15 Ways to Teach Kids About Money

September 10, 2019

If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take! We’ll show you how to give your kids the head start you wish you had and set them up to win with money at any age.

How to Teach Pre-Schoolers and Kindergartners About Money

1. Use a clear jar to save.

The piggy bank is a great idea, but it doesn’t give kids a visual. When you use a clear jar, they see the money growing. Yesterday, they had a dollar bill and five dimes. Today, they have a dollar bill, five dimes, and a quarter! Talk through this with them and make a big deal about it growing!

2. Set an example.

A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. Little eyes are watching you. If you’re slapping down plastic every time you go out to dinner or the grocery store, they’ll eventually notice. Or if you and your spouse are arguing about money, they’ll notice that too. Set a healthy example for them and they’ll be much more likely to follow it when they get older.

3. Show them that stuff costs money.

You’ve got to do more than just say, “That pack of toy cars costs $5, son.” Help them grab a few dollars out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture.

How to Teach Elementary Students and Middle Schoolers About Money

4. Show opportunity cost.

That’s just another way of saying, “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and understand the possible outcomes.

5. Give commissions, not allowances.

Don’t just give your kids money for breathing. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass. Dave and his daughter Rachel Cruze talk a lot about this system in their book, Smart Money Smart Kids. This concept helps your kids understand that money is earned—it’s not just given to them.

6. Avoid impulse buys.

“Mom, I just found this cute dress. It’s perfect and I love it! Can we buy it please?” Does this sound familiar? This age group really knows how to capitalize on the impulse buy—especially when it uses someone else’s money.

Instead of giving in, let your child know they can use their hard-earned commission to pay for it. But encourage your child to wait at least a day before they purchase anything over $15. It will likely still be there tomorrow, and they’ll be able to make that money decision with a level head the next day.

7. Stress the importance of giving.

Once they start making a little money, be sure you teach them about giving. They can pick a church, charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.

How to Teach Teenagers About Money

8. Teach them contentment.

Your teen probably spends a good chunk of their time staring at a screen as they scroll through social media. And every second they’re online, they’re seeing the highlight reel of their friends, family and even total strangers! It’s the quickest way to bring on the comparison trap. You may hear things like:

“Dad, Mark’s parents bought him a brand-new car! How come I have to drive this 1993 Subaru?”

“Mom, this girl at school got to spend $10,000 on her Sweet 16 party. I want to do that too!”

Contentment starts in the heart. Let your teen know that their Subaru (although not the newest car on the block) is still running well enough to get them from point A to point B. And you can still throw a memorable, milestone birthday party without spending a chunk of your retirement savings funding it!

9. Give them the responsibility of a bank account.

By the time your kid’s a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above along the way. This takes money management to the next level, and will (hopefully) prepare them for managing a much heftier account when they get older.

10. Get them saving for college.

There’s no time like the present to have your teen start saving for college. Do they plan on working a summer job? Perfect! Take a portion of that (or more) and toss it in a college savings account. Your teen will feel like they have skin in the game as they contribute toward their education.

11. Teach them to steer clear of student loans.

Before your teen ever applies to college, you need to sit down and have the talk—the “how are we going to pay for college” talk. Let your teen know that student loans aren’t an option to fund their education. Talk through all the alternatives out there, like going to community college, going to an in-state university, working part-time while in school, and applying for scholarships now.

While you’re at it, get The Graduate Survival Guide for them. It’s a must-have resource to help your college-bound teen prepare for the next big step in their life.

12. Teach them the danger of credit cards.

As soon as your kid turns 18, they’ll get hounded by credit card offers—especially once they’re in college. If you haven’t taught them why debt is a bad idea, they’ll become yet another credit card victim. Remember, it’s up to you to determine the right time you’ll teach them these principles.

13. Get them on a simple budget.

Since your teen is glued to their mobile device anyway, get them active on our simple budgeting app, EveryDollar. Now is the time to get your teen in the habit of budgeting their income—no matter how small it is. They should learn the importance of making a plan for their money while they’re still under your roof.

14. Introduce them to the magic of compound interest.

We know what you’re thinking. You can barely get your teen to brush their hair—how in the world are they supposed to become investment savvy? The earlier your teen can get started investing, the better. Compound interest is a magical thing! Introduce your teen to it at an early age, and they’ll get a head start on preparing for their future.

