Working on your finances can be a long process, but taking it one step at a time and developing better money habits can help you get ahold of your finances and start building a better future for yourself.
If you struggle with setting money aside for the future or feel like you’re living paycheck to paycheck, it could be a result of bad money habits. Lucky for you, we’ve gathered some candid advice from Mint Financial Coaches on breaking bad money habits and ushering in good ones in the new year, compiling it all into a list of 23 better money habits to start doing in 2022. Spend less, save more, and budget on!
What Are Better Money Habits?
Better money habits are practical lifestyle changes and practices to achieve your financial goals and have a better relationship with money. Developing good money habits can help you live more comfortably, stress less about your finances, and be prepared for the future.
Creating better money habits starts by getting rid of your bad money habits, such as impulse buying, and swapping it for a good money habit, such as only purchasing in order to satisfy a real need.
23 Better Money Habits to Start According to Experts
If you don’t know how to start developing better money habits, follow our Mint Financial Coaches provided tips for how to start implementing good money habits in your day-to-day life. You’ll be surprised to learn that you can ditch your coffee shop trips and invest in your coffee-making skills to save over $900 a year.
1. Build Your Credit Score
Having a good credit score is not only important for qualifying for better interest rates when getting a loan — it also shows you have good money habits. Working on building and increasing your credit score can qualify you for lower interest rates on your credit card and finance charges and get you better rates on insurance
You can still use your credit card if you use it wisely. Making sure to pay your bills in full on time, and billing fixed expenses to your credit card can help you build your credit score and get rewards.
2. Reduce Credit Card Debt
According to Mint Financial Coach Joe Dike, CPA/PFS, CFP, a good money habit reduces your debt or yields a return. Together with building your credit score, lowering your credit card debt will also help lower interest fees paid each month.
Credit card debt can easily get out of hand when you’re using your credit card for most purchases, especially considering when you add incurred interest and finance charges.
3. Prioritize Your Student Loan Repayment
If you have student loans and you want to start building better money habits in the new year, it can be a good idea to start focusing on repaying those loans to avoid paying large amounts of interest and have peace of mind as an added bonus.
Having student loans is nothing to be ashamed of, but take only what’s necessary. Mint Financial Coach Jared Smout, CPA, mentioned that one of his biggest financial mistakes was taking out more student loans than he needed. “It was easy to justify because I had a young family I needed to take care of,” he said, “but we could have found more ways to sacrifice instead of having an extra debt load.”
4. Keep Track of Your Net Worth
Your net worth is everything you own minus your debts. Staying updated with it, and understanding what it means can help you keep track of your progress and spending, and learn how to be better with money. Routinely looking at your liabilities (your debts) and making sure they don’t exceed your assets (money in your checking account, 401(k) and investments, owned cars, etc.) is a good money habit to start if you want to become more financially savvy.
“Good money habits tend to have a positive effect on net worth by reducing liabilities or increasing the value of assets.” — Joe Dike, CPA/PFS, CFP, Mint Financial Coach
5. Review — And Cut Back On — Your Regular Expenses
Many of us might be scared to look at our expenses at the end of the month. But building a habit of reviewing your expenses can help you cut back on unnecessary spending and build savings.
Mint Financial Coach Om Mandhana, CFP, provided some tips on how to cut back on regular expenses:
- Coffee: Start drinking black coffee when visiting a coffee shop, since it tends to be cheaper. Or make your coffee at home and reduce the number of times you go out to buy coffee.
- Phone: Switch to a mobile virtual network operator (MVNO) or downsize your plan and data allowance.
- Fitness: Instead of spending money on gym memberships and personal trainers, consider free physical fitness activities, such as free online videos, running, walking, and hiking — or even cartwheeling. If you still feel the need to go to the gym, plan to spend no more than 2 percent of your income on a membership.
- Food: Eating at home and eating healthier can get you more bang for your buck. Consider meal prepping food at home and having packed lunches for the whole week.
6. Start a Savings Plan
If you want to start building better money habits, Mint Financial Coach Anthony Castella, CPA, stresses the importance of saving regularly. He mentions that it’s important to try to set aside an amount for savings from each paycheck. To make the process easier, Castella recommends having money automatically taken directly from your paycheck and directed to savings and investment accounts.
Now, if you already have a savings plan but want to increase it, Dike recommends systematic savings. In order to do that, he plans savings goals and establishes deadlines, then calculates the weekly or monthly amount needed to satisfy that goal and sets it on autopilot.
7. Allocate Time for Your Finances
Allocating time for your finances during the week will set you up for success when you’re trying to practice good money habits. Set time aside one day per week to look at your finances and figure out what needs to be improved.
Mint Financial Coach Ralph Schule, CPA, allocates time for his finances by using the bottom-up approach. In this approach, you take into account how much money is leftover every week after expenses and savings, and, except for emergencies, never spend more than the leftover amount.
8. Buy Only What You Need
If you find yourself spending money on unnecessary things, start a habit of taking some time to think before you buy and only buy what you need. Mint Financial Coach Karen Layfield, CPA, always remembers her mother’s advice before buying anything: “It’s not a bargain if you don’t need it.” With that said, do your research and ask yourself if it’s something you actually need, or if it’s something you want.
However, if it happens that you need to buy something, it can be a good idea to look for secondhand items. Keep in mind that you don’t have to go after the latest technology or clothes, and there are many secondhand options that can be as good for the environment as they can be for your wallet.
“In terms of spending on things, I was taught to ‘Use it up. Wear it out. Make it do or do without.’” — Jared Smout, CPA, Mint Financial Coach
9. Plan Your Retirement
Preparing for your future starts when you’re young. If your company offers a 401(k) plan, take advantage of it, especially if they match it. To start preparing for the future and develop better money habits, every bit of help is beneficial. A portion of your paycheck will be going toward this investment account — a retirement account that you can withdraw from in the future.
10. Learn From Your Financial Mistakes
When trying to build better money habits, you will likely make mistakes. But if you want to have a better relationship with money, it’s important to learn from your errors. Even Mint Financial Coaches have made mistakes in the past, and shared their learnings with us.
As an example, Mandhana learned his lesson after losing $5,000 while currency trading on margin. He now stopped margin investing and became a buy-and-hold investor, which has been serving him well.
11. Learn More About Money
One good money habit Dike has is to never stop learning. Learning about money can help you understand what you can do better and get you closer to becoming financially savvy. If you want to start learning more about money and how you can build better money habits, here’s how the Mint Financial Coaches keep themselves updated with the financial world:
“Knowledge applied, not just accumulated, can make you healthy and wealthy!” — Joe Dike, CPA/PFS, CFP, Mint Financial Coach
12. Start Budgeting
Budgeting is key for developing better money habits. To avoid spending money beyond your budget — which Mandhana considers a bad money habit — it’s important to set boundaries, such as having a spending limit for your groceries, and keep track of your finances.
There are many ways you can start budgeting your money, whether that’s through an app or trying out money-saving challenges, staying committed and finding what fits your lifestyle the best are the most important steps.
13. Use Coupons and Discounts
When it comes time to buy something, Mandhana suggests using discount coupons. Doing your research and finding what fits your budget is another good money habit to start. Mandhana adds a tip for grocery shopping: “Buy items only when in season with plenty available and on sale. If you have time and space, store and preserve products during off-season.”
“Buy items only when in season with plenty available and on sale. If you have time and space, store and preserve products during off season.” — Om Mandhana, CFP, Mint Financial Coach
14. Cut Down on Living Expenses
You can also develop better money habits at home. Evaluate your utility bills and find ways to save, such as conserving more water and energy, or negotiate medical bills if possible. Get into the habit of making a grocery shopping list, meal planning to avoid wasting food, and price checking to avoid overspending. And if you feel like you’re spending too much on entertainment, find free activities for the family and cut down on subscription services that are not often used.
15. Avoid Emotional Spending
“A bad money habit enables instant gratification and tends to satisfy temporary urges,” says Dike. Curb your emotional spending by avoiding going out when feeling stressed or sad, deleting shopping apps, and keeping your credit card at home. If you have the temptation to buy something, take a few days to think about it and assess your budget.
“Impulsive spending motivated by immediate gratification without regard to need or emergency is a bad money habit.” — Ralph Schule, CPA, Mint Financial Coach
16. Find Someone to Hold You Accountable
If you’re struggling with staying motivated to work toward your goals, find someone who can hold you accountable. That person could be a close friend who can give you some tough love or even a financial coach.
15. Avoid Emotional Spending
“A bad money habit enables instant gratification and tends to satisfy temporary urges,” says Dike. Curb your emotional spending by avoiding going out when feeling stressed or sad, deleting shopping apps, and keeping your credit card at home. If you have the temptation to buy something, take a few days to think about it and assess your budget.
17. Sign Up for a Budgeting App
If you struggle with budgeting, there are many budgeting tools available to help you keep track of your finances. Signing up for a budgeting app, such as the Mint app, can help you get closer to your financial goals and start building better money habits. Routinely updating your budget on an app will help you evaluate your expenses better and make you think twice before spending.
“Good money habits are the ones that are helpful to you in achieving your financial goals.” — Om Mandhana, CFP, Mint Financial Coach
19. Pay Yourself First
Developing better money habits doesn’t mean you can’t buy things you like anymore. With enough planning, you can still find ways to enjoy yourself while saving money. Smout says: “Pay yourself and your debts first before you pay for your wants. It’s OK to spend money on the things we like, but not at the expense of our future by not saving or trying to run from the past by not paying our debts.”
By evaluating your budget and saving money regularly, you are paying yourself so you can have a better future, enjoy things you like, and take care of loved ones
“It’s OK to spend money on the things we like, but not at the expense of our future by not saving or trying to run from the past by not paying our debts.” — Jared Smout, CPA, Mint Financial Coach
20. Reevaluate Your Role Models
If you find yourself trying to keep up with celebrity and other friends’ lifestyles that are not necessarily within your budget, it might be time to reevaluate your role models. Start a social media cleanse to avoid shopping temptations and surround yourself with people who will motivate you to start building better money habits
21. Be Smart About Investing
Investing can open the doors to financial freedom, but if done poorly, it can take a toll on your finances. Mandhana advises that you shouldn’t invest in anything until you fully understand it. Take time to study investing and evaluate your budget before making that commitment. Whether you want to invest long-term or in cryptocurrency, make sure you’re in good financial standing and understand what you’re doing.
