Tag Archives: savings

America Saves Week: Thinking About Retirement in College

1 Mar

AmericaSaves-Leaderboard-728x90-static-retirement.jpg

If you’re in college your retirement might seem like a long way off. And it probably is, assuming you aren’t one of the very few people who become a wildly successful professional athlete and strike it rich early.

Unless you are currently swimming in cash as a college student and free of taking out educational loans, it probably isn’t realistic to be saving for retirement until you get your first post-college job. While now may not be the time to start investing into your retirement, here are three tips to remember as you’re setting up your career, and the rest of your life.

asw-retirement-txtMinimize Debt:Saving for retirement is a lot harder if you’re paying several hundred per month against debt. So think twice (or three times) before accepting the full amount for educational loans that are offered to you and ask yourself if you really need all of it. Once you start working, make a plan to pay down your debt as soon as possible.

An increasingly popular choice for graduates today is to head back to the parents’ nest for a year or two to save money for life on your own. Keep in mind that living with your parents only helps if you use it as a springboard to save, not as an opportunity to free up more spending money.

Career and Employer Choices: When you’re looking into employers and eventually weighing (hopefully) several employment offers, consider more factors than just the dollar signs on the salary. Once you’re off your parents’ healthcare plan on, or before, your 26th birthday you’ll need your own plan, which can be costly if your employer doesn’t offer one.

Additional non-salary factors to consider are moving expenses, cost of living, vacation, and retirement options. Retirement plans where your employer matches your contribution guarantees you a 100% return on investment, not an easy feat investing your money elsewhere. Also keep in mind if you are part of the nearly 50% of Americans who think that Social Security payments will be important in your retirement that they currently average about $14,000 per year.

Start Saving Early: Within your first month of getting paid you might find yourself wondering how anyone can spend this much money, and then within a few weeks wonder where it all went.

A great strategy to start saving early on is to have money automatically deposited into a savings account. It is much easier to adjust to having less right from the start than to save what you have left.

To emphasize the importance of saving consider this scenario of two employees at the same company.

Alice is 25 and starts contributing $100 every month ($1,200 per year) toward retirement. Alice plans to retire at 65 so she has 40 years to save. Sheila also contributes $100 every month, but she waits until she is 30 because life was just too hectic to start saving earlier. What’s the difference in retirement savings at 65? Alice will have saved $310,000 compared to Sheila’s $206,000 – or a difference in over $100,000. Why does this happen? The miracle of compound interest that you once learned about in math class.

Five years is the difference between surviving and thriving in retirement. Your youth is an investing advantage you will never get back.

Remember that it is important to save up for both retirement AND a regular savings. The savings account is there for you when you need money for big purchases, to handle emergencies, etc. without having to use credit cards and lose money on the interest.

It is important to avoid a mindset of “I’ll start saving when…” It will never be a better time to start. So take the America Saves Week Pledge and start today.

America Saves Week: Make Your Savings Automatic

27 Feb

americasaves-leaderboard-728x90-static-automaticdeposits-2016

Saving money can be hard to do after taking care of bills, groceries, and general living expenses. This is even harder when your idea of saving money is by counting what’s left over in your checking account after paying those monthly expenses. It’s likely you will probably just spend what’s left on a treat for yourself the next month.

ASW Automatic Savings txt.jpgWhile this saving method might work for the rare individual, for most of us we really don’t think about our spending as long as our account stays above a certain number we’ve arbitrarily designated.

The easiest way to create savings and counter our instinct to spend without worry? Save your money automatically.

Saving your money automatically, or as some call it “Pay Yourself First”, is a way to siphon off part of your paycheck every time you’re paid and put it into a savings account before you do anything else. The concept is simple and doing it is quite simple too depending on if you are paid via direct deposit or paycheck. Note: Both of these methods require opening a second bank account if you don’t already have one!

  • Direct Deposit: Let whoever is in charge of your payroll know you want to add an account for direct deposit. You will need your savings account’s routing number and account number to do this.
  • Paycheck: When you go to deposit your check, you will have to let the bank teller know you would like to deposit some into your savings and the rest into checking. It may not be “saving automatically” this way, but it’ll work better than the old method.

Now that you have started saving you’ll soon join the less-than-50% of Americans who can survive for more than one month off their savings. The key to this is not only putting money into savings, but not pulling it out right away. A savings account does no good if you can use an app on your phone and be 3 clicks away from having it right back in your checking account.