15. Help them figure out how to make money.

When you think about it, teenagers have plenty of free time—fall break, summer break, winter break, spring break. If your teen wants some money (and what teen doesn’t?), then help them find a job. Better yet, help them become an entrepreneur! These days, it’s easier than ever for your teen to start up their own business and turn a profit.

Change Your Family Tree

Teaching your children about money at any stage is going to take time on your part. It won’t always be easy. But if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.

Source: DaveRamsey.com

Nearing retirement? This checklist can help you make sure you’re financially prepared

August 27, 2019

For anyone getting close to joining the ranks of retirees, there are some key aspects of your impending new status you need to review.

Roughly 10,000 baby boomers turn 65 every day, the age most often associated with retirement. Of course, not everyone hangs up their working hat at exactly that age, which means your own situation could be very different from that of someone else on the edge of retiring.

And while some people may have been saving and planning for decades for retirement, others might have given little thought to their transition away from 40-hour (or more) work weeks.

Regardless of where you fall on that spectrum, here are some things to consider as you prepare to say farewell to your coworkers and embark on the next leg of life’s journey.

Know your expenses

You might have a general idea of what you spend, but you should have a clear picture of your expenses and how that might change in retirement.

For example, while you may not have to deal with the costs of commuting or office attire, you might plan to spend more on entertainment, travel or other pursuits when your days are no longer consumed by work.

“Track your spending for the next couple of months if you’re not sure,” said certified financial planner Linda Rogers, owner of Planning Within Reach in Memphis, Tennessee.

Many people also aim to have their debt (i.e., credit cards, mortgages) paid off before they make the leap to retirement. While that might not be realistic for everyone, the less debt you have, the better.

The often-overlooked cost: health care

Once you reach age 65, you’re eligible for Medicare. So if you retire at or past that age, the government program generally is there for you. Yet it doesn’t cover everything. For example, dental, vision and long-term care (e.g., help with daily living, such as bathing and dressing) are not included.

The amount you pay for Medicare depends on a number of factors, including your recent income (higher earners pay more), whether you pay any late-enrollment fees (if you didn’t sign up when you were first eligible and don’t meet an exclusion) and whether you opt for additional coverage and to what degree.

However, if you’re younger than 65, you’ll need to find coverage on your own.

“A lot of people forget that, or don’t factor it in or find out they way underestimated the cost,” Rogers said. “If you’re 65 so you can get on Medicare, retiring is much more doable.”

For people who face a gap in coverage, federal law known as COBRA requires employers with at least 20 workers to allow ex-employees (including retirees) to remain in an employer-sponsored health plan — if the ex-worker wants to pay the full cost of the premiums. Many employers pay a share of the premiums for current employees and typically won’t do that for COBRA coverage.

There are potentially other options, including an Affordable Care Act plan (a.k.a., Obamacare). Depending on your income, you could receive a subsidy if you go that route. Other options also might be available, including short-term plans — which come with skimpier coverage and typically only are a viable option for healthy people with no pre-existing conditions.

Additionally, keep in mind that health-care expenses typically rise as you age. In fact, the average 65-year-old couple will spend $285,000 on health care over the remainder of their lives, according to Fidelity Investments’ latest estimate.

Know your Social Security strategy

Although you can start taking Social Security at age 62, your monthly checks will be larger the longer you can delay. In fact, your benefit will increase by 6% to 8% yearly until you reach age 70 if you can hold off.

However, most people don’t wait that long — more than 70% claim by age 64, according to a recent study from United Income.

At the same time, a growing number of 60-somethings are still working either full- or part-time. In the 60-to-64 crowd, about 55% are working at least part-time, according to the most recent data available from the Bureau of Labor Statistics. Among people ages 65 to 69, the share is about 31%.

Be aware: If you start taking Social Security before your government-determined full retirement age of about 66 or 67 — the exact number depends on your birth year — there’s a limit to how much income from work you can have without it affecting your benefits.

For 2019, that cap is $17,640. Earn more than that and your benefits will be reduced by $1 for every $2 you earn over that threshold.

Then, when you reach your full retirement age, the money comes back to you in the form of a higher monthly check. (And, depending on your overall income, up to 85% of your Social Security benefits is subject to federal income tax).

