Empowering Teens through Smart Spending

Helping teens learn to handle money can be a tricky proposition. Mistakes can quite literally be costly, but there’s really no substitute for hands-on practice when it comes to managing finances.

Children are the ultimate investment, so teach your teen to be a smart spender with these savvy tips:

Start with saving. As a first step, open a savings account for your teen and involve them in the process. Use this opportunity to teach good habits, such as putting away a percentage of every paycheck, creating an emergency fund and setting savings goals for big purchases. Visit the bank together and explore the account options. Many banks offer incentives for high-balance accounts, and while your teen likely won’t qualify, it’s a valuable lesson to see the incentives available to big savers.

Move on to basic checking. Although most banks still refer to their most accessible accounts as “checking” accounts, chances are that your teen is more likely to shop with a debit card or cash rather than checks. Still, knowing how to write a proper check is an important life skill – as are conducting debit transactions and understanding any fees associated with using the account.

Create safe zones. Even after teaching them the fundamentals, letting teens make their own purchasing decisions can be a frightening prospect. Fortunately, if you know where to look, there are options available that offer teens a customizable level of autonomy while still under the oversight of a parent. For example, Amazon introduced a way for teens ages 13-17 to shop using their own, independent login linked to a parent’s account. In addition to product recommendations, order histories and lists tailored specifically to the teen’s shopping history and interests, teens can exercise smart shopping decisions with access to customer reviews and comparison shopping tools.

Parents have the option to review and approve every purchase, or set spending limits that offer teens the freedom to place orders up to a certain dollar amount on their own. In either case, parents receive notifications for every order and shipment. Find more details at Amazon.com/forteens.

Set a budget. Part of smart spending is learning to shop within your means. Whether your teen’s income is from a part-time job, allowance or a combination of the two, building a budget that defines expenses and expectations is essential. Like any budget, it should include all income sources and all expenses he or she is responsible for, including auto maintenance, gasoline, insurance and beyond. Reinforce the importance of saving by including a regular savings allocation. Putting all of these numbers to paper lets your teen see clearly where the money is going and how much is left over for extracurricular spending.

Put safety nets in place. No matter how much planning is done in advance, surprise expenses will inevitably pop up. Teens can prepare for these expenses while also guarding against mistakes and the temptation to over-spend by taking advantage of special services available through banking institutions, such as setting a per-transaction or daily spending limit and investing in overdraft coverage.

Ultimately, money management skills come with time and practice. Creating a safe environment for your teen to practice these life lessons sooner rather than later can pay dividends down the road. (Family Features)

Photo courtesy of Jeannette Kaplun, HispanaGlobal.net.

Think Outside the Bank: How to Get a Business Loan Online

immy Standley, president of Solé Bicycles in Venice Beach, Calif., sought a loan online through Funding Circle to grow his business.

In business, dreams are easy. Finding the money to make them happen, however, can be difficult.

Even established, successful businesses can get turned away for loans at banks. This was the case for Sole Bicycles, a popular maker of stylish and high-performance bikes based in Venice Beach, California.

With the busy summer season approaching, they sought a bank loan to expand inventory. The last thing they expected was to be rejected more than 20 times over the following two years.

“No bank was willing to work with us, and we missed opportunities as a result,” said Sole president Jimmy Standley.

His experience is all too common. According to the Federal Reserve’s latest Small Business Credit Survey, nearly one in two small businesses say they struggle to get the funding they need.

Fortunately, over the past few years a new option has grown to fill that gap. Online lending platforms connect businesses looking to borrow with investors looking to lend. It’s a fundamentally different business model than banks, said Sam Hodges, co-founder of one such platform, Funding Circle.

He explained that because they use technology to connect credit supply directly with demand, places like Funding Circle make it easier and faster for businesses to get affordable loans. Funds come from a community of individual and institutional investors.

“It’s not uncommon for businesses to wait weeks to hear back from banks after applying for a loan – just to be denied,” Hodges said. “Once we have everything we need, we’re able to make a decision in as little as 24 hours.”

Funding Circle was founded because Hodges and his co-founders experienced firsthand how difficult it was to get a loan for their chain of fitness centers.

“After applying dozens of times with traditional lenders only to get offers with outrageous terms or flat out rejected, we realized something needed to change,” he said.

