3 Secrets to Keep You From Running Out of Money in Retirement, According to a 38-Year-Old Retiree

Retiring at 38 may seem like a pipe dream for most people, but not for Tanja Hester.

While she loved her high-pressure job in politics, the endless hustle of 70-hour work weeks made her and her husband realize they weren’t enjoying their lives. Hester decided to dive into the world of FIRE (financial independence, retire early) a personal finance movement that has gained traction largely among millennials seeking to manage their money and their lifestyles in a way that allows them to build up enough savings to retire early and leave the cubicle life behind — for good.

Hester and her husband, Mark Bunge, who also worked in politics, turbo-charged their savings for six years and retired in late 2017. Her new book, Work Optional, which debuts Tuesday, outlines a step-by-step process for how to transition to the FIRE lifestyle yourself.

But whether you retire at 35 or 75, sticking to a budget is key to maintaining your financial freedom. When you go from being stuck behind a desk to all of a sudden having an additional 40-plus free hours each week, every day feels like a Saturday, and you have to find cost-efficient ways to keep yourself busy. For her part, Hester enjoys skiing and travel. She and her husband accumulated millions of frequent-flyer miles while working, which helps defray her travel costs.

You need to have a system to in place to prevent from you overspending if you get bored, want to help out a family member or have other unexpected costs pop-up.

“This is about your life, this is about your dreams,” Hester tells MONEY. “The money is the thing that makes that happen.”

It’s not uncommon to spend more money during retirement than you did while working, especially during the early years, thanks to those freed up hours. You finally time have to do all the things you’re interested in. Hester says many people spend less in retirement because they have to — thanks in part of a lack of planning and saving — not because they want to.

“It’s absolutely true that some people are happy spending very little, but for all the rest of us, it’s safe to assume your spending will stay the same or go up in retirement, not go down,” says Hester. “In our case, we took three international trips in our first year of retirement, and even though we kept costs down, those trips still cost money. We didn’t have time to travel like that while working, so we couldn’t spend that money then even if we wanted to. Now we have lots of free time to fill with travel and activities, and very little of that is entirely free.”

Here are her top three tips for for holding yourself accountable to your retirement budget:

Set Up A Paycheck System

Create a system of paychecks using multiple accounts, Hester says. This is especially helpful for people who are prone to overspending. Keep your everyday spending money in one account and the rest of your shorter-term money in a high-yield savings account at a different bank. (This money is separate from your brokerage accounts and your long-term retirement accounts. Hester explains all of the buckets you should keep your money in and when you should draw on them in Work Optional.) Keeping the accounts at two separate banks makes it harder to thoughtlessly dip into your savings because it requires conscious action to access that additional money, Hester says.

Have a transfer set up for every two weeks or once a month like the regular paycheck you received when you were working to keep your spending and your budget consistent.

Build in A Buffer (Or Two)

Know where you could cut your spending if you needed to and go through that thought process in advance, Hester recommends.

“If you’re in a position to plan, build in a big buffer,” she says. “In our case, we know we could downsize our house if we needed to. It’s not a huge house, but we could certainly live in a smaller one. So if something came along that cost us tens of thousands of dollars we could downsize and that would free things up.”

Downsizing a house (as opposed to, say, drawing on cash savings) won’t require you to meaningfully change your lifestyle. Where you can cut back will be different for everyone. Scaling back your lifestyle is another option. If you budgeted to take one international trip a year, you can go only on road trips within the U.S. until you build your nest egg back up again. You can rent out rooms in your house or sell a baseball card collection — anything that can function as a contingency plan without eating into your retirement savings will offer you greater piece of mind.

Don’t Skimp on Insurance

Even though you’re living cheaply, you shouldn’t necessarily be cheap. That’s especially true when it comes to insurance, Hester cautions. Good insurance may sound obvious and somewhat unrelated to budgeting, but it’s another way to prevent an unexpected catastrophic expense from derailing your carefully crafted plans. No matter how many detailed spreadsheets you keep, an outrageous hospital bill or health care expense could you force back into an office if you don’t have ways to mitigate the damage.

“Make sure that you’re not skimping on homeowners and auto insurance,” Hester says. “The difference in cost between the minimum and a higher liability limit is going to be pretty minimal and if something like that happens, you want to make sure that kind of stuff is covered.”

For everyone, but especially those with significant savings, the extra layer of liability coverage that umbrella insurance provides is a good idea, Hester says. It also has a relatively low cost compared to the benefits. If someone ever sues you for any kind of accident, your insurance company will fund your legal defense — which could cost hundreds of thousands of dollars — compared to just a few hundred dollars a year for the plan.

And if you encounter unplanned financial difficulties that make it necessary for you to go back to work? Hester says you should still aim to do something you love that doesn’t feel like a job.

“Something that looks like work is ok if it’s something you would have excitedly done in high school for free,” she says. For her, that’s writing about the FIRE movement and sharing it with all of us.