At that point, you also can earn as much as you want from working without it affecting your Social Security benefits.

Also, if you are an early taker who is working and you reach full retirement age during 2019, then $1 gets deducted from your benefits for every $3 you earn above $46,920 during the months you were below that age.

Evaluate income and tax strategies

In retirement, sources of income can vary from person to person and might involve a pension, retirement savings such as a 401(k) or individual retirement account, Social Security, taxable savings and investment accounts, health savings accounts, or business and trust income.

“Many people have a few different types of assets, so they want to be smart about which they tap into,” Rogers said.

For instance, not all sources of income are taxed the same. Withdrawals from traditional IRAs or 401(k) plans are taxed as ordinary income, but for Roth IRAs or Roth 401(k) plans, the withdrawals are tax-free. If you have a taxable investment account, you could have to pay capital gains taxes on some of the withdrawals.

You also will face taking required minimum distributions — the annual amount that must be withdrawn — at age 70½ from your traditional IRA or 401(k). (The Secure Act, under consideration in Congress, would increase that RMD age to 72.) Roth IRAs do not have RMDs, although Roth 401(k) plans do. Depending on your income, those required withdrawals could push you into a higher tax bracket.

If that’s a possibility, it might make sense to roll the assets into a Roth IRA before you reach that point, or to tap those funds before the RMDs kick in so you don’t face a sudden jump in taxes.

Additionally, your annual income can affect what you pay for Medicare. With higher earners paying more, it’s important to know how your income could affect what you pay for coverage.

Check risk in your accounts

If you have a 401(k) or IRA, make sure your investment mix makes sense for your retirement income plan.

Exactly how much of your portfolio should be dedicated to stocks — which are more volatile but typically deliver the best returns over time — will depend on how much income you need to generate during retirement and how much risk you’re able to stomach.

“We’ve had people come in who have been in the same investments since they were 24,” Rogers said. “You want to evaluate the allocation of your entire portfolio to make sure the stock and bond composition is appropriate.”

Have a cushion

Financial advisors typically recommend that you keep several years’ worth of income away from the stock market, in money markets, cash or other less risky investments.

“Don’t risk the money you need in the next two or three years,” said Terrence Herr, a CFP and managing partner at Herr Capital Management in Chicago. “You can stomach volatility in the market if you have three years of income that is safe and not subject to those ups and downs.”

If the market is down, it would mean not having to sell investments at a lower price to generate the annual income you need to live.

Prepare emotionally

Many financial advisors caution that for people whose job was a big part of their self-identity, the transition to retirement can be trickier.

“Often, for the first couple of years they’re happy, but then some people can get depressed,” Rogers said.

Volunteering, having a strong social network and developing varied interests can help ward off feelings of loneliness or questions of self-worth. For some retirees, sharing their knowledge through teaching delivers satisfaction, Rogers said.

Also get used to the idea of watching your assets get smaller instead of grow.

“One of the hardest things that retirees face is the notion that their retirement account, which has been growing while they worked, will be going down in value over the course of retirement as they make withdrawals,” Herr said. “People can get really uncomfortable with that.”

Source: Sarah O’Brien at CNBC

48 Ways to Save Money When You’re a Broke College Student

August 19, 2019

Between your studies and your social life, there’s a lot competing for your time and attention in college. Still, you can’t forget about your finances.

You’re not in high school anymore; you’re an adult in charge of your financial future. And if you want to master this adulting thing, you’re going to have to dedicate a little of your focus to proper money management.

By saving money instead of spending it, you could end up graduating with a positive net worth instead of being one of the millions of young adults bogged down with debt right at the start of their working lives.

While saving money in college may be challenging, it’s not impossible. It just takes some determination and drive. It’s time to shatter the stereotype of the broke college student with these 48 tips on how to save money in college.

Save Money on College Education Expenses

Getting an education isn’t cheap. But there are ways to save money by cutting down the costs of tuition, books and supplies.