 

Jimmy Standley, president of Solé Bicycles in Venice Beach, Calif., sought a loan online through Funding Circle to grow his business.

Jimmy Standley, president of Solé Bicycles in Venice Beach, Calif., sought a loan online through Funding Circle to grow his business.

When borrowing online, buyer beware

Funding Circle is one of several online lending platforms that have cropped up in recent years. But it’s important to look carefully at what you’re being offered, Hodges said.

He warned that borrowers should beware of lenders who promise approval virtually instantly, without taking the time to learn about how much each applicant can really afford. Loans from these lenders can come with murky terms and upwards of 70 percent annual percentage rates (APRs). Additionally, these lenders may take payments directly out of your sales daily or weekly until the debt is repaid – which could drastically reduce your cash flow.

“Term loans are the better option for established businesses looking to borrow a set amount of money for a specific purpose and pay it back over time,” Hodges said. “These are ordinary Main Street businesses across America simply looking to open a new location, hire more staff, stock up on inventory or refinance debt.”

This includes Standley at Sole Bicycles, who ended up applying for a second Funding Circle loan as his company continued to grow. After shooting his Funding Circle account manager a quick email while waiting in line at the airport for a flight, he had the funds he needed about a week later.

Thinking about applying for a loan? There are five things business lenders typically care about. Read more at www.Made2DoMore.com. (BPT)

Find Medicare Confusing? Start Here

Navigating Medicare can be challenging. In fact, according to a 2017 UnitedHealthcare survey, nearly 40 percent of Medicare beneficiaries find the program confusing. Learning the basics can help you cut through the confusion and make an informed decision about which coverage option may be the right fit for you.

Here’s a quick guide to five important Medicare terms to help prepare for the upcoming open enrollment period. What is open enrollment, you ask? Well, read on.

1. Open Enrollment Period

If you are already enrolled in Medicare and want to make changes to your health plan, you can do so during the annual open enrollment period, which runs from Oct. 15 to Dec. 7. For most people, this is the one opportunity each year to make changes to your Medicare coverage.

Changes made during this year’s open enrollment period take effect on Jan. 1, 2018.

2. Original Medicare

Original Medicare is made up of Part A and Part B and is offered by the federal government. Simply put, Part A helps cover services such as inpatient care at a hospital or a skilled nursing facility. Part B helps cover doctor’s office visits and outpatient physical and occupational therapy services.

According to Dr. Efrem Castillo, Chief Medical Officer for UnitedHealthcare Medicare & Retirement, “Original Medicare generally covers 80 percent of health care costs, leaving you responsible for paying the remaining 20 percent. It also does not have an out-of-pocket maximum, meaning that if you have unexpected health care costs, you could end up with a hefty bill.”

Original Medicare does not cover things like prescription drugs, long-term care, hearing aids and the exams needed for fitting them, or routine dental or vision care.

3. Medicare Advantage

Medicare Advantage plans, also known as Medicare Part C, are offered by private insurance companies. Medicare Advantage plans combine Medicare Parts A and B into one plan (which means you only need to carry one card), and can offer additional benefits such as vision, hearing, dental and even gym memberships. Most plans also provide prescription drug coverage.

In addition to the all-in-one coverage, Medicare Advantage plans also have an annual out-of-pocket maximum, making it easier for you to estimate your health care costs, even when facing an unforeseen health event.

4. Medicare Supplement Insurance (Medigap)

A Medicare Supplement policy is also known as Medigap and is offered by private companies. It can help pay for some things not covered by Original Medicare, such as copays, coinsurance and deductibles. Medigap plans typically have a higher monthly premium but little or no out-of-pocket costs when you access care. However, Medigap plans don’t cover prescription drugs, so you would need to enroll in a separate Part D plan.

5. Medicare Part D

Medicare Part D helps cover prescription drugs. Castillo explains, “You have two options for prescription drug coverage. Either enroll in a standalone Part D plan, or you can get drug coverage through most Medicare Advantage plans.” Make sure that the plan you select covers the prescription medications you need.

