Jill Russo Foster

Tips for Successful Personal Finances

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It’s Never Too Late

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Welcome to 2022!

It’s time to think about your finances.  What are your financial goals for the upcoming year?  Are you looking to save for an emergency fund, retirement, a new home or home improvements, education, an emergency fund? 

There is so much to accomplish and never enough money.  Well, that is how I used to think.  But not anymore. 

I started by taking small steps to achieve my financial goals.  My first goal was to create an emergency fund of $5,000.  Sounds overwhelming, but I broke it down into small steps:

                $5,000 in one year is $416.66 a month   –  $5,000 in one year is $96.15 a week  –                  $5,000 in one year is $13.70 a day

 Next, I needed to find this money in my budget.  What could I cut back on or do without?  It turns out it was multiple ideas to come up with this money.  We spaced out haircuts, we stopped buying beverages for work (we bring our own), we trim our dog’s nails ourselves and more.

 Lastly, we automated the savings.  Each paycheck we save $100.00 into our emergency savings automatically.  It’s set and done. 

 Now we have the emergency fund we need to be prepared for whatever happens in our life. 

Please know that it’s never too late to start to save for your goal.  Obviously, the earlier you start the better off you are.  But not starting is a mistake.  Make a plan and decide to start now.  You too can achieve your financial goals this year.

Are You Losing Money?

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Many companies offer their employees free matching funds for their retirement.  According to CNBC, 17.5 million Americans leave this free retirement money on the table.  Is this you? 

401K retirement account contributions are pre-tax, therefore lowering your taxable income.  CNBC says that 17% of employees don’t contribute.  Why not? Many people say they don’t have the funds to contribute to their retirement.  Among those that do contribute, 12% don’t get the full matching funds.

When I worked at Norwalk Community College, one of the first things I did was read the entire employee manual.  Yes, it was long, but it had valuable information that I could take advantage of.  I chose the alternate retirement plan.  For me that meant, I would have to contribute 5% of my gross income to receive the matching funds.  As soon as I was eligible, I enrolled.  In this particular plan, I was given 8% matching funds.  Why wouldn’t I do this?  For me, this was a no brainer.  I have always accepted free money.

If you have accepted your free money, congratulate yourself.  If not, enroll today (or as soon as you are eligible).  You don’t want to pass up free money.

Things To Do Before You Retire

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Whether you are just starting out or nearing retirement, there are things you can do now to make retirement easier for you.  You don’t want to retire and not have the money to do what you want.  Here are some things you should think about:

  • Do you have enough in your emergency fund? This past year many people were laid off, furloughed and/or unemployed.  An emergency fund helped many get by.  These funds will help you with an unexpected need for funds i.e. fridge dies and needs to be replaced, your car breaks down and you need to rent a replacement car, etc.  Life happens whether or not you have the funds.  Create or increase your emergency fund to cover 6 to 12 months of your expenses.
  • Have you maxed out your retirement contributions? You may want to fund your retirement accounts both through your employer (401K, 403B, 457, etc.) and your personal (IRA and Roth) accounts.  You can never have too much money for retirement.
  • Is your budget balanced? One of the biggest mistakes you can make is to have more expenses than income.  If this is the case, you will be accumulating debt and therefore not savings money.  Eventually, this could snowball and you will be a slave to your debt.   Make changes now to live within your means.
  • Is your debt paid off in full? Just like living within your means, having your debt paid off in full is important.  When you retire, you will be living on less income.  Having debt paid off will help you living within your means.  Make a plan to have your debt paid off.

According to AARP, more than half of the full-time workers age 50 years and above will lose their job involuntarily.  Keep track of your finances, live below your means and be prepared for whatever comes your way.

Your Financial Health

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Do you ever wonder how your financial pictures stacks up?  Are you on track to meet your goals?  What do you need to still do?  These and other questions are always on the many people’s minds.

