I had a great talk with Millennial Money Man yesterday and my favorite piece of advice he gave me was to âwrite what youâre passionate about.â It took me literally five seconds to think of the one thing Iâm really passionate…
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Iâm 51 years old and donât have a large nest egg. Iâm a single parent with three kids. Iâm a second career middle school teacher, so there is not a lot of money left over each month.Â
How much money should I be saving to be able to retire in my 70s? Where should I invest that money?
You still have 20 years to build your nest egg if all goes as planned. Sure, youâve missed out on the extra years of compounding youâd have gotten had you accumulated substantial savings in your 20s and 30s. But thatâs not uncommon. Iâve gotten plenty of letters from people in their 50s or 60s with nothing saved who are asking how they can retire next year.
I like that youâre already planning to work longer to make up for a late start. But hereâs my nagging concern: What if you canât work into your 70s?
The unfortunate reality is that a lot of workers are forced to retire early for a host of reasons. They lose their jobs, or they have to stop for health reasons or to care for a family member. So itâs essential to have a Plan B should you need to leave the workforce earlier than youâd hoped.
Retirement planning naturally comes with a ton of uncertainty. But since I donât know what you earn, whether you have debt or how much you have saved, Iâm going to have to respond to your question about how much to save with the vague and unsatisfying answer of: âAs much as you can.â
Perhaps I can be more helpful if we work backward here. Instead of talking about how much you need to save, letâs talk about how much you need to retire. You can set savings goals from there.
The standard advice is that you need to replace about 70% to 80% of your pre-retirement income. Of course, if you can retire without a mortgage or any other debt, you could err on the lower side â perhaps even less.
For the average worker, Social Security benefits will replace about 40% of income. If youâre able to work for another two decades and get your maximum benefit at age 70, you can probably count on your benefit replacing substantially more. Your benefit will be up to 76% higher if you can delay until youâre 70 instead of claiming as early as possible at 62. That can make an enormous difference when youâre lacking in savings.
But since a Plan B is essential here, letâs only assume that your Social Security benefits will provide 40%. So you need at least enough savings to cover 30%.
If you have a retirement plan through your job with an employer match, getting that full contribution is your No. 1 goal. Once youâve done that, try to max out your Roth IRA contribution. Since youâre over 50, you can contribute $7,000 in 2021, but for people younger than 50, the limit is $6,000.
If you maxed out your contributions under the current limits by investing $583 a month and earn 7% returns, youâd have $185,000 after 15 years. Do that for 20 years and youâd have a little more than $300,000. The benefit to saving in a Roth IRA is that the money will be tax-free when you retire.
The traditional rule of thumb is that you want to limit your retirement withdrawals to 4% each year to avoid outliving your savings. But that rule assumes youâll be retired for 30 years. Of course, the longer you work and avoid tapping into your savings, the more you can withdraw later on.
Choosing what to invest in doesnât need to be complicated. If you open an IRA through a major brokerage, they can use algorithms to automatically invest your money based on your age and when you want to retire.
By now youâre probably asking: How am I supposed to do all that as a single mom with a teacherâs salary? It pains me to say this, but yours may be a situation where even the most extreme budgeting isnât enough to make your paycheck stretch as far as it needs to go. You may need to look at ways to earn additional income. Could you use the summertime or at least one weekend day each week to make extra money? Some teachers earn extra money by doing online tutoring or teaching English as a second language virtually, for example.
I hate even suggesting that. Anyone who teaches middle school truly deserves their time off. But unfortunately, I canât change the fact that we underpay teachers. I want a solution for you that doesnât involve working forever. That may mean you have to work more now.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Months (and months) of grading papers, bringing work home on the weekends, staying on-point for all those young minds you’ve been charged with educating and finally… summer is here! It’s time to put your feet up and relax for a well-earned break from your awesome, and often intense, teaching career. But wait. How do teachers budget with no paycheck during the summer?
The summer paycheck gap doesn’t need to be a cause of stress for educators. You just need to put a plan in place to cover your finances for the months that school is out of session. You can follow these guidelines to create a summer budgeting plan that works for you:
Spread your income over 12 months
Bobby Hoyt, a former teacher and personal finance blogger at Millennial Money Man, says the beginning of the school year is always a “crazy time” for teachers. Your best bet to cover the summer paycheck gap is to have a budget in place well in advance of the bell on the first day of school.