Zonta Club of SCV scheduled to host free workshop on finances

Why this New York Jets linebacker wants to help Wharton undergraduates manage their money

“It was a huge distraction on the field,” the 27-year-old told undergraduate students packed into a room at McNeil Hall on the University of Pennsylvania campus, just off Locust Walk. “I was sitting in meetings with the coach, supposed to be going over plays. But instead I was checking my phone, I was constantly running out of the room,” said Copeland, dressed sharply in a suit jacket and suede sneakers and sporting a behind-the-scenes, you-are-there grin.

How 4 Savvy Locals Who Weren’t Born Into Money Manage Their Finances in Hawai’i

How they’ve made it, saved it and are passing it on.






money

Photo: Aaron K. Yoshino

 

HOW AKAMAI AM I?

It’s an eternal question, one expounded upon—after making allowances for local language differences—by sages from Aesop to Confucius to Warren Buffett. What makes one person a money honey hive and another a financial sinkhole is an issue of special relevance in Hawai‘i these days.

 

This isn’t an abstract question for us at HONOLULU, because we live here, too. And so we asked about, then interviewed, a cross-section of akamai folks who seem to have found a path. Read on for their journeys—and their tips (because, let’s face it, we’re all about the tips).

 

Oh, and one more thing.

 

Although they certainly have assets, own or have owned homes and exude prosperity, none of our subjects are “crazy rich” in the current pop sense. What they have is a mindset that is itself a form of wealth. In our opinion, that makes them among the “really” rich—not least because they can live in our beloved Hawai‘i nei.

 

 

$TARTING OUT

 

What Keoni Vaughn remembers about his Waimānalo childhood is the elephant. “My grandfather worked for the state as a Section 8 housing inspector, but he always had his hand in different things: politics, business. He leased an elephant and rented it out. It was the mascot for Pepsi. Can you imagine?”

 

Vaughn, 46, also recalls snorkeling around in the fishpond at the swank John Dominis restaurant while that grandfather, Bill Young, a part-owner, joined the staff for lunch. “He wasn’t your typical guy who does his 9 to 5 and then goes home.”

 

Vaughn’s grandparents helped raise him while his parents worked long hours at Amfac and Empire Tours. What he doesn’t remember from this time is any discussion of finances, or life strategies, at home. Today he knows he paid a price for it. “I’ve been working since I was 15. Through high school I gave my family my paycheck to help out. They gave me a stipend. When I went to college, I was kind of left to figure it out on my own. I was paying my own way and had a hard time keeping up with the payments. I stopped after six months.”

 

He has felt the lack of a college degree his whole life. “I always started at the bottom of the ladder.” A tour driver, he applied five years in a row to be a manager. “This was at a major tour company and they said, ‘You’ll never be a manager.’” He would rise to assistant director of operations.

 

But disaster struck in 2001. “I had a 401(k) and then after 9/11 the stock market crashed and I watched the money I put in there disappear. I freaked out. I had no financial education, so all my buddies and I cashed out. We paid the penalty, like 40 percent, and the next thing you know we blew it all. I had no retirement left.”

 

He’d also lost his job in the economic downturn. By 2003, he’d gone from assistant director of operations to picking up stray cats for the Hawaiian Humane Society. “It was a very humbling experience. Very. But I found a mentor—Pamela Burns,” the late, and beloved, leader of the Humane Society. As he worked his way back up the ladder, he says, “I knew I had to plan to have something to retire on. So I enrolled in a 403(b), a plan for nonprofit employees. Every time I got a raise I would increase my contribution instead of spending that money.”

 

He was back on his feet, on the rise to vice president, when his family blew up into full conflict after his 104-year-old great-grandmother died. But by then he’d married a woman whose family’s radically transparent approach to finances showed how he could grow his money, while sorting out the mess left by generations of secrecy.

 

 

As a mixed-race child born in war-torn Vietnam, Jacque Vaughn has gone from orphanage to poster child for success, American-style. She’s worked hard for it, but also inherited a scrimp-and-save mentality, she says, from the white U.S. military couple who adopted her. “They lived frugally. When we went out to eat, like at a McDonald’s, we weren’t allowed a beverage. We didn’t have designer anything.”

 

But her parents did design their lives. “Coming from small towns and their small-minded ways,” Jacque says, “they entered the military life and that opened their eyes.” They gave Jacque and her brother, an adoptee from Germany, education and experiences instead of things—and, from an early age, required them to give back in the form of service.

 

Jacquelyn and Stephen Smith also opened the family books to them when they were small: “We call it the Full Monty approach,” Jacque says. Early on, they talked about what would happen when they died. “Our adoptive parents did not want us to be orphaned again by their death.”

 

From Jacque’s adoption on—the Smiths had to fight to receive a presidential authorization to take her from Vietnam—they set an example. “When they first adopted me, my parents planned to live in Virginia near family,” she says. “But they decided not to, because being transracial would be a handicap for me. They moved to Hawai‘i in 1975.” But that raised a new concern: “One, the cost of living, and two, what the future would bring. So they made sure we were exposed to all walks of life, that we were well-traveled and we would learn to manage money.”

