Continue reading »]]> I tend to be fairly vocal about the importance of saving for the future, but I also want to make sure that a lot of the advice I find online is what I wish I would have heard – or, at least, paid attention to – when I was younger.

Hopefully, you find these pieces helpful for you. I know many of our members are well-established, but I also don’t want to miss out helping people who may not be where many of our members are in their financial lives.

So, continuing on with the commentary on Liz Weston’s Three Money Tips for Every Income on MSN Money, we now turn to the $60,000 to $100,000 income bracket. The three tips she has for people in this bracket are:

• Add a Roth IRA. The tax-free withdrawals during retirement make this an attractive option.
• Pay cash for luxuries. “Try not to borrow money for anything that will decline in value,” Weston writes. That means your vacations, cars and home improvements should all be paid with cash.
• Save for college. Your children can get a head start on their own financial lives by you starting to save for college. If they seriously want to get ahead in life, they will likely need a college degree.

Again, all three are sound pieces of advice. However, let me focus in on the last bullet: Save for college. I have said it time and time again that education is important, so seeing Weston recommend this as a key saving tip for this income bracket made me quite happy.

A quick story: When I first went to college, I had to rely heavily on financial aid. My mother had to take out a loan to help me pay for it, and I took out several loans, received grants and scholarships to help cover the costs.

It didn’t seem like it was that big of a deal at the time, but when I graduated and faced this mountain of debt, I realized that there was going to be a long, long period of repayments. Thankfully, my student debt has been paid in full for several years, but it was something that hung over my head when I wanted to buy a new car, a computer, etc.

You can make a significant impact on your child’s education by beginning to save now for their college expenses. And, I firmly believe a college education is well worth the expense.

All of that said, I would like to know what you think. Please share in the comments!

Continue reading »]]> Everyone would probably agree that saving is a good thing – at least, I hope everyone would agree. So, when I found Liz Weston’s Three Money Tips for Every Income on MSN Money, I knew I needed to share it.

Last week, I shared the first two income brackets on two different days. Today, we’ll return to my commentary on the article as we look at the Middle Income bracket.

Weston recommends these bits of saving advice for the $40,000 to $60,000 income households:

• Nuke your credit card debt. Surprisingly, as income rises, the debt found on credit cards tends to rise as well.
• Step up your retirement savings. Gradually increasing it year over year to reach 10 percent of your income can help save for the future.
• Boost your emergency fund. This is where you can build up three months of expenses to help you weather surprises.

First, credit card debt. Credit cards can be very, very useful tools, but if they’re abused, they will come back and bite you. So, when I see “nuke your credit card debt,” I have to admit that it makes me quite happy. Perhaps it was just the influence I had in my life, but credit cards are a last-ditch avenue. I was never proud that I had a credit card balance, so when I finally got it all paid off, I couldn’t have been happier.

I’ve written about retirement savings in the past, and I know I have said that it’s never too early to start saving for retirement. Weston’s tip of increasing contributions year over year to get up to 10 percent is brilliant, and it’s something that I am going to start implementing.

The emergency fund is one that I have always struggled with. True, I tried establishing the emergency fund too early, but even now it seems hard to get one going. Each time I think I get a good start to it, an emergency springs up, and I have to tap into it. Perhaps I’m just unlucky, but it makes establishing this fund very difficult.

For those of you in this income bracket, what do you think? Is there advice that Weston didn’t touch on that you think could be valuable? Share in the comments!

Continue reading »]]> Yesterday, I offered commentary on a small portion of an article Liz Weston wrote for MSN Money during the summer. Today, I will continue giving my commentary with a focus on the next income bracket.

Weston recommends the following three pieces for the lower middle income bracket, or households with an annual income from $20,000 to $40,000:

• “Limit your overhead”: Your must-have expenses – housing, transportation, food and insurance – should only.
• “Save for retirement”: This is a smart piece of advice. Don’t rely on Social Security to get you through and make sure you are putting something into a retirement plan.
• “Set up savings buckets”: Multiple savings accounts can be used to funnel money from direct deposits to help you budget appropriately.