To start, check to see if your school offers a year-round payment option. This would allow you to opt-in prior to the beginning of the school year to have your paychecks spread out over 12 months instead of the 10 or so months that you are working. “That way you’ll have a consistent paycheck no matter what time of the year it is,” says Kristin Larsen, personal finance blogger at Believe in a Budget. Even though your monthly pay will be lower with year-round paychecks, it could be easier to create a financial plan and manage the summer paycheck gap with the predictable cash flow.
If your school doesn’t offer this type of program or if you prefer to collect your standard paychecks and spread them out to accommodate summer, you can create your own 12-month paycheck plan to manage the summer paycheck gap. First, divide your annual income by the amount of months you receive paychecks. If you earn $57,000 a year and work for 10 months, for example, you’ll arrive at $5,700. Next, divide your annual income by 12 months, which in this example, would be $4,750. Finally, calculate the difference between those numbers. In this case, it’s $950. This is how much you would need to set aside from your monthly income to provide for two months of the same pay during the summer. You’re essentially putting money aside so you can give yourself a paycheck during your time off.
“Then, you’ll want to sit down and create a budget and find where you need to cut back and where you can still do the things you enjoy,” Hoyt says.
See if your school offers a year-round payment option. This would allow you to opt-in prior to the beginning of the school year to have your paychecks spread out over 12 months instead of the 10 or so months that you are working.
Calculate your standard expenses and summer extras
If you’re a teacher living with no paycheck during the summer, Hoyt suggests figuring out how much money you’ll need in the summer months to cover your standard living expenses. Think housing, utilities, groceries and transportation. The stuff you can’t live without. If you don’t have a baseline for your essential expenses, keep track of what you spend for at least three months, or sort through old credit card transactions and bank account activity by month. This should help you get a clearer idea of the minimum amount needed to cover your bills and and basic living costs. A summer budget tip for teachers is to use your highest expense month to forecast your summer costs so you don’t have to stress about coming up short, Larsen says.
Another summer budget tip for teachers is to anticipate discretionary seasonal expenses. Let’s face itâthere’s a lot of fun to be had over the summer, and the cost of extra activities and travel can really add up. Quickly. Luxury vacation or the summer festival circuit, anyone? Estimate how much you’ll need for your summer extras, and add those to the living expenses mentioned above. If any of your summer expenses recur annuallyâlike a standing trip with family or friendsâuse what you’ve spent in past years to arrive at how much you’ll need this time.
Whether you receive summer income from a year-round payment program or set aside money monthly to combat the summer paycheck gap, there’s a chance that your total summer expenses may exceed your summer paychecks. Read on for more summer budget tips for teachers that can help you plan for this difference.
Stash summer expenses in a separate account
If you’re stashing money away monthly to avoid the summer paycheck gap, creating a separate summer fund to contribute to throughout the year can be an effective summer budget tip for teachers. You could hold the portion of your paycheck you have set aside for summer in this fund, and look for other creative ways to add savings to the account. Bonus: If you put your summer paychecks and additional summer savings in a separate account, it may be easier to avoid the temptation to withdrawal for other expenses during the school year.
You earned it. Now earn more withÂ it.
Online savings with no minimum balance.
Discover Bank, Member FDIC
Consider parking your summer funds in a high-yield online savings account so you can earn interest while you work your way through the school year. If you plan ahead and won’t need to withdraw your funds for a specific amount of time (say 12 months), you could earn even more interest with a certificate of deposit.
Create a financial cushion
In addition to the money accumulating in your fund for the summer paycheck gap, it’s important to also have an emergency fund, Hoyt says. An emergency fund is just thatâa fund that is set aside strictly for emergencies, like car repairs or medical bills you didn’t anticipate. “It’s always wise to have an emergency fund, but especially if you have gaps in income,” adds Larsen, from Believe in a Budget.
While experts typically recommend saving at least three to six months of living expenses in your emergency fund, you can start small and add as your budget allows. Any cash set aside in an emergency fund will be helpful if an unexpected bill or expense comes your way, especially if it’s during the summer paycheck gap.
Consider a side hustle
If you think your summer paychecks and extra savings are going to fall a little short of your summer expenses, “consider a summer side hustle to pay for the extras that can come with warmer weather,” Larsen says. With no paycheck during the summer, a side hustle can be a good way to funnel more cash into your summer fund account.
According to Hoytâwho actually started his website as a side hustle when he was a band directorâmany teachers can use their skill set for side hustles related to their profession. For example, teachers can offer private lessons or tutoring within their areas of expertise. Teachers can also pursue unrelated side hustles, like flipping items in online marketplaces to bring in more money in anticipation of no paycheck during the summer.