Don’t make it easy to steal from your savings!

If your savings are just a few clicks on an app from being transferred and spent, consider either making it more difficult to access or making yourself wait three days between any plan to withdraw and actually doing it. This should help limit knee-jerk reactions to withdraw and give you time to properly plan how to use your funds.

While saving money isn’t the most intrinsically rewarding thing you can do, you’ll be glad one day that you put away a small portion of your pay rather than making a couple of extra fast food runs a week.

3 details you should know while preparing for tax season 2017

12 Jan

Tax season can be an exciting time for savers. This year, more Americans are opting out of a tax time splurge and focusing on getting ahead with their tax refunds.

Early filers can still file as they normally would, but we’ve got a couple tips in mind for how your household can use this information to make the most of your tax time preparations:prep-for-tax-season

  1. File a tax return, even if you do not owe any tax or are not required to file.You can’t get the EITC unless you file a return. End of story. Since the IRS estimates that about 25 percent of taxpayers who are eligible for the EITC fail to claim it, this is a vital first step in determining your eligibility.Bonus? If this is the first year that you are claiming the credit, you can use the EITC Assistant to see if you qualify for tax years: 2015, 2014 and 2013. You can file any time during the year to claim the EITC. Something to know: A new tax law will delay refunds that claim the EITC or the Additional Child Tax Credit (ACTC) until February 15. Learn more here.
  2. Decide where and how you will file your taxes and know your free options.Unless you know your return is going to be complicated this year, paying someone to file a tax return should always be a last resort. Decide whether you’d rather file online or in person, and then check out these free filing options:
    • Use Free File on IRS.gov– This free software walks you through a Q&A format to help prepare your return and claim every credit and deduction for which you may be eligible.
    • Try the Free File Fillable Forms– If you’re comfortable preparing your own returns, this option is for you! It allows you to file electronically using online versions of IRS paper forms.
    • Visit a free tax preparation site– If your total household income is less than $54,000 a year, you can seek free tax prep at one of thousands of Volunteer Income Tax Assistance (VITA), Military Volunteer Income Tax Assistance (M-VITA), and Tax Counseling for the Elderly (TCE) sites. To locate the nearest site, you can search online or call the IRS at 800-906-9887.
  3. Make a plan for your tax refund that accounts for the EITC/ACTC delay.We know it can be hard to come up with alternative funds if you already had plans for your refund early in the year, but don’t be suckered by refund anticipation products provided by many commercial tax return preparers. The loan fees will have you seeing red.If you start your planning by dedicating your refund, or at least part of it, to savings, you can get ahead of your savings goals. Enter  the SaveYourRefund promotion with $35,000 in cash prizes and 101 chances to win simply for saving a portion of your refund. For more information and how to commit to saving prior to filing your return , visit saveyourrefund.com.

Tammy G. Bruzon works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. Learn more at AmericaSaves.org.

Let’s Talk Big Savings Goals

8 Jun

Raysha Duncan, Financial Aid Administrator
www.purdue.edu/mymoney

night sky; text overlay: Let's Talk Big Savings Goals

A lot of us have something we really want, but just can’t afford. Typically, we have to save money for these things. Whether it’s a study abroad trip, a wedding, a bigger and better computer, or even a house, your big savings goal is a BIG GOAL for you. It’s really important to keep these big savings goals in mind when creating your budget (and organizing your life in general).This way, your money is helping you work towards your goal, rather than holding you back. The money you earn isn’t really working in your favor if you aren’t spending it wisely.

What do you want most? Are you willing to work for it?

If not, then you don’t really want it. If you are, keep on reading! You’ve got a goal to save for!

How much of your monthly income can you save?

Pull out that budget you have and take a good hard look at your current savings rate, where you’re spending money, and where you’re wasting it. More than likely, you have enough room in your budget to save something, but you may have to reconsider where your money is going.  It is important to set at least some money aside each month to achieve your savings goals.

Make your goal visual

Putting money into savings can be so hard, especially for those of us who can feel it burning a hole in our pockets.  This is where visuals might be helpful. Get a cork board and pin up pictures of what you’ve saved for as you go. Once you’ve saved enough for a big piece of your goal (plane tickets, for example) draw up or print off a picture of that piece and put it on your board. This can help you keep your eyes on the prize and see what you’re working towards as you save, instead of just watching a number in your bank account slowly increase.

