Archive for Tanza Loudenback

Master Your Money Bootcamp: Check in on your progress

woman drinking out of mug working on laptop

Welcome to the final Master Your Money Bootcamp, where we learn how to stick to the plan we've established. This week we're checking in.

Exercise 1: Check in

We've covered a lot of ground since our first Master Your Money Bootcamp kicked off earlier this year - from tracking down all of our financial accounts and passwords, to putting a price tag on dreams, to setting investments and savings on autopilot.

The goal for this week: To examine our progress so far.

1. Start with the basics: Check in with how you're feeling about your money. Do you feel overwhelmed and anxious, or generally in control? Do your goals still feel achievable and realistic, even if they're going to take some time?

More practically, do you know how much of your income goes toward expenses every month? What's your credit score? Has it improved meaningfully since you started paying attention to your money? Has your debt load increased or decreased?

2. Next, consider where you are on the path to accomplishing your high-priority goals. You should be somewhere beyond the starting line. Have you paid off a debt balance? Made it more than halfway toward your savings goal for a new car? Started contributing 10% of your paycheck to your retirement account? Recognize how far you've come.

3. Lastly, look at your net worth now and compare it to six months ago, or one or two years ago if you have those numbers.

While it's not a perfect financial measurement by any means, your net worth is a big-picture snapshot of your wealth. What you're looking for is an upward trajectory, however incremental it may be. Setbacks are expected (the pandemic was a big one for many people), but if your systems are working as they should, your net worth will gradually increase.

As a reminder, here's what you'll accomplish in this month's Bootcamp (we'll link to each exercise as it goes live):

For each exercise, you'll get a detailed explanation of how to complete it and why it's important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

Master Your Money Bootcamp: Reach out to a professional

woman on a phone call taking notes

Welcome back to the Master your Money Bootcamp. This week we're reviewing our progress and considering what else we need.

Exercise 4: Decide whether you need a professional's help

It can seem scary to expose your financial life to anyone. But if you're serious about doing whatever it is you dream of, you might need some professional help getting there. While these bootcamps are designed to walk you through the basics, they're limited to general advice and best practices. We can't offer guidance or answer specific questions about your money, but a financial planner can.

The goal for this week: Hire a financial planner, if you need to.

1. Review everything you've accomplished so far during this month's Master Your Money Bootcamp. Here's a refresher:

2. If you're still feeling overwhelmed or confused by your money - or more importantly, have specific questions about your situation that haven't been addressed by our general framework - consider whether you have some room in your budget to hire a financial planner.

3. If you decide to consult a professional, you can find one using tools like the XY Planning Network and SmartAsset's Smart Advisor Match. Expect to pay at least $100 to $300 an hour after an initial no-cost consultation if you're seeking advice only. Full financial planning and ongoing access to a financial planner starts at around $1,200.

For each exercise, you'll get a detailed explanation of how to complete it and why it's important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

4 personal finance books that changed my relationship to money for the better

Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.

Open book with money signs coming out of it on orange background 4x3

Here's what: Books I'm currently obsessed with

I'm a book lover. You can find me reading no less than three books at any given time. Usually one is a novel and the other two are nonfiction.

Picking up a nonfiction book is one of the most cost-effective ways to mentally download a ton of information about a particular topic. And there's no shortage of books about my favorite topic of all: personal finance.

I've read dozens of books about money, and many of them have been helpful in teaching me the basics - how to save, invest, and budget. But today I want to share four books with you that have given me an entirely new understanding of my relationship to money. Here are my current obsessions:

  • Brian Portnoy's "The Geometry of Wealth" is full of insights that inspire me to think about how I can use money to shape my ideal life. He brings in lessons from other disciplines - history, neuroscience, and philosophy - to illustrate how everything in life is connected to money and how we can use that to our advantage.
  • Morgan Housel's "The Psychology of Money" implored me to think about how we behave as investors, savers, and earners. He takes what we assume to be true about money and turns it inside out. I'm always game for new perspective.
  • Rachel Rodgers' "We Should All Be Millionaires" is a new book, released this past spring, that had me hooked from the introduction. Rodgers' financial ambition is infectious, plus her ideas are inventive and totally actionable. This book has reminded me to never sell myself short.
  • Ramit Sethi's "I Will Teach You To Be Rich" has been a favorite for years. It was first published in 2009 and updated a decade later. In addition to really helpful beginner investing and money management advice, Sethi introduces the concept of building a "Rich Life" for yourself and how to identify and get over your money hangups. It's always relevant.

Happy reading!

-Tanza Loudenback, Personal Finance Insider correspondent and certified financial planner

P.S. My time at Insider is coming to a close - it's been a pleasure sharing my money musings with you over the past year. Going forward, senior editor of Personal Finance Insider Stephanie Hallett will be authoring this newsletter.