A side hustle may also be a perfect opportunity to explore a new venture, especially when there’s no paycheck during the summer. Hoyt says a side hustle can even provide a route to a new career path. “The skills that teachers pick up throughout their careerâdealing with people, managing a high workload, having high standards for excellenceâtend to translate extremely well into entrepreneurialism,” Hoyt says.
Make it a summer to enjoy
Teaching has its challenges, but it also comes with the major perk of having some of the best months of the year off. Planning ahead and implementing these summer budget tips for teachers will help make sure that these hard-earned months of vacation are truly an enriching time.
The post Teachers: How to Survive the Summer Paycheck Gap appeared first on Discover Bank – Banking Topics Blog.
Along with the excitement of purchasing a new home, comes the additional costs that you will be expected to pay as a homeowner. Apart from covering the mortgage of your home, you’ll have additional expenses – such as home insurance – that you will be expected to cover. If you’re looking to budget for a home purchase, it’s important that you consider these costs as they can add up to thousands of dollars each year.
To help you make educated decisions when budgeting, we’ve compiled a list of the major home ownership costs in one free, downloadable guide. Get the Home Ownership Costs to Consider guide here.
Home insurance policies help protect against serious damage and destruction, like fires, leaks, floods, or break-ins. It also protects a homeowner from personal liability. Some banks may offer home insurance products, although you can typically purchase a home insurance policy through a home insurance agent or broker.
Tip: You may get better rates if you use a broker or agent. It’s also important to keep in mind that policies typically renew on an annual basis.
The cost of maintenance fees should be taken into account when you’re buying a condo. This recurring cost is in addition to your mortgage and impacts how much home you can afford.
Your mandatory monthly fee will vary by your building and square footage. It typically covers:
Utilities (such as water and garbage collection)
Maintenance of common areas (such as the gym, pool, front desk, hallways, landscaping)
Building reserve fund (covers emergencies and long-term maintenance projects such as a new roof or elevators repairs)
What Are Status Certificates?
If you’re looking to purchase a condo, you’ll want to look into obtaining a status certificate so that you have as much information about the building and your unit as possible before buying. A status certificate provides valuable information about the condo corporation and its financial
situation. It includes details on the budget, legal issues, the reserve fund, maintenance fees, and any fee increases expected in the future.
Tip: You’ll want to carefully review your status certificate with your lawyer before making a purchase.
Property taxes are paid annually by homeowners to their municipality. These taxes are ongoing and are separate from your mortgage. Your annual property tax can often be paid in installments.
Tip: It’s important to remember that this cost is not due at closing, but is a recurring cost.
How Are Property Taxes Calculated?
Your property tax rate will vary depending on the value of your property as assessed by your provincial assessment authority. This is then multiplied by a rate that falls between 0.5% to 2.5%.
How Do You Pay Property Taxes?
You can pay your property taxes either through your mortgage provider or directly to your municipality.
Your Utility Bills
When you purchase a home, you’ll have to set up or transfer your utility bills to your new home. If you live in a condo, these costs may be included in your monthly maintenance fee. Your utility bill will include:
Water and Garbage
Internet, Phone, Cable
For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Home Ownership Costs to Consider Guide here.
The post A Guide To Everything You Need To Know About Home Ownership Costs [Free Download] appeared first on Zoocasa Blog.
Food is essential to our existence. What isn't essential is paying an arm and a leg for our daily bread. Compared to dining out, buying groceries and cooking homemade meals remains a far more affordable way to eat. But grocery shopping can be even more affordable with these tips the next time you find yourself carting down the aisles.
How to Save Money on Groceries
Don’t Dawdle in the Aisles
Consider the Cost of Convenience
Know Your Terminology
A Full Mouth Is a Quiet Mouth
Go for Day-Olds
Break Free from Brands
Use a Prepaid Gift Card
Let's explore each tip a little further.
1. Don’t Dawdle in the Aisles
Shop more efficiently at the supermarket by leaving your cart at the end of each aisle. It’s faster because you’ll go directly to what you need and grab it, plus you’ll be less tempted to purchase extras since you won’t be wandering slowly down the aisle with the cart.
2. Price Watch
When you’re at the supermarket, make sure you keep a close watch while your items are being rung up. A recent study found that 10 percent of items are scanned in at the incorrect price.