22. Live Within Your Means
“Living within your means” spending less than the amount of money you bring in each month. ”Whenever possible, you should try to spend less than your income,” Castella says. “If it is not possible and money is tight, you should try to reduce non-essential spending so that you don’t take on too much debt.”
Avoiding speculative decision-making can also help you live within your means. Smout agrees, “We all need hope that things will get better, but the worst money habit is to live beyond your means — spending more than you make on the faulty thinking that things are already better. Never base your current decisions on desired future outcomes — wait until they have actually happened”
“Whenever possible, you should try to spend less than your income. If it is not possible and money is tight, you should try to reduce nonessential spending so that you don’t take on too much debt.” — Anthony Castella, CPA, Mint Financial Coach
23. Plan for Emergencies
Emergencies can happen at any time and place, so being prepared ahead of time will make sure not to put a strain on your finances. Add to your emergency fund on a regular basis and reserve a chunk of your paycheck each month for your savings. Mandhana advises to always have adequate life insurance to cover your living expenses for 10 years, kids’ education, your mortgage, and other loan balances.
Our experts understand that life can be complicated and unexpected — that’s why it’s a good habit to plan ahead for an emergency. Schule, for instance, suggests: “Try to forecast unexpected needs of relatives, such as parents and siblings. You might have to say no, but it feels a lot better to say yes.”
“As much as possible, try to forecast unexpected needs of relatives, such as parents and siblings. You might have to say no [to helping relatives], but it feels a lot better to say yes.” — Ralph Schule, CPA, Mint Financial Coach
The Bottom Line
The good thing is you have already overcome the hardest step of developing better money habits by finding out how you can start. Whether you start slow by applying only one of these tips, or decide to try out a couple, implementing these into your spending and saving routine can help you get used to budgeting and create a better future for yourself.
Are you living by the mantra, “New Year, new you?” Year after year, we set these resolutions and goals – for them to get tossed out before the year can fully bloom. Looking for ways to elevate your life? Maintain the things you’ve started? Produce real results? Check out the tips below to secure your future and your bag in the year to come.
Write down your goals
As much as we’d like to consider ourselves computers, it’s nearly impossible for us to remember every single thing we’d like to do. In order to stay focused and remain organized, it’s best to simply jot down your goals.
Try your best not to overthink and begin to write everything that comes to your head. Essentially, this is a brain dumping exercise that allows you to clear your mind as much as possible. Often times confusion doesn’t necessarily come from us not knowing, it’s simply because we haven’t written down our thoughts.
Once this is finished, the second step is refining. Go through everything you’ve listed and organize it into categories. From there you’ll be able to highlight the top 3-5 goals you’d like to accomplish. This allows you to only focus on the goals with priority – and as those items are completed, the next ones in line will be yours for the conquering!
Are you wanting to start a new career or business venture? Write down all of the to-do items needed to accomplish that goal and assign a certain number of tasks per day, week or month. In this way you’re not overwhelming yourself with unrealistic expectations but creating an actionable guide that navigates you straight to the finish line.
Self-assess and readjust as needed
Let’s take a moment to reflect on 2021. What are the things you did exceptionally well? What are a few items that need improvement? Are you able to recall the goals that didn’t have any traction at all?
Before you can execute, you need to know where you’re currently starting from. Be honest with yourself – this isn’t an exercise to stir up negative and non-productive emotion. This is to chart your next steps and make them effective.
If you overspent this year on discretionary items, test out the cash method for your purchases. Looking to increase your earning potential? Update your resume, network and explore the opportunities that interest you. Saving for a large purchase? Create a reasonable savings plan that lays out the steps to ensure you’re successful.
Keep in mind this is not a one-day exercise. Carve out some time over the course of a week to truly reflect.
Avoid impulsive behavior and identify the root cause
Each and every one of us have thorns in our side that derail us from our goals – big or small. In order to identify the true problem, we must tap into our self-awareness and discuss some ugly truths. For example, if you are on a fitness journey and have a desire to become healthier– a routine is mandatory. Schedules allow us to operate more efficiently. So, let’s say you want to workout at least three times a week. This means there’s a certain window of time that needs to be allotted for the actual workout. After that you need time to eat, prepare food and continue flowing through the day. If one of these links are missing in the routine, it could tempt you to skip the workout completely.
What needs to happen? Have food readily available on the days you workout. Get sufficient rest the night before to make sure you’re energized to conquer the day. Try your best to eat the right foods to avoid feelings of sluggishness or irritation. Have your exercise clothes ready the night prior to avoid any mishaps in the morning. No matter how crazy and insane these little things may seem they’re very impactful. It creates a smoother workflow which decreases anxiety, worry, frustration and irrational decision making.
Let’s talk money!
If you have an issue with overspending; consider this. Do you spend more money when your emotions fluctuate? Adopt some self-care techniques to relax and unwind before making hash decisions. Try adopting yoga within your weekly routine. Step away from the computer when the feeling of work stress occurs. Swap out the impulse to spend with something positive, like taking a quick walk or simply log off social media. Unsubscribe from retail emails so there won’t even be an urge to spend. When you’re healthy mentally and physically – your finances have no choice but to positively benefit.
Let’s talk retirement
Before the year is up evaluate your retirement account, savings methods and/or investments. Are your selections aligning with the financial goals you’ve set for the upcoming year? Assess your contributions and adjust as you see fit. If there are things you’re unclear on or are in need of further guidance, solicit the assistance of a financial advisor. Don’t allow yourself to get hung up as challenges arise! There’s always a solution. Take a deep breath and revisit your goals in moments of frustration.
Create an accountability tribe
We cannot live life alone and in confinement, so what better way to engage the people closest to you than create an accountability tribe? Establish some safe meetups or virtual check-ins as schedules permit to discuss hiccups, successes and lessons. In this way, it establishes a sense of community and support. It’s almost like having your own personal cheerleaders ushering you through all phases of life. You can gain multiple perspectives while also having a safe space that doesn’t judge you for your mistakes.
Remain positive and stay the course
In this upcoming year, don’t settle for less. The key to achieving all of your goals fall into two main categories: consistency and discipline. Will the work always be easy? Absolutely not. Your goals will stretch you in new ways and will create a new level of resilience.
2022 is ours for the taking. You have the tools; now do the work and secure the life you truly desire to live!
Do you ever wonder why it’s so hard to save money — even when you’ve cut the cable and the meals out, and you’ve never even had a latte habit?
One reason it’s so hard to save is that your fixed expenses — the ones that stay the same each month, like your rent or mortgage, car payment, property taxes and insurance premiums — tend to be your biggest bills. These aren’t exactly easy to reduce. Sure, you could lower your rent by moving to a smaller place, but moving itself is also expensive.
We don’t have a magic money-saving trick that will send your bank account balance soaring, but there are plenty of small ways you can scale back. And the little things do add up. Read on if you’re ready to start saving.
How to Start Saving: Set Your Goals First
We get that making a budget ranks right up there with a dentist appointment or trip to the DMV in terms of things you’d rather do. But it’s your essential first step when you want to start saving money.
Fortunately, the best budgeting apps make it easy to keep track of your spending and identify areas where you can cut back. Just be sure to comb through several months’ worth of expenses to get a true sense of where your money is going. Don’t forget about the expenses you don’t encounter every month, like holiday gifts and car registration.
If you don’t set goals, the only thing that budget will do is make you feel terrible about just how little money you’re saving. To get motivated to make saving a priority, spell out why you’re saving.
Think about the short-term goals you’re hoping to accomplish within the next year or two. Building an emergency fund for your family, making a down payment on a home or saving for a vacation may fit in here. Also consider your long-term goals, like putting more money in a 529 plan for your child or saving for retirement.
25 Tips for How to Save Money — Even When Times Are Tight
Here are 25 ideas for saving more money. The good news is that there’s no one thing you have to cut out. If it really matters to you, go ahead and keep spending on it. You can find other things to eliminate that won’t cause too much pain.
1. Time your purchases like a pro.
You may not be able to time a car repair or vet bill, but with discretionary purchases, knowing when to get the best deals can mean big savings. Need a TV? Wait until January, when last year’s models are discounted to make room for the new ones. Looking for new furniture? Retailers often clear out their stock around Independence Day, making July prime time for scoring cheap furniture.
2. Master the art of getting stuff for free.
Becoming a hermit isn’t the only way to save money. There are plenty of ways to get free stuff or have fun on the cheap. Some of our favorite ideas:
- Use Facebook and Nextdoor. Before you shell out for things like furniture or baby gear, check out buy- nothing groups on platforms like Facebook and Nextdoor to see if one of your neighbors is looking to get rid of something similar.
- Score free food by downloading an app. Plenty of restaurant chains offer freebies or BOGO deals for downloading their apps. You can always delete them after you take advantage if you don’t want temptation at your fingertips.
- Get free stuff just for being born. You can score tons of birthday freebies if your big day is coming up — often not just on your actual birthday, but any time during your birth month.
- Check out your local library for free entertainment. Your library card isn’t just a pass to check out books made from dead trees. Plenty of free library apps allow you to access ebooks, movies, music and more without paying a cent.
- Swap goods or services with someone else. Learning how to barter can help you get what you need without spending money.
3. Smash your credit card debt once and for all.
The average APR for people who carry credit card debt is well over 16%. Your bank jumps for joy when you don’t pay off your balance because it’s getting rich off all that interest. Quit padding your bank’s coffers and break up with your credit card debt forever. Some tactics to try:
- The debt snowball method, where you attack the smallest balance first.
- The debt avalanche method, where you focus on the card with the highest interest rate.
- A debt consolidation loan, where you merge your debts into a single payment. This is only a good option if you’re lowering your interest rates.