Of these recommendations, the third is my favorite. With Premier Members, you can open up multiple share accounts and label them whatever you want. Set up an account for each monthly bill, and then you can direct some of your paycheck into each account to make sure you have enough to cover your bills each month.

I’ve talked about saving for retirement here in the past, and I cannot even stress how important it is to save for retirement. If your employer doesn’t have a retirement plan, open an individual retirement plan and start building up wealth for later in life.

Finally, limiting overhead costs shouldn’t be a surprise. However, in our world, it seems everyone wants the latest and greatest. It may be difficult, but I would recommend keeping your overhead costs to just what you need. Do you really need a new car every couple of years? It also means not being tempted to upgrade to the latest gadget when it hits the market.

Smart spending in this income bracket (and, really, all of them) seems like the way to go. If you can make good decisions now, it’ll help you later.

Come back on Monday for the next income bracket, the middle income bracket.

Continue reading »]]> Saving can be a difficult thing for some income brackets, and it always seems like the advice you find online is geared to the higher income households. Unfortunately, not everyone earns in the top income brackets, and they may need advice, too.

This summer, Liz Weston wrote some good advice for all income brackets in her blog on MSN. Let me say, if I would have had some of this advice when I was younger, I imagine I would have had better control over my finances later on.

I thought I would start a blog series to go over pieces from Weston’s article. Today, I will touch upon the “low income” bracket she discusses.

For income under $20,000, Weston recommends:

• “Save $500″: When you’re in this income bracket, every little bit helps.
• “Get a break”: Tax break, that is. If your income comes from a job or business, then you can claim the earned income tax credit.
• “Avoid businesses that will rip you off”: Avoid “payday lenders, rent-to-own outfits and buy-here-pay-here car lots,” recommends Weston.

I think this is solid advice. If I could have saved $500 early on in college, I would have been in great shape to get through some tougher times in my last several months before graduation. Plus, had I been smart enough to understand.

The part about tax breaks is very important. It was one thing I did make sure to take advantage of when I was in college. I tried to make sure that I wasn’t missing any deduction – something I still practice today.

Finally, while avoiding businesses that rip you off is very sound advice, is it always an option?

But, what do you think? Is this sound advice for someone in this income bracket?

Check back tomorrow as I dive into the next income bracket.

Continue reading »]]> The following post comes from our friends at America Saves offer some great advice. Here, for example, is a fantastic post on how to save for emergencies.

Maintaining an emergency savings account may be the most important difference between those who manage to stay afloat and those who sink in debt. An emergency savings fund consists of a small amount of money, usually in a savings or share account, that you do not have easy access to. Keeping $500 to $1,000 of savings for emergencies can allow you to easily meet unexpected financial challenges such as:

• repairing the brakes on your car;
• paying for a visit to the doctor when your child has the flu;
• covering the dental expense of filling a cavity;
• paying for a parking ticket; or
• flying to visit a sick parent.

5 Ways to Save $500 to $1,000 for Emergencies

1. Save Automatically. Have part of your paycheck automatically deposited into a savings or share account or set up regular transfers from your checking to your savings account.
2. Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
3. Make your monthly credit card payment on time. The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings.
4. Save a portion of your tax refund.  Use tax form 8888 to split your return.
5. Bring lunch to work. If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.

Where to Keep Emergency Savings

It’s usually best to keep emergency savings in a savings or share account. These types of accounts allow you to access to your money when you need it.  Keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses.

Are you ready to set your goal?

America Saves, a non-profit that encourages individuals and families to save money and build personal wealth, can help you develop your goals and take action. When you join as a saver, you’ll receive the following benefits:

• Free subscription to the quarterly American Saver newsletter.
• Free monthly e-mail newsletters with savings advice from national experts.
• Free access to the members-only Savers Tracking Tool to help you reach your goals.

Sign up with America Saves and then come over to Premier Members and start down the path to saving responsibly!