3. Consider the Cost of Convenience
Remember the cardinal rule when it comes to saving money on food: If it’s “convenient,” it’s probably costly. For example, pickles cut flat for sandwiches, juice in single-serving bottles, pre-shredded cheese, and “baby” carrots. Think carefully about what you’re buying and decide if the convenience is worth the extra cost!
4. Know Your Terminology
When shopping, know your terminology: Only the term “use by” means that you shouldn’t eat the food after the date indicated. “Sell by” dates are only an indication for the store, and foods will usually keep one to two weeks after. “Best before” is only an indication of food quality, not of food safety, so again, your perishables may still be fine to eat.
5. A Full Mouth Is a Quiet Mouth
If you find you’re making a lot of impulse purchases at the store because your kids are begging for snack foods, keep them quiet by buying them a package of animal crackers or a similar snack right when you get to the store. Most stores don’t even mind if your kids eat the crackers before you pay for them.
6. Go for Day-Olds
Supermarkets often discount their day-old or slightly overripe items in the morning. This is a great way of getting deals on fruit, vegetables, bread, and other foods. At first glimpse, this money-saving strategy may not seem appealing to you, but you can use these items in casseroles, desserts, and other dishes where you won’t even notice the difference. With a loaf of day-old bread, for example, you can make french toast, stuffing, croutons, bread pudding, and much more!
7. Break Free from Brands
When you’ve been buying the same brand-name product for as long as you can remember, it’s hard to make the switch to generics. However, you’ll be surprised when you find many generic and store-brand products taste exactly the same (or better!) for less than half the cost. Always buy generic baking ingredients such as flour, oil, and sugar. These generics are indistinguishable from their more-expensive counterparts. Frozen and canned vegetables are also usually exactly the same. As for products such as cereals, cookies, and crackers, basic is better—we’ve had good luck with plain granola, potato chips, and wheat crackers. No matter what the product, it never hurts to try. If you end up having to throw away one can of soup, you’ve wasted a few dollars, but if you like it, you can save a lot over the course of a year.
8. Use a Prepaid Gift Card
Need a little help budgeting your trips to the supermarket? Many chains now offer prepaid gift cards. Buy one for yourself and think of it as a portable checking account: Put money on the card, then “withdraw” from it every time you shop. With a dedicated grocery “account,” you’ll find it’s easier to keep a tighter rein on your spending.
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Summer camp is a rite of passage. A place where traditions begin and memories are made. A unique venue with a structured opportunity for kids to grow and learn new skills. As enriching as it may seem, embarking on the process each year can be intense: How do I choose a camp? Should it have a philosophy? How do I know my child will have fun? But often the question at the top of the list is, “How do I budget for summer camp?”
Whether you’re scrambling for camp arrangements for this year or getting a jump-start on next summer, you’re in need of a working budget for summer camp. “As a parent who sent several kids to summer camp for many years, I know how expensive it can be,” says Leslie H. Tayne, author and founder of debt solutions law firm Tayne Law Group.
Read on for expert budgeting tips for summer camp and how to save money on summer camp so you can make the best decisions concerning your wallet and your child’s wish list:
1. Get a handle on camp tuition
According to the American Camp Association, sleep-away camp tuition can range from $630 to more than $2,000 per camper per week. Day camp tuition isn’t too far behind, ranging from $199 to more than $800 per week.
One of the best ways to budget for summer camp and prepare for tuition costs is to understand your needs for the summer as well as your child’s interests. This will help you determine ‘how much’ and ‘what type’ of camp you want: Is day-camp coverage important all summer because of work? Does your child want to experience sleep-away camp for a portion of the time? Is a camp with a specific focus (say a sport or hobby) on the list?
Depending on your circumstances and child’s expectations, it’s not unusual to be looking at a combination of campsâand tuition costsâin one season. If you have multiple kids at different ages, with different interests, creating a budget for summer camp and understanding how much you’ll need to dish out in tuition becomes especially important.
Once your camp plan is in place, assess how much you’ll need to pay in tuition for the summer months with school out of session. The sooner you’ve arrived at this figure, the easier it will be to work the expense into your household budget, says Heather Schisler, money-saving expert and founder of deal site Passion for Savings. “It’s much easier to set aside $30 a month than it is to come up with $300 to $400 at one time,” Schisler says.
Sleep-away camp tuition can range from $630 to more than $2,000 per camper per week. Day camp tuition ranges from $199 to more than $800 per week.