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Join the Master Your Money Bootcamp

In our first two Master Your Money Bootcamps of the year, we got organized - and then we used that mental space to start dreaming big and crunching the numbers. Now we're taking action.

Our third Master Your Money Bootcamp: Make a plan, presented by Fidelity, is a month-long challenge broken down into simple, one-week exercises. We'll walk you through tasks that include finding the right accounts for your goals, opening those accounts, setting up an automated system, and figuring out whether you could benefit from professional help.

You don't even have to sign up. Just check back here for a new exercise every week, or jump in at any time, and follow along on Twitter, Facebook, LinkedIn, and Instagram.


Stories you might have missed

5 strategies an entrepreneur used to go from making $41,000 a year to being a multimillionaire in her 30s

This is a taste of the inspiring advice you'll find from Rachel Rodgers in "We Should All Be Millionaires," one of the books I recommend at the top of this newsletter.

Extreme frugality was so stressful it made it hard for me to save, but my new system is helping me save thousands more every year

Insider contributor Katherine McLaughlin set up two separate checking accounts for spending after realizing that just because she was "good" with money didn't mean she had a good relationship with it.

I travel the US full-time on $90,000 a year by following a few smart money rules

Angie Colee, a confidence coach who works with entrepreneurs, has been Airbnb hopping while working for the last nine months. She explains the financial moves she made to take the leap, and how she keeps it going.

5 challenges I did with my husband to save an extra $2,500 in 2021

If you're looking for ways to bulk up your savings account before year's end, here are some simple ideas that worked for Insider contributor Jen Glantz.

Enjoying this newsletter and want to recommend it to a friend? Here's a sign-up link.

Read the original article on Business Insider

A survey of 2,000 Americans found they’re more likely to talk about politics and relationships with their friends than money

two men talking to friends
Americans are more likely to talk to their friends about politics and sex than money, a Master your Money poll found.
  • A taboo around money persists in America, according to a new Insider poll.
  • Talking money with friends is unpopular across all generations, and more so among older Americans.
  • Money is a sensitive topic, but discussing it can lead to better financial outcomes.
  • This article is part of a series focused on millennial financial empowerment called Master your Money.

Even after a year in which personal financial hardship dominated the national conversation, results from Insider's new Master your Money Pulse Poll suggest that Americans still aren't comfortable discussing money with friends.

When asked which topics they regularly discuss with friends, each of the following outranked the topic of money: health, sex and relationships, politics, current events, and pop culture. The survey was conducted in May 2021 and included responses from 2,130 people 18 and older.

Although there is some variation among generations, the trend tracks across all age groups - Americans are most likely to talk about current events with their friends and least likely to bring up finances.

Old Americans say the are less likely to talk about money with friends:

  • 47% of 18-to-34 year olds regularly discuss money
  • 38% of 35-to-54 year olds regularly discuss money
  • 25% of 55-to-74 year olds regularly discuss money

These results underscore a longstanding taboo around discussing personal finances in America. This "society-wide gag rule" exists at varying degrees, Joe Pinsker wrote in an article for The Atlantic, particularly between socioeconomic classes, genders, and cultures.

"Many Americans do have trouble talking about money - but not all of them, not in all situations, and not for the same reasons. In this sense, the 'money taboo' is not one taboo but several, each tailored to a different social context," Pinsker wrote.

Talking about money can lead to better financial outcomes

Money is an uncomfortable, emotionally charged topic for a lot of people. If you feel like you're lacking or not saving as much as you've been told to, there may be embarrassment or shame. If you feel like you're doing well compared to what you know (or assume) of others' situations, there might be a tinge of guilt.

The negative associations go on and on, so it's no wonder most Americans aren't chomping at the bit to discuss their bank balances, debt journey, or salary with their social circle. But this tendency to be tight-lipped can be more harmful than we realize, particularly when it comes to solving issues like equal pay and the racial wealth gap.

Interestingly, when it comes to asking for advice, a higher share of the Master your Money survey respondents said they go to friends than a financial planner - though most turn to relatives and financial websites.

The younger a person is, the data revealed, the more likely they are to ask friends or relatives for financial advice. As a person approaches their retirement years, they are more likely to get advice from a financial planner.

Working with a professional, such as a financial planner, coach, or therapist, can help you navigate your current money struggles and even uncover the deeper beliefs and attitudes holding you back from making progress. Data show people who seek help from an advisor are more likely to report happiness, confidence, and stability in their financial and personal lives compared to those who go it alone.

Read the original article on Business Insider

We published more than 2,000 personal-finance stories this year. Here are 10 of the most read.

Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.

PFI Newsletter Best of 2020 4x3

Hello!

What a year it's been. We launched this newsletter in September to deliver money inspiration and guidance straight to your inbox. 