 

A Navy commander, her father walked her through her first salary negotiation for a post-college job, in public relations. “We sat down. I said, ‘There’s no way I can make a living in this field at this salary,’ so we crunched the numbers. What I needed to pay the rent, to pay car insurance. And the only way to break even and maybe go out to a movie, he said, was you gross $24,000 a year.”

 

Now, he added, Jacque was to take in her calculations and show it to her interviewers. “He said to ask them to come as close as they could.” She laughs. “You have to be very respectful and polite when you’re laying that on the table.”

 

She got the job at the number she wanted, when others at her level were making $18,000 to $20,000 a year. Her father then marched her into a bank to set up an IRA. “He said, ‘I want you to put a percentage of your income away. And when you get a raise, put more away, maybe 5 percent.’”

 

She followed through. And yet, in her 20s, she went through a rebellious phase. “You look at other kids wearing all the clothes you wanted, you’re in that shallow and sensitive stage,” she recalls. “I ran up credit card debt, bounced checks, as many do in that time period. So many of my peers got caught upholding the mythology of how it should be: the designer bags, the designer clothes, the expensive cars which tend to depreciate so much. It was a real struggle.”

 

 

DREAM$ VS. REALITY

 

Socking away micro-percentages, keeping to a spreadsheet budget—frankly, it all can sound rather joyless.

 

And yet you can have your dreams and your savings and growth strategy, too.

 

When Cyndi Mayo was born in Oakland, California, her parents were living with relatives and trying to decide if they could afford to move back to Hawai‘i. “Dad is Hawaiian-Caucasian, Mom’s Filipino-Spanish-Chinese,” says Mayo, whose hyphens include singer-dancer-actress—and investor. “All told, 11 ethnicities.”

 

She grew up on O‘ahu and then Maui when her father, who had a car-detailing business, decided to get away from traffic. There, the family formed a band. “Since I was 10, we’ve had a group called Family Ties. We all took hula, Tahitian dance. I sang pretty much in Hawaiian.”

 

Often, work brought the family band to Waikīkī. “Since I was a young age I’ve been in shows,” she says. To tide them over the lulls, her father had a side business. “He’d have vending machines, so we’d go around town filling them.”

 

His industriousness rubbed off as Mayo hit adulthood. “I just decided to go to college, get a business degree and put the entertainment thing on the side.” At the University of Hawai‘i at Mānoa she earned a degree in travel industry management. Her course seemed set.

 

But college had whetted, not dampened, her passion for dance. “I was in a group, Maile Aloha Singers, that took us around the world.” A visit home after graduation led to a job at a show as a singer-dancer on Maui, allowing her to pursue her art while keeping other revenue streams flowing.

 

She’s traveled the world and risen to new challenges. “I was a magician’s assistant once, because it paid more. I didn’t get sawn in half.” She was hired by Legends in Concert to play Janet Jackson in Waikīkī. There’s been acting, commercials, movies; a long gig with the ‘Ulalena show on Maui paid her $50,000 a year, much of which she banked by staying with friends.

 

She knew just what to do with the money. “Because I came from pretty humble beginnings, over time I saved. A friend helped me open a 401(k) in my early 20s. From just talking to people, I got into investing, seeing what I could do.” When she saw a professional opportunity, she invested in that, too, by flying to auditions in Las Vegas and New York City.

 

The payoff from sticking to her passion came when she was called to New York in the 1990s to audition for her dream job—Dreamgirls. “I stayed with friends who all had Broadway backgrounds, but they all had regular jobs. I said, ‘Guys, don’t you want to go audition?’ But they’d given up their dreams.”

 

Mayo was hired to tour and then the original dream girl, Jennifer Holliday, decided to join them. Performing in front of tens of thousands of people, she played nearly every role—even that of a blonde with a top hat and cane. “I lived with another cast member and saved enough money to buy a one-bedroom condo in Hawai‘i and was able to sell that in two years and use the profit for my next townhouse, which was a three-bedroom, two-and-a-half-bath. Now I’m renting again, but I want to own again.”

 

Never forgetting her father’s example, for the past seven years Mayo has also balanced her creative schedule with a “real” job as a flight attendant for Hawaiian Airlines. “I could’ve gone into management somewhere, but flying is more fun, more flexible.” And she can keep dancing and singing.

 

So, yes, you can still keep your dreams.

 

 

Studies show that wages grow fastest in your first 10 years of work. However, not everyone gets the memo about growing an asset base. For many in their 30s, one day they look around and realize life is a race—and they’ve missed the starting gun.

 

For others, it’s a job with a low salary limit that puts a crimp on any hopes of surviving in Hawai‘i, let alone buying a home. “Finance was discussed” growing up, says Ellen (who asked that her last name not be used). But she chose to be a multimedia specialist anyway—No. 28 on USA Today’s list of lowest-paying professions. After a few years working her way up from entry-level positions in a small metro area on the Mainland, she was making $29,000 a year.

 

Then her company was sold and she decided to move to Hawai‘i to join her grandparents and parents. It was only a couple of years after the 2009 crash. “My timing was terrible,” she says. “I was so stupid.” Plus, instead of staying with her grandparents, “I paid rent!” After seven months, her savings almost out, she finally found a job.