- A balance-transfer credit card, where you transfer your balances to a card with a 0% promotional interest rate. That zero-interest period typically only lasts 12 to 18 months, though, so this approach is best if you don’t have tons of debt.
4. Flex interest rates to your advantage.
Although they may be on the rise, interest rates are still low, especially if you haven’t refinanced your mortgage in a number of years. One good rule of thumb: Refinance when you can lower your interest rate by 1 percentage point or more, since you’ll have to pay closing costs.
5. Lower your student loan payments.
If you’re struggling to pay off student loans, take advantage of the freeze on interest and payments during the forbearance period to talk to your servicers about whether an income-driven repayment plan is an option for your federal loans. These plans will stretch out your repayment over the standard 10-to-20 years — and if you still have a balance after 20 years, it will be forgiven, though you’ll still owe income taxes. If you have private student loans, check with your servicers about whether there’s a way to lower your debt payments.
6. Do meal prep. Don’t go overboard.
Grocery stores play all kinds of sneaky mind games with you, and you’re most vulnerable if you shop while you’re harried and hangry. A great way to combat their money-snatching tactics is to make a shopping list and devote a few hours to meal prep every week.
But don’t get too ambitious here. If you’re an UberEats addict whose pantry consists of three spices, you’re setting yourself up for failure if you plan to cook 21 meals a week. Start with a more reasonable goal, like making your own breakfast and lunch each day, plus dinner three nights a week.
Only buy in bulk if you’re purchasing products that have a long shelf life or ingredients that you have enough freezer space to store for future recipes.
7. Squeeze every cent you can out of your employer.
We aren’t just talking about negotiating your salary and asking for a raise when you’ve earned it — though both are essential, albeit awkward. To build your long-term savings, make sure you’re not leaving free money on the table. Contribute enough to get your employer’s full retirement match if they offer a 401(k) plan. If you have a health savings account, take advantage of any matching contributions to that as well. You can use the money you save for your own expenses, your spouse’s or a dependent family member’s.
8. Got a raise? Congrats, but don’t spend it.
Do your tastes get fancier every time you get a raise? This phenomenon is called lifestyle inflation, and it’s a notorious savings killer. You don’t have to live like you’re on an entry-level salary forever, but make a plan for your future raises so your living expenses increase at a slower rate than your salary. For example, plan to save half of your next pay increase and sock the rest in savings.
9. Be skeptical when something seems like a deal.
Free shipping if you spend just another $11? Step away from the digital shopping cart. If you’re being coaxed into shelling out another few bucks for something that’s “free”… well, it really isn’t free.
Playing the credit card rewards game is another good example. Yes, you can score free airfare and cash back. But it’s only free if you don’t spend more to get those rewards, and if you pay your balance in full every month. Otherwise, you’ll shell out way more in interest than you’re getting in rewards.
10. Cancel automated purchases for non-necessities.
Curbing mindless spending isn’t just about cutting out late-night Amazon purchases and impulse grocery buys. You probably have monthly subscriptions and memberships that are draining your bank account each month for things you rarely, if ever, use.
One of the best ways to save money is to look carefully at gym memberships, streaming services, subscription boxes and anything else that you automatically pay for each month. If you haven’t used it in the past month, it probably belongs on the chopping block. Also be on the lookout for any free trials you forgot to cancel.
Avoid storing your credit and debit card information on websites you frequently shop on. You’ll make it harder for yourself to spend mindlessly.
11. Find energy suckers that are driving up your electric bill.
No, we aren’t going to tell you to invest thousands of dollars on solar panels for your home as a way to save money on your electric bill. But there are a few inexpensive tricks that can help you save money on utilities. Simple things like regularly changing air filters and switching to more efficient light bulbs can make a big difference on energy costs.
12. Repair what’s broken instead of buying new.
Just because something’s broken doesn’t mean it’s destroyed. By learning some basic DIY techniques, you can make your lightly damaged goods like new again without shelling out for repairs. For instance, learning a few basic sewing stitches will help you repair your clothing for you and your family, even if you don’t have a sewing machine. There are plenty of ways to learn home repair skills for free online.
But for major repairs, know when to call a pro. It’s worth the cost when you’re repairing a big-ticket item or doing anything that could jeopardize your safety.
13. Save money on prescription drugs.
Whether you have health insurance or not, it often pays to do some detective work before filling your prescriptions. If you don’t have insurance, you can save up to 80% on generic medications and 40% on name-brand drugs through Amazon Pharmacy or find medications nearly at-cost at Mark Cuban’s Cost Plus Drug Company. Even if you have insurance, a prescription drug card could help you save money. You can ask your pharmacist to run the cost using your insurance and the card to find out which option is cheaper.
If a medication is expensive because you have to pay for it out of pocket or your insurance company puts it in a pricy tier, talk to your doctor or pharmacist. A lower-cost alternative may be available. For over-the-counter meds, always buy generic. The FDA requires generic drugs to be chemically identical to their more expensive name-brand counterparts.
14. Ditch your cell phone plan if you have a major carrier.
You don’t have to worry about spotty service when you switch to a discount cell phone plan. Most discount plans run on the network of one of the four major carriers, so the only thing you have to lose is your out-of-hand bill. Depending on the plan, you may have data restrictions. Some also require an unlocked device.
15. Find money you’ve long forgotten about.
Some money-saving strategies require a ridiculous amount of discipline. So here’s a super easy trick that could give you a quick savings boost in just three minutes. Find out if someone owes you money by searching your state’s unclaimed property website.
At least 1 in 10 Americans has missing money waiting to be claimed. You could find money from old security deposits or bank accounts, or even a life insurance policy you didn’t realize a loved one left you. The key to making a one-time windfall work for you is to use it purposefully. That can mean saving or investing your money, or putting it toward debt.
16. Get cash for switching banks.
Another way to get a quick cash infusion: Switch bank accounts. Some of the best bank promotions will give you $500 or more just for opening a new account. Just be sure to read the fine print, since a bank account with ridiculous fees or minimum balance requirements could cost you big.
17. Be strategic about your tax refund.
Some personal finance types will shame you for getting a big tax refund because you’re giving Uncle Sam an interest-free loan. We say, do whatever works for you. Opt to have less money withheld from your paycheck if you’ll actually save it or apply it toward debt. But if the idea of a giant tax refund motivates you, it’s OK to make the IRS play piggy bank. Just make a plan for how to spend your tax refund that will pay off in the long run. Some of our favorite ideas:
- Put it in your savings account for an emergency or upcoming expense.
- Pay down your highest-interest credit card.
- Make an extra mortgage or car payment.
- Give your Roth IRA a boost.
- Put it in your child’s college fund.
18. Travel by two wheels whenever possible.
Even if it’s not feasible to ditch your car, bike commuting a couple days a week can help you save money on obvious expenses, like gas and parking. But there’s a bonus here: When you’re on your bike, you can fit a lot less in your basket or backpack than you can in your car trunk. So if you have a habit of making extra trips to the grocery store or stopping for takeout on your way home, traveling by bike reduces the temptation.
19. Cancel the insurance you don’t need.
Insurance can seem like a money-sucker, because hopefully, you don’t need to use it very often. Having sufficient homeowner insurance or renters insurance, car insurance and medical insurance is one of the best ways to prevent an emergency from destroying your finances.
That said, some types of insurance are a waste of money. For example, you probably don’t need collision insurance or comprehensive insurance on a car that’s paid off if it’s older and one fender-bender away from scrapyard heaven. You may not want to shell out for accident insurance or critical illness insurance either, because the circumstances they’ll cover you for are so limited. Even life insurance may not be worth the cost if you’re single with no dependents.
You can often get discounts on insurance by bundling your coverage. For example, you may save money by getting your car and renters insurance from the same company.
20. Do a no-spend challenge
Duh. It sounds so easy: To save money, just don’t spend it. But doing a no-spend challenge, where you commit to not spending any money over a certain period — be it a month, a week or even a single day — can help you reign in your spending.
Or you could try a modified version. Do a pantry challenge, where you avoid the grocery store and use the ingredients you have on hand to feed your family. Or build a capsule wardrobe, where you select a certain number of clothing items and make those your only wardrobe for the time frame of your choosing.
21. Find discounted services at vocational schools
If you’re looking for ways to save money on expensive services, sometimes it pays to let a student practice on you. You can get services like beauty treatments, sonograms and massage therapy at steep discounts from local vocational schools. If you live near a university and you’re truly brave, you could even get low-cost dental work from a student dentist.
22. Get free or low-cost financial help
If you’re struggling to stick to your budget or keep your spending in check, it’s OK to ask for help. You don’t need to spend big bucks to work with a financial pro. Unlike financial planners and advisers, who often cater to people with a higher net worth, a financial counselor is trained to help regular people manage their money from day to day. Many offer their services at little to no cost through a bank, school or nonprofit, or they practice on their own and use a sliding scale based on your income.
23. Find ways to earn extra money.
There’s no way around this one: Even when you have a bare bones budget, sometimes saving money just isn’t possible. One reason is that your fixed costs, like your rent or mortgage, medical insurance and car payments are often your biggest expenses — and those are the hardest to lower.
If you’ve cut everything you can and still can’t save, it’s time to find ways to make extra money. Switching to a higher-paying job isn’t always realistic, but you can still take on a side hustle, find a work-from-home job you can do part time or make extra cash selling stuff online.
24. Find cheap ways to treat yourself.
Any successful savings plan has a little built-in flexibility so you can treat yourself from time to time. Rather than downing drinks at happy hour, buy yourself a good but cheap bottle of wine to enjoy at home. Have a DIY spa day using simple ingredients you probably have on hand. If you’ve been stuck at home for too long, you can refresh your home’s look without spending a dime.
25. Talk about your struggles and your successes.
One of the best ways to save money is to tell other people that you’re trying to save money. Doing so can help you prepare your friends and family for when they hear you say no to joining them when they suggest expensive plans.
