For millennials, app use and financial literacy don’t go hand in hand

A recent study released last week found despite the number of financial apps millennials are using, their personal finance management skills are severely lacking.

The report, released by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business, examined the personal finance knowledge of millennials.

Titled “Millennial Financial Literacy and Fin-Tech Use: Who Knows What in the Digital Era,” the study utilized the TIAA Institute-GFLEC 2018 Personal Finance Index (P-Fin Index) to test millennials’ finance knowledge and found that 44 percent of millennials answered the P-Fin Index questions correctly, compared to 50 percent of the US adult population.

In addition, younger millennials (ages 18-27) answered 41 percent of P-Fin Index questions correctly, compared to 47 percent of older millennials (ages 28-37).

“The millennial oversample in this year’s P-Fin Index sheds a light on the use of mobile technology, and the impact that it has had on an increasingly influential generation,” said Stephanie Bell-Rose, Head of the TIAA Institute.

“As technology continues to develop ways to make our lives easier, it is clear that we cannot exclusively rely on it to guide us through our financial lives. Our research underscores the importance of financial literacy and its complementary relationship with fin-tech in producing good outcomes.”

Both older and younger millennials are hurting most in the areas of understanding risk and insuring, the study found. Understanding insurance, in particular, saw the greatest gap between younger and older millennials. Financial literacy is highest in the area of borrowing and debt management for both younger and older millennials.

The study also looked at how millennials use these apps to track their personal finances, as well as the effect of this fin-tech on financial outcomes.

About 80 percent of millennials use their smartphones to do things like pay bills and deposit checks, while 90 percent use their phones for things like tracking spending.

However, although apps make it easy to manage money, those who do via the technology don’t always make financially savvy decisions. Almost 30 percent of millennials who use their smartphone to make mobile payments report overdrawing their checking account, compared with 20 percent who do not make mobile payments.

In addition, one-quarter of those who track spending with their smartphone report overdrawing their accounts, compared with 20 percent of those who do not track spending via their smartphone.

“The low level of financial literacy among millennials speaks of the importance of equipping this large generation with the knowledge and skills that are needed to make financial decisions in the digital era,” said Annamaria Lusardi, Academic Director at GFLEC and the Denit Trust Chair of Economics and Accountancy at GW.

“This study shows that fin-tech users have different needs and characteristics, providing many opportunities for innovation for fin-tech developers.”

 

 




Relocation and your social security disability insurance: Your questions answered

Part of the American dream is being footloose and fancy free…and whether you are relocating to be nearer family, to find a place with a lower cost of living or just to see some new scenery, you probably will move at some point in your lifetime.

But in the midst of the goodbye parties, the packing and the moving, don’t neglect important tasks that are necessary for your financial well-being. And chief among them should be making sure that you have taken care of your Social Security Disability Insurance (SSDI) or SSI (Supplemental Security Income) benefits before you relocate.

Here’s everything you need to know for a smooth move.

What is the difference between SSDI and SSI?

First, it’s important to know which of these programs you use. SSDI is the program that provides payments to those who are disabled or blind who qualify due to their work history – they have worked in jobs where they have paid FICA benefits.

SSI is a need-based program that makes payments to the elderly, blind and disabled who have limited incomes.

Will I have to reapply for SSDI and SSI if I move?

The good news is that it doesn’t matter if you move across town or to another state: You won’t have to for reapply these programs, which are overseen by the federal government, rather than individual states. That makes it easy for you to carry it over even if you move across the country.

However, whether you receive SSDI or SSI, you do need to make sure that you have changed your address so they know how to reach you should there changes to your benefits or other paperwork you need to file to remain eligible.

If you receive SSI, there’s another factor to consider — there could be a change to your payment based on what state you live in. That’s because most beneficiaries (except those who live in Arizona, Mississippi, North Dakota or West Virginia) also receive a state supplement. The amount varies by state, so when you move, you then qualify for your new state’s supplement, rather than your previous one. (You can find more details here.)

Also, some states disburse their own state supplements while others are handled by the Social Security Administration. If your old state and new state are both administered by the SSA, then there should be no lapse. But if you are moving to a state that administers its own supplemental program, you’ll need to apply in that state.