I have discussed the importance of having an emergency savings, a budget to know where your money is going, great credit /score to have the best interest rates when you need to borrow and minimal high interest debt.  Check out some of my past emails for more information on these topics.

This is a great article Six Numbers Reveal the State of Your Financial Health. How well do your finances compare to these six areas?  All are important areas that should be goals for you to accomplish with your finances.

Have You Checked This Lately?

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Every year around my birthday is the time I check my social security.

No, I am not ready to apply.  But it’s something I do annually to make sure all is correct.  Every year social security posts your income to your account (the same income you file on your federal tax return).  I like to double check to make sure mine is correct.  It’s much easier for me to check now, then to figure it out when I apply for social security down the road.  My records are easily accessible and easy to review to double check.

When was the last time you looked at your social security account?

Thinking about retirement

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As we get older one of the things that is always on my mind is retirement.  What does it look like for me?  Where do I want to live – stay where I am or move?  Stay in my current house or downsize (maybe condo)? The list of questions goes on and on for me.

Wallet Hub has come out with a list of 2018 Best and Worst States to Retire To.  Where is your state?  This might be something to take into consideration in your planning.

Saving For Retirement

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We all want to save for retirement, but there never seems to be enough money left over to save.  Does this sound familiar?

The first rule of saving for retirement is, if you are offered free money take it. If your employer sponsored retirement plan offers you matching funds, take it. Contributing to a retirement plan through your paycheck is a great way to get started on the path of regular automatic saving. The earlier you start this habit the better off you will become. On the other side if you haven’t done this, it’s never too late to start now. In this case, free money is a good thing

Next you want to manage your debt. Debt is the enemy to your budget, so you want to avoid it at all cost. I am not saying don’t borrow or use credit, what I am saying is to use it wisely. Don’t become a slave to your debt and that you live paycheck to paycheck trying to keep up with your debt payments.

Charge wisely and only amounts that you can pay off easily. If you find yourself with an emergency and you have to borrow money, evaluate your options and make the choice that is best for you and your budget. Pay back the debt as quickly as possible to avoid as much of the finance / interest charges as possible.

Lastly, gratification – are you someone who needs instant gratification? Do you buy without a payback plan? Look at the food cost (groceries, dining out, take out etc.), shopping, memberships, entertainment etc. These are the expenses, that where the instant gratification that can harm your budget. These are the first defense against the leaks in your budget. Plug those holes to have more money for your retirement.

Think about your finances then make a plan to implement these strategies one by one.  Once you master one, start the next.  Remember that your finances will not change overnight, be patient and remember it takes time.

What will your retirement income be?

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Remember these?

20150424-socialsecurity

You used to receive one in the mail around your birthday. If you are younger than 50, you probably threw it directly into the trash. (It’s much more interesting the closer you get to retirement.)

Now you can just go online

To see your Social Security statement, go to www.SSA.gov (If you have trouble remembering it, just think “ass backwards” then “gov”). You’ll need to set up an account with the typical personal details plus security questions to verify your identity. If you want added security, you can take it a step further and use information from a prior year’s W-2.

Why do you want to see it?

  • To verify your earnings. It’s a lot easier to correct errors when they are new.
  • To help you plan how and where you will live at retirement. You can see how much you will earn when it’s your time to collect. Is it enough to cover your mortgage payment? Is it enough to continue with your hobbies or cover basic expenses?
  • To help you decide when to retire. You will be able to determine your Full Retirement Age (based on year of birth). Currently, you can take your social security benefits early at age 62 with a lower monthly payout or wait as late as 70 to receive a greater payout.

Protecting your account

You can add extra security by having them text you a unique code every time you want to sign in online. In a surprise twist, setting this up initially involves them sending you a letter in the mail. It’s a process that takes 5-10 business days, but once it’s done, you can rest a little easier. I recommend taking this extra step, since everyone’s had their information compromised at least once or twice in the last few years.

I would suggest that you check your Social Security statement annually – either a month or so after you file your income tax or around your birthday. The important thing to do is to check it.