 

After a few years of living with four roommates and paying $730 a month in rent, Ellen decided to buy her own place. But to obtain even a $250,000 mortgage in a state where the average condo costs $410,000, she calculated it would take at least 10 years of saving—and by then the price could be 30 percent higher, or even more.

 

Ellen met with a real estate agent who specializes in putting people into their first home. “She got me to the Hawai‘i HomeOwnership Center,” a nonprofit that helps local lower-income working people to become homeowners.

 

“They educate you on the homebuying process,” Ellen says. “They have classes, one-on-one counseling.” With HHOC’s help, she created a monthly budget and stuck to it. As her savings grew, she enrolled in the nonprofit’s down-payment assistance program. “If you live in the state of Hawai‘i, are buying for the first time, and your income is within a certain range, you can get up to $40,000 to use toward a down payment. With zero interest,” she adds.

 

She smiles. “I was so surprised by this, I emailed everybody.”

 

Her income fit into the range—it can’t be too high or too low—and she set about gathering documents, including credit reports, W2s and tax returns for the past three years, pay stubs, checking and bank statements. But since she only qualified for the lowest-priced unit in a still-unbuilt affordable housing development, the competition was stiff.

 

She didn’t get a place—but she didn’t touch her savings, either. After an initial deposit, a second was due after 30 days. But before that happened, she got a phone call: Somebody had dropped out of a condo deal. She had 24 hours to accept, commit and make her down payment on a place that wouldn’t be finished for another three years, and that she wouldn’t be able to sell, or rent, or move from, for five more years.

 

“I said yes.”

 

It’s now almost three years later and Ellen has just gotten word that the deal has closed and the condo is hers. During those three years, she says, “Some of my friends have had to leave Hawai‘i. A couple of them made double of what I did. So I’d just say to you, ‘Wait—you don’t have to go live in Florida.’”

 

 

growing an a$set and revenue base

 

At 29, Jacque Vaughn had tamed her spending—and her debt. “I didn’t run it up so much that I couldn’t get out from under it.” And although it may have seemed as if the lessons learned from her parents hadn’t sunk in, she was ready for a change. A special incentive took the form of what she calls “a mean-spirited kick in the skirt.” When she moved on from her first job, her boss—her third in two years—said: “You’ll never do better than you did here,” financially. At the time, she was making $34,000 a year. “And I remember thinking to myself: Of course I can.”

 

Meanwhile, Jacque’s parents had some advice. “‘You’re giving all your money to the landlord,’ they said. ‘Buy an apartment. You don’t have to love it.’” Working with a budget of $125,000, in 2000 she found an 800-square-foot condo at Crosspointe by Aloha Stadium. It was leasehold, with 20 more years to run, meaning she could end up with nothing for her investment. “Any less time on the lease and banks wouldn’t finance it,” she recalls. Her Realtor thought she might be offered a deal on the lease down the line, however.

 

“I gambled on it,” she says, “thinking it would be the same as paying rent.” In the end, the landowner offered her the chance to buy after five years, for an additional $46,000. “The day I bought it was really exciting and liberating. I was owning my life.”

 

She also owned an investment property that is now worth $400,000. When she met a man and started a serious relationship, she says, “I said, ‘This is the way to go, this is how it can be done in Hawai‘i. If we can buy property and rent them for close to the mortgage and stay budget-neutral, we should do it.’” By the time they were married, six years later, they each had two properties—hers at Crosspointe and his in Mililani.

 

Then her husband took an overseas posting in Sicily. “We got all our moving expenses paid for by the government, we could rent out our place, let it appreciate and let someone else pay the mortgage.” While an immediate financial boon, the four-year sojourn would end, however, in divorce.

 

 

ri$ing above disaster

 

Stuff happens. Things fall apart. Disaster strikes even the best-prepped.

 

After separating from her husband, Jacque Vaughn moved back to Hawai‘i in 2009 and into her original Crosspointe condo. “I remember being shocked—there was nobody at the mall, nobody at restaurants, For Rent signs everywhere.”

 

With the divorce, she says, “there was a financial reckoning.” But she was able to find her footing. “You need to have a hard times strategy,” she says. “I think you should always put yourself in a position where you’re prepared for the worst. If you have strategies in your life that are solid and good, you’re going to weather the storm, whether recession, losing your job or divorce.”

 

Of particular importance was keeping a level head in dealing with the end of her marriage. “Fortunately there was enough respect in the relationship that I could say, ‘Hey, you came in with two properties, I came in with two properties, let’s walk out of the marriage with what we came in.’ I don’t think we even used a lawyer. We used a paralegal.”

 

By working the problem, not the grievances, Jacque avoided the divorce penalty that many women pay (they typically lose 20 percent of their income in the aftermath of a divorce). She also never lost touch with her career while overseas. Among the companies Vaughn did long-distance consulting for was a former employer, the Hawaiian Humane Society. Upon her return, she says, “they welcomed me back with open arms.” And it was here that she met her future husband, Keoni.

 

When disaster strikes, she sums up, “the only thing I can recommend is make a thoughtful decision, not an emotional one.”

