How to Help Your Kids Understand Money

Recently I had an opportunity to speak with a class at Pacific University, in Forest Grove, Oregon. We covered a variety of personal finance topics. I’ve done this before, and I’m always struck by the fact that young people are largely unprepared to live in the world of personal finance.

There are many reasons for this. It’s not taught in schools. Often parents themselves don’t understand the concepts. When quizzed about basic financial literacy topics, most Americans only score about a C minus. But a big obstacle is interest.

When talking with kids, or anyone, about money, you have to meet them where they are. The topic has to match not only their skill, but their interest. As with most skills, if the topic is not currently relevant, it is too abstract. Here is what I’ve learned from the literature and my own experience:

Elementary School Kids

Once kids are in the third grade, they have enough math skills to do a bit of money management. Your kids should have some money available to manage on their own, whether it’s from doing chores or an allowance. Have them save up for the things they want that are not necessary to everyday life. Help them understand the process for saving. How much money will they put aside each week? What are they willing to do for the thing they want, such as extra chores or giving up other ways they spend their money?

It’s important that kids truly have a choice. This is one area where I routinely got it wrong with my own kid. I remember vividly the day she wanted to spend $5 for a pony ride. I lectured her about how many weeks of allowance it took her to save $5 (though she wasn’t saving for anything in particular) and how short the ride was going to be. I should have just let her get on the pony.

Older elementary school children have the ability to understand the concept of debt. While I don’t encourage taking on debt for things you can reasonably get by saving ahead, it’s not a bad idea to let your kids have the experience of owing you money.

If they have something large on their wish list, consider letting them borrow the money from you to be paid in installments over a time you choose. Make a contract with them that clearly states what they will pay each week and how long it will take to pay you back. Talk to them about how they will raise the money for the payments.

Middle School Kids

Middle school kids can start to learn more about creating a budget. You can give them control over some of their needs as well as their wants. Give them a reasonable budget for things like their school clothes and supplies, and let them make their own choices about how to use it. Show them alternates to their choices, but let them make their own and live with them.

They can also understand the cost of living. Consider having your kids participate in paying the bills with you and making some family decisions. For example they could help plan a vacation, making choices that fit in your budget. Or you can work together to save for something the whole family can enjoy, like a new television.

High School Kids

In high school, you can add in activities that involve more complex financial concepts, but you are losing their interest. From here on out, you need to focus on things in which they will have a personal stake. College is a good one. Most parents have not saved enough to cover the full cost of college. Kids need to understand where the money is going to come from.

Make your family situation clear to them, and explain how they can help themselves. Good grades and extra curricular activities can result in scholarship money. After school and summer jobs can help them pay for books and room and board. And most importantly, their choice of schools will have a huge impact on how much money your family has to come up with.

If debt is going to be part of the picture, estimate their monthly payments now. It will help them understand the impact of the choices they make. You can estimate payments for different loan amounts at StudentAid.gov, and you can find more resources to help your child understand their options at the same site on this page.

College Age

College students are living on their own to some degree, and it’s a great time for them to begin to understand how the world works. College students should begin to pay some of their own bills. Likely candidates are cell phone bills and car insurance. If they are not living in the dorms, have them manage rent and utility payments and groceries, even if you are providing the funding.

When your child starts looking for work, with or without college, help them understand company benefits. Even some internships offer health insurance and an opportunity to participate in retirement plans. Help them understand how these benefits work and why they should participate. It’s also important to talk to them about building an emergency fund. How much they need, how they will save it, and why it’s important should all be understood.

It’s hard to get young people to begin thinking about retirement, but if they start participating in their company retirement plan early, it will reduce the amount of money they need to save out of their paychecks for the rest of their lives. I’ve found illustrating how a company matching contribution works is miraculous in getting these newly minted workers to participate. Here is a simple example you can use:

  • Your young person contributes $100
  • Since the contribution is before tax, only $80 comes out of their pay
  • Their company matches their contribution with $100
  • They have saved $200, and only $80 has come out of their pay.

Talking to kids about money is hard. You want to protect them from the cold world realities as long as possible, and as a culture, we’re just not good at talking about money period. The hard part is even if you do everything right, which you won’t, sometimes they just don’t listen. I wrote about how my own efforts didn’t help my daughter avoid going into the financial ditch in this post. But keep in mind, every lesson you teach stays in their heads somewhere. They’ll remember when the time comes.