But that’s not the only advantage. It’s easy to feel like you’re the only one who’s struggling to save money, especially when you scroll through Instagram. But you’re far from alone. Find other people who are trying to save money, either within your social circle or by connecting with a like-minded online community. You can swap tips for saving money and find encouragement when times are rough.
And when you reach your savings goals, no matter how big or small? Pay it forward. Talk about it. Let others know exactly how you managed to save money — and that they can do it, too.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to [email protected].
Think you need to work long hours to qualify for company-backed retirement plans, tuition reimbursements and affordable health insurance?
Actually, you don’t have to have to be a full-time employee to get those perks. There are many companies that offer generous benefit packages for their hourly part-time employees.
These 14 companies lead the way in offering part-time jobs with benefits. You could land a flexible role that also allows you to attend school, take care of family or do whatever you please.
14 Companies That Offer Part-Time Jobs With Benefits
If you’re looking for part-time work, start your job hunt with these employers.
Hourly part-time employees can receive benefits from Costco once they’ve accumulated 450 hours. Healthcare coverage includes medical, vision, prescription drugs and core dental coverage.
All hourly employees working at least 10 hours per week can enroll in voluntary short-term disability insurance, which provides tax-free income replacement in the event of a non-work related accident or illness that prevents work.
Part-time employees at Lowe’s are immediately eligible for medical benefits, including prescription drugs, short-term disability, life insurance and dental and vision coverage..
After one year, Lowe’s offers an employee stock purchase option to its part-time workers, as well as a 401(k) after 180 days. Eligible family members can also opt-in for group medical, dental and vision coverage and dependent life insurance.
Part-time employees at REI become eligible for a benefits package if they work an average of 20 hours per week over a 12-month evaluation period.
The company pays the majority of employees’ medical and dental coverage and the full cost for basic life and accidental death and dismemberment (AD&D), employee assistance program, business travel accident insurance and long-term disability insurance.
REI also provides a generous PTO package, a wide variety of leave options, and “Yay Days” twice a year – a program that allows employees to take part in their favorite outdoor activity, take on something new or participate in a stewardship project.
They also offer a public transit benefit which provides a 50% pre-tax subsidy on public transit expenses up to the current IRS limit through payroll deduction.
Staples offers its part-time associates access to dental and vision coverage, life, dependent life, accidental death and short-term disability insurance coverage. They’re also eligible for the company’s 401(k) plan after one year and 1,000 hours of service.
Stick with the company for a year and average 30 hours per week, and you’ll be eligible to enroll in a full-time medical plan. Staples also offers 10% employee discounts on online or retail items, adoption assistance and its own confidential employee counseling program.
Starbucks is well-known for its benefits program for part-time employees. All you have to do to be eligible is work at least 240 hours over three consecutive months, then continue to average 20 hours per week.
Health coverage offered by Starbucks includes routine visits, hospitalization and more, along with dental,vision and life insurance coverage. Alternative care options, like acupuncture or chiropractic treatment, are covered too. After 90 days, employees can opt-in to Starbucks’ 401(k) plan.
Other employee benefits include up to a $10,000 reimbursement for adoption expenses, confidential counseling, full tuition reimbursement, and one pound of Starbucks coffee or Teavana tea every week!
Part-time employees who work between 225 and 400 hours at UPS within a three month period are eligible for medical and dental coverage, vision insurance, hearing, prescription drugs and an employee assistance program.
Part-time employees who exceed 400 hours over three months are eligible for the same benefits as full-time employees.
Part-time employees can also take advantage of the Earn and Learn tuition assistance program that provides up to $5,250 in assistance per calendar year (with a lifetime maximum of $25,000). Eligibility begins on the day of hire.
7. Trader Joe’s
After three months and working an average of 30 hours per week, Trader Joe’s “crew members” are eligible for medical, dental and vision coverage at a cost as low as $25 per month.
The company also offers a matching 401(k) plan and contributes 10% of a crew member’s salary annually to the plan, according to an employee.
Other employee benefits include a 20% store discount, scholarship programs, store tastings, employee assistance programs and paid relocation and transfers.
Aerotek is one of the world’s leading staffing agencies. Part-time employees who work a minimum of 20 hours per week are eligible for contributory medical, dental and vision insurance.
The company also offers a 401(k) and 529 plan, a tuition reimbursement after six months, dependent care flex spending accounts, a free counseling service and an employee discount program with Aerotek’s many retail partners.
All hourly crew members at Chipotle are eligible for its robust benefits package that includes medical, vision and dental insurance, as well as a 401(k) match after one year of employment.
Part-time employees also receive a salary percentage-based annual bonus, mental health assistance, education assistance up to $5,250 annually, stock purchase plan, gym membership discounts and one free meal per shift. Free burritos on Chipotle!
10. JPMorgan Chase
The global banking institution offers benefits to its part-time employees, after 90 days, who work between 20 and 40 hours per week.
Benefits include medical, dental, vision, life and accident, disability, before-tax flexible spending accounts and group legal services. JPMorgan Chase also offers a 401(k) match starting at 3% annually and increasing by 1% every year up to a maximum of 10%.
Other offered benefits are an employee stock purchase plan, a comprehensive health and wellness program, parental leave, backup child care options and discounts on banking services.
The United States Postal Service hires career and non-career (temporary/seasonal) workers. Part-time career workers are eligible for its benefits package which includes the Federal Employees Health Benefits (FEHB) program – a plan in which the federal government pays two-thirds of the health insurance premiums for employees and retirees.
They also offer federal group life insurance (FGLI), and federally-backed long-term care, dental and vision and a flex spending account.
The USPS retirement system, also available for part-time career workers, offers a fixed annuity based on years of service, a defined contribution 401(k) THRIFT Savings Plan with a 5% employer match and Social Security.
Part-time and temporary associates at Wal-Mart who work an average of at least 30 hours per week over a 60-day period are eligible for benefits.
After the initial 60 days, associates must wait another 60 days to enroll. Once you enroll you’re eligible for the remainder of the calendar year as well as the year after. Benefits include medical, dental, vision, AD&D, critical illness insurance and accident insurance, as well as a 6% 401(k) match after one year and a 10% in-store discount.
Wal-Mart also offers Resources for Living – a free counseling service that offers unlimited phone support anytime and up to 10 no-cost counseling sessions or 10 free weeks of no-cost, chat-based therapy.
13. American Red Cross
Employees at this major nonprofit are eligible for part-time health benefits if they work 20 hours per week Those who work 30 or more hours per week are eligible for full-time benefits.
The American Red Cross also offers a 401(k) plan with a match up to 4%.
The American educational training company offers eligible part-time employees access to a third-party company that helps enroll in a range of health insurance policies from multiple insurance carriers. Options include a supplemental hospital plan, life insurance, a dental and vision option, disability insurance and a free prescription discount card.
Part-time employees and their families also have access to free or significantly discounted educational courses offered by Kaplan.
Robert Bruce is a senior writer for The Penny Hoarder. Lisa Rowan is a former staff writer.
Long-term financial goals take five or more years to accomplish and generally apply to major life events. Some of the most important long term financial goals people have include saving for retirement and paying off their mortgage.
It’s natural to feel overwhelmed when thinking about your finances several years down the road. Seeing your responsibility for a mortgage, credit card debt, or personal loan can often feel unmanageable when viewed as a whole. The key to overcoming this feeling is to prepare yourself long before the need arises. Setting long-term financial goals early in life can make the process more manageable.
Long-term financial goals take five or more years to accomplish and generally apply to major life events. To boot: You can set them anytime in your life. This guide breaks down how to set a long-term financial goal at any stage of your life and provides tangible financial goal examples to inspire your planning.
Why Are Long-Term Financial Goals Important?
If you only focus on financial goals relevant to your current situation, you may find yourself unprepared when you experience future life events. For example, saving an emergency fund is an incredibly useful short-term goal, but if you don’t save money outside of that fund, then you will be unprepared for retirement. Long-term financial goals bring awareness to events that may be decades away and help to ensure you’ll be prepared for when they arrive.
Long-Term vs Short-Term Financial Goals
While long-term financial goals focus on several years into the future, short-term goals are concerned with the present. Short-term goals can generally be accomplished within a year and are usually easy to achieve. Typical short-term financial goals include establishing a monthly budget and saving an emergency fund. Establishing key short-term goals can help investors achieve their long-term money goals by getting them on the right track early on.
Long-Term vs Mid-Term Financial Goals
Mid-term financial goals are a gray area in financial planning. They often overlap with short and long-term goals—taking longer to achieve than short-term goals, while less difficult than long-term goals. Saving for a down payment can fall under either type of financial goal since the amount you need to save can vary based on the size of the purchase. It can take more than five years to save up for a house down payment depending on your income and the cost of the house.
Long-Term Financial Goals For Your 20s
Your 20s represent a unique time in your financial journey since many people start out with a blank page. Knowing where to begin can be a challenge, but this time in your life has the power to set the stage for decades to come. Setting financial goals now can improve your quality of life and answer the question, “Where should I be financially at 25?”
Identify Your Retirement Needs
Although your retirement is likely several decades away, identifying your future needs will increase your likelihood of meeting them when they arise.
Think about likely expenses you’ll have at this time in your life. How much might you receive from social security? Will you have rent or mortgage payments? How much will you need to receive from your retirement account to cover your estimated retirement budget?
You can build your current monthly savings plan around your expected future needs. Comparing these needs to your current income will help you determine if these goals are realistic and if you need to find new income streams.
Open a Retirement Account
Saving money early on is the one of the greatest ways to secure your financial future. The interest you earn on your savings will compound, leading to exponential growth by the time you’re ready to withdraw it. The rule of thumb is to save 15 percent of your pre-tax income each year.
There are multiple options for where to invest your money. A couple of the most common include individual retirement accounts(IRA) and 401(k)s. It can be very beneficial to participate in your employer’s retirement program since they often include company contributions, which is like an addition to your salary.
Save For a House Down Payment
Most people dream of owning property. Building equity in an appreciating asset instead of spending money on rent can be a great way to eliminate future expenses after you pay off the mortgage.