To learn more, visit UHCOpenEnrollment.com. (BPT)

Best Holiday Travel Credit Cards – $600+ In Savings – WalletHub Report

With some of the year’s busiest travel dates fast approaching, the personal-finance website WalletHub today announced its selections for Winter 2017’s Best Travel Credit Cards, plus key money-saving tips for domestic and international travelers. Applying for the right card now will give people enough time to earn up to $625 in free travel.

Below, you’ll find an overview of our picks, which were selected from more than 1,000 offers due to their uniquely attractive travel rewards. 

  • Best Initial Bonus: Chase Sapphire Preferred – $625 in travel for spending $4,000 in the first three months; $95 annual fee starting year two.
  • Best All-Around Travel Rewards: Barclaycard Arrival Plus – $400 travel statement credit for spending $3,000 in the first three months; 2% back on all purchases when you redeem for travel and a 5% miles rebate; no annual fee in the first year ($89 thereafter).
  • Best Airline Rewards: Frontier Airlines Credit Card – 2 round-trip domestic tickets for spending $500 in the first 90 days; 2 miles per $1 spent on flyfrontier.com and 1 mile per $1 spent on everything else; $69 annual fee.
  • Best Hotel Rewards: Club Carlson Premier Rewards – 50,000 bonus points after first purchase and 35,000 points for spending $2,500 within 90 days of account opening, redeemable for up to 9 free nights; 40,000 bonus points on account anniversary, worth up to 4 free nights; $75 annual fee.

For the rest of the best offers as well as additional money-saving travel tips, please visit: https://wallethub.com/best-travel-credit-cards/.

Easy Ways to Make Your Data, and Your Dollars, Go Further

Wireless providers would love for you to believe that a modern lifestyle requires an endless, unlimited stream of data; and by the way, they’d love to sell it to you! On its face, there’s probably nothing wrong with this assumption. Just think about how much of your day is spent on data-dependent activities, like streaming video or music, searching the internet or using GPS on your smartphone. They all require data, in some form, to deliver what you need.

But in our fast-paced, plugged-in world, don’t lose sight of the fact that all of these things can actually be done while using far less, and sometimes even none, of the data from your cellular plan. This means that in just a few simple steps, you can save considerable money each and every month. Here’s how:

Tame the Video Beast

The convenience of watching video on your smartphone can sometimes obscure an important fact: it’s a data glutton. For example, viewing a full-length movie on Netflix consumes about 1GB of data per hour in standard definition video, and up to 3GB per hour in high definition. At that rate, you’ll burn through even the most robust data package in no time.

Try connecting to Wi-Fi instead. It’s widely available, and lets you stream without using any cellular data at all, often with a faster connection. While connected to Wi-Fi, you can also download videos, TV shows or movies to your phone or SD card to watch anytime at your convenience, with no data required.

In addition, when you’re streaming video on a small screen, such as a cellphone, you really don’t need high resolution. Many apps give you the ability to change video quality settings, and therefore consume less data. For Netflix, log into your account and switch to one of three settings: low (using 0.3GB per hour), medium (which uses 0.7GB per hour) or high (using up to 3GB per hour). In the YouTube app, just tap the three-dots menu and click “Quality” to lower it.

Manage Social Media and Streaming Music

Videos have also become a standard part of the social media experience. Adjusting your settings to prevent videos from playing automatically will prevent them from eating up your data. The steps to change this setting can vary between applications. On most platforms, like Facebook, you’ll go to your Account Settings and either disable the “Autoplay” feature entirely, or change it so that videos will only play automatically when you’re connected to Wi-Fi.

All of the popular audio streaming apps offer ways to listen to your music without having to use a network connection, or even Wi-Fi. Spotify lets you download your albums and playlists right to your device. If you use Apple Music, you can add songs, albums and playlists to your library. With Google Play Music, you can download everything: songs, albums, playlists and even radio stations.

Try a Smaller Plan for Bigger Savings

By managing data effectively, you can save money by choosing smaller, less expensive data plans. Consumer Cellular, for instance, offers no-contract monthly plans ranging from 250MB to 10GB, for $5 to $40 per month. That’s far less than most “unlimited” options, and you also get the flexibility to change your plan as needed with no extra charges.

Also, be sure to take advantage of Usage Alerts, which most carriers provide for free. On an Android device, you can do this by going to your device settings, and then tapping the data usage option. Simply turn on “Alert me about data usage” to receive notifications about how much data you are consuming.