Photo by Sharon McCutcheon on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

Slice Your Own Darn Cheese

The latest thing to hit the snack food isle is Oscar Meyer’s P3 protein snacks. They are two ounces of protein in a handy portable package. They contain a few cubes of lunch meat, a few almonds and a few cubes of cheese.

On the Safeway website, they run $2.29 per package. That’s more than $18 a pound. You can buy some really nice fish or a fancy steak for that price. What if you cut up your own meat and cheese and bought your almonds in bulk? Here’s what it will cost you.

Cost/PoundCost/P3 Serving
Turkey (pre-cooked)$10.00$0.42
Colby Jack Cheese$11.00$0.46
Almonds (bulk)$3.76$0.16
Total$8.25$1.04

So, you can essentially have the same thing in your own reusable package for less than half the cost. Convenience foods are expensive. This may not seem like a big deal, and it’s not if you grab one on the go once in a while. But if food like this is a staple on you’re grocery list, it’s an easy place to look for savings.

Here are a few other items where you can find big savings if you do your own slicing and packaging.

Pre-packagedUnpackaged
Bottled ice tea
6 pack
$9.89Home brewed ice tea
Same volume
$1.00
Steel cut oatmeal
24 oz package
$3.00Bulk steel cut oats
24 oz
$0.60
GoGo squeeZ applesauce
12 pack
$8.79Applesauce
Same volume
$3.84
McCormick Ground Cinnamon
2.4 oz
$2.37Bulk cinnamon
2.4 oz
$0.58
Sliced apples
Five 2 oz multi-packs
$4.49Apples
10 oz
$2.18

There are savings from 50 to 90 percent here. Next time you are at the grocery store, see what’s on your list that also comes with less packaging. You’ll find your savings add up quickly.

On the road to meeting your financial goals, it helps if you have a few short cuts. Finding a way to cut expenses without giving up anything is one of those. By doing your own portion sizing and packaging you can save big on your grocery bill. And that is one step closer to everything you want to achieve with your money.


Photo by Thanos Pal on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

Your Retirement Savings Account is Not an ATM

There it is. It’s just sitting there, and you need it. Why not take advantage of it. It’s your money after all. If you need money, and you have money in your retirement account, it can be very tempting to borrow from it.

Most retirement plans allow participants to borrow against their balances. About one in five 401(k) participants have an outstanding loan, and over a five-year period, almost 40 percent of participants borrow from their account at some point. Most loans are taken to pay off debt, usually of the credit card variety.

That can make some sense, since the loan rate on a 401(k) loan is lower than rates on credit cards. But there are other costs beyond the interest rate. While you are essentially borrowing from yourself, there are several consequences to taking the loan that make this a bad idea.

  1. While your loan is outstanding, your money is not invested in the market. You are earning the interest on the loan to yourself, but you are missing out on the greater growth you could get from stock market-oriented investments. The market rate of return is the true cost of your loan. Historically the stock market has returned on average 10 percent per year.
  2. Some employers don’t allow you to make contributions while you have a loan outstanding. If that is the case with your plan, you will miss out on the opportunity to grow your retirement account balance. If your employer matches contributions, you will also miss out on that.
  3. Your loan is repaid with after-tax dollars. When you retire, the money you repaid, like the rest of your balance, will be taxed when you take it out to meet your living expenses. So your loan will be taxed twice.
  4. If you leave or are let go from your job, you will only have sixty days to repay the loan or it will be considered a distribution. The distribution will be taxed as ordinary income in the year you take it, and you will pay an additional 10 percent penalty.

Instead of taking out a loan from your retirement account, consider what other options you have. If you are consolidating debt, have you considered taking advantage of a zero or low interest promotion on a credit card? Instead of adding to your debt, can you reduce your spending either by cutting discretionary expenses or by making bigger changes to lower the cost of where you live or how you get around?

To avoid using your 401(k) as an ATM, make sure you have an emergency fund. You should have at least three months of mandatory expenses saved in an easily accessible account, such as a bank savings account or a money market mutual fund. If you have a high deductible health care plan, work toward saving enough to cover at least the deductible. And make sure you are setting aside money for those big expenses, like home and auto repairs, that you know will come up, but you don’t know when.

