Tag Archives: Financial Planning

Author : Joseph Kenny

In our world of “keeping up with the joneses”, it’s an everyday struggle to resist buying the latest, greatest toy to wow our neighbors with But how did we come to be this way?

If you’re a Baby Boomer, your parents probably weren’t like this They were too busy trying to feed, clothe, and provide shelter for their families; everything else was gravy But in today’s world of borrowing, credit and instant gratification, seemingly anything we want, we can have We pay for it for years, and thanks to interest rates, we end up paying a lot more than actual sticker price But hey, we have it now, right? Thing is, if we step back and think about it, we can learn a lot about finances from our parents We can also pass that info on to our kids, creating a lineage equipped with sound, smart financial knowledge

Teach them about today’s money

Spending isn’t like it used to be Through the prevalence of checks, credit cards and debit cards, cash is a rarity in today’s world But it’s important that our kids understand where money comes from and how it’s used When you plop down the plastic for a purchase, let your kids know that the money is either coming directly from your bank account, or a bill will arrive in the mail which you will soon have to pay When at the ATM, tell them that cash isn’t magically coming out of the box It was put there from your work, and its money you earned As they grow older, instill more sophisticated lessons into their lives Tell them about late fees, interest and the importance of saving The early you start teaching your kids about finances, the better off they’ll be

College quality counts

Studies show that four-year undergraduate degrees are now the norm in the working world, and in order to stand out, a graduate degree is necessary On average, the income of someone with a master’s degree was nearly $10,000 greater than that of a person with a bachelor’s degree Also, the higher rated the college your child attends, the more they will make Start saving now for your child’s education, and be prepared to shell out extra over the long run if need be It’s proven that the amount they will make after college will easily outpace the extra cost incurred by attending a big-name school

Save, Save, Save

Don’t spend, spend, spend Advertising today would have you believe that everything on the market is an absolute must have for you and your family Credit card companies are approving younger and younger kids every day Resist the urge to splurge Make saving a priority in your family, and introduce kids to the concept as early as you can If your child requests a big ticket item, put them on an allowance and encourage them to save for it Tell them that if they save an agreed-upon amount within a certain time frame, you’ll match it (a nice little introduction to the world of the 401(k))

Help them as adults

Studies show that most grown, independent children ages 25 to 34 receive over $14,000 from their parents No, these aren’t slacker kids still living at home These are independent, educated adults who earn a decent income, but who might need a little help getting started in the world Giving now can help your kids save on estate tax when you’re gone, and will also have more of an immediate impact for them and more satisfaction for you The IRS will allow a gift of up to $11,000 per year for each child without incurring a gift tax, and couples are allowed $22,000 When you do give a sizeable gift to an adult child, make sure you set the ground rules on it before the money exchanges hands Let them know that the money is to be specifically used for something like a down payment on a home, not for a new sports car You want your cash gift to help your child become independent, not condition them to expect parental gifts for frivolous purchases

Most importantly, be a role model to your children when it comes to finances Just like everything else, you can preach until you’re blue in the face, but if they notice you making unsound financial decisions, the more likely they are to do the same

Joseph Kenny writes for the UK Loans Store and offer more information on secured loans and other loan topics available on site.
Visit Today: http://www.ukpersonalloanstore.co.uk

Syndication Source: Thought Search Articles Continue reading →

Author : Peter Kenny

Many people find themselves uncertain whether it is a wise course to add money to their savings accounts or to standing investments while trying to pay off their outstanding debts The essence of the question is really about whether this makes any sense The answer is sometimes far from simple and requires an examination of the individual’s circumstances rather than some ready-made solutions The difficulty lies in the fact that most people try to do both regardless because it they have important reasons for their savings and investments Retirement, a child’s college tuition, and the purchase of a new home are all powerful incentives to put away the money rather than pay off the debt

At the same time, there may be some form of answer for those who still want to know What it really comes down to is learning how to identify and separate your good debt from your bad debt You might wonder, “What do you mean by good and bad debt; isn’t all debt a bad thing?” While it may seem strange, there are some forms of debt that can be a good thing at least to a point Some examples of bad debt include credit card debts and high-interest loans Good debt includes such things as mortgages and student loans

This relates to saving money because it should make sense that the bad debt should be dealt with before you seriously concentrate on your savings You would not necessarily want to rush to pay off that mortgage or student loan since these have relatively low interest rates and can provide some tax advantages over time (If you spend all of your time trying to pay off these good forms of debt, you may come to retirement with little to no savings to show for it )