The amount of money you need to save will be dependent upon the cost of your desired home. A down payment of 20 percent can lower your interest rate and eliminate the need for private mortgage insurance (PMI). If your desired first home costs $300,000, then you will need a down payment of $60,000 to meet this requirement. Smaller down payments are possible, but they will affect your interest rate and the likelihood of being approved for the loan.
Pay Off Credit Card Debt
Credit cards can allow you quick access to funds when you need them most, but carrying credit card debt can quickly wipe out your financial progress. In a perfect world, you’ll be paying off your credit card monthly without accruing any interest.
In the event that you have accumulated credit card debt, it should be a top priority to pay it off. High interest rates, sometimes surpassing 15 percent, offset the gains you’d be making by investing that same money while holding the debt. Use a credit card payoff calculator to learn how long it will take to settle your debt.
Increase Your Earnings Potential
Making more money is the simple answer to securing your financial future, but how do you go about making it happen? Evaluating where you want to be in five years is a great starting point. Does your career path require a higher level of education than you currently have? Does your current job have a glass ceiling preventing growth?
Talk to your boss about your aspirations. There may be training they can recommend to put you on the ladder of success. If your current employer is unable or unwilling to help, consider upskilling on your own. Get certifications independently or enter a graduate program. Proactively finding ways to increase your earnings is better than wasting years at a dead-end job.
Long-Term Financial Goals For Your 30s
Entering your 30s often brings a new degree of stability to your finances. Ideally, you will be on a career path that allows you to meet most of the long-term financial goals you set for yourself in your 20s. However, with age comes life changes that may require you to shift your priorities.
Pay Off Student Loans
The sooner you pay off your debts, the more money you can put toward other financial goals. If you have no higher commitments, it can be better to aggressively pay off your student loans early. Variable loans may be manageable for you at the moment, but if interest rates rise, your loan could quickly increase by more than 5 percent.
Large payments are not a possibility for every investor’s goals. Putting just 10 percent of your gross income toward your student loans can still be enough to whittle away your outstanding debt. As your income increases, aim to pay a larger monthly amount until the loan is eliminated. Using a student loan calculator can help make your goal attainable.
Improve Your Credit Score
A good credit score makes it easier to meet a number of personal financial goals. You can get approved for a better apartment or receive a better interest rate on your car loan and mortgage payments. Although it depends on the scoring system, aiming for a credit score above 700 will generally give you more favorable terms.
Ways to improve your credit score include:
- Paying your rent on time and not breaking the lease early
- Using 30 percent (or less) of your total credit limit
- Paying your credit cards in full each month
- Keeping old lines of credit open
- Limiting the number of hard inquiries into your credit
- Settling any delinquencies
Set a Retirement Date
In your 20s, you might have had a general idea of when you wanted to retire. In your 30s, it’s time to think about a precise date that you can plan around. Your potential retirement year will vary based on your income, debts, and personal commitments.
If you were unable to stick to the goals you made in your 20s, then you may need to adjust your financial planning for retirement to something more attainable. If you are committed to retiring in a specific year, you may need to ramp up your savings and cut unnecessary purchases. Identifying when your mortgage will be paid off and when your kids will be finished with school can also affect your retirement date.
Create a Last Will and Testament
A last will and testament is the legal document used to allocate your property after you die. It also identifies the executor of your estate—the person responsible for settling your outstanding debts and seeing that your will is honored.
Without a will, your assets will be distributed by the government after you die. This can be a costly process with no guarantee that your wishes will be honored. If you have plans for who inherits your belongings, meeting with an estate planning attorney should be made a priority.
Long-Term Financial Goals For Your 40s
Life in your 40s is full of responsibilities. You likely own more assets now than at any other time in your life, your family is growing, and your goals are changing. Now it’s time to reorient your long-term financial goals to your current situation.
Pay Off Non-Mortgage Debt
Aside from your mortgage, which can follow you into your 50s and 60s, all other debt elimination should be prioritized. Just because you eliminated some debts in your 20s and 30s does not mean new debts haven’t appeared.
You may have new credit card debt or student loans from returning to school. Automobile purchases can happen at any point in life. Regardless of the reason for the debt, you won’t want high APR payments lingering when you are approaching retirement age.
Evaluate Life Insurance Policies
Life insurance is what your dependents will use to bolster their lifestyle in the event of your death. Having a comprehensive policy can ensure their needs are met even if your savings at that time are not enough.
Due to the financial obligations the average 40-year-old has, it is often recommended to purchase more life insurance than you initially thought you’d need. You’ll want to make sure your family can cover their living expenses and settle any debts without your income.
Invest in Your Child’s College Fund
Saving for your children’s education is one of the best ways to set them up for financial success. If they can avoid the early debt of student loans, then they can focus on other financial goals earlier.
A college fund is a large investment and it will take a long time to accomplish. Depending on when you have kids, you may want to start their college fund before your 40s to ensure it is adequate by the time they graduate high school.
Maximize Your Earnings Potential
Most people reach their peak earning potential at some point in their 40s. Putting yourself in a position to maximize this number will set the stage for your quality of life in retirement. A larger income will enable you to max out your retirement contributions.
This is another time to analyze if your current job aligns with your long-term financial plans or if you need to make a change. Look for ways to make more money by negotiating for a raise, earning a promotion, starting a side hustle, or changing employers.
Long-Term Financial Goals For Your 50s and 60s
These two decades in a person’s life often have a large degree of overlap. Your personal commitments are simplified, and your set retirement date is finally within view. All that is left for you to do is tie up loose ends.
Become Entirely Debt-Free
Paying off your mortgage is a major financial goal and getting it done before you retire is a huge accomplishment. Knocking it out while you’re still working full-time enables you to put more money into your retirement portfolio. The same goes for any other outstanding debts that are persisting. These monthly expenses can prolong your time in the workforce past what you originally intended.
Plan Long-Term Care Options
There may come a time in your life when you are no longer able to take care of yourself. You’ll want a plan in place before that happens so your finances will be enough to meet your needs. Make sure your family is aware of your wishes so they can prepare as well. Some things to consider include:
- Who will be your guardian?
- Will you receive in-home care or move to a live-in facility?
- If you require a live-in facility, which one will it be?
Long-term care services are a costly addition to your retirement budget. Setting up funding for such an event years before the need arises can make it more manageable.
Re-evaluate Your Estate
Many changes may have occurred in your life since you first drafted your will. Re-evaluating what assets are currently in your possession will make the process of managing your estate go much smoother. This is another opportunity to discuss your financial affairs and wishes with your family. Avoid unexpected revelations after your death, so there isn’t fighting amongst your loved ones.
Downsize Your Living Expenses
Implementing cost-cutting measures in your life before retirement can help put your future lifestyle into perspective. You may realize that your initial retirement budget can’t meet your needs and you need more time to save.
The house you raised a family in may no longer be necessary once your kids are out of the house. Selling it for a smaller property can add to your savings while reducing expenses. The same can be said for owning multiple vehicles or vacation properties.
Everyone has unique needs and obligations that influence their financial journey. Budgeting and saving can keep you on track to meet your long-term financial goals. Regardless of where your finances stand today, it’s always a great time to prepare for many of life’s important events.
People are worn out. They are trying to make it through the stress of the pandemic, a continually volatile market and record inflation. And, for many who are years from retirement, they have decades of work ahead of them.
These younger Americans are in the middle of their working years – those critical saving-for-retirement years. It’s not easy to keep those retirement goals in mind when current finances feel uncertain.
The new 2022 Retirement Risk Readiness study* from Allianz Life found that people who have yet to retire are much more concerned about their financial futures than retirees – particularly after two years of uncertainty with the pandemic.
The big point: People further from retirement feel financially at risk.
The majority of younger Americans (particularly those more than 10 years from retirement) are more afraid of running out of money than death. In the study, 63% of non-retirees said they fear running out of money more than death. Meanwhile, just 46% of retirees had the same fear. All people are saving and investing in the same market. Yet, these younger Americans are much more worried about their financial future.
Actions taken during the pandemic could be one reason they don’t feel secure because, according to the study, non-retired Americans made some financial decisions during the pandemic that left them in a precarious position:
- 34% took cash out of investment accounts like a 401(k) or IRA.
- 39% reduced the amount of money they were putting into retirement accounts.
- 54% said they spent too much on non-necessities.
In general, people should refrain from touching retirement investment accounts until they leave the workforce. They should also maintain contributions to those accounts. But, these moves already happened – an opportunity lost. So, let’s focus on what people can do to address risks to their retirement security, starting today.
Here are some tips to get back, or stay, on track toward retirement goals. The proposed SECURE ACT 2.0 looks like it will pass at the time of this writing, and some of the provisions will help saving for retirement more attractive and affordable for younger pre-retirees.
Get back to basics
Sometimes you have to return to Finance 101. Re-examine your monthly income and expenses. Find out how much you can reasonably save – and then do it. Make a plan to pay off debt, especially high-interest or non-mortgage debt like credit card debt and car loans.
The hardest part about this process is that it involves work and brutal honesty. You have to write everything down – don’t expect you’ll remember everything. This is where commitment begins.
Then, start checking down the list of ways you can make those efforts work even harder for you. First consider putting those savings into a high-yield savings account. Once you have an emergency fund of around six months’ worth of expenses in cash, then you can start putting money into investment accounts.
If your employer offers a retirement savings plan, consider enrolling in it. Many companies also offer employees a match on contributions to a retirement account as part of their benefits package. Take full advantage of it. That means, if you make $50,000 a year and your company matches 5%, you could invest $2,500 into a 401(k) plan a year and automatically double that with another $2,500 from your employer. By the end of the year, you have just put 10% of your salary into retirement savings.
The proposed SECURE ACT 2.0 contains a provision that would provide for automatic enrollment for employees at a 3% contribution rate that will increase every year by 1%. Before this comes about, make sure you are comfortable with that amount. Also, if student loan debt is preventing you from being able to make contributions, there is currently a provision that would allow employers to match what you are paying in student loans with a contribution to your 401(k) or other employer plan. If the bill passes, you should ask about this.