In 2021, we'll continue to send a new issue twice a month, packed with stories and advice to help you build wealth, no matter where you are on your financial journey.

But first, a recap of 2020: We published more than 2,000 personal-finance stories about everything from retirement and mortgages to investing and savings strategies.

Below are 10 of our most-read stories of the year, written by in-house reporters, talented freelance writers, and even a few financial planners. See you in 2021!

-Tanza Loudenback, Personal Finance Insider correspondent and certified financial planner

10 of our most-read stories of the year

1. Coronavirus stimulus check questions and answers

The pandemic plunged tens of millions of Americans into financial precarity. Stimulus checks became a lifeline for many of our readers, and we created this hub to help them figure out how much they were getting and when.

2. My dad retired comfortably at 54 thanks to a simple savings rule. Now I'm using that same rule to take time off work to raise my kids.

Several of our contributors wrote this year about how their parents, in-laws, uncles, and other relatives' financial behaviors shaped their own. This story by Katie Oelker was a hit. 

3. 5 ways I'm earning thousands in passive income every year without owning a rental property

Writer Jen Glantz figured out how to create passive income streams that don't take up a ton of her time (or money) beyond the initial setup.

4. Other landlords may think I'm foolish because I've barely raised my tenants' rent in 10 years, but there are 3 reasons I know I've made the right choice

Readers were incredibly interested in real-estate investing this year. This story by writer Holly Johnson bucking a conventional rule struck a chord.

5. 3 things self-made millionaires never do with their money

As ever, self-made millionaires are a fascinating case study. Business Insider reporter Liz Knueven used insights from the bestseller "The Millionaire Next Door" to highlight a few behaviors they avoid.

6. For years banks have asked for 20% down on a mortgage, but cash-strapped Americans are buying homes with less

In this story first published pre-pandemic, Knueven asks homebuyers and realtors: Is the 20% down payment rule dead?

7. I'm a financial planner, and there are only a few situations where I recommend homeownership to my clients

Financial planner Chloe A. Moore went from renting to owning a home and back again. In this story, she explains why homeownership for most people should be a lifestyle decision, not an investment.

8. I'm a financial planner, and my wealthiest clients have the same 3 habits

After nearly 15 years of helping high-net-worth people manage their money, financial planner Malik S. Lee has identified a few distinct behaviors they share.

9. I used an old savings trick to stash $5,000 in my emergency fund in less than a year, and I'd recommend the strategy to anyone

In a year when emergency funds became a hugely valuable asset, writer Jackie Lam explains how she combined hyper-frugality with a tried-and-true automatic savings method to build hers.

10. I'm an attorney and have $50,000 in my retirement account. My white attorney friend has $1 million in hers - and it's not because she went to a better school.

In this deeply personal account of systemic racism, writer and lawyer Lynette S. Hoag says she's living proof of the racial wealth gap.

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Read the original article on Business Insider

I started saving for retirement when I was 24, and I’d recommend just about anyone do the same for 2 reasons

tanza loudenback
The author at age 24.
  • I started contributing to my employer-sponsored 401(k) well before I had an idea of what I wanted my retirement to look like.
  • Looking back, I'm glad I started early. The longer my money sits in the market, the more interest it earns over time.
  • And while retirement accounts have a reputation for tying up your money for decades, there are various exceptions to the rules.
  • Sign up for Personal Finance Insider's email newsletter here »

Saving for retirement can feel like the furthest thing from a priority in your early 20s.

But after working at Business Insider full-time for over a year, I decided it was time to set aside part of my paycheck in my company-sponsored 401(k) when I was just 24.

I didn't have grand plans for retirement, but I was newly assigned to the personal-finance beat. The piece of advice I heard most often from experts in interviews was to "save early and save often," so I took it to heart. 

It's been almost four years since I made the first contribution to my 401(k). Now I'm a certified financial planner myself and I'd recommend just about anyone start saving early for retirement, whether in an employer-sponsored account or an IRA.

I say "just about anyone" because there are, of course, exceptions. If you can't make ends meet on your current income or you're up to your eyeballs in high-interest debt, investing shouldn't be your top priority. But if you can spare cash in your budget each month - or better yet, make room for it - there are at least two reasons to consider investing it in a retirement account.

1. Compound interest is your friend

Time is the key ingredient to building wealth. With investing, time gives way to compound interest.

Imagine you have $100 and earn an annual rate of return of 5%. After one year, you'll have $105. Now the rate of return is applied to $105. Five percent of $105 is more than 5% of your original $100 investment, so your money begins to grow exponentially. That's compound interest.

Compound interest can work wonders even if you don't add a dime to your original investment. The chart below illustrates how just one $5,000 investment would grow over 35 years earning a 5% return compounded semi-annually. 