 

pa$sing it on

 

Good planning and financial transparency have a cumulative effect in the typical family’s life cycle. Learning to talk dispassionately about finances with members of the younger and older generations reduces friction and misunderstandings. Keeping everything under wraps, however, virtually guarantees a struggle, even a fight, that can inflict ruinous costs and permanent emotional damage.

 

For Keoni Vaughn’s family, everything fell apart when his 104-year-old part-Hawaiian great-grandmother died. “Her trust went into effect and it was a total nightmare. My grandmother came to me for help—so, in my 40s, this is the first time my family has ever talked about money. Before when I asked, it was, ‘None of your business, pal.’”

 

As often happens in large, complicated multigenerational families, various members had cut different kinds of backstage deals with each other and the great-grandparents. There were trusts within trusts, with cloudy wording. Different properties were involved. The main trust had been written long before, but both the great-grandfather and one of two brothers had died. Members on the Mainland were out of touch.

 

But at least Keoni had a different way of looking at money; watching and dealing with Jacque’s family had been a revelation. “They treat me like their son,” he says of the Smiths. “There’s no holding back. They talked to me about stocks and bonds. They started me thinking about property and real estate.”

 

Within his own family, on the other hand, things escalated to the point of one of the surviving brothers threatening to sue, even if the costs would sink the estate and force the sale of properties at auction. Keoni brokered a deal that diminished his own grandfather’s inheritance, but allowed a clean break. (The malcontented octogenarian moved into a family property and a month later passed away.)

 

Now, Keoni Vaughn says: “I’m breaking the mold when it comes to my family. I lived a life of secrets. To me that’s just so detrimental to those left behind.”

 

Almost four years ago, Jacque and Keoni adopted a son, Hunter. “This year my husband and I undertook the emotional process of setting up our own trust,” says Jacque. “And it was a life-changing experience to come face to face with our own mortality and scenarios that can empower or cripple your heirs. Inheritance can rob heirs of ambition and of truly claiming their own life and we are mindful of that and have seen it happen.”

 

Adds Keoni: “If we die, I don’t want our son to have access to the trust until he’s 30, and then only for education and medical purposes. He’s required to go to school to access any of this money.”

 

Today, Keoni is the executive director of the Lāna‘i Cat Sanctuary, which is also a tourist attraction enjoying national attention, including a recent CNN profile. He commutes from O‘ahu and is proud he just got 100 percent of his employees to sign up for the 403(b), the nonprofit’s 401(k). “I felt so passionate about getting them started in the right place,” he says.

 

 

A few years ago, Jacque Vaughn took a deep breath and started her own business, Transcendence Pacific LLC, a community engagement consulting company. “My parents grew up much less affluent than our upbringing,” she says. “They received nothing from their parents upon their death except for memories and mementos. And yet they have created a wonderful lifestyle and comfortable retirement. They set themselves up to ensure they will never have to depend upon their children for anything and they did it in Hawai‘i. And they expect us to do the same, by their example.”

 

 

READ MORE STORIES BY DON WALLACE

 

 

7 things you need to know about money before you graduate

https://www.chase.com/news/021119-money-before-you-graduate
smart investments, savings tips, 401(k)

African American girl smiles at the camera holding her diploma from college during graduation day.
African American girl smiles at the camera holding her diploma from college during graduation day.
02/11/19
African American girl smiles at the camera holding her diploma from college during graduation day.

Your Money

Understand Your Finances

Let’s have some real talk for a minute.


Managing money can feel daunting: as you approach graduation, it might seem like a bunch of weird stuff like taxes and deductions, fees and interest rates, is rushing toward you. But you don’t need to be the next Warren Buffett to put your best foot forward financially. In fact, some of the most important steps to financial success are super simple.

Here are seven things you should know about money as you contemplate your first steps into financial adulthood:

1. Learn how to make ends meet

The first thing you need to master is living within your means. After you land your first job, get a handle on your actual monthly take-home pay—the money you have after accounting for taxes, insurance, retirement, and other withholdings. Then, subtract your total monthly fixed costs, including rent, utilities, car payment or student loans. If you make an automatic contribution to a savings account, factor that in, too.

What’s left after your set expenses is your discretionary income, and how you spend it—or save it—will influence your budgeting, savings, and investing. Love trying new restaurants? You may have to compromise by eating inexpensive meals at home, and packing lunches for school and work. That way, you can splurge a couple times a month.

2. Put time on your side

Saving may seem like a stretch when you first begin juggling the expenses of adult life, but even small contributions can add up over time. Generally, it’s not recommended to start investing until you have about three to six months of living expenses saved, though this varies based on your own situation.

3. Keep it simple

David Hilty, 22, credits a high school internship with a financial advisor with helping him navigate the early stage of adulting. The internship, he says, was a crash course in money management, and how investing really works. “Before my internship, I had an interest in investing, but I didn’t know where to start because it’s such a complex world,” David recalls.