Follow these tips and you’ll enjoy streaming movies, listening to music and so much more while also keeping money in your pocket for things other than a colossal data plan. You can truly have it all, without needing an unlimited budget to do it. (BPT)

The Real Risks of Retirement Investing

To anyone on the glide path to retirement, it is becoming clear that today’s retirees are facing a completely different set of challenges than prior generations. This is the first generation in which retirees are carrying mortgages and other debt into retirement. Health care costs are expected to eat an ever increasing piece of the retirement budget. An increasing number of people are entering retirement sandwiched between the needs of their financially-troubled adult children and their aging parents. In view of the increasing costs of retirement, the traditional notion that retirees will only need 70 percent of their working income could very well be a dangerously misguided assumption.

Add in Longevity Risk

Compounding these challenges is longevity risk, which wasn’t much of a concern for prior generations. While most people may understand they can expect to live longer, few realize that life expectancy is constantly expanding, meaning that the older you get, the greater you can expect to live. Today, there is a one in four chance that one of the spouses of a 65-year old couple will celebrate their 95th birthday, and it is more than likely to be the wife. The greater risk is that few 65-year old people fully grasp the enormity of this risk.

The risk of longevity is further compounded by the risk of inflation. Even at an average inflation rate of 3%, the cost of living will double in 20 years which could put many retirees’ life style in jeopardy. Any resurgence of inflation to the levels seen in past decades could have a devastating impact on the lifetime income value of your assets.

Add in the Risk of Investing too Conservatively

For many people, the further they move down the retirement glide path, the greater the temptation to invest more conservatively, which is understandable. However, tilting your allocation towards conservative investments too quickly can expose your financial security to a much larger risk, which is the loss of your purchasing power at the time you really need it.

The chart below illustrates the erosion of purchasing power on earnings generated from an investment in 10-year Treasury Bonds. The decade of 2000 – 2009 had one of the lowest rates of inflation, as measured by the Consumer Price Index, in the last 30 years, yet purchasing power on the earned income was reduced by 25 percent. It is important to note that the CPI, which is the official government measure of inflation, doesn’t include food and gas prices which have increased at rate three times the CPI over the last couple of years. If food and gas prices were included in the CPI, the rate of inflation would be closer to 10 percent, and, at that rate, the net purchasing power of earnings in ten years would be less than the initial investment, meaning you would have lost money.

Investing your money in safe or guaranteed instruments may provide peace-of-mind that you won’t lose any money due to market fluctuations; however, each day that your returns fail to exceed the rate of inflation, you are, in effect, losing money, and that loss becomes more pronounced over time.

Conservative Investing is about Managing All Risks

There are ways to invest conservatively that can reduce portfolio volatility while addressing the risk of inflation. The key is in knowing what your financial objective is in real terms by factoring in the true cost-of-living and taxation. Once you know the real rate of return that must be achieved to provide lifetime income sufficiency, a diversified portfolio of equities and fixed-income securities can be constructed to match your particular risk profile With an investment strategy tailored to your specific needs and objectives, you need not take any more risk than is absolutely necessary to achieve your objective. A well-conceived investment strategy focuses on managing the risk and volatility of your portfolio; your job is to stay focused on your objective.

Bio for byline article: Esteemed personal finance pro Ray LeVitre, CFP, author of “20 Retirement Decisions You Need to Make Right Now” and Founder/Managing Partner at Net Worth Advisory Group. This 19+ year industry veteran helps individuals make key financial decisions during that critical yet oft underestimated period transitioning from the workforce into retirement—many of which are irrevocable and profoundly affect one’s financial security and lifestyle for decades beyond. He may be reached online at www.NetWorthAdvice.com.

Source: National Association of Realtors, Economistsoutlookblog.realtor.org

3 Steps to Help Freelancers and Gig Economy Workers Avoid a Tax Blunder

More and more people are earning extra cash by freelancing in the sharing economy. That may mean writing on the side, playing music on the weekends, driving for ride-sharing services like Uber or Lyft or selling handmade jewelry on Etsy. No matter how the money flows in, gig economy earners must be aware of the related tax obligations and potential pitfalls.