There also may be changes based on your living situation; i.e. if you are moving in with additional housemates who are covering part of your food and housing, your benefits may be reduced.

When should I contact the government about my change of address?

Don’t delay…you’ll want to put this on your “to do list” right away. If you are receiving SSI, you need to report the new address within 10 days after the month the change occurs so they can adjust your state supplement. Otherwise you might receive less than you are owed or too much – in which case you will have to refund the money — and you also might be charged a penalty.

The good news is you can handle it with a simple phone call to the Social Security office at 800-772-1213 or online here.

What other disability insurance might I qualify for?

Most people find that the amount they would receive from the SSDI or SSI benefits is not adequate to cover all their financial needs. That’s why it’s important to sign up for a group or individual disability policy that will protect your income and provide financial security if you should become disabled.

While it’s not fun to think about, the truth is that disability is far more common than one might think…in fact, nearly 25 percent of those who are 20 years old today will be out of work for at least a year due to a health condition before they reach retirement age.

If you have to stop working temporarily or permanently, disability insurance will kick in – providing the paycheck protection you need to ensure that your bills remain covered.




Make fall foolproof — Save money by tackling winter house maintenance now

winter home maintenance

As we bask in the lazy days of August, there are subtle reminders that the change of seasons is around the corner – from the school supplies clogging the shelves of big box stores to that one tree whose leaves are reddening prematurely.

Before the first pumpkin spice latte hits the neighborhood coffee shop, take a weekend afternoon to knock out these cold weather household chores while it’s still nice out. You’ll save time – and money – when fall rolls around.

Clean your gutters

Yes, they will likely soon fill up with fall leaves, but now’s the time to remove any debris that may have built up over the past season. Clogged gutters can cause long-lasting, expensive issues around your property – water spilling over can damage your foundation, and heavy gutters can sag and break.

Inspect your roof

Even if you don’t want to climb up on your roof (and if you do, be very careful, as falls are a leading cause of disability), now is the time to do a visual check before the roof becomes hidden by leaves or snow. Use binoculars to get a closer look and note any missing, damage or slipped shingles that should be further investigated by a roofing professional before the rain and wind arrive.

Check your trees

Loose limbs can become hazardous in storms; they can knock out windows – or people passing underneath them, in the worst-case scenario. Cut back branches that are listing or that are too close to power lines or the roof.

Tidy up your landscaping

You might still be enjoying your summer flowers and by all means, continue to. But while you’re in your garden, pull weeds and rake up needles and leaves before the chore gets bigger in the fall.

Organize your garage

Late summer is the perfect time to try out those bikes and see if they are still the right size, or determine that no one is ever going to play ladder ball. It’s much easier to make a decision on what to get rid of when you know for a fact that no one has touched it all season. And there’s still time to hold a garage sale and make a little back-to-school cash.

Have your heating system checked

Need to service your furnace or heat pump? Now’s the time…before everyone else realizes they need to, too. Ditto your fireplace and chimney. You’re guaranteed to get faster – and probably cheaper – service from a repair person who’s not being pulled in a dozen different directions as other homeowners realize their heating element isn’t working up to par.

Get your back-to-school system in place

The night before school starts is not the time to remember that you never cleaned out last year’s backpack. Before the stress of September rolls around, take the time to fill out the paperwork that came in the mail earlier in the summer, sign up for music lessons, create a paper filing system – all those organizational chores that will make your fall less harried.

Coordinate your emergency supplies

What better time to establish your emergency kit than as you’re stowing your camping gear from summer getaways? Rather than relegating it to the attic or a hidden shelf, make an organized plan to have it ready should you need it if the power goes out or there is another weather emergency. Change the batteries in your flashlights and lanterns; wash and store the sleeping bags; replenish the waterproof matches and first aid supplies. While you’re at it, add a stash of non-perishable foods and an extra deck of cards – just in case.

Hang your holiday lights

Seriously…your future self will thank you – the one that’s not standing on a ladder as the wind gusts and the rain pelts. Of course you don’t have to turn them on – in fact, please don’t – but it’s nice to know they are ready and waiting for when the holiday spirit strikes.

And now that your house is ready for fall, enjoy that warm summer evening in your newly prepped yard. You deserve it!