You don’t need to be a stock market expert to invest successfully. Warren Buffett, widely considered one of the world’s most brilliant investors, has said the single best investment is a fund—or combination of stocks—that follows the Standard Poor’s 500 index, which tracks the 500 largest US stocks. The beauty of this sort of fund is that, since it’s invested in hundreds of different stocks, you have an opportunity to get the safety of a diverse collection of stocks without having to invest in each one separately. While this is a good example of how you can diversify, it’s important to keep in mind that there are more layers of diversification. For example, other diversification options include holding investments across stocks, bonds, and other asset classes and from different parts of the world.

4. Be consistent

When it comes to saving, slow and steady really does help win the race. Making monthly, automatic contributions to a savings account can put you on the path to long-term money growth—and economic security.

This approach can also work in long-term investing if you make consistent contributions. This strategy, known as “dollar-cost averaging,” takes your emotions out of the equation. Regardless of whether you’re nervous about market downturns or excited at upswings, you’re investing more when prices are lower and getting the benefit of upturns.

5. Don’t blow the big picture

Pay attention to fees. Overdrawing on your checking account or missing the due date on a credit card payment can easily cost you $30 a pop and also cause a ding to your credit score. Meanwhile, above-average investment fees can add up to a huge expense over time. Pay attention to how fees can impact the overall return of a mutual fund.

For most investors, the biggest cost is the fees charged by the funds they invest in. While these fees are often less than one percent, they can eat into your returns over time.

6. Get tax savvy

One of the more painful rites of passage into adulthood is the realization that a considerable chunk of your paycheck will go to taxes. Luckily, there are ways to cut the amount you give Uncle Sam. One of the best is a 401(k) or other tax-friendly retirement saving account.

When you opt for a traditional 401(k), your contributions are taken out of your salary before you pay taxes. Once that money is taken out, your take-home pay drops, which can put you into a lower tax bracket. That means you’ll pay less taxes on all your income.

Of course, you’ll eventually have to pay taxes on all those retirement contributions, but—on the bright side—you’ll have years of collecting interest on money that would have gone to the IRS.

Another benefit is that many companies will match your 401(k) contributions, contributing money to your retirement. While it can vary widely, a typical program will match a percent of the employee’s contribution, up to a certain amount of their salary, like 50 cents on every dollar contributed, up to 5 percent of their salary. For a recent grad who lands a job paying $50,000 a year with a dollar-for-dollar match of up to 3 percent, that amounts to an extra $1,500 a year for those who contribute enough to reach the full match .

7. Pay taxes on your retirement now…and save later

401(k)s aren’t the only option for your retirement. You can also invest via a Roth IRA if you qualify or—if your employer offers it—a Roth 401(k). Unlike a standard IRA or 401(k), these plans require that you pay taxes today, which means that when you are eligible to start receiving distributions in retirement, you won’t have to pay taxes on the money you receive. Since everyone’s situation is different, you should speak to a tax advisor to help you decide which retirement account is right for you.

Like any stepping stone to adulthood, learning how to manage your money is a process. By developing some smart habits and a little knowledge today, you can set yourself up to be that much more ahead of the game tomorrow.

The information within this document is being provided for informational and educational purposes only. It is not intended to provide specific advice or recommendations for any individual. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult the appropriate financial professional.

Investing involves market risk including the possible loss of the principal amount invested. Asset allocation/diversification does not guarantee a profit or protect against a loss. JPMorgan Chase Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.

Any type of continuous or periodic investment plan does not guarantee a profit or protect against a loss. Since such a plan involves continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to continue your purchases through periods of low price level.

Investors should carefully consider the investment objectives and risks, as well as charges and expenses of the mutual fund before investing. To obtain a prospectus, contact your Advisor or visit the fund company’s or insurance company’s Web site. The prospectus contains this and other information about the mutual fund. Read the prospectus carefully before investing.

JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (JPMS), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase Co. Products not available in all states.

INVESTMENT AND INSURANCE PRODUCTS ARE:
• NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

JPMorgan Chase Bank, N.A. Member FDIC

© 2019 JPMorgan Chase Co.


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3 Secrets to Make Your Money Last in Retirement

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Millennial money: Minimalism can declutter finances, too

Christian Matney, 22, and his wife, Aubry, 23, haven’t let their youth hinder them from big financial goals.

The Austin, Texas-based couple — content creators at YouTube channel The Matneys — are travelers, entrepreneurs and homeowners, thanks in part to their commitment to financial minimalism . The approach involves decluttering accounts, obligations and balance sheets.

“We got things simple enough (to) where we both knew where our money was going,” Christian Matney says.

Here’s how financial minimalism can help you clarify goals, reduce stress and focus on what matters.

LIST YOUR MOTIVATIONS

Minimalists live intentionally by carving out goals around which they center their lifestyles. But the key is knowing what those priorities are.

“If you’re not directed and know exactly where you’re going, something’s going to be directing you,” Christian Matney says.

The Matneys married in May 2016 and began mapping their goals and documenting milestones on YouTube. At the time, both were employed at the same startup, working long hours and unable to commit much time to one of their top goals: travel. They set about simplifying.