In some cases, a loan on your retirement account may be the best of a few bad options, but that doesn’t make it a good one. There are costs that aren’t obvious, and they put you at risk of a big tax bill if you lose your job. Avoid having to make the choice by saving ahead for emergencies and other big expenses.


Photo by 🇨🇭 Claudio Schwarz | @purzlbaum on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

I Want it All

GrubHub has a new TV ad that features the song lyrics by Queen “I want it all and I want it now.” This ad seems to sum up our consumer culture and precisely why so many people with good incomes can’t seem to get a grip on their financial situations.

Americans of all income levels struggle with unexpected expenses and debt, and, as a result, find it difficult to even have financial goals, let alone achieve them. Just this week, it was reported that the famous lawyer, Michael Avanatti, is accused of embezzling nearly $2 million from a client’s settlement to pay for his “own expenses and debts.” How can a guy like that run out of money?

A 2015 study by the Center for Retirement Research found that of those in the top one-third by income, one in three reported having difficulty covering regular expenses. I’ve seen it myself. I recently spoke with a couple making $400,000 a year, but going further into credit card debt with each passing month.

This couple seemed confused. They made so much money but couldn’t understand why they weren’t getting ahead. Eating out twice a day, designer clothes, and weekend getaways had something to do with it, but they hadn’t tallied their expenses. They also weren’t paying their debt down, which caused them to wrack up extra interest charges, and their careless approach to paying their bills resulted in unnecessary late fees. They simply weren’t paying attention.

It could be that high income people like these simply believe they don’t have limits. They make enough money, they shouldn’t have to worry about how they spend it. They want it all and they want it now. But that mindset is a trap. It can keep you on a treadmill of always needing to make more money, or in the case of Avanatti, to steal it.

There is always a limit. No matter how much money you make, if you want financial security, you actually have to do something about it. You must always pay attention to how you spend your money, and save for your financial goals. And you don’t even need to make a lot of money to do it.

Alan Naiman, a Seattle social worker who died last year at the age of 63, managed to save enough to give a small fortune to charity when he passed. By living an extremely frugal life, he was able to save and invest enough to have several million dollars in his own estate, and to his own savings he added his parent’s estate. All tolled, he donated $11 million.

Of course, these stories are extremes. You are probably not spending your way to bankruptcy despite a top 1% income, nor are you willing to hold your shoes together with duct tape in order to reach your financial goals. But they do illustrate the possibilities and what is required. While it may be true that you can have anything you want, you can’t have everything you want. You will always have to make choices. Choose wisely.


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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

Photo by freestocks.org on Unsplash

How to Go From Happy to Desperate in 6 Weeks or Less

Last week GoBankingRates published an article on how to get your grown kids out of the house. After seeing it, I thought I better come clean. Our daughter, Kaye, has been back living with us for about a year after being mostly on her own for about two. She’ll be moving out again sometime this summer in a much better position, but it took a catastrophic fall to get her to learn how to manage her money.

Kaye made a series of decisions that, had we not been able to help her out, would have led to her becoming homeless. It was a serious eye opener and highlighted how vulnerable you can become.

In March of last year, Kaye moved into an apartment with her girlfriend. Both were making minimum wage. Kaye was busing tables at a big chain restaurant, and her girlfriend was working two jobs part time. They didn’t make much, but between the two of them, if they were smart about their decisions, they would have been all right.

There are several apartment complexes near us that offered relatively cheap rent for the Portland Metro area. They’re close to public transportation, which was important since neither owned a car. If they had picked one of those, their rent would have been about $500 a piece. It would be tight, but with no other big bills, they could have swung it.

They didn’t do that. They rented a much more expensive place that wasn’t nearly as accessible by public transit. Kaye’s girlfriend bought a car. Not a cheap used car but a nearly new mid-sized sedan. The payments and insurance were $500 a month. Well, they might still have been able to swing it, if the two of them picked up extra shifts.

They didn’t do that. Kaye’s girlfriend had a dispute with one of her bosses and quit. And then didn’t do much to get another job. Meanwhile, Kaye wasn’t getting enough shifts to even work 40 hours a week. The restaurant was sending her home when business was slow. She couldn’t get a second job, because she was scheduled 40 hours, but she wasn’t actually working them.

