Easy Steps for Starting out on the Right Foot
We've got a tip for that.
If you missed Money Management 101, consider this your cheat sheet. Whether you’re signing a lease on your first apartment or looking for ways to rein in your spending, we’ve got a tip for that. These bite-size bits of financial advice are designed to help you get a grip on your finances—and then get back to doing something about it.
Landing a job in a new city can be exciting, especially when it means a raise in salary. But that extra money won't go very far if the cost of living is higher than you are used to. Before you break your lease and pack up your belongings, be sure you can afford your new locale.
If your employer makes a financial contribution to your health plan and keeps your salary going when you’ve got the flu, chances are good it offers a few nice quality-of-life perks, too. If you’re considering a car-sharing membership, donating to charity, taking a class, joining a gym, or shopping for a big-ticket item, remember to check your benefits package first. Some employers provide reimbursement offers, store discounts, and matching gifts. Don’t go it alone if you’re lucky enough to work for a company that will share the expense.
find yourself needing it. Look for ways to expand your network: Connect online with people in your field and stay in touch with contacts
at companies you'd like to work for. Even if you're not looking for work, it can pay off to do this legwork now. If you do suddenly find
yourself without a job, you'll have contacts you can call upon for leads and potential opportunities.
on up to a two-bedroom of your own. Living within your old budget and saving or investing at least half of your extra cash can help you
reach your savings goals faster. Consider increasing your retirement account contributions or setting up a monthly automatic transfer from
checking to savings.
Withholding less from your paycheck will give you extra cash on payday. On the other hand, if you withhold too little, you could find
yourself owing a whopper at tax time. For this coming year, take a good look at your W-4 and figure out if you should make any changes.
start, the better: If you begin saving in your 20s, you’ll need to save 10–15% of your annual salary to have enough to retire in your 60s.
Wait until you hit 30 to start saving? You’ll need to put away 15–25%. A good goal: Increase what you save by 1% of your salary every
year. Because the more you save now, the less you’ll need to work later.
about a possible employer match. Many employers offer charitable matching gifts or volunteer programs as part of their benefits package.
offer fee reduction on financial planning services as a part of employee benefits packages. Whether you're starting a new job or simply
haven't reviewed your benefits in a while, carefully go over your package to make sure you're not missing a valuable perk.
you're getting the best terms for your situation. Also ask if you qualify for tax benefits that could offset costs.
track all the expenses associated with maintaining your home office. These can include utilities, equipment such as computers used exclusively or nearly exclusively for business, some furniture, and more. Check the IRS home office deduction guidelines for a complete list of what qualifies.
Splitting up the bills may not be the best date-night activity, but if you’re considering living together, you need to address who will pay for what. Details like how to split rent and utility bills can strain any relationship. Making sure you’re both clear now on shared expenses can save you headaches and conflict later.
You’ve made time to pick wedding colors and cake flavors, so we know you can make time to talk finances, too. Sit down with your sweetie before the big day and fess up to individual credit histories, assets, and debt levels. Discuss your financial goals and create a plan to get there: Decide on a budget, which accounts you’ll hold jointly (and which you’ll keep separate), and who will pay the monthly bills. Then make a solemn vow to talk regularly about your finances.
You may be focused on finding the best preschool, but one day your little one will head off to college—and saving now can help her get there. A 529 college savings plan or an educational savings account (ESA—also known as a Coverdell account) both offer tax-deferred growth. As long as the money is used for qualified education expenses (like tuition, books, computers, and room and board), the money can be withdrawn tax-free. And because the money will count as your assets, not your child’s, it’ll have less impact on her ability to qualify for financial aid. The earlier you start saving, the better—she’ll be out of diapers and off to prom before you know it.
You've promised "to have and to hold"—but does that also mean a joint bank account? Joint accounts can encourage you and your partner to talk about your financial goals and work together to achieve them. Of course, the drawback is that there's no spending privacy. With separate accounts you gain independence, but you're also likely to spend a lot of time deciding who pays for what. Some people prefer a hybrid option: using a joint account for shared expenses and separate ones for personal spending.
See if you can cut back on childcare expenses by tapping in to local parenting networks to find a playgroup near you. And depending on where you live, you may be able to join an organized babysitting co-op, which allows you to accrue babysitting credits in exchange for watching other members’ kids. Sharing a nanny with another family may also be an option. And consider talking to your employer about tweaking your hours—if you can start work earlier, you may be able to better match your schedule to your partner’s time off or your kid’s daycare hours, reducing the need for a babysitter.
Having the talk with your parents won’t be easy, but it’s better to do it than to assume your parents have all of their affairs in order. Ask them about their overall financial picture (income, assets, and expenses) and where their accounts and official documents are held. Find out whether they’ve granted power of attorney to someone to manage their finances and health care. And make sure they have a properly executed will and a plan for later-life care, including a living will (which covers wishes regarding resuscitation in case of a medical emergency).