 




Why You Should Start Your Holiday Shopping Now

Most of us groan when stores start displaying holiday decorations before the kids have gone back to school, but they may be on to something. In fact, the smartest way to shop is to forget about “Black Friday” and start your shopping in the summer. Here are eight reasons it will have you ho-ho-hoing come the traditional holiday season.

 

  1. You will have more time to buy just the right thing.

Impulse buys can kill your budget, but there’s something about holiday stress that can make you grab the first thing you see just to cross something off the list (or when the thing you were most hoping to buy is unavailable by the time you get your shop on). When you are able to start your buying early you have plenty of time to wait for a sale that puts the item you have your eye on within reach. Just make sure to save your receipts.

 

  1. You have more time to take advantage of price adjustments.

Speaking of saving your receipt, you’ll want to watch the item you’ve purchased to make sure that you get reimbursed should a sale roll around. To make it super easy, use an app like Paribus, which will track your receipt and “watch” your item for you to let you know if a price has fallen.

 

  1. You can shop the back-to-school sales.

Don’t want to give school supplies to your loved ones? Of course you don’t. But stores roll out the red carpet during the back-to-school season with a huge number of sales on everything from clothing to electronics. Even if the item you want isn’t on sale today, starting early gives you a much more likely “head start” that it will be eventually.

 

  1. And maybe realize tax savings.

We’re talking about “Tax Free Shopping Days”which many states hold in the summer to coincide with back-to-school shopping. Any discount counts so no reason not to head out and see what you can find on that magic day.

 

  1. You can get a more realistic idea of what things cost – and budget accordingly.

Were you misled that the jeans your daughter has her eye on could be had for a good price? You might be surprised at the price tag of coveted items and starting early gives you the chance to find out how they might fit into your budget – or if they do. If you do decide to get a particularly pricey item, you can then adjust the rest of your budget to accommodate it – maybe brown bag an extra day or two a week and put the savings aside — rather than getting stuck at the last minute having to shell out for the “dream gift” that comes with a nightmare price tag.

 

  1. You can spread out the bills.

No holiday hangover when you spend a little every month instead of a lot all at once in December. Considering that the average American adds an average of just over $1,000 in holiday debt, it can make it much easier to pay those bills when you spread it out over several paychecks.

 

  1. You won’t pay any rush fees.

We’ve all been there. You think you’ve done your shopping and all of a sudden you realize that you forgot something special for Aunt Mary. And just like that, you’ve incurred an extra $15 in shipping fees. Ordering ahead means that you have all the time in the world for the package to get lost or misdelivered – and you’ll STILL have it on time.

 

  1. You have more time to rack up (and redeem) rewards.

If you are in the market for a credit card anyway (we said “if” – don’t get a card just for this reason), you can spend the next few months putting expenses on it that you would pay anyway– from filling your gas tank to paying your electric bill, provided you intend to pay them off right away and not incur any fees. You can then use the points you’ve amassed to pay for gift cards or other purchases closer to the time.

 

And when you escape the holiday season with no extra debt, you can truly say “It’s been holiday miracle.”




Six Back-To-School Expenses to Start Budgeting for Now

While December is typically considered the traditional “budget-busting month,” September, with the back-to-school season, is close behind. In fact, the back-to-school shopping season is the second largest shopping event of the year, with 29 million households expected to shell out $27.6 billion in 2018, according to Deloitte. But any parent with school-aged children will tell you that the actual “back-to-school” shopping is just one part of the host of expenditures you’ll face as September rolls around.

The good news is that you still have time to budget for these expenses so you can cover them without dipping into your emergency fundor succumbing to consumer debt.

Here are six expenses to start thinking about now and tips for making them cost a bit less:

 

Back to school supplies

At some schools, school supply lists seem to grow ever longer. But, you’re in luck because most big box and office supply stores are having amazing deals on almost every type of supply.

Shopping around will yield different sales at various stores, so give your child the circulars and have them plot your supply shopping strategy. Download the stores’ apps for even more savings.

This is also the time to stock up on supplies for the rest of the year, so you’re not paying full price when your child loses the scissors or the homework folder falls apart.

 

Afterschool sports

Trying something new is a great way to build confidence, but often a new sport comes with a cost curve of both lessons and new equipment.