You could also be eligible for tax credits for those contributions made to retirement accounts. The Saver’s Credit is available to some low-to-moderate income families. The Saver’s Credit gives a tax break for contributions made to an IRA or employer-sponsored retirement plan.
Automate your savings
The easiest way to save is not to have to think about it. This is one reason why 401(k) contributions are so great. They come out of your check each pay period without you having to make an active decision. This eliminates the temptation to spend, spend, spend. Particularly if you’re among the more than half of non-retirees who said they spent too much money on non-necessities during the pandemic.
Examining your budget could help figure out how you could change your monthly cash flow to put more money into savings and investment accounts. Automatic transfers from checking into these accounts will establish strong habits. You could start with something as simple as a $10 transfer into these types of accounts each week.
Once you reach age 50, you can make catch-up contributions to IRAs and 401(k) plans. That means you can go beyond the normal limits to contributions allowed in those plans. This can help make up for not saving as much as you would have liked in the past.
The typical contribution limit for 401(k) plans is $20,500 in 2022. A catch-up contribution allows you to put another $6,500 into the plan. The proposed SECURE Act 2.0 has a provision to increase the catch up contributions to as much as $10,000 starting at age 62. There may also be a way your employer could match your Roth 401(k) contributions that could potentially add more tax-free retirement income for you later in life. You should consult with a tax adviser on whether this makes sense for you.
Manage your risk
Don’t be seduced by a potentially huge upside. If you’re feeling behind, you may want to protect the money that you are investing.
Sure, a riskier investment might have a bigger payoff over time than the traditional, safer choice. But, that means the risk to lose is higher too.
Consider creating a balanced portfolio of investments with varying levels of risks. That balance should include financial products like index funds, bonds and annuities that historically carry less risk. Investments that offer some risk mitigation, such as buffered (ETFs), or fixed indexed or registered index linked annuities (RILAs) with buffers could also be considered.
As you age, the more you should seek to control risk in your portfolio. Oftentimes these buffered products are a good compromise between a fixed investment that is not likely to keep pace with inflation and investing in something like stocks, which have inherent risks or are subject to volatility. Talk over your options with your financial adviser to come up with a balance between the need for growth and your ability or willingness to accept a certain level of risk.
Make more money
Between savings taking a back seat and record-setting inflation, you might just need to make more money to right your financial strategy. Sometimes the only way to save more is to make more.
Now might be the time to ask for a raise or look for a new, higher paying job. The labor market is in your favor with companies fighting to attract and retain talent. The study also found that 53% of non-retirees have had to or expect to find a job that pays more money due to the rising cost of living, so you’re not alone if you fall into this camp.
Use your increased earnings to increase your savings. Sure, it means you can spend more elsewhere too. Just be aware of lifestyle creep detracting from your future goals.
Create a long-term plan and consult a professional
Creating a long-term financial plan will help you think in detail about what you want those 20 to 30 retired years to look. The most important thing is that it has to be written down. Having a plan in your head does not work. While there is online software that can help, you really need to work with a professional who will create a plan for you.
This takes work, which is why many people don’t do it. However, after you put in the initial effort, your plan is an invaluable asset that you can refer to, adjust and find comfort in as you move toward and through retirement.
A good written plan will also account for risks to that ideal future in retirement. Risks like volatility, inflation and longevity all pose a threat to those plans. You can incorporate financial strategies that can mitigate those risks.
Creating this document will determine strategies to set yourself up to attain that retirement lifestyle you deserve. Your actions now will dictate how you will secure those retirement goals. There is no one-size-fits-all financial plan. These tips are in the “fits most” category. Your financial situation would benefit from the detailed assistance of a professional.
*Allianz Life Insurance Company of North America conducted an online survey, the 2022 Retirement Risk Readiness Study, in February 2022 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.
This content is for general educational purposes only. It is not, however, intended to provide fiduciary, tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives and employees do not give fiduciary, tax or legal advice. Clients are encouraged to consult their tax advisor or attorney for their particular situation
Allianz does not offer financial planning services.
Registered Index Linked Annuities are subject to investment risk, including possible loss of principal. Investment returns and principal value will fluctuate with market conditions so that units, upon distribution, may be worth more or less than the original cost.
Investing involves risk including possible loss of principal. There is no guarantee the funds will achieve their investment objectives and may not be suitable for all investors.
Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.
Products are issued by Allianz Life Insurance Company of North America. Variable products are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.542.5427 www.allianzlife.com
Vice President, Advanced Markets, Allianz Life
Kelly LaVigne is vice president of advanced markets for Allianz Life Insurance Co., where he is responsible for the development of programs that assist financial professionals in serving clients with retirement, estate planning and tax-related strategies.
Every year we see the same months, holidays and seasons – it’s all pretty predictable. While you may not know when a winter storm will hit, you can usually count on chillier weather come winter. The same can be said for financial phases. While not always easy to predict, you can find patterns if you look for them.
But how does knowing a financial phase pattern help? When it comes to financial planning, the answer is a lot.
What are financial phases?
There is a natural ebb and flow to money habits throughout the year. For example, most of us tend to spend more around the holidays because of gifts and parties. When January hits, people take a look at their budget, set goals for the year and attempt a financial diet. The same can happen in the summer as people splash out on vacations or enjoy a plethora of activities with their families.
Patterns can also occur throughout, showing up in spending and savings habits. Recent college grads probably live on a tight budget with less savings, whereas an established professional might be more focused on long-term goals, such as buying a home or saving for retirement.
Is it the same for everyone?
While the year can offer similar periods of spending and saving, each individual has their own plans, priorities and habits that make them unique. If you enjoy saving, maybe you take vacations during shoulder seasons to take advantage of lower hotel and airfare prices or you sign up for a credit card (of course, paying it off every month) that supports your travel habit – think free rooms, reduced flights, etc. Or if you always go big on your birthday each year, you create a plan to automatically save money every month into a “birthday fund” so when the time comes each year you’re ready.
The same is true when looking at life patterns or saving and investing. If you land a well-paid job out of college, perhaps you spend more lavishly than the average early 20-something would. Or someone who joined the FIRE movement would contribute to their retirement and save differently since they have a different goal. It’s important to understand that each person has their own goals and priorities, and sometimes life gets in the way with unexpected obstacles.
How does knowing this help?
Knowing the patterns can help you plan for the future. If flying home for the holidays with a Santa sack of gifts is your pride and joy, you can plan ahead by only eating in or cutting back on entertainment a few months in advance. When you know something happens annually that you want to enjoy to the fullest and not worry about your cash flow, you can budget it in fun ways beforehand.
For example, if you love having happy hour with friends every week, maybe offer to host it at your house for one month. Rotate who brings the drinks and apps each week, and what you spend in one month can easily be equal to what you spend in one week out on the town.
Taking the time to write down important things to you, both annually and in the bigger picture, is a great starting point. If some of these items have regularly occurring dates, like holidays or birthdays, you can build specific timelines around when you need to focus on saving.
Sometimes there are unplanned events, like weddings or concerts, but you can find ways to save all year round so you have a sturdy fun fund waiting for you when you need it. (Of course, you should only build a fun fund after you have a solid emergency savings fund.)
What phase am I in?
The economic life phase you’re in isn’t necessarily tied to your age, as many people assume. We’ve uncovered that the phases actually better reflect where you are in your life, which is split into three different phases: (1) build and grow, (2) transition (3) and finally, distribute and deploy. For example, a 35-year-old in the FIRE movement and a 68-year-old late saver for retirement can both be focused on their transition into retirement.
Assessing your stage and adjusting your plan should be an ongoing process, but you can only know the phase you are in after you articulate your goals.
Financial phase No. 1: Build and grow
During this phase, decide on your long-term goals and plan for them. Is saving for retirement a top priority? Work toward maximizing your contributions to your 401(k) plan. (A tip I learned early on: When you receive raises, save more and live off of the amount you were already comfortable with.) Or, is buying a home a priority? Then figure out a savings plan for a deposit, mortgage and other expenses that is realistic and build on it.
The build and grow phase is also about protecting your future earnings. This is a good time to look at life insurance and create an estate plan for you and your family. I’m currently in this phase and wanted to ensure that (as scary as it is to think about!) my husband and boys would be OK if something were to happen to me. We bought term life insurance for each of us and created an estate plan to dictate what would happen if something were to happen to me or my husband. This gave us both peace of mind.
Financial phase No. 2: Transition
During this phase, it’s important to understand what you’ve built during your years of saving. It’s also the time to figure out how you want to live once you decide to leave full-time employment. Working with a financial adviser to do a financial goal assessment is important to project how well you’ve saved.
If you haven’t done a budget yet, it’s critical to understand your spending so you know what you will need to live off of.
During this phase, it’s important to factor in possible moves – do you want to stay in your home, downsize or even upgrade? Are there any plans to buy a second home to travel to since you’ll have more time? These are factors to take into account.
It’s also critical to assess how much risk you’re taking in your portfolio – this is the time to really have a good plan for protecting your assets. If something big happens in the market, it would be terrible to lose a large amount of money and delay your plans to make this transition.
Financial phase No. 3: Distribute and deploy
In this phase, understanding where and how you are going to pull from your assets is crucial. There are important strategies to think about and tax consequences to consider.
If you are well-funded and have excess assets, thinking about how you are going to leave your legacy is also important. There are many ways to give, including charities, foundations and personal gifts, and these can be structured to be given while you are alive or after you pass. The beauty of it is, it’s all your choice as long as you have a good plan.
No matter what financial phase you are in, planning and preparing for the next step will always yield positive results. The better you articulate your goals, for both the short and long term, the more likely it becomes you can achieve them.
Managing Director of Growth and Client Experience, Halbert Hargrove
Kelli Kiemle is the Managing Director of Growth and Client Experience at Halbert Hargrove and has been with the firm since 2007. Kelli earned her Bachelor of Science degree in Business Administration-Business Communication/Marketing from the Marshall School of Business at the University of Southern California in 2006.
