Monthly Archives: April 2012
A 45 year old man working a typical 9-5 job might be thinking more intensely about saving for retirement than a 21 year old that just landed his first full time job with benefits. At the age of 21, he might start contributing 4% of his income to his 401k with a more aggressive market approach. His 45 year old neighbor is struggling tirelessly to contribute 10% of his pay with a much more conservative approach. They both share one common interest: saving for retirement.
How much should an individual really save for retirement, and what is the ideal contribution to a company match plan? Many people have relied on and researched retirement planning calculators on the internet for years. The majority of these will calculate a percentage of income that one should be saving and deliver a figure that will support his/her lifestyle in 40 years. The calculator doesn’t take into consideration what everyone’s standard of living will amount to then. The sum of money that an individual should save for retirement doesn’t rely on income; it relies on money spent. A man could make $60,000 a year, but his current lifestyle requires an annual spending figure of $80,000. Another might bring home $80,000 a year, and his current lifestyle requires only $40,000. Should they both contribute the same amount to their 401k? Not likely.
Calculating a substantial amount of savings for retirement relies on evaluating an individual’s current spending and determining the standard of living he/she wishes to uphold at retirement. The retirement calculators that are based on income are not completely worthless. They provide a valuable resource for determining a figure of funds that will be saved after a number of years. Before utilizing these calculators, the individual must determine the ideal amount to save. This number will be derived from deciding how much to spend at retirement. Will they live lavishly, or will they live comfortably? Once a decision has been made on how much they want to spend in 40 years, then they can decide what to save. If the current budget does not allow for that level of spending, then they must discover other ways to save.
Here are a few frugal tips on saving money now for the future:
Stay healthy. One of the leading money guzzlers in retirement are health expenses. Prescription medications, knee replacements, high cholesterol, and cancer all come with a hefty bill. Regular physical activity and proactive health precautions may reduce these expenses.
Make friends with the neighbors. Retirees benefit from friends and family. Several people are willing to lend a helping hand to a senior citizen; a solid relationship will open this door.
Weatherproof the home. Energy costs are rising every year, and they might only increase in 20-40 years. Visit a local home improvement shop to find sealant for windows to prevent cold winter drafts. Ask about clearance items during the contrary weather season.
Being frugal will allow the individual to contribute much more to their company match plan for retirement.
Online banking has many online benefits and may be one of the best financial moves a student can make. John Schickedanz, a personal banker and consumer lender for MidWestOne Bank in Iowa City, has given his insight and advice when it comes to this new mode of banking. Online banking establishes many benefits. “After you establish your online banking account,” Schickedanz explains, “you can transfer funds between accounts, set up automatic payments and transfers, access Bill Pay, view all statements within the last 18 months, view images of the checks you’ve written, and place a hold on a check you’ve written.” The account holder is able to check their account 24 hours a day. This allows you to better protect yourself against fraud. In his professional opinion, Schickedanz believes this to be one of the best features of online banking.
One common misconception of online banking is that it will be difficult to maneuver. College students, however, tend to find the process extremely easy and usable due to their advanced knowledge of new and different forms of technology. Schickedanz highly recommends online banking to all college students. College students are busy; there is no denying that. Between work, classes, exams, social lives, we can hardly find time to breathe, let alone make it to the bank. “Online banking gives them a resource to review their banking history from the convenience of their own homes,” Schickedanz says. MidWest One bank also offers Mobile Banking Services. Through this program you can view your account through a smart phone as text message, downloadable application, or mobile webpage. This service even has a built in protection plan, allowing you to access your account safely while on the go.
As an avid user of online banking, I discovered just how much I need my online account when my debit card was stolen out of my car three years ago. By checking my online account, I was able to see where my card had been used and how much was spent. After cancelling the card over the phone, the thief was no longer able to use the card and the rest of my money was safe. If I had not had my online banking account, I would not have realized my card had been stolen as soon as I had and would not have been able to take the steps that I did to protect myself.
Through my online account, I take advantage of the automatic withdraw that comes along with online banking. After transferring a specific sum into a new savings account, I set up a monthly $25 withdraw from my checking account into my savings account. I can view the growth of both accounts through my online banking account. This route of savings also comes highly recommended by Schickedanz.
“We have become a society that finds it very difficult to save money. Let’s be honest, we all enjoy going on shopping sprees and don’t have time to come in to the bank to set aside money. By establishing a free, recurring, automatic transfer, you can ensure that money is automatically put aside for a rainy day. In addition, if you establish Bank Your Change at MidWestOne, each transaction made using your debit card is rounded up to the next whole dollar. Then the rounded amount is transferred to your savings free of charge. By creating this type of transfer, you save money without even thinking about it.”
As a college student, my online banking account has not only saved me time, it has also saved me money. It is a feature that all students should look for when choosing and opening a bank account.
Congratulations! You graduated. And you, like countless of other graduates, have pretty outstanding student loans to pay back. Although there is no magic button, there are a few smart money tricks to help along the process.
Firstly, take advantage of the fact that many loans do not need to start being paid until 6 months after graduation. This alleviates some pressure, but not all of it. Depending on the type of loan, interest may or may not accrue during these months. There is never any harm in paying both interest and principal before you need to.
Secondly, you may qualify for a loan deferment of forbearance. Deferments and forbearances mean that you do not have to pay off any of the loan for a specified period of time. Interest may or may not accrue, depending on your loan company. You must apply and qualify for a deferment. Reasons for qualifications include economic hardship, unemployment, enrollment in school, teaching certain under privileged populations (such as Teach for America), working in health care professions, or certain volunteer services such as Americorps.
Thirdly, there are a few ways to receive debt forgiveness. Programs like the aforementioned Teach for America often forgive a percentage (albeit not a very large percentage) of student loans. Of course, it is important that they offer forgiveness as the salaries are not competitive enough for you to be able to pay off your student loans and live comfortably.
Fourthly, try to pay more than the minimum. The more you pay per month, the less you pay over all. A huge part of making this possible is living slightly below your means. Having an inexpensive rent, not eating out frequently, and limiting unnecessary spending are all factors that help you put a little more towards loans. Paying off loans in a shorter term period of time is like investing in your long term future. The more principal you pay off monthly, the less amount of interest you pay off in the long run.
Lastly, never be afraid to call your loan company to see what they can do for you. They are there to help–and to make sure that you do not default.
Below is a special video preview of a whimsical documentary titled “The Keeper” directed by Chris Bailey and Jake Naish and brought to you by Santander.
This documentary short was filmed about a man who makes a hobby of collecting and scrap booking his debit card statements. This short film won the MOFILM Cannes 2011 film contest. This film contest was sponsored by Sovereign | Santander, and in this film the main character has saved his debit card statements for the past thirty years. Although silly and kind of funny at times, the video brought up some important points.
First of all is the importance of good record keeping, this man had saved his receipts for the past thirty years, he knew all his expenses and he had a connection to them. Most people these days lose touch with what those statements even mean or even what you had purchased at the time. It is also important to look at all your monthly statements to check for credit fraud and make sure no one is charging you maliciously.
Second is just how useful a credit card or a debit card in this case can be. This man was able to buy almost everything he needed in life. He mentions one particular month that he bought “A night at the city hotel,” a ring and some flowers. All of which led up to him proposing to his wife. However in a sad turn he no longer is married but it is important to see that he still uses the same debit card, since it is something you truly can’t live without.