If your child wants a few private lessons to brush up, consider hitting up a sporty teen to do some work with them, rather than finding a pricey specialized coach.

And see about borrowing equipment or buying it at a resale store – at least until you find out their level of devotion to the sport.

 

Tutoring

Is your kid falling behind in math or having trouble with their reading? Academic issues should never be ignored, and sometimes classrooms just don’t have the capacity to offer the individualized instruction that would benefit some children.

But after-school tutoring centers can be costly. Ask around to see if there’s a retired teacher or even a smart and patient teen who could help your child brush up on some basics for less.

 

School pictures

Of course you want to see your darling grow up right before your eyes, but the packages that many schools offer can be pricey – and often the pictures end up being disappointing. Many families always buy a portrait to line their walls, which is a great idea, but don’t get lured into purchasing a large package. If you want to maintain the annual portrait tradition, order the smallest package you can.

But don’t feel obligated to buy official school photos if you don’t want them. With today’s great smartphone cameras, we can all be photographers, and the shot you take of your smiling child in your front yard might be far better than a forced studio photo.

 

Transportation

Get ready to pull out your “taxi driver” hat if you’re like most parents, constantly shuttling kids to and from afterschool activities. Sometimes your wallet can take a hit if you’re driving long distances for specific practices. Your best bet for saving time and money is to team up with parents and start a carpool.

If dropping off and picking up at multiple homes becomes onerous, have every kid meet at a specific spot so that you can pick them up all at once.

And, a pro tip for the “chauffeur:” Rather than taking one way and having someone else pick up, try to go both ways on the same day. You’ll save time and gas by not driving one way with an empty car. Instead, use the time to run an errand, do some laps around the track or catch up on your reading.

 

School fees

These can vary widely depending on your school district and its funding models. In some schools, almost everything is covered via property taxes, and in others, parents pay for everything from field trips to teacher supplies.

When the fundraising pleas come home, please give as generously as you can, even though it coincides with these other expenses. And consider joining the parent-teacher group, which typically funds events, assemblies and other important activities at school. Your child will thank you (and so will his or her hard-working teacher!)

 




8 Creative Ways to Enjoy Summer That Don’t Cost a Fortune

Ferris wheelIs everyone playing while you’re working? We get it: It can feel painful to sit at your desk when the weather warms. But there’s no reason to forfeit fun in the sun.

Here are eight ways to enjoy summer, without going into debt on a pricey vacation.

At work

1. Eat lunch al fresco: There’s nothing like an hour in the sun to recharge your batteries. But don’t waste money on an overpriced salad at the local café. Brown bag it to a park or even just a nearby bench, then take a stroll after you’ve eaten. At least one study has connected a lunchtime walk with increased enthusiasm and less fatigue and stress when workers returned to the office.

2. Ask about flexible hours: Something about a sunny summer morning makes you want to get out of bed with the birds (or the birds might just be waking you!). Some people prefer to get their day started and head straight into the office, then leave earlier to enjoy an extended late afternoon. See if your HR department will allow you to flex your hours at least part of the week and then take advantage of an early departure to enjoy an afternoon hike or a spin on the Ferris wheel at the local carnival when it’s less crowded. You can even finish your work at home later that evening if you need to.

3. Take the meeting outside: Everyone is feeling the same summer fever so be the hero and move from your boring conference room to an outdoor location. Even claiming a far corner of the parking lot can feel like a respite when you feel the sun on your face.

4. Take days off strategically: If you’re not able to plan an extended getaway, see if you can create your own mini trips. The trick is to take Fridays off so that you have three uninterrupted days to play. Plan short getaways to nearby towns, go camping or just be a tourist in your own town on a staycation. (Trust us: There’s nothing like taking in a matinee to really feel indulgent!) Try taking every other Friday off in July and August and see how much summer fun you can cram in without dealing with crowds and overpriced lodging and travel costs.

After work/ on the weekends

5. Find a festival: Art. Music. Food. Doesn’t matter. Nothing says summer like a festival. Beware of some that can be budget busters, especially if rides are involved, but many even allow you to browse for free or a nominal fee. Find samples to graze on or bring your own snacks. But do enjoy that elephant ear if you’ve been craving one!