We’ve rounded up the answers to the most commonly asked questions about how to accrue Society Security credits so you can get retirement benefits.
How many credits you need — the full 40 or something less — will determine if you need to work full-time or part-time in the limited time you have to accrue credits. Here are some possibilities from our list of part-time jobs for retirees that will work for anyone. It’s imperative, though, that you work for a company that is taking out Society Security taxes or you are paying them yourself if you are self-employed.
For whatever reason, you do not yet qualify to receive Social Security benefits, but you are old enough to begin thinking about your retirement. What can you do about that?
As stated above, as long as you are making ,040 in a year, you are going to earn your four credits for Social Security in that year. The more you earn, the more money you will get back in Social Security benefits when you are ready to access them.
How Social Security Credits Are Accrued
What kind of job can you get after age 50 that will build up your credits? The simple answer is any job where the employer pays Social Security taxes, and we will give suggestions on that later in this post.
If you have accrued enough credits, you will not be denied benefits except under some circumstances. You will be able to collect Social Security benefits even if you move to a foreign country after you retire. Cuba and North Korea are currently the only two countries where you will be denied benefits if you move there. If you are serving time in prison, your benefits may be suspended during that time, however, the general rule is that felons can receive their benefits after being released.
Social Security taxes are taken out of your salary to fund the Social Security program. You must have 40 credits to qualify for Social Security benefits when you reach 62½ years of age.
Almost Any Job Can Build Credits
Can I Get Social Security if I Never Worked?
Can I Buy Social Security Credits?
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.
If you are or were married for at least 10 years, you are eligible for spousal benefits assuming your spouse is or was eligible for Social Security. Spouses and ex-spouses generally are eligible for up to half of the spouse’s entitlement. Widows and widowers can receive up to 100%. If you have not been married for 10 years or your spouse or ex-spouse is not eligible for Social Security, then you should begin a retirement savings plan (Individual Retirement Account) that will accrue interest and
What if I Have Been Self-Employed?
Social Security benefits are earned through your work history. To be eligible for benefits, you must work full time for 10 years, earning a maximum of four Social Security credits a year. (You could also work part-time over a number of years and earn enough credits.) In 2022, a worker gets one credit for each ,510 earned, so that earning ,040 in one year gets you the four credits for the year.
Can I be Denied Social Security Retirement Benefits?
Jobs That Will Hire Employees at Age 50+
One of those reasons you haven’t paid enough into the system to qualify may be that you stayed home to raise children. That’s a big job for sure, but an unpaid one. Now that the children are grown, you might want to get back into the workplace to earn Social Security benefits.
No. There is no way to make up for lost time with the Social Security program. You get 1 credit for each quarter in which you earn the qualifying amount up to 4 credits per year, and you need 40 to be able to someday receive your Social Security benefits.
Self-employed people (freelancers, gig workers, contractors, etc.) earn Social Security credits at the same rate as others, up to the four credits per year.
- Online tutoring. Use your skills to teach others in academic subjects or English as a second language. Many tutoring jobs are online.
- Patient advocate. The job of a patient advocate is to assist someone who is struggling to cope with the healthcare system. A patient advocate deals with paperwork and appointments, and communicates with healthcare providers to get information on diagnosis, treatment and follow up procedures. These positions can be full- or part-time. Check with insurance companies or hospitals for opportunities.
- Virtual assistant. If you’re the kind of person who loves helping others get organized, you can start a virtual assistant business. Now, you will be self-employed but as long as you are paying those Social Security taxes out of your income, you will accrue credits.
- Security guard. While many large businesses like Target or Wal-Mart hire security personnel from a service, small employers such as charitable or service organizations are likely to hire someone who is reliable and gives the appearance of authority. Find these jobs through searching job sites such as Indeed or Monster.
Frequently Asked Questions (FAQ) About Social Security Credits
Because the salary to qualify for Social Security credits is so low (,510 per quarter), most part-time jobs that take out Social Security taxes will qualify you for Social Security credits.
Many people today begin new careers at the age of 50+. The days of passing over older workers are long-gone because of remote opportunities and perceptions of increased reliability for older workers. Also, there are many job opportunities because of the pandemic-caused Great Resignation.
Setting up a budget can be daunting. So much of the advice seems to call for digging up impossible amounts of paperwork and receipts, only to invest hours in front of the calculator. Not exactly how you want to spend your precious free time! But, take heart: The 70-20-10 rule can help. A percentage-based, easy-to-apply formula, this tried-and-true budgeting rule uses simple underlying concepts to help you keep your personal finances in good order. Which is a very good thing! With smart cash management, you’ll be growing your wealth and avoiding debt traps today and tomorrow.
What is the 70-20-10 rule?
More specifically, the 70-20-10 rule is a way to allocate your monthly income into three categories — living expenses, debt repayment and short-term savings, and investing and donations. Using these categories can help organize the way you think about your income — how it comes in, and importantly, how it goes out. It’s a simple and often very successful way to get a personal budget in place.
Let’s take a closer look at each of the three components of this budget tool.
70% for Living Expenses
Living expenses are exactly what they sound like — expenditures you need or want to make each month. To see how much of your post-tax dollars go toward these costs every month, you’ll do a little math. You’ll add up the monthly payments that cover essentials such as housing, utilities, food, childcare, and medical expenses. It also includes expenditures made only once or twice a year, such as auto or home insurance premiums or yearly car tune-ups. In those cases, you simply figure the total paid for the year, divide by 12, and add that number to the monthly figure.
For the purposes of the 70-20-10 rule budget, living expenses also include discretionary spending on things like shopping, entertainment, travel and other non-essential items.
To get started, scan through a couple of months of your bank statements, credit card, utility, medical, housing, insurance, and cable and internet bills to see how you’re tracking. Use the common living expenses listed below as a guide. You’ll be able to determine how much you’re spending on living expenses and whether it exceeds 70% of your available income.
• Car payments
• Gas and tolls
• Public transportation costs
• Taxis and ride shares
• Auto insurance
• Day care
• After school programs
• College tuition
• Health insurance premiums (if not deducted from your paycheck)
• Auto and home insurance premiums
• Life insurance premiums
• Disability income insurance premiums
• Takeout and restaurants
• Deductibles, copays and coinsurance
• Prescription drug costs
• Over-the-counter drugs
• Eyeglasses and contacts
• Concert, theater, and movie tickets
• Paid streaming and podcast services
• Flea and tick prevention/other medications
• Vet bills
• Pet insurance
• Hair care and other grooming
• Gym membership
If your monthly number hits the 70% mark or less, congratulations. You’re living within your means. For most people, however, this first calculation will likely exceed 70%. More on what to do when that happens below. For now, let’s keep looking at the big picture of tallying your 70-20-10 numbers.
20% for Saving
Next, you want to calculate how much it will take to hit the 20% goal of saving and debt repayment. (If you don’t have debt, hooray; you can zoom straight to saving. But many of us need to use this bucket to pay off debt and save.) In terms of calculations, let’s say your monthly income after taxes is $2,500. Divide by five to get your 20% figure: You’ll need to shoot for saving $500 a month.
If you have credit card debt, you’ll likely want to focus all or part of this 20% on paying that down so you can avoid the high interest payments. If you have college debt, the monthly repayment amount should be included here in the 20% category.
Once that’s done, you’ve cleared the decks for other savings, whether for an emergency fund (aim for three to six months of expenses) or a near-term goal such as a vacation or down payment for a home.
Depending on what and why you are saving, different kinds of savings accounts may make sense. There’s always the traditional savings account at a bricks and mortar bank, but consider these smart options to get extra benefits:
• High-yield savings accounts make sense if you need your money liquid (accessible) but want to earn more interest than the current rate on traditional savings accounts. And who wouldn’t? A high-yield account won’t earn you double digits of interest, but it should get you out of that fraction-of-a-point place that many traditional accounts are sitting in. And they’re FDIC-insured. This can be a great place to put emergency funds, money that’s growing towards an upcoming goal (like a big vacay), and the like.
• A certificate of deposit (CD) is another option. These accounts lock up your money at a specific interest rate for a period of time, usually from six months to a few years. What’s nice is you know how much money your money will earn, but keep in mind, if you pull your money out early, you’ll face penalty fees.
• Money market accounts (MMAs) combine some aspects of a savings account with features of a checking account. You’ll earn interest on your savings (possibly in the ballpark of high-yield accounts), and you may be able to access funds via debit card or checks.
Once you’ve taken a look at your savings/debt picture, you’ll determine how best to handle the 20% rule. Depending on the size of your debts and your living expenses, you may need to temporarily allocate more or less funds to this category. More on that below.
Recommended: How Do Savings Account Work?
10% for Donation
While the final 10% of this plan is typically earmarked as for “donations,” let’s be clear: The beneficiary of those donations may well be you! The remaining 10% can be allocated to investing in your future, usually for retirement. Contributions to an IRA, 401(k) 403(b), self-employed retirement savings vehicles, or other long-term, tax advantaged savings plan can be best for this category. This is money that you won’t need in the short term, so it can be invested more aggressively than the savings in your 20% category.
In addition, part of this allocation can go to donations and other charitable giving that you want to make part of your budget. Perhaps there’s a cause you want to support, from animal rescue to medical research, or you like to donate to your college; it’s your call.
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Tips for Following the 70-20-10 Rule
The beauty of the 70-20-10 plan is its simplicity — and flexibility. You can customize the allocations within reason to meet your own needs and financial goals over time. Creating a budget can give you peace of mind, because you’ll know you are taking care of your financial health. So let’s get going. Here, a few tips for increasing your likelihood of success in following this plan:
Use After-Tax Income
When allocating your monthly income to the various percentages, you want to work with after-tax income, or the money that’s actually available to you, instead of your gross salary. This is important, otherwise you will be working with your pre-tax or gross income, and the numbers won’t track properly.
Worth noting: Bonuses, tax refunds, money from side gigs and other income should be factored in later, as they are earned; don’t consider them as part of your base income. The bulk of the extra income can be designated toward the area most in need of attention, such as paying off credit card debt or boosting emergency savings. But do feel free to set aside a small percentage of those earnings as a reward for your hard work and have some fun with it.