  1. Consider attending community college and then transferring to a four-year school to lower your cost of tuition. Or look into attending a public university instead of a private one to save money.
  2. Complete the FAFSA — Free Application for Federal Student Aid — each year to find out what financial aid is available to you.
  3. If you have to take out student loans, make sure to meet with a financial aid counselor, who can help you understand the terms of your loans and how you’ll be expected to repay them.
  4. Apply for scholarships and grants to help cover the costs of tuition, room and board.
  5. Get textbooks online instead of at the (often overpriced) campus bookstore. You can buy or rent books for less on sites like Amazon or Chegg. Ask your professor if you can use an older version of the textbook, which will likely be cheaper than the latest edition.
  6. Buy, rent or borrow used textbooks from former students. Or share textbooks with students who are currently taking the same courses.
  7. Check if your campus library has the book you need before buying or renting it.
  8. Take advantage of your professor’s office hours instead of paying for a tutor to get extra help, or form a study group with your peers.
  9. Shop for school supplies during tax-free holidays before school starts. These tax-free days usually occur in July or August. In 2018, 16 states held back-to-school tax-free holidays.
  10. Look for special deals for students when purchasing laptops or other electronic devices or software. Apple and Dell offer discounts for college students, and Microsoft provides students with a free version of Office 365.

Save Money on Living Expenses

Living on your own for the first time can be exciting — and expensive. Whether you’re living on campus or off, here are some tips to lower your cost of living.

  1. Don’t assume living on campus will be cheaper. Crunch the numbers. If you want to live off campus, don’t forget to factor in the cost of utilities, cable and internet when comparing. Or if you attend college near your hometown, live at home to really cut costs.
  2. Become a resident assistant to get your living expenses covered. Some schools even pay resident assistants a small stipend
  3. Instead of buying wall art or desk accessories, make your own DIY dorm decor. If DIY isn’t your thing, make sure to shop for dorm room decor during back-to-school sales or a tax-free shopping holiday if your state holds one
  4. Share big-ticket items with your dorm roommate. You probably don’t need two minifridges or microwaves in your small space.
  5. Create a graduation registry so that loved ones can purchase needed dorm supplies for you as a high school graduation gift.
  6. Reduce the cost of monthly bills, like cable and utilities. Instead of signing up for a cable package, watch shows and movies on streaming services like Netflix, Hulu or Amazon Prime for much less. Lower your utility costs by conserving energy. Meghan Prusinowski, a graduate student at West Virginia University, said she saves money by keeping the lights off and rarely turning on the heat or air conditioning. Her monthly electric bill is between $25 and $40, while other residents in her apartment building pay over $200 for their high energy use.
  7. Get a roommate — or roommates — to split the cost of rent and utilities. You may even find an apartment complex that gives residents separate leases, even if they live together in the same unit. Make sure you discuss from the start how you’ll divide the costs — both bills and household expenses like toilet paper, cleaning supplies and any shared food. You should also make sure you’re on the same page on things like utility use and having guests over.
  8. Get renters insurance. Though it’s an added expense now, having renters insurance can save you from having to spend hundreds or thousands if your property gets damaged or stolen. Shop around for the best deal by getting quotes from multiple companies.
  9. Buy personal care products, like toilet paper, soap and shampoo, in bulk. Check the cost per unit to make sure you’re getting the best deal.

Saving Money on Food in College

Gone are the days when your parents filled up the fridge and cooked you dinner. Hopefully, they’ll send you a care package every now and then, but in the meantime, here are some ways to save money on food.

  1. Evaluate your meal plan to make sure you’re not overpaying at the dining hall. If you always skip breakfast, or if you can’t make it to the cafeteria for lunch most days because of your class schedule, you’re wasting money if you pay for a three-meals-a-day plan
  2. Bring your own snacks with you when you’re out for the day. You’ll avoid overpriced vending machines or convenience store treats.
  3. Avoid eating out at restaurants or ordering takeout food. Instead, make the most of your meal plan. If you live off campus, make meals using simple ingredients like rice, potatoes, frozen vegetables and beans. Buy them in bulk for additional savings. Ramen noodles, PB&J and oatmeal are other classic cheap meals.
  4. Eliminate the need for a bunch of kitchenware by cooking one-pot meals or meals you can make in a slow cooker.
  5. Save money on beverages. Drink water instead of buying soda or juice, and invest in a filtered water bottle that you can refill whenever you want. Make your own coffee. If you’re of legal drinking age, buy your own alcohol to avoid bar prices.
  6. Take advantage of events on campus offering free food. The complimentary drinks and refreshments served may be substantial enough to cover a meal — or, at the very least, a snack that you don’t have to buy.
  7. If you do dine out, visit restaurants or bars during happy hour or when they have special discounted prices. Some establishments may provide discounts for students, so make sure you bring your college ID. You can also find deals on Groupon to save some money on your bill.
  8. Get a side gig as a mystery shopper to get paid — or at least reimbursed — to dine out.