In order to keep things organized, you should begin by listing those high interest debts and prioritizing them according to factors like the interest rate or payments so you have an idea about which ones you want to wipe out first Bear in mind that these priorities should not be set in stone, but keep open to readjustments based on current circumstances and the state of your savings and investments

Keep your goals clear: You need to start by paying off the high-interest debts before you seriously tackled savings of any kind Once it is out of the way, you can put a concerted effort at building up your savings amounts and finding sound investment opportunities For those who have assets like 401(k) plans, savings, or even an IRA should think about liquidating those to eliminate the crippling effects of their high-interest loan or credit card debts If this is too extreme, you could get a loan from your 401(k) to pay off the encumbering debt

As far as the good debt is concerned, don’t be overly concerned about paying that mortgage off immediately if retirement is decades away There are some benefits available through the government such as getting a percentage of the interest payment back in the tax refund If you have student loans, you could benefit from the changing conditions relating to interest even to the point where you may be able to right off all of your interest and take as long as you want to pay back the loans There are other options in development to ease the burden of this type of debt

It really does pay to have a plan so that you not only pay off the debt that is hindering your financial freedom, but also have the ability to set aside savings and make investments that will benefit you in the end beyond the shadow of debt!

Peter Kenny is a writer for The Thrifty Scot, please visit us at Compare Loans and Credit Cards
Visit Northern Rock To Be Nationalised

Syndication Source: Thought Search Articles Continue reading →

Author : Eric Bayne

Many people, after having invested much of their money into a safe 401k fund, are ready to begin their retire with no money problems In fact, have you actually taken the time to sit down with pen and calculator in hand to figure out exactly how much of your monthly expenses your 401k fund will cover? If you haven’t, you may be truly shocked when you finally do get around to it

The majority of workers have never taken the time to come up with a long term money strategy for retirement Unfortunately, for most people, doing so never seems to rise to that degree of importance Yes they will save a bit here and there and a few may even have a organized savings plan where a certain sum of money is removed weekly or monthly from their paycheck and automatically placed in a fund But relatively few people go through the tedious process of writing down such elementary and relevant facts such as what age they are planning on retiring, the amount of income they’ll need when they retire, and how much cash their fund will realistically provide for them when at retirement

And that’s a big mistake It’s also why when the big day finally comes, many new retirees will belatedly discover that their 401K and Social Security payments will not even come close to covering their monthly dollar outlays So, unfortunately, at the age of 65 or whatever age they retired they discover that they have to go back to work – sometimes part time but sometimes full time – in order to make ends meet

This scenario happens over and over again But why? And can we avoid it? To put it bluntly – it occurs because they failed to make themselves a retirement plan And yes, this situation is avoidable – if you don’t wait too late to start So let’s start now

Here’s a practical, easy way to at least begin to create a retirement plan How much do you currently earn a month? Most experts figure that you’ll need at least 60 to 80% of your pre-retirement gross income to keep you at the same standard of living that you now enjoy So let’s be conservative and figure that you’ll need 80% to be comfortable So, if you make $4,000 a month, your retirement fund plus Social Security payments would have to provide you with at least $3,200 a month

Then answer the question – what percent of my current living expenses, adjusted for inflation, will be covered by my current 401k fund, in addition to social security? Is it at least 80%? It may take a bit of time to calculate, but this is critical information If you need help, you can find calculators across the Internet that can assist you

If you find out that your retirement fund as currently established won’t provide you with at least 80% of your pre-retirement gross earnings, then unfortunately you have one of two hard decisions to make Either you make a willing decision to lessen your standard of living at retirement Or, you make a conscious decision to growth the amount of money that will be in your fund when you retire You can achieve this by either taking an extra job and placing the extra money in your retirement account or by choosing more lucrative investments Whatever decision you choose, at least you won’t be going into your retirement years financially blind

Now admittedly, this quick and dirty retirement plan analysis does not take into account many factors that a thorough analysis would For example, we’ve left out factors such as whether your house has been paid off at retirement, whether you’ll still be supporting your children at retirement, and whether you have other substantial debt loads And it’s more than worthwhile for you to map out a thorough retirement analysis plan as soon as possible But even a quick and dirty plan such as this is more than most people do and is better than no plan at all which, unfortunately, is what most people have

Eric Bayne is writer and researcher issues relating to the retirement community such as 401 k rollover and senior citizen retirement communities.

Syndication Source: Thought Search Articles Continue reading →