Through the month of March, we heard about spending that was extravagant, even for people who had money. They had a spa day together, and Kaye’s girlfriend had her hair done in dread locks to the tune of $300. They went out to nice dinners. I had no idea where the money was coming from.

And I’m just watching, knowing my daughter is going down in flames. She wouldn’t listen to me when I tried to show her how to make ends meet. She would barely sit still as I explained what she could really afford. She thought because she had made it on her own for a bit, she knew better. It was clear she was not going to take any of my advice.

It was tearing me up. After all, I wrote a book about this stuff. How had I screwed up with her to the point that she wouldn’t listen to me on the one thing I’m really good at? Nothing I said was getting through.

So, I shut up. My husband and I could only stand by and hope they figured it out.

Then Kaye got good news. She was offered a new job, with higher pay, benefits, and paid leave. We were all thrilled. She was to start on April 15th. She gave notice at the restaurant. I cautioned her to make sure she worked until she started the new job. She was going to need the money.

She didn’t do that. She left her restaurant job as soon as she could at the end of March. It left two weeks before she started her new job, and it would be another three weeks before she would be paid again. Five weeks total without a paycheck. Her girlfriend working 20 hours a week at minimum wage. Things were getting very dark.

Meanwhile her relationship with her girlfriend was deteriorating quickly. By the end of April, they were breaking up. They had no money. Kaye had sold a few pieces of jewelry to scrape together money for food. There was no way they were going to be able to pay rent in May. She finally came to us for help. All told, it took only about six weeks for them to crash and burn.

With the caveat that Kaye would pay us back, we covered the May rent, giving Kaye’s girlfriend the time to find another place to live. She ultimately went back home to her own parents. We also covered the fee to break the lease, so neither would have a hit to their credit. All in we paid over $3,000.

Kaye moved back in with us with the understanding that while she lived with us, she had to attend the Mom school of basic money management. The first thing she and I did was create a budget. We researched what she’d pay for rent and utilities in a roommate situation by searching Craigslist roommate wanted ads. We estimated the cost for food, laundry and toiletries. Since she needed a car for work, we agreed to sell her one of ours over time. So, car insurance was added to the list of mandatory expenses.

Each month Kaye gave us the money to cover these expenses, and we put it in a money market account for her. These were bills she would have to pay if she lived on her own. In addition, Kaye covered other costs out of her remaining money. Things like gas for the car, haircuts, her phone and any other spending came out of what was left after she paid these mandatory expenses.

To make sure she didn’t overspend, I asked Kaye to sit down and write out how she would spend every dollar of her paycheck before she spent any money. She simply wrote it in a ledger. She itemized the expenses and planned out how she would spend her remaining money. To help break her impulsive spending habits, she left her money and debit card at home, unless she had a planned expense to pay.

One year later, Kaye routinely plans how she’ll spend her money. By making the payments to us, she has saved enough money to cover three months of living expenses and more than enough to cover move in costs when she is ready to move out. In just a few months, she will have paid enough to buy the car from us. Of course, she couldn’t have made so much progress so quickly if she didn’t live at home. But it’s still a big accomplishment.

On her own, she’s also saving money to maintain her car, and cover her healthcare plan deductible and some potential out of pocket healthcare expenses. She saved enough money to have a short vacation in January and is saving for another trip in October. When she does move out, I believe she will have the skills she needs to stay afloat. She gave me permission to write this story about her experience, in case it would help someone else.

It didn’t take long for Kaye to appreciate her planning routine. She feels in control of her money and now uses it to do what she wants within what her income will support.


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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

This is Not Us

One of my favorite shows on television is the NBC series “This is Us“. It tells the story of three siblings, two of them twins, the third adopted, coping with life under the backdrop of the death of their father twenty years earlier, when they were teenagers. It’s one of those emotional roller coasters of pain and elation as the characters face and overcome heart wrenching challenges.

But I’m worried about the characters’ finances. They live lavish lifestyles with seemingly no regard for where their next dollar will come from. For two of the siblings, Kevin and Kate, there may be plausible explanations for the way they live, but they are a stretch. The one I’m really concerned about is Randall.

Early in the show, Randall worked for a hedge fund as an weather derivatives trader. He had a nervous breakdown after the death of his biological father with whom he’d recently reconnected, and wasn’t able to return to work. His wife, Beth, was a city planner, but was laid off.