Save Money on Transportation

Having your own car on campus may buy you popularity points, but it also may not be the most economical choice. Here are some tips to save money on transportation.

  1. Walk, bike, take campus shuttles or use public transportation instead of bringing a car to school. Your student ID may score you discounted bus or train fares.
  2. When you take Uber or Lyft, use the shared ride function for a lower fare.
  3. If you have a car at school, find ways to help cover your expenses. Share rides with other students to split the cost of gas and parking. Rent out your vehicle when you’re not using it to get extra cash. Also, make sure to keep up with maintenance. Cars that aren’t well-maintained may face more expensive repairs down the line.
  4. Use apps like Gas Buddy to find cheaper gas when you fill up.
  5. Limit trips home if you don’t live close to your college campus. When you’re planning on going home for Christmas or spring break, monitor websites for cheap flights and plan to book at least two months in advance. Or take a bus or train instead of flying home. Riding Greyhound could significantly lower your travel costs.

Save Money on Entertainment

Some say college was the best four years of their lives — and that isn’t because of the time they spent studying. Here are a few ways to save money while also having fun.

  1. Take advantage of your local library. Public libraries offer more than just free books. You could check out passes to museums or stream your favorite movies or TV shows with your library card.
  2. Attend free events on campus or in your town. Visit the student center or check out your local or campus newspaper to learn about upcoming events.
  3. Have fun at home. Indulge in cheap entertainment by hosting movie nights or game nights.
  4. Make the most of student discounts. A variety of places offer student discounts, from chains like AMC Theatres to your local art museum. Make sure you carry your student ID with you, and ask businesses you visit if they offer student discounts.

Make Money to Increase Your Savings

Your No. 1 job is keeping up with your studies, but having a source of income in college can really boost your savings. Here are some options for earning cash while you’re in school.

  1. Get a part-time job on campus or close to school. Scott Henderson graduated from the University of Utah in 2017 with no debt and money in the bank by working a part-time job on campus, starting a side business detailing cars and saving between 30% and 50% of his income.
  2. Start a side hustle like driving for Uber or Lyft, delivering groceries with Shipt or Instacart or doing odd jobs on TaskRabbit.
  3. Tutor other students on campus or students at a local high school or middle school.
  4. Get a gig as a babysitter or nanny over Christmas break or during the summer.
  5. Get an internship in your field. Meet with your academic adviser for advice on good internship programs, or check online job boards like Internships.com or Indeed.
  6. Start a blog and monetize it.
  7. Make quick cash selling things you no longer need. Sell old textbooks on BookScouter, clothes you no longer wear on Letgo or unwanted DVDs and video games on Decluttr.

How to Stay on Top of Your Finances

Start adulthood off on the right track by being smart about how you save money. Consider these tips a crash course in personal finance.

  1. Learn to track your expenses and stick to a budget. It can be easy to swipe your debit card without thinking, but having a budget will help you avoid overspending. One popular budgeting method is the 50/20/30 budget — where half your money goes to bills and essentials, 20% goes to savings and debt and 30% is for spending on fun stuff. You can use a free tool, like Mint, to track your spending and keep you on budget.
  2. Avoid overdraft fees by linking your student checking account to a savings account and signing up for overdraft protection. Just make sure there’s money in your savings account to cover any needed overdraft transfers.
  3. Be responsible about credit cards. Don’t sign up for all the credit card offers that come your way. Try to get the lowest interest rate you can. Having a secured credit card — one that’s backed by your own cash — can also help you establish a credit history and build up your credit score.
  4. Automate your bill payments, so you don’t have to worry about remembering due dates. You don’t want to forget to pay your cell phone bill and get hit with a late fee.
  5. Don’t give in to the peer pressure of spending money just because all your friends are paying for tickets to an event or going out for drinks every weekend.

Know the difference between wants and needs, and focus on having a solid financial future.