Like any budget, the 70-20-10 plan works best if you take a bit of time to track your spending over a month or two. Don’t just put it in place and feel you are bound to follow it forever. This success secret will allow you to see what you’re spending for essentials and where discretionary dollars are going. This, in turn, can help pinpoint areas that could be reduced or increased. Budgeting apps such as SoFi Relay can help simplify the tracking and budgeting process.
Adjust the Percentages When Needed
After tracking your spending and making possible cuts, you may find you still can’t fit living expenses into the 70% category. Don’t stress out over this! If you have limited funds and lots of bills, you may have to allocate a bit more to that category and put less in short-term savings until that next raise or other income spurt comes through.
A quick note for people with lots of credit card debt: Those hefty bills are a sign that you may be spending more than your income level allows. You’ll probably do better with the 70-20-10 budget if you increase the paying debt/savings percentage to higher than 20% till your debt is lower. Take steps to reduce discretionary spending, perhaps even more than you have already. For example, cutting back on take out and restaurant meals, streaming services, and clothing purchases can all add up to more savings quickly. This bit of belt-tightening is also a good way to keep debt from getting out of hand as you go forward.
In addition, you may find you need to make more drastic cost-cutting moves too, such as finding an apartment with less expensive rent or ditching the expensive car payments and switching to mass transit. The goal is to get costly debt under control so you can start saving for your priorities and peace of mind.
Whenever you find the need to adjust percentages, it may be best to avoid tampering with the 10% investing for the future allocation. The sooner you start saving for retirement, the more that money will add up over time. By the same token, older people who may need to catch up on retirement savings may want to increase this 10% allocation. One of the reasons the 70-20-10 plan can be successful is that it helps you balance both short-term needs with long-term financial planning.
If you do make percentage adjustments, be sure to continue to track expenses so you can see when you can readjust allocations back to the original 70-20-10 plan.
Make the Most of Your Saving Allocation
Where you put your 20% savings can help you reach your goals. High-yield savings accounts, money market funds, certificates of deposit (CD), and cash management accounts are all vehicles that may pay more interest than a traditional savings account, helping your savings grow.
Ta-da! You’re now ready to try the 70-20-10 formula. By allocating your available income into three distinct categories, you can take steps toward achieving your financial goals, now and into the future. Sure, the mere mention of this kind of budgeting can make many of us cringe. But with this simple plan, you can likely clean up your financial act and feel less stressed about money. Which are very good things to work toward.
Bank the Smart and Simple Way with SoFi
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You can purchase up to ,000 in paper I bonds each calendar year. Paper I bonds come in denominations of , 0, 0, 0 and ,000.
A savings bond is essentially a loan to the federal government issued by the U.S. Treasury.
To get started, log into your TreasuryDirect account and set up a Payroll Savings Plan. Decide what type of savings bond you want to purchase along with the dollar value.
Series EE savings bonds purchased from November 2021 through April 2022 earn an annual rate of 0.10%.
This means that every six months after the bond’s issue date, interest the bond earned in the six previous months is added to the bond’s principal value. Interest is then earned on this new, higher principal value.
The Internal Revenue Service (IRS) will forward your savings bond request to the Treasury Department, and you should receive your paper bond at the address on your tax return in about three weeks.
What Is a Savings Bond?
These payroll deductions continue automatically until you update your preferences.
To gift a paper I bond, you need to fill out an additional form when you file your federal tax return.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
- Series I Bonds
- Series EE Bonds
I bonds issued from November 2021 through April 2022 pay a composite annualized rate of 7.12% for six months.
For example, if you want to buy Series I savings bonds and you ask your employer to withhold from each paycheck, TreasuryDirect will purchase a bond on your behalf every other payday.
How Do Savings Bonds Work?
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Series I bonds rates are tied to inflation. As inflation goes up, so does the variable interest rate on these bonds.
Electronic bonds purchased through TreasuryDirect are usually added to your online account in just one business day.
If you redeem a paper bond at a bank or credit union, bring your ID with you along with the savings bond.
- Your bond can accrue interest for up to 30 years after purchase.
- You must wait at least one year before you can cash in a savings bond.
- You can buy a maximum of $10,000 worth of each type of savings bond in a single calendar year, or a total of $20,000.
- If you cash in (redeem) a savings bond within five years after purchase, you’ll lose the previous three months of worth of interest payments. For example, if you redeem a bond after 24 months, you only get the first 21 months of interest.
- You can purchase a savings bond in any amount over $25 in one cent increments. For example, you can purchase an EE bond for $51.23.
- Interest accrues monthly and compounds semiannually.
- The interest rate can’t go below zero, even during times of deflation.
- Rates are set each May 1 and November 1.
Where Do You Buy a Savings Bond?
But when inflation is lower, other investments have historically earned higher returns. The stock market, for example, has historically earned a 10% annual return.
You will also need to know the recipient’s full name and Social Security number or taxpayer ID number.
After you purchase a bond, you start earning interest on your principal. Interest can accumulate for as long as 30 years.
Direct Deposit Option
The financial institution will usually give you a tax form when you’re there, or it will mail one to you.
The catch? Savings bonds typically don’t earn much interest. However, that’s not always the case, especially during times of high inflation.
Think of it as an IOU from Uncle Sam. You give the government your money, and in exchange, the U.S. government pays you back — with interest — at a later date.
Plus these bonds are backed by the full faith and credit of the U.S. government — which has never defaulted on bonds.
To get started, you will need to make an account, enter some personal details and link your bank account information.
Curious to learn how savings bonds work?
The biggest difference between I bonds and EE bonds is how they earn interest.
Regardless of the fixed interest rate, the bond will be worth twice what you paid for it after 20 years.
Savings bonds used to finance education won’t be subject to any taxes.
The U.S. Treasury also lets you purchase savings bonds via automatic payroll deductions.
Different Types of Savings Bonds
Savings bonds are considered one of the safest investments out there. The interest rate can’t go below zero and the bond value can’t decline.
Series I Bonds
These bonds will continue earning interest at their original fixed rate for another 10 years unless new terms and conditions are announced before the final 10-year period begins.
Once upon a time, you could buy paper savings bonds from your local bank or credit union. This hasn’t been the case since 2012.
- A fixed rate of return, which remains the same throughout the life of the bond. (It’s currently at 0%.)
- An inflation rate that is set twice a year. This rate of interest fluctuates based on changes in the Consumer Price Index.
When inflation is high, Series I bonds are a great investment. They earn an attractive rate that compounds twice a year. You can start small and your investment is backed by the U.S. government.
With amounts ranging from to ,000, U.S. savings bonds fit almost any budget. Most importantly: You’ll never lose value on your initial investment.
Are Savings Bonds a Good Investment?
Series EE Bonds
Here are some other characteristics of savings bonds:
Series EE bonds can be a good investment if you have a long time horizon and a very low risk tolerance. They can also be useful to pay for future college expenses.
Once your Payroll Savings Plan is up and running, the U.S. Treasury system will automatically purchase the type of bond you want each time you’ve accumulated enough money in your account.
Yes. To give an electronic bond to someone else, both you and your recipient must create a TreasuryDirect account.
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How to Cash in Savings Bonds
Looking for a nearly risk-free way to save for the future? A savings bond might be right for you.
EE savings bonds earn the same fixed interest rate for up to 30 years. It doesn’t change over time.
If a financial institution doesn’t accept your bond, check out these institutions from the Treasury website.
- You must wait at least one year after issue to cash in a savings bond.
- Only the owner can redeem the bond.
- You can’t sell a savings bond to someone else.
Simply log in to your account on TreasuryDirect and follow the redemption instructions.
The fastest and easiest way to buy savings bonds is from the U.S. Treasury’s online portfolio platform, TreasuryDirect.
On May 1, 2022, The Treasury will calculate a new inflation rate. If inflation continues to heat up, you could earn more interest. If it cools off, your variable rate declines.
A savings bond accrues interest over time, though interest doesn’t pay out until you redeem the bond.
Pros and Cons
There are two types of savings bonds:
Savings bonds can be a great way to diversify your portfolio.
- They’re a safe, low-risk investment. Savings bonds are backed by the U.S. government. If you keep the bond until maturity, you’re guaranteed to get your entire original investment back plus interest.
- No fees. Savings bonds are sold at face value. If you want a $50 I bond, you pay $50. It’s that simple.
- Low minimum investment. You only need $25 to purchase an electronic savings bond.
- Diversification. Savings bonds can add stability to your portfolio. They’re seen as a good way to offset more volatile investments like stocks.
- Buy now, pay taxes later. Savings bonds offer tax-deferred growth, so you don’t pay federal tax on bond interest until you redeem it. You might avoid federal taxes entirely if bond funds are used for
- You can avoid paying other taxes, too. You won’t pay any local income tax or state tax when you redeem your bonds.
- Series I bonds protect against inflation. This is one of the only investments with a guaranteed built-in hedge against rising inflation.
- Not as liquid as a savings account. You can’t redeem U.S. savings bonds for at least one year after purchase.
- Long maturity dates. You will lose three months interest on savings bonds redeemed before five years. A Series EE bond only doubles in value if you hold it for at least 20 years.
- Rates on Series EE bonds have been under 1% for more than a decade. Rates on EE savings bonds are low: They’ve held steady at 0.10% since Nov. 2015. If you lock in a low rate, you’re stuck with it.
Savings Bonds FAQ
Interest on savings bonds is compounded semiannually, or twice a year.
Your initial investment plus any interest earned will be deposited into your linked checking or savings account within two business days.
Do I Have to Pay Taxes on the Interest?
You don’t pay federal taxes on accrued interest until you redeem the savings bond.
But they’re not the best investment in every situation.
Savings bonds aren’t subject to state or local taxes either.
Series EE bonds replaced Series E bonds which were first issued to help the government fund itself during World War II. Series E bonds were sold until 1980 and are no longer issued.