Spend Your Values

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I have written here before about how people are not robots and that earning, spending, savings and investing money is seldom done in an emotionless vacuum. Of course, that doesn’t mean you shouldn’t understand what is the “right” move according to an unemotional spreadsheet, but actually living with your money and personal finance is much more important than trying to pretend you should strive toward never doing anything but what the calculator says is right. Spending My Values The concept of spending your values, is not mine. I’m not sure where it came from originally, but now that I’ve heard of it from someone else, I thought it would be interesting to take a look at it, and pass the idea on to you. When we look at spending money responsibly, the first thing we do is look at a budget, whether formally written down and calculated, or just sort of sketched out mentally. The main component of spending responsibly is not spending more than you have. After that, personal finance at its most basic level is paying your obligations in any given month, and then, determining where to spend and save whatever is left over. For many of us, …

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Your First Basic Financial Plan

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As a former Certified Financial Planner, or CFP, I tend, like many other financial experts, to think (and write) in terms of the tricky, the convoluted, and the complex. The truth is that money and personal finance can be very intricate and complex. However, it is also true that the biggest bang for the buck financial planning wise comes from doing the most basic things. Too often, we get caught up in things that actually end up being tiny details of your overall financial life. For example, many people shop endlessly for higher savings account interest rates. Whether you have a high-yield savings account, a regular savings account, or even a kids savings account, the interest rate matters far less than how much money  you put in it. If you have $10,000 and you put it in a regular savings account earning 0.5 percent, your interest for the year will be approximately, $50. If you got double that rate, 1.0%, then you’d have $100 in interest. In either case, you would still basically just have $10,000 at the end of the year, $10,050 or $10,100, respectively. Neither has a meaningful impact on your overall financial status. On the other hand, if …

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Saving Money Into 529 Plan

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OK, if you have already opened a 529 plan, and you have chosen which investments to use in your 529 plan, then the next step is to actually start getting money into your college savings account. And, it is here where the most important thing about saving money for college comes into play. The most important thing, more important than choosing the right college savings plan, more important than choosing which investments to use in your college savings plan, and more important that updating your higher education financial plan, is consistently automatically investing money in your college savings accounts. Let me go into a little more detail, it’s that important. We get caught up in the notion that what matters when saving or investing money are things like investment returns, taxes, using the right account, or getting the right financial advice. None of those things matters nearly as much as consistently investing more money. When I was a financial advisor some of the biggest 401k accounts, or 457 plans, I ever saw were from people who didn’t know a thing about them. These people opened the account when they were hired, set some sort of amount to contribute, picked an investment, or …

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What Do Stock Market Records Mean?

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Both the Dow Jones Industrial Average and the S&P 500 closed at all-time highs on Friday. It seems that every week brings new record-breaking highs for the Dow and the SP500. The question is, what do all of these record highs mean. Should an average investor do anything when the stock market hits a new record? What Is a Stock Market Record High? Let’s start with the basics. While individual stocks on the stock market are going up and down based on their own merit, and supply and demand, the stock market is often reported as a single thing. What financial reporters and analysts mean when they say “the stock market,” is one of the indexes of the markets. There are numerous indexes, but the most widely touted are the Dow Jones Industrial Average and the Standard and Poors 500 index. When people say the stock market broke a record high, they mean that one (or both) of those indexes is higher than it has ever been. (You can’t invest directly in the indexes, which are just academic, mathematical statistics, but you can get close using index funds.) In a way, higher records are inevitable. Even if the intrinsic value …

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Types of College Savings Accounts

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When it comes to saving money for college, there are a lot of options. A parents saving money for children’s college fund there are different ways to title those accounts, jointly or otherwise. Believe it or not, saving up money so your kid can go to college is a lot more about actually doing it, than how you do it. Most parents let a sizable amount of time pass in between college investments and that is a much bigger deal than exactly which kind of college savings account is right for you. Ways to Save Money for College Assuming you don’t want to stick money into a mattress, you are going to need some kind of bank account or other financial account to store up that money you need to save and invest. Here are the options. 529 College Savings Plans If the 529 plan came first, there wouldn’t be so many other ways to save for college. It is, quite simply, the best possible way to invest for college for most people. A 529 college account works a lot like a Roth IRA plan for college. You don’t get a federal income tax deduction for your contributions, but the …

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Saving Money for College The Basics

