Let's be honest, no one teaches you what to do with your money. While I am by no means an expert, I run social media and write educational content about personal finance which has given me a lot of basic knowledge about money.
Plus, we're all adults here and I'm sure you guys know things I don't! (Or at least know about non-US specific stuff!).
So let's help each other out. Have a money question? Someone here probably has an answer!
Money Qs & As
11 posts in this topic.
-
-
Okay so! Most of my family read the Barefoot Investor recently and absolutely loved it (It's about how to work your savings and investments...i think) i didn't read it because numbers make my head hurt. But on my mum's advice i opened a purely savings account -it is with a bank my other account is not with, is entirely online, and doesn't have a credit/debit card attached.
My problem? I'm putting $20 a week in it and want to add more but I'm worried if I'm adding too much a week then I'll suddenly find i don't have cash for something i need.
How do you get over this fear and start saving more and how much do you think is a good stable amount per week? I get paid fortnightly, i should also say. -
It involves working a budget to know how much goes to your month-to-month spending, and putting everything else to savings. So basically add up mandatory bills (rent, utilities, taxes if applicable— anything you can't change)+ flexible amounts (phone, internet, food— stuff you need to buy every month but can be modified)+ some fun money ($20 to $100) and see what's left over. Yes, you will want that fun money, because living without any treats long term is unsustainable (unless you're saving up for a single big treat, then that lack of month-to-month fun has a later payoff).
You can also work on making a 1-2k emergency fund for those expenses that come up that are rather large, and once that emergency fund is saved, you allocate the rest to general savings. That can help alleviate the fear of not having enough for stuff that comes up— because you've saved that money already. If/when you spend it, you just start replenishing the emergency fund.
(and just a general savings tip— have 6 months' living expenses in the bank should you ever find yourself unemployed)
If you want a yardstick, I was saving about 10% of my income monthly and found that amount just about right most months. I lived pretty lean on the remaining money, but if/when I ever had a financial crisis (and I did), I had a huge cushion to fall back on. -
Okay so I'm kind of bad with money. Or at least I characterise myself as such. I'm not good at saving. But equally, I have money stashed away. I'm starting to refer to myself as a "passive saver". My lifestyle hasn't changed too much since I was a student. My biggest expense is travelling, which is a very expensive hobby. But I don't run a car and I drink like one G&T a fortnight and don't smoke. Day to day my biggest expense is food, and coffee. I probably spend way too much on coffee.
But even with that I live well within my means. Instead of putting away a certain amount each month which I should be doing, I'm trying to move a lump sum of 5k into a savings account every time I have enough. It's probably a bad idea as I can eat away at my income in my current account, and I should probably set up a proper direct deposit every month. But that said I saved about 33% of my income in intern year overall so I'm not doing too bad a job, but I'm not really *doing* anything.
And besides, all this money is earmarked to send me to Asia and Australia in 2018... >.> -
Back when I used to help mothers with financing, the number one rule I asked them to remember was Income - Savings = Expenses. Savings constitute what Rosey pointed out above.
In my opinion, it might be a good idea to test out putting away 10-20% of your income in your savings account OR your preferred money safe (be it an actual safe or money box at home). If that doesn't work, find a comfortable percentage and try to stick to that. If it improves, all the better!
Also, I'm not sure about this since it might depend as to where you guys are, but buying things you need in bulk might be a good idea too. You *ideally* should be able to save a little more compared to if you buy things one at a time. -
The thing that worries me is my pension. Probably because I don't totally understand it. I have a pension pot that started recently that my company pays into (I don't pay in yet) and it's due to increase soon. So there's that going on.
But I constantly worry about not having enough money to live on when/if I get old. I listened to a Radio 4 show about it recently that was super interesting. Tom says I don't need to do anything else and he's an accountant so I believe him but I still worry xD -
Penguino! You could try the 50/30/20 rule. That means 50% of your pay goes to necessities (needs), 30% for discretionary spending (wants), and 20% to savings.
It's not possible for everyone (like, I'm technically rent burdened because I pay more than 30% of my income on rent so my necessities category is big). It might also help to set concrete goals for yourself. For me, I aimed to have one month of expenses in savongs. Then three months. Then six. Now I'm going to put what I usually save toward opening a retremendous account.
As for not worrying, you should definitely keep your emergency savings in an account you can easily withdraw from. Don't let this be an excuse to rob from yourself, but it should be a comfort that if you need it you can get it quickly and easily. Mostly it's a mental thing. You just have to decide it's really really important and commit (which is really hard!).
Savings takes a long time to grow. It's worth it to work really hard to hit that emergency savings goal so you know you're safe if something happens, but then yu can relax a bit.
Becki! Knowing Tom, you're probably good xD The only thing you could do to make yourself feel better us start paying in yourself. But you're still young and the money your company puts in will grow (assuming your pensions are invested and not just sitting there like a regular savings account). Your best asset is time. The more you can save now, the more you'll have later on because it will have much more time to gain in value. -
I think the biggest thing that we did so far was pay off our major debts. Like, Dave Ramsey was a major inspiration for this. We didn't follow his plan, mind you, and we still don't now, but hearing his show made us realize that it was possible to be debt-free and made us super hungry for that, which made us do ridiculous things to become debt free. It took us 27 months, but we did it! So, that was really awesome.