They have a large home in Alpine, New Jersey. A Zillow search suggests a home like their’s in that area would be worth at least $1.6 million and probably as much as $3.5 million. At $1.6 million, with a 20 percent down payment, their monthly mortgage would be over $6,000. At $3.5 million, the payment is over $13,000 per month.

For much of the second and third season, neither had a job. Meanwhile they bought an apartment building in Philadelphia, which required a significant investment for maintenance and repairs, and Randall ran for city council there. We’re not sure where the money came from for that.

So while the two were finding themselves, we can only assume they were burning through their savings like mad. Though neither seems to be worried about money. Randall’s new gig as a city council member will at most pay $150,000, or $12,500 a month. That means the mortgage payment alone will eat up two thirds to more than all of his take home pay.

Beth recently took a job as a dance instructor. That job pays about $25 an hour in New Jersey. That will give her $2,000 to $3,000 a month in pay, depending on how many hours she works. Maybe they’ll be able to cover the mortgage between the two of them. But who knows how they’ll pay their other bills.

The lifestyles of our favorite TV characters, like Randall and Beth, can distort our ideas about what is a “normal” lifestyle. The characters’ implied spending can be far above what families in similar income brackets can really afford. That world is simply not the real world, and trying to live up to it can be a dangerous trap.

While it’s natural to compare yourself to others, don’t do it. Instead consider a different comparison; where you stand relative to your savings goals. Having a savings goal and working toward it can be an effective way to overcome your concern that your lifestyle is somehow not up to par. Keeping track of your progress and comparing where you are to where you were is much more satisfying than comparing what you have to what someone else has, especially if they aren’t real.


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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

How to Keep Medical Expenses From Wrecking Your Plans

Medical expenses may be one of the biggest budget busters. Even with health insurance, there are deductibles that must be met. After the deductible you will still have coinsurance to pay, at least until you reach your annual out-of-pocket maximum.

Today’s insurance plans often have very high deductibles and out-of-pocket maximums. If you are having a terrible year, medically speaking, you can easily rack up several thousand dollars in out-of-pocket expenses. And for some, it can make meeting your other financial obligations difficult.

My go-to advice for expenses like these is to save ahead for them. Everyone gets sick from time to time, so you’re going to have some medical expenses. Saving up enough money to cover at least your deductible, will ensure you don’t have to adjust your monthly spending plan should a doctor’s bill come in.

If your healthcare plan offers a health savings account, put your healthcare savings there. Your employer may even help you by making a contribution to it as well. Contributions are made before tax and withdrawals for eligible medical expenses are tax free. The account is yours, so you don’t have to worry about spending all the money in the year you contribute, and you can continue to hold it or roll it over to a new provider if you are no longer with your current company.

However, if you’re worried you’ll have a significant expense before your savings are built up, there is a product that can help you. Supplemental health insurance can help you cover your deductibles, copays and coinsurance. You can add the coverage at any time. Whether it’s a good deal depends on the coverage you select and your core healthcare plan.

For example, a thirty-year-old woman could get a plan that will pay $7,500 if she were in an accident or came down with a critical illness for about $40 per month. That would cover most of the maximum out-of-pocket expenses under those circumstances for any healthcare plan. For broader coverage, that includes hospital stays, surgeries, and doctors visits, the same age person could pay $130 per month. Prices go up for older ages.

You would need to save much more than $130 per month, to have $7,500 set aside in a reasonable time frame. If you just saved the $130, it would take you nearly five years, and a lot can happen in that time.

If you are interested in a supplemental insurance plan, you can search online for policies available in your area by entering “metal gap insurance” in your search engine. Metal gap refers to the plan categories under the Affordable Care Act (bronze, silver, and gold). Before you buy a policy, pay attention to the details of the coverage. Make sure you understand what constitutes an “accident” or “critical illness”.

There are drawbacks to these plans. They are not subject to the same regulations as core healthcare plans. You can be denied coverage for pre-existing conditions. And if you develop a chronic condition, your coverage may not be renewed. Saving for your medical expenses will always be less expensive than paying for insurance. However, if you don’t have adequate savings now, a supplemental insurance plan may help keep your financial plans on track.