That's remarkable growth, but things aren't as predictable in the real world. Markets move up and down all the time, rarely producing steady returns. That's why it's crucial to keep saving consistently, if you can. And if you haven't started yet, it's not too late.

A huge perk of 401(k)s is that an employee and an employer can contribute, supercharging the potential for growth. A common way employers add to a 401(k) is through contribution matches. For example, my employer puts the same amount of money into my 401(k) as I do, up to 3% of my salary annually. To date, about 18% of my total 401(k) balance is attributed to employer contributions and subsequent investment gains.

 

In addition to my 401(k), I save for retirement in a Roth IRA. This type of account is funded with after-tax contributions, as opposed to the pre-tax contributions of a 401(k), and enjoys the same compound interest benefits, plus more flexibility around withdrawals.

2. Retirement is flexible

A lot of people have a fairly cookie-cutter image of retirement: stop working at 65, pick up a hobby or travel, and live on a combination of lifetime savings (or pension funds) and Social Security. 

The truth is that retirement can be whatever - or whenever - you want it to be if you start preparing early. I didn't have a clear mental picture of what I wanted my retirement to look like when I started saving at 24, and I don't have an exact plan now. But with two growing investment accounts, my options are open.

Tax-advantaged investment accounts that are designated for retirement, such as 401(k)s and IRAs, do have rules about when you can withdraw your money, but they're more flexible than you might think.

You can withdraw contributions to a Roth IRA at any time, tax- and penalty-free. Earnings can be withdrawn under certain circumstances before age 59 and a half. While you can only add up to $6,000 a year to a Roth IRA, and have to meet specific income thresholds to do so, it's a good place to stash money for an early retirement if that's your goal.

The rules around employer-sponsored accounts, like 401(k)s and 403(b)s, are more strict. You generally have to be over age 59 and a half to take money directly from these accounts without incurring penalties, but there are some exceptions. 

  • The rule of 55: If you leave your job voluntarily or involuntarily and you're at least 55 years old, you may be able to tap into your 401(k) without paying penalties. You'll still owe income taxes if the account is a traditional 401(k), but you won't pay the additional 10% penalty on top of that.
  • Rollovers: IRAs have more lenient withdrawal rules than most employer-sponsored plans. If you leave a job and roll your 401(k) into a traditional IRA or Roth IRA, you may be able to avoid a 10% early withdrawal penalty on certain distributions.
  • SEPP arrangement: If you still hold a 401(k) at a previous employer, you can choose to take substantially equal periodic payments (SEPP) that last the longer of five years or the time until you reach age 59 and a half. There are three different formulas to choose from that determine the size of your payment.

The bottom line: Retirement accounts are full of tax advantages and other benefits that can really help maximize your savings. Don't write them off because you aren't sure what "retirement" means to you just yet.

Related Content Module: More Retirement Coverage

Tanza Loudenback, CFP®, is the personal-finance correspondent at Business Insider. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth. Have a money question for Tanza? Fill out this anonymous form

Read the original article on Business Insider

I’ve followed the ‘30% rule’ since renting my first apartment, and 5 years later I’m seeing the impact

woman moving into apartment
I committed to the '30% rule' in my early 20s and have lived by it ever since (author not pictured).
  • There's a rule of thumb that Americans should spend no more than 30% of their income on housing costs.
  • I've followed this rule since renting my first apartment in New York City, and stuck to it when I moved to Los Angeles and ever since.
  • I've had to make some concessions along the way, like living with multiple roommates and taking the "worst" bedroom for a lower price.
  • By keeping my long-term fixed housing costs to less than 30% of my take-home pay, I can be way more flexible with the rest of my budget.
  • Sign up for Personal Finance Insider's email newsletter here »

It's been just over five years since I went looking for my first post-college apartment in New York City.

I knew rent could be a wallet-buster in NYC, but I didn't want to ask my parents for help even though I was earning a low hourly rate as an intern. It was time to flex my frugality muscle. 

I had some cash set aside from graduation gifts and decided part of it would go toward a security deposit and part would become my emergency fund. That meant monthly rent and utilities would come from my paychecks (as it does for most people). Rent in college was dirt cheap, so I had no idea how much I should be spending in the real world.

After some Googling, I found a rule of thumb recommended by financial experts and upheld by the US government: Aim to spend no more than 30% of your gross income on housing.

This concept was developed in the 1930s when the government began measuring housing affordability. It was originally lower, but by 1981, 30% became the standard. Americans who spend more than 30% of their pretax income on housing costs, including insurance and property taxes, are considered "burdened." The calculation is based on the cost of other goods and services, like groceries, healthcare, and education.

Mortgage lenders can be even stricter - many don't like to see a potential homeowner spend more than 28% of their income on housing.