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Saving money for college has always been an important financial goal for many parents. It is only becoming more important as college tuition continues to skyrocket, and stories of people buried under huge student loan burdens become more common. Before we jump into the nuances of the many different ways to save for college, let’s start with the basics. How Much To Save For College I’ve talked before about how hard it is to make a financial plan for retirement because of how many variables there are. You don’t know when you will start retirement, you don’t know how long you will live once you do retire, and you don’t really know how much money you will spend each year during retirement. Add it all up, and any retirement plan is a lot of guesswork.Fortunately, making a financial plan for education comes with a little more certainty to work with. For starters, you have a pretty good idea of when your children will start college. Take the grade they are in now, and count until you get to their senior year. The next year, is the first year of college. Granted, there are always exceptions, and your child may take …

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Complete Definitive Guide to 529 Plans

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For some reason, I thought I had written about 529 plans to death. After all, figuring out a way to pay for a child’s college education is a top priority for many people, and something I worked on a lot when I was a financial planner. More than that, I’m also a dad with a couple of rug rats that I’ll want to send off to get a great education, and then on to a wonderful life in the real world unencumbered by the all too common, crushing student loan debt. So, naturally, I think a lot about how education planning and college savings fit into a person’s personal financial plan. And, usually when something money related stays on my mind, I write about it a lot. Then, a family member shot me a message asking a question about paying for college for her growing sons. I figured I’d send her a dozen links to all my best college saving advice and 529 plan information. Only, it turns out, I haven’t covered near as much over the years as I thought I had. So, starting Wednesday, I’ll be cranking out the Complete Definitive Guide to 529 Plans and College Savings …

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Is The Economy Good or Bad?

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I occasionally get questions regarding the economy that sound frustrated in the inability to get a clear answer. That is understandable. The U.S. economy is getting better, but it isn’t really getting better fast enough for anyone to be able to benefit from the fact that it is getting better. Add in the fact that many news outlets have gone partisan and that their reporting is designed more to highlight certain aspects that make their guys look good and the other guys look bad, and you get a confusing picture about whether the economy is good or bad right now. Doesn’t make much sense does it? To really understand what is going on economically, it may help to read an article from The Economist. As an aside, whenever you really want a reasonable idea of what is happening in the U.S. it can be helpful to read non-U.S. publications such as The Economist, and to a lesser extent, the Guardian. The Economist leans toward the conservative side, but that doesn’t mean the same thing as it does here in the U.S. More specifically, the publication does not have an owner or readership with a dog in the hunt, so to speak, …

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Jobs Looking Good for September

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Every time a jobs report, or other important economic numbers, come out politician run screaming into newsrooms across the country to spin it so that it says what they want it to say. If you want to know what economic data really mean, ignore the politicians. On Wall Street, investors put their money where there mouth is. Spinning for an investor is the same thing as deliberately losing money. While a politician is more than happy to say something that isn’t true, no investor is willing to throw away their cash for the sake of appearances. September Jobs Report Is Good News The stock market is up 206 points as I write this. No matter what some politician says, this was good news. In some places, they are calling this the “Goldilocks” jobs report. It was not too hot, and not too cool. The economy added 248,000 jobs and the unemployment rate dropped below 6 percent to 5.9 percent. Wall Street wants job growth; they need job growth. An economic recovery can’t go anywhere with too many people unemployed. However, job growth can mean inflation, and no one wants inflation. More accurately, no one wants the Fed to worry about inflation and start …

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Fourth Quarter 2014

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Welcome to the fourth quarter of 2014. It’s been an interesting year so far. Let’s jump right in. First, if you own a small business, like me, your third quarter estimated tax payments are due to your buddies at the IRS by October 15. By now, you should start having a little bit of an idea how your income might go for the year. If you are doing more business than last year, consider bumping your payment to keep up with your higher income. On the other hand, if business is off, then back that withholding off a bit too. Also, if you are a small business owner and you don’t get your health insurance through a spouse or other plan, don’t forget about the Obamacare open enrollment period for 2015, which runs from November 15, 2014 to February 15, 2015. You got an extra extension into April this year while the government worked out some bugs. That won’t necessarily be the case this year, so double-check your plan, or see what the new ones are. You can go to HealthCare.gov and they’ll redirect you to your state exchange if necessary. September Jobs Number The September labor report is due …

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