Determine your timeframe for saving

This needs to be realistic. As a student, you can’t afford a study abroad trip in a week or save for a house in a month (unless you’re totally loaded, in which case…this blog probably isn’t for you!). Let’s say you decide today that it’s really important for you to study abroad and you have 2 years left until you graduate. Your timeframe would be less than two years to save for that goal – which is pretty realistic! Your timeframe needs to line up with what you’re actually able to save every month. If it doesn’t, then maybe you need to re-evaluate your goal and your expectations.

Tips on how to save

-Keep a small visual of your goal handy (the background on your phone, a picture on your fridge, a sticky note of how close you’re getting to your savings goal on your computer screen).

Automate your savings.

-Save your change! Holding on to those pesky nickels and dimes could really add up!

-Track your savings via an app on your phone or with a countdown, whatever works for you.

-“Treat yourself” by putting money towards your goal.

 

Do you have a big savings goal? How do you save towards it?

Spending Summer $avings … the Right Way

1 Jun

Raysha Duncan, Financial Aid Administrator & Purdue Alumna
www.purdue.edu/mymoney

girl gazing at mountains

Summer vacation has just started for some, and for others we are a month or two into the season. By now you’ve probably been able to save up a bit of money from your summer job. And if you haven’t been saving, you’re realizing now is the time to start. It’s great to save money from your job over the summer, but what exactly do you do with all that money you’ve been saving up?

Tuition Money

This is the most obvious option. If you’re working over the summer to pay for your schooling, this is one major expense your savings should be going towards. Earning money over the summer and saving a lump sum of your earnings for your tuition can keep you from taking out loans. As a result, you graduate with less debt increasing your discretionary income (income after taxes and current bills have been paid). This will save you interest over time and allow you to fund other investments like a house, car, or your retirement.  The Project on Student Debt had the following to say: “Seven in 10 college seniors (71%) who graduated last year had student loan debt, with an average of $29,400 per borrower. From 2008 to 2012, debt at graduation (federal and private loans combined) increased an average of six percent each year.” Imagine being part of the 29% instead of the 71%….

Put it Towards a Big Purchase

If your computer broke down on you during the school year and it’s something that you really need (not just for Facebook or Netflix) this is a legitimate expense to spend your hard-earned cash on. Other big purchases like brand-name purses, designer shoes, cologne or designer sunglasses are not really a good use of an entire summer’s wages.

Another big purchase you could put it towards would be a study abroad trip for next summer or school year (and I’m sure a summer in Paris sounds really good right about now after working the cash register for 30 hours every week). Purdue has numerous study abroad options for students of varying interests and majors. It’s also highly recommended by students and faculty that any student who wants to goes on a study abroad; it’s an experience of a lifetime.

Have Your Own Safety Net

Adults are always talking about having a 3-month, 6-month, one-year safety net of funds in case something was to happen to them. This money is the minimum that they would need to get by for a set-period of time if they were to remain unemployed for a time period. This is something college students should have too! What if you end up having to take 18-credit hours and it’s a really strenuous course-load that causes you to leave your part-time job? What if your car breaks down part way through the semester? How will your rent, water bill, cell phone, etc. get paid? You’re a student first and foremost in college, and planning ahead and saving can help keep that priority in focus.

Invest It

One thing college students typically don’t think about is investing. Investing is something you do once you’ve graduated and are bringing in a steady paycheck. But, there’s no better time like the present to start investing! It’s important to do your research before you start. You may want to look into what options your own bank has for investments and compare them to other options like Roth IRAs or investing straight into the stock market. This is a good option especially if you have a large sum saved up, already have your tuition covered, and have a safety net established.

These are just a few of your options to help you get set up for the long-term versus just satisfying you in the short-term. It’s always good to plan ahead, and saving money is one tool at your disposal. Do any of you already have plans for what you’re using your summer savings for?  Share your summer plans below.

America Saves Week 2/23-2/28

27 Feb

Start saving today! Take the pledge!

America Saves Week Poster

#ASW2015

Spending Summer $avings … the Right Way

9 Jun

Raysha Duncan, Purdue Alum
www.purdue.edu/mymoney

tree made of money

Summer vacation has just started for some, and for others we are a month or two into the season. By now you’ve probably been able to save up a bit of money from your summer job. And if you haven’t been saving, you’re realizing now is the time to start. It’s great to save money from your job over the summer, but what exactly do you do with all that money you’ve been saving up?