I did some back-of-the-envelope math using my take-home pay instead of my gross income because I wanted to account for taxes. The 30% benchmark seemed to fit well with the rest of my budget. I'd have enough to cover my other expenses, like food, transportation, and some entertainment, plus stash a little bit in savings.

Right then I committed to the 30% rule, and I've lived by it ever since. 

How I followed the 30% rule in expensive cities

Apartment hunting sounds fun in theory. In practice it can be tedious and frustrating, especially if you're on a strict budget. But a good enough apartment always crops up eventually, even if it doesn't tick every box on your wish list. 

After about a year and a half living in New York, I moved to Los Angeles. I jumped from one increasingly expensive city to another.

To stick to the 30% rule, I had to make some concessions. In both places I lived with at least two other roommates and always took the worst room, which translated to the cheapest rent. In New York City, that meant a windowless bedroom in a railroad-style apartment in one of the outer boroughs. In my first apartment in Los Angeles, I took the most inconvenient parking spot and the only bedroom without an en suite bathroom (this is nothing to complain about, I know).

Rent isn't the only housing expense, though. Internet has typically cost an extra $30 or so each month, but water and power can be more unpredictable. These costs are hard to control when you're living with roommates, since you can't police their energy usage or shower time. In fact, I've had minor crises in the past - a $500-plus electric bill just about floored me.

In these cases, I tapped my emergency fund to pick up the slack, which I'm convinced I have been able to maintain precisely because I've been so strict about keeping my fixed housing costs low.

Keeping my housing costs low has opened up room for savings

Each time I've moved apartments - a total of three times since that first New York City apartment - I've been at a higher income level. I do a new calculation every time to see what 30% of my post-tax income is, and won't sign a lease unless what I'm agreeing to pay is below that amount.

Housing is not a very liquid expenditure. You can't cut back on a dime because most leasing agreements last around 12 months. But you can quickly cut back how much you spend on shopping or lunch. I realized how important it is to be mindful of how much I spend on housing, since it's usually a long-term commitment.

By controlling my housing costs, I'm able to be way more flexible with the rest of my budget. It's worth noting that I didn't have student loans to repay and have always avoided credit-card debt, so my expenses outside of housing were already pretty flexible.

As my income has gone up, I've put the money toward other categories of my budget, like upgrading my gym membership, traveling more comfortably and conveniently, and saving more money

I'm particularly focused on funneling as much money as I can into my 401(k) so that it has decades to grow before I retire. I also want to make sure I'm prepared for unexpected costs that arise now. Instead of moving into a nicer apartment in a nicer neighborhood each time I get a pay raise - therefore eating up my newfound cash with housing costs - I bump up my 401(k) deferral rate and add to my emergency fund.

The 30% rule won't work for everyone

Like any other personal-finance rule of thumb, the 30% rule is more of a guideline than a mandate. You might have less choice than I did about exactly which city or neighborhood you live in and how many roommates you have, or you might prefer to spend more budget on your house and less on food and travel. 

For me, the 30% rule provided a good foundation for crafting a spending plan. Keeping my fixed, long-term costs low means I can be nimble with everything else.

Tanza Loudenback, CFP®, is the personal-finance correspondent at Business Insider. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth. Have a money question for Tanza? Fill out this anonymous form

Related Content Module: More Personal Finance Coverage
Read the original article on Business Insider

5 steps to take control your money — even when it feels like everything’s gone sideways

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  • Preston Cherry, a certified financial planner and the founder of Concurrent Financial Planning, and Kelly Lannan, the vice president of Fidelity Investment's Young Investors for Personal Investing, joined Business Insider's Tanza Loudenback for the Master your Money Live Digital Bootcamp.
  • They talked about creating a flexible, values-based budget, identifying personal attitudes and beliefs about money and staying motivated during difficult or uncertain times.
  • We've turned the experts' advice into a toolkit for navigating your way through financial ups and downs. 
  • You can watch the entire video from the event here.
  • This article is part of a series focused on millennial financial empowerment called Master your Money.

Our plates have been full of challenges this year, many of them financial.

To discuss strategies for navigating these difficult times, I hosted a conversation between Preston Cherry, a certified financial planner and the founder of Concurrent Financial Planning, and Kelly Lannan, the vice president of Fidelity Investment's Young Investors for Personal Investing for the Master your Money Live Digital Bootcamp.

Cherry and Lannan offered strategies for mitigating the financial consequences of the pandemic and talked about how people could maintain control over their money right now. 

Here are five steps to take.

Build a flexible budget.

A budget isn't just a nice thing to have — it's a necessity. Start by tracking your money to create a visual representation of your monthly cash flow before setting any limits.