Source: Nicole Dow at The Penny Hoarder

5 Rules for an Emergency Fund That Will See You Through (Almost) Anything

July 31, 2019

An emergency fund may go by many names, but at its core, it’s an economic essential for anyone seeking financial independence. The emergency fund—similar to, but not always the same as, an emergency safety net—is a cash cushion against financial hardships such as losing your job, getting evicted or getting in an accident; it’s the financial life preserver that keeps you afloat during rough patches.

“When we think of an emergency fund, we simply want to make sure that someone has cash on hand for anything that’s unexpected,” says Lauren Anastasio, CFP at personal finance company SoFi. “Whether it’s a matter of getting you from one paycheck to the next, transitioning from that lifestyle of living paycheck to paycheck, or something a little more substantial, like the ability to support yourself should you lose your job, it really can serve in a variety of fashions.”

Everyone knows, on some level, that it’s important to have some savings to use in case of emergency; what those savings look like, where they’re stored, and what they’re used for are aspects of the emergency fund that aren’t quite as clear, though. To help clear up some of the confusion, Anastasio answered our major questions about emergency funds. With any luck, her smart, accomplishable advice will have even the least financially savvy among us moving a little closer to that most essential of financial goals: establishing an emergency fund.

A few reminders first: Everyone is different, and all financial situations are different. Some people have plenty of financial support from their families; some are facing student, medical, or credit card debt (or a mix of them). When reading personal finance tips, it’s important to consider everything within the context of your personal financial situation and do what’s best for you.

Ready to save? Read on for some rules for the emergency fund you’re going to want to start working on, stat.

  1. You need a savings goal to work toward

It should be specific, too. Telling yourself you’re just trying to save money isn’t enough. Give yourself a nominal (and realistic) savings goal for your emergency fund, write it down, and work toward that. When you reach it (or get close) you can raise it as needed; the important thing is to have a goal.

“Part of the reason having a goal in mind when you’re saving is so important is to make sure that you stick to your plan to save up for whatever that goal might be, to make sure that you’re accomplishing it,” Anastasio says. “Once you lose sight of what you’re trying to do by saving, that’s where people kind of derail and start to justify spending more money in the now, as opposed to making sure that money is being set aside for something specific.”

A savings goal or a financial goal—whatever you want to call it—can keep you motivated and on-track, just like setting a fitness goal to run a race or lift a certain amount of weight can keep you active. Ideally, it’s specific; “I’m trying to save $1,000” is much more motivating than “I’m trying to save for an emergency fund.”

Some banks—or financial companies such as SoFi—offer free one-on-one consulting sessions with expert advisers who can offer guidance on how to prioritize savings goals; if you’re struggling in this area, checking to see if your bank offers this kind of service can help set you on the right path.

  1. Three to six months’ worth of expenses is still the benchmark

For years now, the most common goal for a fully funded emergency fund is to tuck away the equivalent of three to six months of your expenses into savings, and Anastasio says this is still the case.

“It has been the default guidance for many years, and I think it remains appropriate for the majority of the population,” she says. “The two factors that I always encourage people to consider when they’re trying to figure out what’s right for them are how they define an emergency and if they have personal circumstances that might make something like 8-12 months more appropriate.”

This is where the context of your financial situation is so important: Most people can get away with just three to six months’ worth of their expenses (rent or mortgage, car payments, bills, groceries, etc.) in savings, but someone who is the sole provider for his or her family, self-employed, or has a chronic medical condition may be better off with a larger emergency fund.

“At the end of the day, we want to make sure that people have enough to cover them in the event of an unforeseen expense,” Anastasio says. “If someone needs more to feel safe or to feel like they’ll be covered, that’s okay.”

  1. It should be liquid

Some people invest their savings; others keep them under the mattress. Whatever you do, just remember that you need that money to be liquid: Should disaster (a layoff, sudden illness, a car breakdown) strike, you want to be able to access that money quickly without paying fees on it.

Maybe you have six months’ worth of expenses saved, but three months is invested; that’s all right, as long as you can access a sizable chunk of cash when you need to. You do want to make sure that money isn’t at any risk (as it would be in the stock market, for example). CDs, low-risk investments, Roth IRAs, and the like are all popular picks for emergency fund storage, but Anastasio recommends savings accounts for the easiest access to your money.