6. Grow your own produce: A summer vegetable garden will get you outside and also help you eat healthier — while saving a bundle on weekly produce. If you’re not one for a green thumb or don’t have ample space, a farmer’s market is a great alternative to once again — be outside.

7. Streamline your errands: It can be brutal to spend a lovely afternoon running errands, but we all need to grocery shop and get the dry cleaning. Or, do we? Sometimes ordering online can actually save you money, even despite the nominal service or shipping fee, since you won’t be tempted to impulse buy, a habit that costs Americans a whopping $5,400 annually If you must do some errands in person, plan them efficiently, which not only saves time, but gas, as you avoid backtracking.

8. Use “nature’s gym:” Summer mornings are glorious times to go for a walk or bike ride, and even if you work full time, there’s still plenty of light to do the same in the afternoon — maybe even hit a nearby hiking trail or play an active game of tag with the kids. Bonus: You can probably put your health club membership on hold to save some cash. Many gyms allow a “freeze,” until it’s, well, freezing.




4 Things to Know About Family Leave and Your Income

Mother holding a baby. Becoming a parent is an extraordinary and, at times, stressful endeavor. Your life is about to fundamentally change. And as you plan the myriad dimensions of this new reality, you may be wondering how you’ll cover all the bills while you take time off work.

Family leave is a complex issue and it requires a good amount of research. Begin by reading your employer handbook or asking a co-worker how they dealt with family leave and what they were offered. Consider what will work best for you, in terms of the time you’d prefer to take off work. If you do become pregnant, make sure you let your boss know before anyone else. Embrace it enthusiastically as an opportunity for growth. As Carol Walker, president of the consulting firm Prepared to Lead tells the Harvard Business Review: “Planning for your maternity leave is an opportunity to demonstrate to everyone that you’re in the game.” 

Here are a few ways you can replace your income during family leave: 

Paid Family Leave

This is the ideal situation of course, but don’t hold your hopes up too high. The National Compensation Survey (NCS) conducted by the Bureau of Labor Statistics, revealed that just 14 percent of civilian workers had access to paid family leave in 2016. There are a few states who are pioneering paid leave: These include California, New Jersey, and Rhode Island, and New York joined the group in January 2018. If you work in the tech industry, you could also be in luck: Tech companies offer some of the best family leave out there. Ask your HR team or boss if they offer this benefit. 

Short-Term Disability Insurance

Short-term disability insurance is another way to protect your income when you cannot work due to an illness or injury. This includes pregnancies — and it’s very commonly used for this purpose by employers. Short-term disability insurance plans often cover six weeks post-partum. It covers a portion of your income — normally around 60 percent. Several states such as New York, New Jersey, Hawaii and Rhode Island have short term disability laws in place. You can also purchase this form of insurance as an individual. 

Unpaid Family Leave

The vast majority of American workers don’t have access to paid family leave (88 percent according to the NCS study). So your next step is to see if you qualify for unpaid family leave — which keeps your job intact although it doesn’t offer a salary. The federal Family and Medical Leave Act (FMLA) was signed into law in 1993 and it guarantees eligible workers up to 12 weeks of job-protected, unpaid leave per year. FMLA does have its limitations though: it only applies to companies that have more than 50 employees within 75 miles of your workplace. You also need to have worked there for at least a year and put in a minimum of 1,250 hours. Laws around this also vary from state-to-state so you’ll need to research your local situation. FMLA applies to giving birth, adopting a child, or fostering a child — and it can also be used in the cases of caring for a spouse or parent with a serious health condition. There are ways of making it work while on unpaid leave—you just need to plan well.  

Paid Time Off (PTO)

Many people will use some of their PTO to cover their income for part of their leave. Your workplace may require you to use up your accumulated PTO before benefits can kick in. Others will allow the benefits to begin immediately, which may allow you to use some of your PTO to extend the length of time you can stay at home. 

Take the time to educate yourself on the benefits that apply to you. Know your rights and don’t be afraid to try to negotiate a better deal. If you are just starting to think about having a child, now is a great idea to build out a financial plan to help avoid the stressors down the line. With a plan in place, you can relax and enjoy the extraordinary gift of welcoming a new life into the world.