"I would say that the first step — I'm always surprised at how many people either discount this or put this off or just don't know — is really being honest about how you're spending your money," Lannan said. "You have to know how much is coming in versus how much is going out on a monthly basis."

Gather all your bills and credit-card and bank statements, and list each expense you have. Then write down how much money you bring home every month. If it's variable (say, because you work on commission or as a contractor) write down how much you were paid for each of the past six months so that you can come up with an average.

Make sure that your expenses — the bills you must pay to have shelter, food, and healthcare — are covered by your income. From there, you can start adding in discretionary costs, like dining out, shopping, streaming subscriptions, or a gym membership.  

"It might sound simple, but to me that's the very essence of what it means to start thinking about a budget," Lannan said, referring to tracking your spending. "That term doesn't have to be so scary, but if you don't take that step back and evaluate this, you're never going to be able to move forward."

Flexibility is important, Lannan said. When you know the handful of expenses you absolutely have to pay each month versus the ones that you can cut back on, you can be nimble if your income takes a hit.

Understand your financial behaviors.

Uncovering why we do something can be just as consequential as the action itself. Emotion is embedded in money, whether we recognize it or not. From childhood onward, our financial behaviors are shaped by what we experience.

For instance, if someone grows up in a household where money isn't discussed openly, it could lead them to avoid talking about money in their adult life, ignore bank statements, and refuse to meet with a financial advisor for fear of the unknown.

"In terms of our beliefs about money, the most important thing is that you can work to change it," Lannan said. "It's like building a muscle." It's as though you wanted to run a marathon, she said. Most people can't just decide today and run tomorrow. Getting in shape requires training and practice, just like learning to change your beliefs and feelings about money requires a similar effort.

"Yes, we might feel uncomfortable," Lannan added, "but if we don't push ourselves, if we don't continue to harness that muscle as if we are running a marathon, we're never going to actually be able to grow with our financial selves."

Cherry said you have to be willing to identify a feeling or an attitude about money and the courage to decipher what it really means. You can do this by thinking critically and honestly about financial decisions you've made recently, and how they made you feel.

"The first step is acknowledging how you feel about your money," Cherry said, "and then actually working to put together a step-by-step action plan — how to grow from those original beliefs to something more."

Spend and save intentionally.

A budget should be a representation of your values and goals. It should provide a clear picture of where your money needs to go for you to live well — to keep a roof over your head, food on the table, and cash in a savings account. It should also help you enjoy today and plan for tomorrow.

"Let your life lead your money — that's the first thing," Cherry said. "What is it that you aspire to do? What do you value? What are your goals? Let's start there. Then the money is not necessarily a second. It's a complement; it's a partner."

Creating an intentional budget or larger financial plan often isn't the difficult part. It's following through when roadblocks arise.

Cherry has developed a three-step framework that he recommends to clients who feel they're in financial distress. It's called the three A's: Admit where you are. Acknowledge your feelings and forgive yourself. Take action.

"You can't take action without the first two," he said. You have to admit where you are, truthfully, then acknowledge and process your feelings about it. Only then can you move forward.

Control what you can.

You may be the architect of your own life, but events such as a recession, layoff, or health crisis are out of your jurisdiction. Still, they're bound to happen.

"First of all, uncertainty is certain," Cherry said. "It certainly is going to happen. It's going to always be there. There are different levels of uncertainty. We're dealing with a big-time uncertainty right now with the pandemic."

Rather than be flattened by these events, both experts recommend doing your best to prepare for them with an emergency fund and flexible budget.

Lannan shared one of her mottos: "There's so much we can't control, but take what you can control and kick the crap out of it."

Lannan said the best money habit anyone can practice throughout their life is consistent automated savings.

"This is so important — to choose a set amount that is automatically coming out of your bank account and going into an account for things like retirement or some of those longer-term goals," she said. "The whole 'set it and forget it' mentality, of course you don't want to completely forget it, but there is a lot of power to automating."

The idea is to keep as much of a holistic view of your financial life as possible, she added.

"Let yourself be nimble in the near term, keep those habits up," Cherry said, such as saving for retirement. But don't be afraid to reduce contributions if you need more cash in your pocket right now.

"Manage the moment, because that's going to help you maximize the future," he said.

Practice gratitude.

There's no shortage of research on the power of gratitude. Being thankful for or appreciative of an element of your life — whether a person, privilege, outcome, or circumstance — has an outsized effect on well-being. There's no downside to finding the silver lining.

"We can talk about it during this pandemic, but it's really every day," Cherry said. "What are we most thankful for? I'll say it like this, too: Contentment is not settling. Contentment is finding your space and having gratitude about that."

To illustrate his point, Cherry referenced a scene from the "Rocky" series in which the title character tells his partner how excited he is to shower her with the trappings of wealth.

