long will you be paying for it?

Once you have set measured goals, you can set a monthly budget accordingly. You may have to rework your other priorities, so be clear about the order.

Make a Budget

A budget helps you reduce unnecessary spending, and direct your funds to what’s really important for you and your family. Keep a track of all your expenses, big and small. A record of each dollar spent will show you where your money is really going. It can be an eye-opener – certainly in the age of high gas prices.

Understand your spending patterns, which can fall into a couple of broad categories:

  • Fixed Expenses: Recurring expenses like rent, EMIs and subscriptions, etc.
  • Variable Expenses: Expenses that change like food, clothes, gas, recreation                        

Check your recent bank statements to get specific inputs about where your money goes. This can show you the difference between how much you make and spend. You can allocate the difference towards achieving your goals.

Manage Debt

Loans can be a good way to acquire things you may not be able to buy upfront, like a house. But EMIs can hold you back from achieving your other objectives. The interest amount can really affect your finances. With that said, repaying your debt should be a top priority. There are two ways, in which you can better manage your debts.

  • Consolidating: This involves combining all your loans into one. You may become eligible for a lower interest rate. It certainly makes it easy to remember just one EMI per month.
  • Listing: You can list your debts by balance and interest. When you list by interest, pay the minimum on all but the highest interest loan; try and pay something extra each month. When you list by balance, try and make extra payments on the smallest loan.

Making a plan to manage your debt help you better understand your financial situation, and how the debt affects your life.

Savings vs. Investment

It doesn’t always have to be one or the other. With savings, your money grows with interest, but nothing else. You have something in the bank for a rainy day. Investments can make your money grow faster, but can also make you lose money.

Time is money if you invest in 401K or Roth IRA. Your money earns interest, and after some time, the interest earns interest. This is called compounding interest. Over many years a small fund can grow into a substantial amount.

In accumulation of this, you must always have an emergency fund in the bank. This is may consist of three to six months’ living expenses. This can help you tide over crises without putting you into deeper debt. You may also want to put something away for upcoming events.

Be Flexible

Change is the only constant in our lives. Your circumstances may change; you may get a better job, or get laid off; you may win a lottery; or lose money in the stock market. This means you may need to postpone some goals, or the situation may put you on a new track to achieving the goals faster.

If things are better, you can even add to your current financial wish list for the forthcoming year. Be prepared to monitor your financial plan regularly, and tweak or redo it, if needed. You may not be able to strictly as per your plan. You may stick to your budget in some months, or exceed it. That’s ok as long you stay on course with your New Year financial resolutions for the whole year and beyond.

Finance

5 Steps To Create A Personal Budget

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Personal Budget

Every dollar you earn and every minute you spend is an investment. Your budget tells you where your money goes each month and can help you gain more control over your finances. Follow these steps to make personal budgeting quick and easy.

Step 1: Determine Your Net Income

Your net income is the foundation of a well-planned budget. In other words, it is your take-home salary after deductions for taxes and employer-provided benefits like retirement plans and health insurance. 

Remember, relying on your total salary instead of your net income may make you splurge. You’ll mistakenly believe you have more money than you have. Maintaining detailed records of your agreements and payments can help you manage unpredictable earnings if you are a freelancer or a self-employed person.

Step 2: Find Your Savings Rate

You get your savings rate from the difference between your earnings and expenses. It defines your financial stability and wealth. The savings rate shows you how much of your earnings you can allocate each month toward accumulating wealth.

Keep a savings rate target of 10% or more of your net income post-tax. Depending on your financial goals or if you wish to retire early, you should increase your savings rate and build a passive income from it which can help you in times of high inflation and runaway food costs.

Also, you can use your monthly savings to pay off unsecured debts, such as credit card debts or personal loans. Next, enroll for a secured credit card. How you achieve your savings goal is the rest of the budgeting process.

Step 3: Make a Spreadsheet for Your Budget

Creating a basic monthly budget doesn’t need you to be an Excel expert. It’s not even necessary for you to build your template; you can use the worksheets on Google drive.

The spreadsheet should have four categories: savings, income, expenses, and a financial summary. But first, write in your savings goal that you’ve already determined. Next, you can start mapping out a course to get to that savings rate.

Pro Tip: You can sign up with Tiller or check out Microsoft 365 for customized templates and easy budgeting on Google Sheets or Excel.

Step 4: Identify Month-to-Month Expenses

The two main expenses you incur each month are essential (unavoidable) and optional (avoidable) expenses. You can cut back even on the essential expenses to some extent. Based on this, the distinction between necessary and optional spending is a helpful reminder of where you have the most flexibility to save in your monthly budget.

Essential Expenses

Although there are inventive ways to cut or evade these necessary costs, most financial experts call them unavoidable monthly living expenses. 