Now that you've got a baby, you've developed an obsession with adorable onesies, booties, and mini basketball jerseys. But the splurges add up even faster than your baby will grow out of those tiny clothes. Hand-me-downs and secondhand apparel can save you a bundle—this goes for items like toys and books as well, which are expensive to buy new and are often age-appropriate for all of six months.
No single tactic is going to work for every couple. Some hold completely separate accounts, others set monthly meetings to review their budget. But the first step should always be the same—talk it out. Figure out your individual and shared financial goals, discuss what drives your financial behaviors, and move on from there. Ultimately, you may benefit from meeting with a financial advisor to help create a workable plan.
If your parent needs medical, financial, or living assistance, get the whole family on board. Talk to your siblings or other family members about sharing the personal and financial responsibility.
On average, Americans give 3.2% of their income to charity. Whether you give more or less, it's important to work charitable giving into your monthly budget. If you can't give as much money as you would like, volunteer instead. Time really is money—and most charities need as much as they can get.
Find out where your money is going before you donate to a charity you’ve never heard of. Confirm the organization’s 501(c)(3) status and try to determine how much of your donation will go to program services versus administration and fundraising (sites like charitywatch.org and charitynavigator.org can help you with this). General rule of thumb: Steer clear of organizations that spend less than 60% of their cash on directly serving their cause. This is not to say that charities asking you for money on the street corner are not trustworthy—it’s just important for you to understand exactly what your $10 pays for.
You don’t have to be a zillionaire to donate to charities—for many, even a $10 donation helps. But there are many other valuable ways to give back: Sort and wrap toys for a holiday drive, donate blood, or mentor a student, to name a few. Or, gather up those winter clothes that don’t fit anymore and bring them to an organization collecting warm gear. Trust us, if you didn’t wear that sweater last year, you probably won’t wear it now.
It’d be awesome if you could buy a whole table at your friend’s charity dinner, or chip in for every 5K fundraiser. But when you don’t have an endless supply of cash, giving out of guilt can mean you have less for an organization you’re really passionate about. Create a charitable giving budget for the year, and once you’ve hit your limit, don’t feel guilty about saying no. Giving back to your community is important, but when resources are tight, you can only give so much.
A tax-exempt donation is a charitable gift you can claim as a tax write-off. It can be anything from used clothes to Goodwill, to a cash donation to a charity or organization with 501(c)(3) status, as long as you follow a few simple rules. First, when donating money or property, be sure to get a receipt detailing the name of the recipient, the date, and the value of the donation. To write off donations, make sure their total exceeds your standard IRS deduction for the year, and use the Schedule A form to save money on your tax return. For more information on which contributions are tax deductible and which aren't, check out these tips from Carrie Schwab Pomerantz.
If you are thinking about making a substantial contribution to a charity or organization, consider donating appreciated stock from your investment portfolio instead of cash. If you donate appreciated stock that you've owned for more than a year, you'll not only avoid paying capital gains taxes but also be able to deduct the fair market value. And, of course, the organization benefits from having the full current value of the stock.
It's good practice to thoroughly research a charity before making a donation. Think of your donation as an investment. Find out what impact your money can have on the organization's cause, and evaluate how efficiently the organization operates. It's all part of being smart while doing good.
Nonprofits depend on volunteers as well as dollars to accomplish their goals. And if you really want to learn about an organization, there is no better way than by spending your time with its staff and clientele. Volunteermatch.org is a great place to find organizations that will welcome your very personal contribution.
You can see the world and give back at the same time. Just make sure that the organization you select engages in practices that directly benefit the host community in every way possible. For example, rather than bringing in school supplies from overseas, some organizations purchase supplies from local vendors, which benefits both the schools and the local economy.
Whatever your charity of choice, it can almost certainly use every donation it can get. Make your contributions go further by inquiring about a possible employer match. Many employers offer charitable matching gifts or volunteer programs as part of their benefits package.
Craigslist. Knowing exactly how much you can spend helps you negotiate a better price. Start by visiting your bank’s website to get a
quote and then check other banks and credit unions to find the best rate. Avoid dealership financing, which tends not to be a deal at all.
There are also property taxes, home insurance, and possibly home owners association dues—all of which can add up fast. And if the furnace goes out, you won’t have a landlord to call to replace it. On the plus side, you can usually deduct mortgage interest payments and property taxes on your tax return—which can turn into a nice refund.
on your retirement accounts or insurance policies will outweigh the directions in your will. Take some time this month to review your forms
and make sure they're up to date.
realize that whenever it comes to estate planning, it's essential to consult with an experienced estate planning attorney—a will is not a DIY