"And Adrian just simply said, 'You know, I want to be with you, Rock. And I want to see you be successful in the things that you love.' And that's it — that's gratitude," Cherry said. "Just asking yourself, 'Do I have what I need?' Am I living the life that I'm aspiring to? Do I have the opportunity to aspire?"

"As long as you're building toward your aspiration, that in and of itself is some gratitude."

Read the original article on Business Insider

5 steps to take control your money — even when it feels like everything’s gone sideways

kelly and preson 4x3
  • Preston Cherry, a certified financial planner and the founder of Concurrent Financial Planning, and Kelly Lannan, the vice president of Fidelity Investment's Young Investors for Personal Investing, joined Business Insider's Tanza Loudenback for the Master your Money Live Digital Bootcamp.
  • They talked about creating a flexible, values-based budget, identifying personal attitudes and beliefs about money and staying motivated during difficult or uncertain times.
  • We've turned the experts' advice into a toolkit for navigating your way through financial ups and downs. 
  • You can watch the entire video from the event here.
  • This article is part of a series focused on millennial financial empowerment called Master your Money.

Our plates have been full of challenges this year, many of them financial.

To discuss strategies for navigating these difficult times, I hosted a conversation between Preston Cherry, a certified financial planner and the founder of Concurrent Financial Planning, and Kelly Lannan, the vice president of Fidelity Investment's Young Investors for Personal Investing for the Master your Money Live Digital Bootcamp.

Cherry and Lannan offered strategies for mitigating the financial consequences of the pandemic and talked about how people could maintain control over their money right now. 

Here are five steps to take.

Build a flexible budget.

A budget isn't just a nice thing to have — it's a necessity. Start by tracking your money to create a visual representation of your monthly cash flow before setting any limits.

"I would say that the first step — I'm always surprised at how many people either discount this or put this off or just don't know — is really being honest about how you're spending your money," Lannan said. "You have to know how much is coming in versus how much is going out on a monthly basis."

Gather all your bills and credit-card and bank statements, and list each expense you have. Then write down how much money you bring home every month. If it's variable (say, because you work on commission or as a contractor) write down how much you were paid for each of the past six months so that you can come up with an average.

Make sure that your expenses — the bills you must pay to have shelter, food, and healthcare — are covered by your income. From there, you can start adding in discretionary costs, like dining out, shopping, streaming subscriptions, or a gym membership.  

"It might sound simple, but to me that's the very essence of what it means to start thinking about a budget," Lannan said, referring to tracking your spending. "That term doesn't have to be so scary, but if you don't take that step back and evaluate this, you're never going to be able to move forward."

Flexibility is important, Lannan said. When you know the handful of expenses you absolutely have to pay each month versus the ones that you can cut back on, you can be nimble if your income takes a hit.

Understand your financial behaviors.

Uncovering why we do something can be just as consequential as the action itself. Emotion is embedded in money, whether we recognize it or not. From childhood onward, our financial behaviors are shaped by what we experience.

For instance, if someone grows up in a household where money isn't discussed openly, it could lead them to avoid talking about money in their adult life, ignore bank statements, and refuse to meet with a financial advisor for fear of the unknown.

"In terms of our beliefs about money, the most important thing is that you can work to change it," Lannan said. "It's like building a muscle." It's as though you wanted to run a marathon, she said. Most people can't just decide today and run tomorrow. Getting in shape requires training and practice, just like learning to change your beliefs and feelings about money requires a similar effort.

"Yes, we might feel uncomfortable," Lannan added, "but if we don't push ourselves, if we don't continue to harness that muscle as if we are running a marathon, we're never going to actually be able to grow with our financial selves."

Cherry said you have to be willing to identify a feeling or an attitude about money and the courage to decipher what it really means. You can do this by thinking critically and honestly about financial decisions you've made recently, and how they made you feel.

"The first step is acknowledging how you feel about your money," Cherry said, "and then actually working to put together a step-by-step action plan — how to grow from those original beliefs to something more."

Spend and save intentionally.

A budget should be a representation of your values and goals. It should provide a clear picture of where your money needs to go for you to live well — to keep a roof over your head, food on the table, and cash in a savings account. It should also help you enjoy today and plan for tomorrow.

"Let your life lead your money — that's the first thing," Cherry said. "What is it that you aspire to do? What do you value? What are your goals? Let's start there. Then the money is not necessarily a second. It's a complement; it's a partner."

Creating an intentional budget or larger financial plan often isn't the difficult part. It's following through when roadblocks arise.

Cherry has developed a three-step framework that he recommends to clients who feel they're in financial distress. It's called the three A's: Admit where you are. Acknowledge your feelings and forgive yourself. Take action.

"You can't take action without the first two," he said. You have to admit where you are, truthfully, then acknowledge and process your feelings about it. Only then can you move forward.

Control what you can.