“While it’s easier now than ever to earn extra cash, it’s important for freelancers and independent contractors to get smart about their tax responsibilities,” said Mark Jaeger, director of Tax Development for TaxAct, a leading provider of affordable do-it-yourself tax software. “Gig economy earners must remember they are responsible for paying federal and state income tax on any income earned. And, they’re also subject to self-employment tax, to cover Social Security and Medicare taxes.”

If you’re one of the 55 million Americans who chooses to freelance, it can be difficult to correctly calculate and report to the IRS how much tax you owe. In fact, a recent survey conducted by the National Association of Enrolled Agents found that, “independent contractors participating in the gig economy were cited as among those most at risk of failing to accurately report all of their income.”

Taxpayers who miscalculate taxes owed are likely to get a form called a CP2000 from the IRS. According to the agency, that form means, “the income and/or payment information the IRS has on file doesn’t match the information on your tax return.” That could result in issues with your tax bill.

Jaeger said the best way for gig economy workers to avoid a tax misstep is to be diligent and plan ahead now. He provided the following tips to help freelancers get on track so they’re ready to tackle taxes head-on this tax season.

1. Get organized

Whether you work full time and earn a little extra cash from a side hustle or you’re a full-time contractor, meticulous record-keeping is a must. One option is to keep track of all business expenses and related receipts in one large folder. Jaeger recommends taking that one step further by categorizing receipts into specific folders — for example, one folder for mileage and maintenance records, a second for rent or dues if you lease a workspace, and a third for office equipment and business-related equipment. Once a quarter, as you determine what you’ll owe for quarterly tax payments, make note of which of those receipts are deductible.

2. Keep track of your income

When you’re freelancing, you’re your own accounting department. Not only are you responsible for generating invoices and collecting payment, you must also keep track of all income earned and accurately report it to the IRS. That can get complicated when multiple income streams are at play.

For example, gig economy workers who make money freelancing for multiple clients while also moonlighting as an Uber or Lyft driver should track all income and expenses separately. That means keeping accurate records of any money paid directly by clients and keeping track of income reported on documents such as Forms 1099-MISC and 1099-K. These forms are issued when self-employment income exceeds $600 (1099-MISC) and when a contractor is paid through credit- and debit-card payment processors (1099-K). Come tax time, fill out a Schedule C for every company or client who has paid you to report all of the income you earned.

3. Make estimated tax payments

The IRS requires independent contractors to file and pay taxes on a quarterly basis, even if you anticipate getting a refund at the end of the tax year. Use a tax calculator to help determine whether you should make estimated tax payments. You can also use Worksheet 2.1 in IRS Form 1040-ES, Estimated Tax for Individuals, to figure out whether you must pay estimated tax. Whatever method you choose, make sure you calculate adjusted gross income, taxable income, taxes, deductions and credits.

As a rule of thumb, if you will owe at least $1,000 in taxes, you should plan to pay estimated taxes during the current tax year. Jaeger added, “If you owe estimated quarterly payments but don’t pay them in full, you could face an underpayment penalty by the IRS.”

Earning extra money from your freelance work or side gig may not make you feel like you’re self-employed, but in the eyes of the IRS, you are. By planning ahead, getting organized and doing your own taxes with an affordable online option such as TaxAct, you can avoid tax missteps and stay focused on what matters most: earning income on your own terms! (BPT)

5 Steps Helping Ensure Adequate Retirement Income

Expert tips for cultivating a nest egg that ‘really’ meets your nearing retirement needs

Written By Merilee Kern, MBA

While plenty of people are duly committed to saving for retirement through 401k, IRA or other nest egg-inducing personal finance plays, however devotedly and even over many years, it turns out several may actually be suffering a false sense of security. This as recent findings by the Employment Benefit Research Institute reveal that far too many may not be poised for a financially secure retirement.

The study found that a staggering majority (82%) are not very confident in their ability to retire comfortably; that fully one-third of people aren’t confident they will be able to cover basic living expenses in retirement; and that nearly half of Americans aren’t confident they will be able to cover their medical expenses once they’re retired; among other ominous revelations. It’s no wonder that almost one-third of workers report that preparing for retirement causes them to feel mentally or emotionally stressed, which is understandable given the bulk of respondents (82%) don’t’ feel “very” confident that they are doing a good job preparing for retirement. Scary stuff.