When they moved into an apartment together, they purged many of their belongings — and many of their financial obligations. “We had tons of unnecessary expenses we didn’t even know were there,” Christian Matney says. He notes they went from 30 monthly bills — including subscription accounts and donations they didn’t realize had piled up — to five.

They then bought a van and, in 2017, moved into it, taking their jobs with the startup on the road. Along the way, they continued building their social media brand. By 2018, Christian says, they were able to quit their jobs and become business owners themselves, focusing on their brand and building websites for other companies.

For the Matneys, it was a matter of visualizing a goal — travel — and organizing their lives to meet it.

“The money follows, the steps follow and everything follows, but you’ve got to know where you’re going first,” Christian Matney says.

WEIGH VALUE VERSUS STRESS

When deciding whether to buy, skip or toss an item, minimalists try to determine whether it adds value to their lives. Apply that to your financial accounts.

Beyond holding your money, accounts should save you time, fees and, perhaps most importantly, stress. For 64% of Americans, money is one of the most common sources of stress, according to the 2018 American Psychological Association’s Stress in America Survey.

If your accounts are stressing you out, switch, close or consolidate. “If you can take four different accounts and move them into one, on your brain, that makes such a tremendous impact because your finances are so much easier to manage,” says Brent Sutherland, a certified financial planner and self-proclaimed “semi-minimalist.”

Take a look at:

— Bank accounts. Keeping track of checking, savings, money market and/or CD accounts can be daunting and expensive, thanks to service fees. Resolve to manage only a few low-cost options. For the Matneys, one savings account and two checking accounts suffice. Some online savings accounts pay upward of 2 percent annual percentage yield, much higher than the 0.09 percent national average.

— Credit cards. Clear out plastic that no longer fits your spending habits or charges an annual fee. If you have an older card with a high limit, closing it can ding your credit scores, but you can still move it to a sock drawer.

— Debts. Moving debt to a balance transfer card can mean paying less interest. If student loans are part of your debt mix, you can consolidate or refinance. Automating your payments can help, too, especially if you’re still writing checks or paying via multiple creditors’ websites.

— Investments. If you’ve changed jobs, see if you can transfer your old 401(k) to your new employer’s plan, or roll it over into an IRA. If your other investments are scattershot, transferring them to a single brokerage firm can help you better track your allocation and performance, Sutherland says. (Before doing so, ask about costs for such transfers.)

SPEND WITH PURPOSE

In 2018, the Matneys became homeowners, splitting the down payment and monthly mortgage 50/50 with Christian’s grandparents. All four are on the deed, and they all live together.

Adding responsibilities and roommates may seem at odds with minimalism. For the Matneys, who still travel, the arrangement makes sense.

“It gives us . a home base at an affordable rate, an investment property and an ability to take care of my family, which is a huge factor for me,” Christian says.

_____________________________________

This article was provided to The Associated Press by the personal finance website NerdWallet. Melissa Lambarena is a writer at NerdWallet. Email: mlambarena@nerdwallet.com. Twitter: @lissalambarena.

RELATED LINKS:

What is a balance transfer and should I do one?

Minimalist finances and budgeting https://www.theminimalists.com/finances/

Transferring your investment account https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-transferring-your-investment

Tips for Managing Your Money Like a Millionaire

Just because you don’t have the bank account of a millionaire doesn’t mean you can’t manage your money like a millionaire. Improving the health of your finances is all about improving your relationship with money. Here’s a handful of key takeaways we can all learn from some of the wealthiest people in the world.

Forget About Instant Gratification

Before you swipe your card, click the “Purchase” button on your computer, or fork over your cash, ask yourself if you’re making the purchase because you want an immediate rush of happiness. If so, the next question to ask is whether that happiness will curdle to regret in the near or far future. Rather than make financial decisions because what you’re buying will give you instant gratification, it’s better to make purchases that give you lasting gratification. Buying a cup of coffee may put a smile on your face until you finish it, but stashing that money in an emergency savings account will give you peace of mind that can last for years.

Invest in the Stock Market

There’s no doubting that the stock marketing and putting your money in it can seem intimidating. That said, it’s easier than ever to get started with investing. Better yet is the fact that you don’t need a lot of money to start investing. There are plenty of apps and online services that break down how the stock market works and how you can start investing a little here and there as another means of saving for retirement.

Make Your Savings Automatic

Speaking of emergency savings and the stock market, you can automate both. What’s so great about automating is the fact that you don’t have to consciously remember to put money into a savings account or your stock market investments, giving you one less thing to worry about. Talk to any bankruptcy attorney in Flint, MI, or elsewhere and you’re sure to understand how this simple step can do wonders for your financial health and any anxiety you may have surrounding your financial health.

If you do decide to automate your savings and investing, be sure you have that money in the funding account. Otherwise, any fees you incur are likely to wreck your good intentions.

Get Help Before You Need It

Speaking of bankruptcy attorneys, the best time to get help with your finances is well before you actually need it. Sit down with a financial planner (checking to see if any in your area offer a free initial consultation) to get a professional financial checkup, so you know whether you’re doing as well as you think and hope you are when it comes to your money. Stockbrokers, financial planners, and tax consultants can offer you some great insights on ways you can maximize your efforts and your money. There could be a great opportunity you’re unaware of that you may come to regret years later when you learn it’s come and gone.