Photo by rawpixel on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

How Marie Kondo Can Help You Meet Your Financial Goals

The new Netflix series, Tidying Up with Marie Kondo, is getting rave reviews. Marie Kondo is the best selling author of The Life-Changing Magic of Tidying Up. The Netflix series brings Kondo into American family homes, where she teaches them the fundamentals of organizing their stuff.

Organizing your stuff and managing your finances have much in common. They both require you to evaluate your situation, think ahead and make choices. The foundation of Kondo’s approach to decluttering is to choose the things that “spark joy”, and jettison the possessions that don’t. This particular focus on the things that make you happy is also a good way to manage how you spend your money.

If you are not making the progress on your goals that you want, you need to change something. To save more, you must spend less. For many, this simple truth keeps them from facing their financial situation and taking a step toward a more secure future. It simply doesn’t seem like any fun to spend less.

Yet many of us spend money on things that are not important to us. Takeout food eaten on the go, clothes that never get worn, TV channels that never get watched are all expenses that do not enrich our lives.

For most, your choice is not between doing what you love and financial security. It’s more about not doing what you don’t love. If you approach freeing up room in your monthly spending to save more with this in mind, you may find that it is a fun challenge to weed out those wasted expenses.

Some friends, Lisa and Candice, asked me to help them get started on a strategy to meet their financial goals. The two love music, and going out to dinner. This type of entertainment really made them happy. But they thought they would have to give it up if they wanted to make progress on their goals.

However, a review of their spending revealed some expenses that were neither necessary or making their lives better. For one, they were subscribed to a home security service, but in fact never actually engaged the alarm system. This is clearly an expense they could avoid. Other expenses that didn’t “spark joy” were daily coffee runs and takeout lunches that they consumed at their desks alone.

It may not be just the small stuff either. Maybe you have an expensive car, where a lower cost model would do just as well. Or you have extra room in your home that doesn’t make you happy just sitting there empty.

It may be that you can’t fully meet your savings goals by getting rid of expenses that don’t bring meaning to your life. You may need to get creative, and perhaps you ultimately do need to cut back on the things you love doing. But that doesn’t mean you have to stop doing them altogether. You won’t be successful long-term if your only tool is to deprive yourself of the things that are important to you.

Short of earning a bigger income, you only have so much money to go around. You have to make choices about what you do with it. Make them intentionally. Choose the things that bring you safety, security and joy, and give up the things that don’t. Make sure saving for your financial goals is one of those you keep.

Photo by Preslie Hirsch on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

The Power of $5

We tend to overlook the power of small steps. We want a magic bullet to somehow make us thinner, richer and more successful. But much of life is simply putting one foot in front of the other in the direction we want to go. If your financial goals seem out of reach, consider what you could do with just $5 a day.

If you could find $5 a day to save instead of spend, by the end of the month you would have $150. By the end of the year, you could have saved $1,800 toward an emergency fund or expenses that would have otherwise gone on your credit card.

If you used your $150 to contribute to your company retirement savings plan, and your employer matches your contribution, you could turn it into $300 a month just like that. In a year you would have contributed a total of $3,600 toward retirement.

A recent CNBC article highlights a survey done by Creditcards.com. In it they found 42 percent of those aged 18 to 37 don’t know when or if they will ever be able to pay off their debt, and 20 percent expect to die with it. The average non-mortgage debt was $36,000.

You could use your $150 to make an extra payment on your debt. If you add $150 to the current minimum payment and make the same payment every month going forward, you could have $36,000 of debt completely paid off in as little as three years, depending on your interest rate. Of course that assumes you stop adding to it.

Once your debt is gone, instead of making payments on it, you could work toward your other financial goals, like saving more for retirement, saving for your children’s education and other things that are important to you. If your $36,000 of debt is credit card debt, the minimum payment is over $800. With your extra payment, it’s $950. That is a lot of money that could be going toward all your other goals.

Where could you find $5? Most of us spend money on things that aren’t important to us. Did you eat take out lunch at your desk? If so, you probably don’t even remember what you had, and you could have saved $5 by bringing your lunch from home.

You might be able to shave $5 a day, or $35 a week, from your grocery bill by changing the store where you shop or shopping more carefully so you have less food waste. There might be a combination of things you could do, like changing your phone plan, getting rid of the gym membership you don’t use, and turning down the heat when you aren’t home.