5 Steps to Reducing Credit Card Debt

Cutting up credit card

Credit card debt is a painful reality that more and more American families are living with. According to ValuePenguin, the average credit card debt for American households that carried a balance in 2017 was a massive $16,048. The 2017 American Household Credit Card Debt Study by personal finance website NerdWallet came to a similar conclusion, showing an average of $15,654 per balance-carrying household — with a worrying new trend of families increasingly using their credit cards to pay for medical costs.

The best way to deal with credit card debt is to take action. Rather than allowing the interest to accumulate, take a clear look at your situation and plot a strategy to firmer financial ground. Here are five steps to help you move in the right direction:

Take a Clear-Eyed Look at the Debt

Begin by taking stock of exactly where you are. What do you owe on each card and what are the interest rates? Write your numbers down on a piece of paper or type them into a spreadsheet. If you have more than one card, rank the debts according to the interest rates — so you can clearly identify which cards are costing you the most over the long-term.

Know Your Spending Habits

Now study your credit card statements in more detail. Run them by your budget. Analyze your habits over the past year. It’s all too easy to use a card and forget about all the small purchases that can add up. If you’re living above your means, you need to know this now so you can course correct and bring down your spending.

Get Better Rates

Call your bank to find out whether you can negotiate a better interest rate on a card. If you’ve been making your payments on time and have a solid credit score, you’ll have more bargaining power. You may need to have the primary cardholder around to join the call — and note that the conversation could take some time.

Build Your Plan

 There are two major strategies when it comes to paying off credit card debt:

  • The Debt Avalanche: This is where you focus on paying off the card with the highest interest rate first. You continue to make minimum payments on the other cards, but focus your energies — and cash — on eliminating the highest-cost card first.
  • The Debt Snowball: This is a different strategy entirely, where you focus on paying off the smallest debt first, while making minimum payments on the others. Just as the name suggests, it starts out small but as you wipe out each debt, that money then gets transferred over to paying the larger debts.

There has been much debate about which strategy is best. The math suggests that the debt avalanche is the winner, however the psychological boost of wiping out debt in the snowball method can be highly motivating. Depending on the degree of your debt, there are other options such as consolidating debt where you roll all your debt into one. You can also transfer your debt to a new credit card that has zero percent APR. Bear in mind that this approach generally works best for those with good credit scores, and it does require the discipline to not overspend. The Motley Fool recently compiled the best cards of 2018. Choose a strategy that works for you, then stick with it.

Grow New Habits

As you move ahead, build new habits. If you’re an impulse buyer, consider physically taking the cards out of your wallet and leaving them at home. You can also experiment with increasing the regularity of your payments. If your budget allows, try shifting payments from monthly to more frequent increments such as weekly. When you completely eliminate that debt, you can then start a practice of paying off all credit card purchases at the end of every month.

It’s all about living within your means — and taking back control. As Rod Griffin, director of public education at Experian recently told CNBC, good credit card management boils down to making payments on time and not buying things you otherwise can’t afford. “Ride the wave, don’t fall off the surfboard,” he said. “That’s the trick.”




How to Build a Basic Budget

Couple working on financesMany people are struggling to gain control of their finances. According to a LendingTree report in 2017, four in five Americans are in the red—and a quarter of those in debt do not have a plan to pay it off. By building a budget, you can gain clarity into your financial situation. This is a vital, first step that will help you chart a route to a far more sustainable place.

Here are the key steps in building a basic budget:

Set a Date

Building a budget requires time and patience; don’t set yourself up for failure by starting the process at a point in the day when you don’t have time to see it through. Peering into the cold reality of your finances can be an overwhelming and disheartening task, so take away any time stressors. Make a date for your budget by choosing a slot in the week where you’ll have a few hours to invest in the process. Invite anyone else who may need to be included—and even think about making a few snacks to power you through the process. Rather than approaching it as a chore, see this as a project that’s leading to your stability and peace of mind.

Choose Your Format

Are you going to use a spreadsheet? There are several great free templates online that you can download and work from. There is also a whole ecosystem of software tools that automate the process and increase accuracy. Or perhaps you’re far more comfortable with pen and paper. Choose a format that makes sense to you. As you build that budget, identify your goals. Are you trying to pay off a large medical bill? Do you have credit card debt to reduce or are you saving for an addition to the house? Identify what your realistic goals are, both short-term and long-term.