  1. Keep it in a high-interest savings account

Yes, your emergency fund should be liquid, but that doesn’t mean it should languish. Keep in mind that the value of that money can fall as inflation occurs and balance that concern with keeping your money accessible. (That’s the whole point of an emergency fund, after all.)

“We always recommend that an emergency fund go into a high-yield savings account, or something like SoFi Money, where you have very quick access to the cash and are ideally earning as much interest as possible, but not taking up any risk or locking it up in a way that it would be difficult to get to or where you would have penalties,” Anastasio says.

Interest rates for savings accounts have been on the rise the last few years; right now, a good rate is somewhere between 2 and 2.5% APY. Shop around for a good rate (ideally, without tacked-on fees) for keeping your emergency fund at the ready.

  1. Remember why you have an emergency fund

Even once you’ve successfully built an emergency fund, forgetting what it’s there for can derail your hard-earned financial success.

“All of our savings are there to serve a purpose, or maybe to accomplish a goal for us,” Anastasio says. “Keeping those goals in mind will help people stay on track in the future. It’s when we lose track of why we’re saving that money or what that money is designated for that we get in the pitfalls along the way.”

In the case of emergency funds, the purpose is to keep you financially afloat during rough periods. Putting that money toward something else—such as a vacation or a wedding—can put you on unstable financial footing should some disaster strike. Staying on track means defining what constitutes an emergency and sticking to that definition.

“What is an emergency to one person might not be an emergency to someone else,” Anastasio says. “I do try to remind people that a sale is not an emergency. Wanting to get out of town for the weekend is usually not an emergency.”

Setting aside money in a separate spot for those goals is smart, but dipping into that emergency fund to cover them isn’t. Be honest about what an emergency is for you, and you’ll be able to rely on your emergency fund in case of emergency for years to come.

Source: Lauren Phillips of RealSimple.com

What You Need to Know About the Latest Social Security Scam

July 10, 2019

Social Security scams are hardly a new thing, but the latest one could cause you a fair amount of undue stress, not to mention put your finances at risk. Scammers have been calling seniors claiming to be Social Security Administration (SSA) reps and threatening to suspend benefits for those who don’t provide the information they ask for — information that could easily lead to identity theft.

As part of this scam, you might also get a call stating that there’s criminal activity linked to your Social Security number, and if you don’t resolve it, you’ll be putting your benefits at risk. Or, you may be asked to confirm your Social Security number so that the “SSA” can sort out a problem relating to your account.

If you’re collecting Social Security, it’s imperative that you recognize the makings of a scam and avoid giving out your Social Security number or other key pieces of personal information. Otherwise, you may indeed wind up with a very large problem on your hands.

Protect those benefits

Let’s make one thing clear: The SSA will never call you and threaten to suspend your benefits over the phone. If you receive a call along those lines, hang up. Furthermore, you should never, ever give out your Social Security number when the request is unsolicited.

Now you may, at times, get a call from the SSA asking for information, but because scammers can alter their numbers to make it seem like it’s the agency dialing you, it’s hard to know when those calls are legitimate or not. Your best bet, therefore, is to call the SSA back yourself at its main number — (800) 772-1213 — and speak to an agent directly following such contact.

Furthermore, if you do get a scam call, be sure to report it at once. The Federal Trade Commission (FTC) has a website dedicated to Social Security fraud, and sharing your experience could make it easier for them to investigate.

What if you’ve already fallen victim to fraud?

If you already gave out your Social Security number, or other pieces of personal information, in conjunction with the aforementioned scam, you’ll need to do some legwork to minimize the damage. First, contact the FTC — they’ll guide you through your next steps. Next, contact the SSA and explain that you’re worried your benefits are at risk. The agency should be able to advise you on what to do, and in some cases, it may even issue you a new Social Security number.

Furthermore, you may want to freeze your credit to prevent criminals from using your Social Security number to open new accounts in your name and rack up debt against them. And from there, you’ll want to monitor your credit report by checking it every few months to make sure there’s no fraudulent activity to be found.

The last thing you want to do is fall victim to a Social Security scam. So don’t let that happen. If a caller contacts you claiming to be the SSA, don’t believe it. Even if that call is legitimate, the issue at hand can be resolved by you calling the SSA back and dealing with it from a place of having initiated that contact.

Source: Maurie Backman from The Motley Fool