  1. Accommodation: Think about how much you can afford while still being satisfied rather than how much you can spend.
  2. Transportation: If you want to amass a fortune, buy the least expensive car. 
  3. Groceries: To survive, you must eat. Moreover, you do not need a gourmet feast every day – not even every week. Once a month is more like it when gas prices are what they are.
  4. Utilities: You will require internet, water, power, and possibly gas. Still, you can reduce utility costs through sustainable living. 
  5. Medical care: You can use benefits, choose a preferred provider option (PPO) based on your insurance plan, pay in cash, or even request discounts.
  6. Child care: For under-school-age kids, you can hire babysitters instead of nannies, swap responsibilities with family or friends, or have play dates.
  7. Debts: Pay off unsecured debts like credit card bills and student loans as soon as possible. 

Optional Expenses

Remember that you have total control over these costs. Anything you spend on the below items should be the bare minimum and only if you can’t live without them. The list includes:

  • Food: restaurants and takeout
  • Shopping for clothes or accessories
  • Cosmetics and personal care
  • Electronics
  • Alcohol and tobacco
  • Gifts
  • Travels
  • Entertainment

Step 5: Review Your Budget Regularly

It’s essential to regularly review your spending to make sure you are staying on track. No budget is set in stone; it can change. For instance, your spending might alter, you might get a bonus, or you might achieve a target and decide to create new goals. Whatever the reason, establish the practice of periodically reviewing your budget using the methods above. Here is a practice you can follow: 

  • Keep a track of monthly expenses
  • Understand your spending pattern
  • Adjust expenditures to must-haves and eliminate luxuries

Closing Thoughts

It’s simple to create a budget, but changing your spending habits is the tricky part. There are several ways you might hold yourself accountable for deviations from your budget. To begin with, you can activate notifications for your bank and credit card accounts to remind you when you hit a set spending limit. Learn to live frugally, which means not buying things you cannot afford. It constitutes the foundation of successful personal budgeting.

Finance

3 Fundamental Steps to Manage Your Finances

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
money management

Money management refers to planning your money and liquid finances so that you can make the most of it. It typically involves saving and budgeting money, investing in future, and reducing or avoiding debt. Here are three fundamental steps that will help you gain more control over your money.

1. Assess Your Current Position

Money management is not just about making the math work. You need to adjust your mindset too. You need to take stock of your current position.

  • Have you been overspending frequently?
  • Do you have enough saved to tide you over a rainy patch?
  • Are you consistently living paycheck to paycheck?
  • Does financial jargon overwhelm you?

Don’t lie to yourself. You need to be prepared to face your weaknesses. There may have been a few missteps in the past. You don’t have to continue with those mistakes in the future. Be determined to undertake bold corrective measures.

2. Create a Financial Blueprint

Before you can put your plan into action, you need to create a blueprint that works for your finances. Use these steps:

Budget

Start with a budget. Choose a system that you know is easy enough to stick with. Most people find the 50/30/20 budget plan simple enough. You need to allocate 50% of your income to needs, 30% to wants, and 20% to debt repayment or savings. There are plenty of budgeting options to choose from if this doesn’t work for you.

Track your expenditure

You can have a better idea to where your money is going by tracking expenses. You may not spend so much on a certain category. Or, you may adjust your expenditure so that it aligns better with your goals during times of serious inflation and high gas prices.

Save

You will find various avenues to save and invest once you pay attention to your finances. You need to make long-term changes by tweaking daily habits and negotiating your spending. Ideally, money saving should become a part of your lifestyle over a period of time.

Separate your accounts

You should have designated and different accounts for savings and spending. A terrific way to manage your money is to keep money for bills and budgeted expenses in a designated account. This should be separate from your emergency fund. You will be less likely to blow up your rent money on a night of binge drinking with friends. Keep your savings in separate accounts if you are looking to vacation, purchase a house, or a new car.

Pay off expensive debts

An integral part of money management is creating a plan to pay off debt. A strategic approach will help you reach the debt-free finish line quicker. You need to tackle the most expensive debt first. These are the ones with the highest interest rates. Keep making minimum payments on the rest. Work your way down till all debt is paid off.

Build your credit score

Your credit determines the rates you get loans and other borrowings on. You can enhance all aspects of your financial life by developing good credit habits. Credit checks are common whether you are getting an apartment, car insurance, or a cell phone plan. Focus on the two biggest influencing factors – credit utilization and payment history. Make sure you pay everything on time. A single missed payment can affect your score.

Think about your financial future

It is never late to invest in your future. Set money aside in IRA or 401(k) now. The compound interest will work its magic. After all, the ultimate goal is to achieve long-term stability and financial freedom even in times when policies from the government seem to be working against you and everyone else.

3. Save, Invest, and Reduce Debt

Money management doesn’t just consider your expenditure. You need to have saved enough to live comfortably in both short-term and long-term. These are a few steps to achieve financial prowess:

Start saving now

Start building your emergency fund by socking away anything extra. You should ideally have 6 months of living expenses in case something unthinkable happens. You don’t need to start large. You can always start small. Work towards a $500 reserve goal as a starting point.

Invest

Nobody created wealth by savings alone. You need to invest and beat inflation to live comfortably in the long-term. You should consider contributing to 401(k) to set yourself up for retirement. Get the maximum contribution if your company offers a match.

Pay off outstanding debt

You probably have obligations whether it is a looming credit card bill or a loan. Make sure you never miss payments. At the least aim for minimum monthly payments. Pay off high-interest debt first if you have any extra money for bills.