Tuition Money

This is the most obvious option. If you’re working over the summer to pay for your schooling, this is one major expense your savings should be going towards. Earning money over the summer and saving a lump sum of your earnings for your tuition can keep you from taking out loans. As a result, you graduate with less debt increasing your discretionary income (income after taxes and current bills have been paid). This will save you interest over time and allow you to fund other investments like a house, car, or your retirement.  The Project on Student Debt had the following to say: “Seven in 10 college seniors (71%) who graduated last year had student loan debt, with an average of $29,400 per borrower. From 2008 to 2012, debt at graduation (federal and private loans combined) increased an average of six percent each year.” Imagine being part of the 29% instead of the 71%….

cartoon man with briefcase overflowing with moneyPut it Towards a Big Purchase

If your computer broke down on you during the school year and it’s something that you really need (not just for Facebook or Netflix) this is a legitimate expense to spend your hard-earned cash on. Other big purchases like brand-name purses, designer shoes, cologne or designer sunglasses are not really a good use of an entire summer’s wages.

Another big purchase you could put it towards would be a study abroad trip for next summer or school year (and I’m sure a summer in Paris sounds really good right about now after working the cash register for 30 hours every week). Purdue has numerous study abroad options for students of varying interests and majors. It’s also highly recommended by students and faculty that any student who wants to goes on a study abroad; it’s an experience of a lifetime.

Have Your Own Safety Net

Adults are always talking about having a 3-month, 6-month, one-year safety net of funds in case something was to happen to them. This money is the minimum that they would need to get by for a set-period of time if they were to remain unemployed for a time period. This is something college students should have too! What if you end up having to take 18-credit hours and it’s a really strenuous course-load that causes you to leave your part-time job? What if your car breaks down part way through the semester? How will your rent, water bill, cell phone, etc. get paid? You’re a student first and foremost in college, and planning ahead and saving can help keep that priority in focus.cartoon roadmap

Invest It

One thing college students typically don’t think about is investing. Investing is something you do once you’ve graduated and are bringing in a steady paycheck. But, there’s no better time like the present to start investing! It’s important to do your research before you start. You may want to look into what options your own bank has for investments and compare them to other options like Roth IRAs or investing straight into the stock market. This is a good option especially if you have a large sum saved up, already have your tuition covered, and have a safety net established.

These are just a few of your options to help you get set up for the long-term versus just satisfying you in the short-term. It’s always good to plan ahead, and saving money is one tool at your disposal. Do any of you already have plans for what you’re using your summer savings for?  Share your summer plans below.

Ways to Save on School Supplies

4 Jan

Raysha Duncan Purdue University Student and Peer Counselor
www.purdue.edu/mymoney

School Zone

Photo by: Bidgee

It’s that time of year again! It’s time to buy school supplies, get ready, and re-organized for a new school year. I don’t about you, but this is my favorite time of year! Buying school supplies and getting myself organized for the semester really excites me. I have to watch my excitement though because sometimes it can lead to overspending on supplies.

My biggest tip for saving money on back-to-school supplies is to shop the sales. Even if you think you will find a great deal in the middle of the summer, you should wait because you’ll regret missing out on the extra savings. As the start of the school year approaches, there are tons of deals on school supplies. For example, a lot of the larger office supplies stores have big deals and post them regularly on their websites (i.e. Office Depot and Staples). This past Sunday, many of these companies sent out flyers in the local newspaper. However, I find the easiest way to search for deals is to just use an online search engine. There are even websites and blogs dedicated to listing out the best deals of the week. Follow these and you can save a lot of money.

colored pencils

Photo by: Guerrion Boatto

If you’re not up for hunting around and comparing deals like an extreme couponer, just make sure to go with your gut and compare the prices at the store you’re shopping at. Do you really need the brand name notebook? Is it that much different from the store brand that costs three dollars less? Also compare the price per unit if you’re in a tough situation. You can see how much you save by purchasing the pack of 20 pencils versus the pack of 10 scented pencils (and yes, those do exist). Also, in the world of school supplies, simpler really can be better. For one, it’s much cheaper. And two, you can customize supplies if you really don’t want just a plain blue folder. Decorating your folders yourself sets you apart from the crowd AND it’s much cheaper than the colorful folders at the store.

One of the simplest ways to save money is to not spend money! Just re-use the supplies from previous years. Don’t think you have anything? Check everywhere (in your pencil box, old book bag, and yes even under and in the couch)! You might be surprised by how many pens you have laying around. And girls, check the bottoms of all of your purses, you may have more pens lurking there than you could imagine. The quickest place to check is in your backpack from last year (you should re-

Book Bags

Photo by: Thamizhpparithi Maari

use that too) and see what supplies you have that are still usable.