So now, the only debts that we have is our monthly credit card bills that we pay off every month. And we track our credit card purchases so that we won't get any jaw-dropping surprises. Plus, since I'm married and we do everything jointly, we have plenty of discussions of money and we don't do anything super expensive and unexpected without each other's approval.
Because we're done paying off our debts, we take the money we previously spent on our debts and save up our money and invest it in stuff that has a decent APY.
So, like... we use a high interest savings account for our emergency fund (it currently has a 1.1% APY. If you're American and you're interested in this bank, search up FNBO... that's what we use.)
We have college savings funds (for our kids, not for ourselves) in high-earning CDs in our regular bank account (so, about 2.5% APY, plus we can add to it every month). We also made sure it was automatic payments, so we don't even think about paying their college savings funds... we just automatically deduct it.
We also invest in the stock market, which is kind of risky and scary at first, but you can minimize the risk by putting your money in index funds, which is spread over a huge collection of companies. So, if one company goes broke, that's not going to bankrupt your fund. So that's what we do!
We do this kind of investing for our 401K, which is a US retirement fund. We also save up money and privately invest it outside of retirement funds into an index fund that tracks the S&P 500. Since we started investing, it's shown us a 16% growth rate, which is astoundingly good, but on average the stock market seems to grow at an average of 8%, overall.
Another investment that we did was a house... we bought a house that was in foreclosure, and we're right now fixing it up. And apparently we bought it at the right time, because housing prices have SKYROCKETED over here. O_o
As far as spending money, we... don't really have a lot of discretionary spending, considering? It's a low percentage of our income! But, we are also in that point in our lives that we are so busy with life (kids for me, work for him) that we wouldn't really enjoy spending that much money anyway. Plus, we have kind of figured out what makes us happy and what we don't care for, so we can just optimize our happiness that way.
For instance! We can be perfectly happy going to the park and watching the kids play -- and they absolutely love it! And that's free. And kids aren't supposed to have lots of screen time anyway, so we spend a lot of time reading with them and playing with puzzles and blocks and other toys, so we don't need cable. So they learn how to play, we interact with them, and life is good.
As far as us adults, since we need to have an outlet for ourselves besides work and kids, both of us are very creative and we're happiest when we have some sort of creative project that we get a chance to work on. So, he'll get wood and create furniture and I'll write and do graphic design, and we're both happy. Then, after we do our own thing, we can come together and talk about our awesome achievements and give each other high fives for doing such wonderful things, and that makes us even more happy! So, we found out how we can be content in our own lives by focusing on what is really important to us, found out how to do this on a budget, and are happy with what we have. (Plus, since we don't have lots of time to do these things because of our other responsibilities, that is a huge way of cutting costs... all our creative projects take a long time to complete! XD)
Our biggest splurge is travel. We do splurge on travel to see our family, since our family is far away from us, but since we stay with family during those times, that's relatively cheap too, considering. And occasionally we'll go somewhere exotic, like Japan or New York City, but it's a work trip, and that's why we can afford to go there. So, there are ways to travel on the cheap... but usually work is involved. :p
I figure that when we're retired and the kids have grown up, we can go somewhere exotic for just pure vacation. That way, we'll have money stashed away and we won't be having to juggle kids.
As for now? We'll enjoy the little moments that having a family brings our way. 
-
@Snoink - Congrats on being debt free, that's a huge accomplishment! have you looked into a 529 plan for the college funds? It depends on your state as to what tax benefits are offered (my state has a really nice benefit), but I would recommend checking what your state has to offer. It works similar to an investment account but for college savings! Right now, you don't get any tax credits/deductions by investing in a CD.
As for investing, I recommend vanguard funds. They have good interest rates and really low fees!
Also if you have no clue how to invest or even where to start I HIGHLY recommend "I will teach you to be rich" by Ramit Sethi. -
Our state doesn't have a 529 plan, actually! It just has a pre-paid tuition program which... isn't actually running right now? It's kind of sketchy. Plus, we don't have state income tax, so that isn't an issue. We're just going to save up by ourselves, I think, unless something major changes. ^^
As far as tax deductions/credits go, honestly we put so much in retirement (traditional 401K is deferred!) and we have two, soon to be three kids, like... our taxes are really low, considering!
In the US, each kid gives you another deduction, PLUS you get an $1000 tax credit because they're so small, so that probably lowers our taxes by probably about $3000 for two kids, with deductions and credits included. Then, because we're married, that means that the IRS taxes us on the married income level, which is set at significantly higher than the single income level, since many spouses both work. Since I don't work outside the home, we rely on a single income, that pretty much means that our taxes become lower. We owe about half of what my husband paid when he was single!
Mind you, because we're a family, we also spend more... *sighs* And, my not working is technically a missed economic opportunity, because if I were consistently working, we could be making bank. But, we run a tight household, I love spending time with the kids, and we are happy. -
OH. I was so busy geeking out about taxes (I love taxes way too much, lol) I forgot to second @Lumos and recommend Vanguard investments. We use Capital One investing and basically invest in Vanguard in our private investments. (The 401K is a TSP, so we have no say in what exactly we invest in, besides general categories.
)
It's a little scary at first because there's lots of choices, but we settled on buying VOO, and I have not regretted it!
Sign in to reply to this topic.
Delete this post?
Are you sure you want to delete this post? This cannot be undone.