2. Plan for expenses beyond tuition
One of the biggest budgeting tips for summer camp is planning for the many costs outside of tuition. Tayne points out that sleep-away camp usually comes with a longer supply list than day campâsuch as specific clothing or gear and toiletries to cover the length of stay. If your child is heading to a sleep-away camp far from home, your budget for summer camp may also need to factor in the cost of transportation or the cost to ship luggage. Day camps can also have fees for extended hours or transportation if your child rides a camp bus each day.
Once you’ve selected a campâday camp or sleep-awayâcheck its website for camper packing lists and guidelines. Most camps offer checklists that you can print out, which can be good for tracking supplies and costs as you go. After you enroll, your camp may provide access to an online portal that can help you manage tuition and track additional expenses, like canteen money, which is cash your child can use for snacks and additional supplies while away.
3. Create a year-round savings strategy
By calculating the necessary expenses ahead of time for the camps you and your campers have chosen, you’ll be able to determine an overall budget for summer camp. A budgeting tip for summer camp is to save money monthly throughout the year. To determine a monthly savings goal, divide your total summer camp costs by the amount of months you have until camp starts. If camp is quickly approaching and you’re feeling the budget crunch, you may want to start saving for next year’s costs once it’s back-to-school time so you can spread out your costs over a longer period of time.
Once you start saving, you’ll need a place to put it, right? When it comes to budgeting tips for summer camp, consider placing your cash in a dedicated account, which will keep it separate from your regular expenses and help you avoid tapping it for other reasons. “Then you can have your bank set up an auto draft [for the summer camp money] so it automatically goes into your account each month and you will have the money you need when summer rolls around,” Schisler says. If you use a Discover Online Savings Account for this purpose, you’ll also earn interest that can be put toward camp expenses.
âIt’s much easier to set aside $30 a month than it is to come up with $300 to $400 at one time.â
4. Find ways to fund your summer camp account
To boost cash in your summer camp savings account, consider asking relatives and family friends to gift your children cash for camp in lieu of birthday and holiday gifts, says Tracie Fobes of budget blog Penny Pinchin’ Mom. “If your child has his or her heart set on sleep-away camp, they may be willing to forgo a gift or two,” Fobes says.
Another budgeting tip for summer camp is to put your cashback rewards toward your budget for summer camp. For example, if you open a checking account with Discoverâcalled Cashback Debitâyou’ll earn 1% cash back on up to $3,000 in debit card purchases each month.1 You can enroll to have that cashback bonus automatically deposited into your Discover Online Savings Account so it remains designated for camp costs (and can grow with interest).
Say hello to cash back on debit card purchases.
No monthly fees. No balance requirements. No, really.
Discover Bank, Member FDIC
Lastly, if you don’t have your tax refund earmarked for another financial goal, you could use the windfall to kick-start your summer camp savings fund. Depending on the refund amount and your total camp costs, it could reduce your monthly summer camp savings goal significantly.
5. Reduce camp-related costs
Despite having your budget for summer camp in full view and planning in advance, camp can still be expensive. Here are some ways to save money on summer camp by cutting down on camp costs:
Ask about scholarships and grants: “Some camps offer scholarships or discounts for children and families,” Fobes says. Research your camp to see if they have anything similar to help offsetâor even pay forâthe cost of tuition.
Use a Dependent Care Flexible Spending Account (DCFSA): A Dependent Care Flexible Spending Account is a pre-tax benefit account that can be used to pay for eligible dependent care services. You can use this type of account to “cover dependent care [costs], and camp may qualify,” Fobes says.
Negotiate price: “Many people don’t think about negotiating the cost of summer camp, but it is possible,” Tayne says, and more and more camps are open to it.
See if there’s an “honor system”: Some camps have what’s known as an honor system, where the camp offers a range of costs, or tiered pricing, and parents can pay what they can comfortably afford. Every child enjoys the same camp experience, regardless of which price point, and billing is kept private.
Take advantage of discounts: Attention early birds and web surfers: “There are sometimes discounts offered when you sign up early or register online,” Fobes says.
Volunteer: If your summer schedule allows, “offer to work at the camp,” Fobes says. If you lend your servicesâperhaps for the camp blog or cleaning the camp house before the season startsâyour child may be able to attend camp for free or a reduced rate.
Don’t let summer camp costs become a family budget-buster. Plan ahead and look for money-saving opportunities and work your budget for summer camp into your annual financial plan.
To save money on summer camp, remember that you only need to focus on camp necessities. “Don’t spend a lot of extra money on new clothing, bedding, trunks or suitcases,” Schisler says. “Remember, summer camp is all about the experience, not the things.”
1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as VenmoÂ® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
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