“For many years, financial planners have espoused general formulas for determining the amount of income retirees will need, the most popular being the ‘70 percent rule’ that suggests that retirees will need to replace just 70 percent of their pre-retirement income to provide for their living needs in retirement,” notes Ray LeVitre, CFP, author of “20 Retirement Decisions You Need to Make Right Now” and founder/managing partner at Net Worth Advisory Group—a firm specializing in retirement financial planning.

“That may have been an effective guideline a few decades ago when the rule was established; however, for many retirees, relying upon it today may be fraught with financial peril. It’s a very different world today, and old guidelines based on conditions that existed 30 years ago don’t necessarily reflect real costs of aging today. Compounding the complexity is that many retirement decision you make today are irrevocable, profoundly affecting one’s financial security and lifestyle for decades beyond.”

 

According to LeVitre, modern-day aging cost considerations include:

  • A male turning 65 years old today can be expected to live another 19 years versus 11 years in 1970; for women, they can expect to live another 23 years
  • The chances of retirees or an elder family member requiring some form of long-term care is 7 in 10.
  • Many of today’s retirees are carrying some form of debt into retirement, including mortgages, consumer debt and student loans.
  • Although inflation has moderated somewhat since the 1970s, lifestyle costs, such as housing, food and transportation consume a larger portion of a retiree’s budget today.
  • Although health care cost increases have slowed, the rate of cost increases continues to be well above the general rate of inflation.

LeVitre adds, “For many retirees, the 70 percent income replacement rule might be an acceptable baseline for planning. However, with the risk of inflation compounded by longevity risk now confronting retirees, income planning should be based on the realities of aging today. It’s not inconceivable that, for some retirees, their income replacement need could be as high as 100 percent.”

With this in mind, I asked LeVitre what baseline, foundational steps those within 15 years of retirement can do to enhance lifetime income sufficiency. Here’s what he had to say:

  1. Track your expenses now. You should begin to track your living expenses and gradually adjusting your budget to smooth out your consumption between your living requirements now and your requirements in retirement.
  2. Start living like a retiree now. Taking it a step further, you could take the approach of changing your lifestyle now to reflect how you expect to live in retirement. That might mean downsizing your home now, reducing your leisure travel, driving more efficient cars, and generally adopting a more frugal mindset.
  3. Increase your savings. Any combination of the first two steps should generate steady increase in excess cash flow which should be saved for retirement. Pre-retirees within 15 years of retirement should target a minimum of 15 percent of their earnings for contributing to their retirement.
  4. Start exploring your Social Security options. Retirees who are able to postpone their Social Security benefits until age 70 can significantly boost their lifetime income; and additional Social Security planning for spousal benefits could increase it further.
  5. Don’t invest too conservatively. Although the natural inclination is to reduce your exposure to risk-based investments like equities the closer you are to retirement, reducing your exposure by too much, too soon could stunt the growth of your capital. To ensure lifetime income sufficiency, today’s retirees should always have some exposure to equities. A broadly diversified, well-balanced portfolio of equities, bonds and cash offers the best opportunity to maintain the necessary growth of capital needed while minimizing volatility over the long-term.

LeVitre also underscored that, regardless of your planning method or process, it would be a mistake to succumb to standard formulas or a generalized approach to retirement planning.

“Right now, your retirement vision—formed by your specific needs, wants, attitudes and beliefs—rests in your mind, and it will undoubtedly change as your outlook and priorities change,” he says. “But, you should always base your income needs on realistic assumptions.” Read: it’s time for America’s aging population to do a collective fiscal-future reality check.

Merilee Kern

Merilee Kern

Branding, business and entrepreneurship success pundit, Merilee Kern, MBA, is an influential media voice and lauded communications strategist. As the Executive Editor and Producer of “The Luxe List International News Syndicate,” she’s a revered consumer product trends expert and travel industry voice of authority who spotlights noteworthy marketplace change makers, movers and shakers. Merilee may be reached online at www.TheLuxeList.com. Follow her on Twitter here: http://twitter.com/LuxeListEditor and Facebook here: www.Facebook.com/TheLuxeList.

Source: https://www.ebri.org/pdf/briefspdf/EBRI_IB_431_RCS.21Mar17.pdf.