Gather Your Data

U.S. News recommends that you physically bring together all your bills, credit card reports, bank information, and paychecks. Spread this paperwork out on the table and gather the digital versions in your devices. Separate them into two parts: incomings and outgoings. Then start inputting all of these items into your monthly budget.

As you build out your budget, insert your income at the top—such as work, investments, and freelance projects. Then you’ll insert the various costs below. The first will be fixed costs such as utilities, mortgage or rent, and insurance costs. Then you can list discretionary costs—like gas, food, and entertainment. Don’t forget items that often go under the radar, such as car registration, memberships, and subscriptions.

Analyze the Data

Now comes the moment of truth: add everything up. If you earn more than you spend, congratulations, you have a surplus. If you spend more than you earn, the important thing is to spot the trend now and start correcting it. It’s vital to your long-term financial health that you see things realistically.

Now you can dig into the numbers and identify areas you can cut down on costs. Your fixed costs may be fixed—as the name implies—but perhaps you could find a better deal for some of your bills, such as your internet provider. If you have credit card debt, figure out how much you can pay off each month—you’ll want to do more than the minimum if you can. You can also review the dates for each payment. If they’re huddled close together in the month, see if you can spread them out.

Continue to work with the numbers until you get to a place where you can balance things out. Your discretionary costs are usually where the most cost cutting can occur. How much is that daily latte coming to on a monthly basis? You may also need to identify new sources of income to bring in.

Set Targets

Set a target for your costs for next month. If you’re giving yourself a limit for your spending on items such as groceries, one tried and true method is to put cash into envelopes for certain purchases, such as your weekly grocery shop or your money for lunch at work.

Then, as you move ahead, make sure you revisit your budget on a regular basis. Keep coming back and tweaking, and checking your progress on this document. By sticking with it long-term, you’ll start to see the gains and that budget may start to feel like your closest ally.




Family Planning: Daycare or Stay-At-Home?

Jan-childcare-imagePlanning for a family can be an exciting and daunting step, when you think of all the changes having a baby leads to. There’s the rewarding feeling of creating a bond with a tiny little human, even when you’re too tired to see straight. And then there’s the financial drain that comes with an extra person who must be fed, clothed and cared for 24/7. Child care, alone, is often one of the largest monthly expenses for working parents, unless you’re lucky enough to have a friend or relative who can’t get enough of changing diapers. This leaves many weighing the benefits and implications of child care vs. staying home with a new baby.

 

Those most impacted by this life-changing financial decision are millennials. In 2014, millennial moms accounted for almost 90% of all moms that year, up 50% from a decade ago. According to reports on the average salary for a millennial, in 2013, the median annual earnings for millennial women working full-time, year-round were $30,000, compared with $35,000 for their male counterparts. According to the National Association of Child Care Resource and Referral Agencies, the cost of center-based daycare in the United States can run up to $18,773 a year ($361 a week). With less than half their salaries left over, many millennials have some soul searching to do about what’s best for their families.

 

Assuming one has some financial flexibility, and can go without what’s left of his or her salary after childcare costs, how does one take on this decision? There are several factors to consider. Are you happy in your career? Are you driven to move your career forward? Do you dread the thought of being away from your child? Ultimately, you need to decide how this decision will affect the well-being of you and your family.

 

These days, American companies are starting to wake up to the idea that better parental leave is good for business. They are able to compete for a higher standard of employee by offering longer paid leaves. In addition, a new mother or father with an 8-week-old baby is not getting the quality of sleep he or she should, and may suffer at work. It may sound obvious as a parent, but companies are starting to recognize this as a priority benefit. These companies often combine short-term disability leave and paid parental leave, as their parental leave strategy. A few companies even offer on-site child care as a benefit to their employees, offering the best of both worlds.

 

An expectant mother or father can spend days, weeks or even months trying to figure out what to do. But when that little human comes into the world, everything changes. It’s good to have a plan. But it’s also good to be open to changing that plan. You may find that work is the perfect escape from the trials and tribulations of parenthood.