You may be the architect of your own life, but events such as a recession, layoff, or health crisis are out of your jurisdiction. Still, they're bound to happen.

"First of all, uncertainty is certain," Cherry said. "It certainly is going to happen. It's going to always be there. There are different levels of uncertainty. We're dealing with a big-time uncertainty right now with the pandemic."

Rather than be flattened by these events, both experts recommend doing your best to prepare for them with an emergency fund and flexible budget.

Lannan shared one of her mottos: "There's so much we can't control, but take what you can control and kick the crap out of it."

Lannan said the best money habit anyone can practice throughout their life is consistent automated savings.

"This is so important — to choose a set amount that is automatically coming out of your bank account and going into an account for things like retirement or some of those longer-term goals," she said. "The whole 'set it and forget it' mentality, of course you don't want to completely forget it, but there is a lot of power to automating."

The idea is to keep as much of a holistic view of your financial life as possible, she added.

"Let yourself be nimble in the near term, keep those habits up," Cherry said, such as saving for retirement. But don't be afraid to reduce contributions if you need more cash in your pocket right now.

"Manage the moment, because that's going to help you maximize the future," he said.

Practice gratitude.

There's no shortage of research on the power of gratitude. Being thankful for or appreciative of an element of your life — whether a person, privilege, outcome, or circumstance — has an outsized effect on well-being. There's no downside to finding the silver lining.

"We can talk about it during this pandemic, but it's really every day," Cherry said. "What are we most thankful for? I'll say it like this, too: Contentment is not settling. Contentment is finding your space and having gratitude about that."

To illustrate his point, Cherry referenced a scene from the "Rocky" series in which the title character tells his partner how excited he is to shower her with the trappings of wealth.

"And Adrian just simply said, 'You know, I want to be with you, Rock. And I want to see you be successful in the things that you love.' And that's it — that's gratitude," Cherry said. "Just asking yourself, 'Do I have what I need?' Am I living the life that I'm aspiring to? Do I have the opportunity to aspire?"

"As long as you're building toward your aspiration, that in and of itself is some gratitude."

Read the original article on Business Insider

A financial coach explains the 2 key decisions that helped her save $17,000 for a wedding

Alli Williams wedding
Alli Williams and her husband on their wedding day.
  • Alli Williams, age 29, started saving for her wedding before she met her husband. 
  • She got the idea after paying off a car loan with a monthly payment of $415. Instead of spending the money, she redirected it into a savings account.
  • Williams said she felt more motivated to save knowing that she was working toward a specific goal.
  • By the time she got engaged, she had around $17,000 saved.
  • Sign up for Personal Finance Insider's email newsletter here »

Weddings are expensive, and Alli Williams wanted to be prepared for hers. 

Before she even met the person who would stand across from her at the altar, Williams, who is a financial coach in South Carolina, began squirreling away hundreds of dollars a month for the occasion.

Based on a survey of thousands of couples, The Knot reports that the average cost of a wedding in the US, excluding the engagement ring and honeymoon, is $28,000. That isn't pocket change for most people. In fact, 28% of couples in the US take on credit-card debt or loans to help cover the cost of their wedding.  

About three years after she started saving, Williams got engaged to her husband in August 2018 — and brought a $17,000 wedding fund with her. She says two strategies helped her do it:

1. She redirected a former debt payment to savings

When Williams paid off a car loan in her mid-20s, she decided to redirect her large monthly payment into a high-yield savings account earmarked for a wedding.

Since she was already in the habit of putting that money aside, "I told myself, 'OK, that $415, instead of now spending it, it's going to be my automatic wedding fund,'" Williams said.

By keeping her living expenses level after paying off debt, she was able to not only save around $400 a month, but allocate a set portion of every windfall — a tax refund or birthday money, for example — toward her wedding fund, too.

2. She saved for a specific goal

Williams said she was able to maintain her disciplined savings habit because she had a goal in mind.

"What I always tell my clients is, it's so much easier than just saying 'I'm saving money,'" she said, "because when it's not tied to anything, you're more likely to pull it back out of savings when you're not really attached to it."

People were often surprised to learn that Williams was saving for an event that wasn't certain to happen, but she didn't think twice. She knew she'd need money for a big expense someday, even if it wasn't a wedding.

"There's no downside to saving money," she said. "I could have used it for a down payment or bought a car if I needed a car or I could have split it between different goals."

In the year following their engagement, they saved an additional $1,000 to $1,500 a month, she said. Her parents paid for the invitations, extra food, the post-wedding brunch, her dress, and two hotel rooms. Their honeymoon was paid for mostly in credit-card rewards points. Thanks in large part to Williams' foresight, the couple covered everything else themselves. 

Related Content Module: More Savings Coverage
Read the original article on Business Insider