It doesn’t seem like much money. Just $5 a day. But the impact can be so powerful. You can have more financial security and your big financial goals are within reach. You only have to take the first step, even if its a small one. Whatever you do is progress, and you may be able to do more in the future. It may not be a magic bullet, but it will do the trick.

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.

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How to Clean Up Your Financial Junk Drawer

Today’s post comes from guest writer Aiden White.
Aiden is a San Francisco based writer. Discussion and debates on financial and political subjects are her forte. Being a debt fighter in her personal life, her goal is to share innovative thoughts and knowledge in the debt communities. Get in touch with her at aidenwhitejoe@gmail.com.

What’s in your financial junk drawer? Is it incomplete goals from 2018? Or could it be that you are not coming clean with your partner on some financial issue? Like the junk drawer in your kitchen, you may be reluctant to look at what is lurking in there. But to be successful in reaching your goals you have to sort through it.

Incomplete Financial Goals

It’s easy to say you want to do something, but it’s harder to commit to it. Saving more money or reducing debt are common New Year’s resolutions, but if you weren’t successful in achieving your goals in 2018, it could be that you didn’t put enough specificity around them. Here are a few common goals and how to define them in a way that will motivate you.

Build an emergency fund

An emergency fund is savings that will help you in the event of a personal financial crisis such as the loss of a job, a prolonged illness or an unexpected major expense. Your emergency fund should be enough to cover at least three months of basic living expenses. Yours may need to be bigger depending on your circumstances.

This is your top priority. To help you achieve it, define how much you need to save and determine exactly what you will do to save it. For example, you might decide to get a jump on your savings by dedicating your next bonus or tax refund to it. You might decide to cut out restaurant trips until your emergency fund is in place.

Set milestones. Determine what you will save each month, have saved in six months, etc., and when you will complete your emergency fund. Whatever your strategy, you will be more likely to achieve your goal if you have one.

Get out of debt

Debt creates financial insecurity. With debt, your emergency fund needs to be larger than it otherwise would need to be, and you are more prone to a financial disaster.

Consider consolidating high-interest credit card debt or multiple credit cards to a 0% APR balance transfer card. You may also be able to consolidate other unsecured debt like payday loans, utility bills, medical bills, personal loans, etc.

Once your debt is consolidated and you are down to your lowest interest rate possible, you can pay down your debt using a strategy such as the debt snowball. In this strategy you make only the minimum payment required on all your loans except the smallest one. Pay as much as you can on that one. Once that is paid off, take the full monthly payment you were making on the smallest loan and combine it with the minimum payment on the next smallest loan. Continue through the remaining obligations.

As with your emergency fund, you’ll need a strategy for raising the money to make extra payments on your debt. Determine what you will do differently as part of setting your goal.

Create and follow a budget plan

A recent survey revealed that only 32 percent of people make a proper financial budget. Your budget is your strategy for achieving your goals.

If you need guidelines to get started, experts suggest a 50/20/30 rule. 50 percent of your money should be used for essential spending (rent, transportation, utilities), 20 percent should go towards completing personal financial goals (saving and paying off debt), and the remaining 30 percent could be used for discretionary expenses.

Save for your retirement

Supporting yourself in retirement takes a lot of money. To make it as painless as possible, you need to start saving for it as soon as you can. A recent survey from Provision Living revealed that 43% of millennials have $5,000 or less in savings for retirement.

Start by taking advantage of your employer sponsored retirement plan, especially if they offer to match your contributions. The automatic contributions will make saving easier for you. If your employer doesn’t offer a retirement savings plan, open a Roth IRA. You can make those contributions automatically as well by having your employer make a direct deposit from your pay to your IRA account.

Hidden financial secrets

According to creditcards.com, one in twenty people in a serious relationship have a secret bank or credit card account. Whether you’re embarrassed by a purchase you made or you’re keeping a slush fund so you can spend money without discussing it with your partner, this could be considered financial infidelity.

The problem is that many of us still hesitate to talk about money with anyone, even with the person whom we love the most. Keeping financial secrets can ruin your relationship as well as create grave financial problems. This corner of your junk drawer may be hard to face, but you must for the health of your relationship and your finances.

That financial junk drawer is causing you stress. Unfinished business and unrevealed secrets will stay on your mind until you resolve them. Perhaps this year’s resolution should be to get rid of the junk drawer all together.



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Save Yourself is now available on Amazon




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