Be realistic about what you’re buying too. Keep track of what you’re purchasing and make sure you’re not buying excessive amounts of supplies. Notebooks, folders, and pencils can pile up if you’re not careful. And keep in mind, just because it’s cheap doesn’t mean you need to buy it. Only buy it if you actually need it. You probably have a school supply wish list, but are realistic too. Maybe if you save money on notebooks and pens, you can save up to buy that new tablet.

Do you have any tips to keep in mind when shopping for back to school?

Avoiding the Freshman $$15

19 Aug

Federal Reserve Bank Vault

Federal Reserve Bank of New York

College is expensive, and it’s not easy managing your finances on your own for the first time. From your freshman year to graduation, your savings account will be your first line of defense against consumer debt and financial misery. By building up a healthy ‘savings buffer’ and stretching your college dollar, you’ll graduate with your financial house in order and, most importantly, peace of mind. Here are some key lessons for developing “money smarts” to go along with your book smarts.

Start Saving

One of the biggest problems for underclassmen is overspending. Fortunately, putting a little cash aside can be a great way to cut spending. Here are some ideas:

  • Calculate your monthly income from all sources, and use that to create a savings plan and budget. Don’t spend more than you make!
  • Avoid credit cards, unless you’re planning on sticking to a strict budget and recording all of your purchases. Credit cards give you a false impression of having more money than you actually do. Don’t assume you’ll be able to make up for a shopping splurge next month. With so many temptations and high interest rates, odds are you won’t.
  • Get a part-time job and deposit a percentage of each paycheck directly into your savings account. These small amounts will add up over time and having less cash on hand will force you to forgo frivolous spending. You’ll be forcing yourself to save rather than fighting temptation each time you enter a convenience store. Plus, a sizable chunk in savings will end up being far more satisfying than your gourmet latte routine.

Staying Frugal in a College Town

Aerial photos of Purdue University

photo by: Purdue Marketing and Media,Dave Umberge

College is a critical learning period for adopting adult habits, like living within your means. Here are some ideas for living a frugal life that is both happier and richer:

  • Avoid luxuries like cable TV or a fat phone plan. You are still a student, not a middle-class consumer, so act like it. Plus, college is no time to be sitting at home watching TV — you’ll get several more decades of that after graduation.
  • Buy or rent used textbooks, or borrow them from the school or public library. With the average cost for new textbooks over $1,000 a year, this is an obvious – and easy – place to find some savings.
  • Never buy new! You’re not working full-time, so why act like it by buying brand new things? Thrift shops are a fraction of the price, environmentally friendly, and the consensus in cool nowadays.
  • Make your own coffee instead of blowing money at an expensive café. A few bucks may not seem like much, but it adds up fast. It’s easy to heat water and use a French press. Give it a try.
  • Bike if you can. You’ll be killing two birds with one stone: exercise and transportation. Plus you’ll save on public transit or, heaven forbid, gas and parking.
  • Host dinner parties and other fun in-house events instead of going out to restaurants and bars. Again, you’ve got plenty of time after college to enjoy bars, restaurants, and pricey events.
  • Make the most of on-campus resources like laundry services, the gym, and the library
  1. Most college libraries have excellent movie rental selections, so why are you dishing out for Netflix or Redbox?
  2. More time spent in the gym or library is time spent getting smarter and fitter and not time spent out on the town spending money.
graduated

GIF by: , MarcelKirsteinLE

Financially Preparing for Graduation

You may be thinking: college is supposed to be the best time of my life, so why am I wasting it pinching pennies? Well there are a couple problems with this line of thinking. First, if you spend four years racking up debt, barely passing your classes, and living large, then college is going to be the best time of your life…because you’ll spend the rest of your life struggling to pay it back. Second, college can be just as fun without splurging. The fun comes from the camaraderie, adventure, and self-discovery — not from the shopping.

The College Board estimated average miscellaneous expenses to be $2,527 for private colleges and $3,201 for public universities for the 2012/13 school year. Four years of frugal living could save you a few thousand dollars, rather than sticking you a few thousand into credit card debt. Trust me, it’ll come to make a big difference.

Karla Lant is a contributor on The Simple Dollar’s life insurance center.  She is currently an adjunct at Northern Arizona University; find Karla Lant on LinkedIn or Google+.

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