Do you have troubles with finances? Maybe not in the literal sense where you can't hold on to a penny for your life. But maybe you don't know a lot about investing, or what type of savings account would be best for you? Read on!
I have a background in accounting. I have been doing accounting for over ten years now and am lucky that I have picked up the knowledge that I have over the years. But maybe your job is working as a physical therapist and you don't know what type of life insurance to get, or what a roth IRA is.
I am far from a financial planner, but what I am is great with researching and keeping track of money. And I want to share with you some of my knowledge!
This obviously isn't a post about crafting, but I want to share a few things with you to possibly help you understand from a more financial-point-of-view what you should be and could be doing.
1.) Check out free checking and savings.
No one likes to talk about their money. No one! But we all want to make money and save money. And trust me, I know it's hard to do BOTH. So when you do make money, and save money you want to make sure it is working for you. You can, of course, throw it in to your checking account or get a small percentage back on your savings account at the bank down the street - BUT what if I told you there are ways to make more than just .05% on your savings account?
Online-only banks are not necessarily a "new" trend. Online-only banking - in every sense of the term - has been around for years. But in this day and age, it is becoming more and more popular. There are quite a few online-only banks, such as Ally, GE Capital and Capital One 360. They're user-friendly, easy to transfer funds, and you can deposit a check with a quick picture from your phone.
My online bank of choice is Capital One 360. I chose this bank, not because they have the highest savings interest (they don't), but because they are easy to use and easy to deposit to. You would think that I would want to choose the bank with the highest rate, but between .75% and .90%, you're talking about pennies on the dollar unless you're in to the tens and hundreds of thousands. And as much as I wish I could say I had that chilling out in my bank account, I just don't. SO, back to the second most important parts - Capital One is a well known bank that has been around for 25+ years, you can use any ATM near you with all fees reimbursed to your account (ioe-free!), and you can deposit checks from another account, via direct deposit, or even with your cell phone!
Another plus side, is capital one allows you to have one savings account with multiple different savings "branches". Are you saving for a car, a vacation, and Christmas? Great! Set up a branch for each of them and save individually, all under your one savings account.
And the best part about Capital One 360 right now is when you sign up for a checking account or savings account you can get up to $50 FREE! Literally free, just sign up and deposit at least $250 to start with, and the money is f.r.e.e.
If free money doesn't excite you - I don't know what will...
Check them out here: Capital One 360
2.) Get some life insurance...maybe.
Life insurance is a tough one for most. Is it really worth it to insure your life? It all depends. If you are young with no children and no mortgage, then no. It is not worth it. But if you have other lives that depend on you and your income, then life insurance is exactly what you need.
BUT, make sure not to over-insure yourself. For a quick guideline on term health insurance:
An average 30 year old male in decent health should carry a $100,000/30-year policy. And it should not cost any more than $400 per year! Please keep this in mind.
3.) 401(k) or IRA?
Retirement is important. You don't want to work your whole life just to reach retirement age and realize you have to work some more. No one wants to be the Wal-Mart greeter just to make ends meet!
A very important step on having a good retirement is understanding how to get there. A lot of people do not know the difference between a 401(k) and an IRA.
401(k) - This is an employer-based retirement fund. This only means that you can only get a 401(k) through your employer - IF they offer it. This is an easy way to have money taken out BEFORE TAXES and put away for you. And if your employer matches your contributions - even better. That's some more FREE MONEY for you! BUT, keep in mind with a 401(k) that you will have to pay taxes on it eventually - when you're ready to use it! Uncle Sam always has his ways...
A 401(k) is also managed by whatever company your employer chooses. There is no moving money around at your leisure or changing fund management. You're stuck, that's it. If you don't like it, tough cookies.
Roth IRA - This is a plan that you choose on your own, outside of the work place. You can choose who manages your money and how it's invested. This money is put in to your account AFTER taxes, since it does not come out of your paycheck. BUT, this money will forever and ever be tax free from now on. You're done - no more taxes on this money once you put it in! Unfortunately, this account has it's limits, set at $5,500 per year under 55 and $6,500 over 55. That is the max.
Ultimately, I prefer a Roth IRA UNLESS your employer matches 401(k) contributions. There is just no way that I would ever pass up free money! Last comment on this section though is NEVER feel like it's too early or late to put money away!
4.) What is a financial planner and do I need one?
"A financial planner or personal financial planner is a practicing professional who prepares financial plans for people covering various aspects of personal finance which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, Tax planning, estate planning and business succession planning (for business owners)." {via Wikipedia}
Essentially, a financial planner can help with everything on life insurance, retirement accounts, investment opportunities, and more. Do you need a financial planner? For most things, no, you do not. However, a financial planner is very helpful when it comes to getting better rates, setting up IRA accounts (very often you cannot set these up without a professional), setting up investments and trades, and getting help with financial issues and advice. Most financial planners do not even charge you. They make their money by commission (meaning they make a small percentage from what you invest).
If you ARE planning on seeking help from a financial planner, I of course would love give you a recommendation! Mike Kanik of Kanik Financial is great - he was recommended to me by someone who has used him for years, and he has been a great help with K and I!
Check his website out here: Kanik Financial.
So what should you take away from this?
I hope that this helps, even the slightest bit, in understanding the importance of a retirement account, the difference in needing or not needing life insurance, the helpfulness of a financial planner, and very importantly the extra cash you could make just by opening a new account online!
Do you have questions or information about financial information that I have (or haven't!) posted here? Feel free to email me or leave a comment below! I know this was a long post and slightly out of the norm for my blog, but I hope you enjoyed this post!
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