Differentiate Between Your Wants and Your Needs

Another question you can ask yourself before making a purchase is whether this is something you want or something you need. This answer requires a level of brutal honesty, one you need to come to terms with if this tip is to do you any good. Do you really need to keep paying for cable every month when you can cut the cord and save money on one or two streaming services? Do you need to eat out again, or do you have leftovers at home in your fridge that you can have for a few meals? Once you learn to tell the difference between the two, you can save a lot more money than you realize.

This is just a quick starter for thinking like a millionaire. Use these tips to see how they work for you and your finances. You don’t have to look like a CEO to spend and invest like CEO.

Better Money Habits: 8 tips for getting the most out of your checking account

While some checking account information might seem obvious — after all, the majority of Americans own checking accounts — you may not be taking advantage of a number of common features. Read on for a few checking account tips to help you manage your money and get the most out of your account.

 

1. Set up direct deposit

One of the easiest ways to get the most out of your checking account is to set up direct deposit. Direct deposit is a fast and safe way to deposit money into your account, without you having to lift a finger. If you’re a Bank of America customer, you can set up direct deposit.

2. Sign up for mobile and online banking

The majority of Americans who use the internet bank online. Enrolling in online banking allows you to monitor your accounts, including your transaction history and your balance, simply by logging in. Mobile banking allows you to do the same via your phone or tablet. Additionally, by banking online you can quickly access accounts, order checks, pay bills and transfer money, track spending, set alerts and travel flags, and manage your accounts from almost anywhere. If you’re a Bank of America customer, learn more about Online and Mobile Banking features.

3. Take advantage of your debit card

With a debit card, you can access your checking account conveniently and securely, without the hassle of cash or checks. You can use a debit card at millions of locations worldwide, including places that don’t take checks such as online merchants. Debit cards can also be used at ATMs for deposits, withdrawals and transfers between your accounts. With debit cards, your purchases and withdrawals are deducted directly from your checking account. Debit cards also offer security if your card is lost or stolen or if fraudulent purchases occur.

4. Move money between accounts

If you have a checking and savings account at the same bank, it’s usually fairly easy to transfer money between your accounts. You can link your accounts, but you don’t have to. If you know you have a certain amount of money in your checking account at a certain time each month, you might consider setting up an automatic transfer to your savings account. Automating the process can be a great way to build your savings.

5. Learn to manage overdraft fees

You’re charged an overdraft fee when you spend more money than you have in your account. The best way to avoid these fees is to keep an eye on your account balance or to set up alerts, which we cover in tip No. 6. Many banks offer optional overdraft protection, which allows you to link an eligible checking account to other eligible accounts to cover you in case of an overdraft. However, these plans may come with fees, so be sure to know the terms before signing up. Some banks enroll you in certain overdraft-related services automatically, so it’s a good idea to check on your account’s terms.

6. Take advantage of alerts

If you’re enrolled in online banking, you can set up alerts to notify you via email or text of certain activity. For example, you can set up balance alerts for when the funds in your account drop below a certain amount, which can help you avoid overdraft fees. Just make sure your bank has your up-to-date cell phone number and email address.

7. Look into automatic payments

Setting up automatic payments for recurring bills can help ensure you pay your bills on time with no hassles. This common checking account feature can help eliminate worry (no need to wonder whether your check was lost in the mail), save you money on stamps and free up your time. Automatic payments can also be a good way to help ensure your bills are paid on time when you are traveling.

8. Know how you’re protected

Many banks offer security features to help protect you if your debit card is lost or stolen, including security features on the card (such as photo ID or chip technology), monitoring for unusual purchasing, and protection against liability for fraudulent transactions reported within a specified period. Some banks may allow you to put a virtual lock on your card via your mobile or online account if you suspect the card has been lost or stolen. Check with your bank to learn more about the security features it offers to help protect against theft and fraud. It’s also important to know that federal law limits your responsibility if your debit card is stolen, but you must act quickly to notify your bank.

See more stories on our Better Money Habits page.

Love and Money: How to Manage Finances Equally

WASHINGTON, Feb. 11, 2019 /PRNewswire/ — The topic of money has always been a leading cause of stress in a relationship. Often, conversations about money are pushed aside for another day or pushed under the rug all together. However, the key to a healthy relationship comes down to open and honest communication, and this is especially true for conversations about your joint finances, says CFP Board Ambassador JJ Burns, CFP®.

“While there is no ‘one size fits all’ approach to managing finances, it is essential both parties are active participants in critical conversations, like those around your finances,” says Burns. “Once you are married, many financial details become entwined with your spouse’s, so maintaining open, honest and constructive conversations about your debt, savings goals and budgeting plans will help you and your partner maintain transparency when it comes to your joint finances.”

Whether this is your first conversation about money or your hundredth, Burns highlights the top three financial topics you and your significant other should cover to better manage your finances together:

  • Commingling Credit: Once you’re married, your credit score no longer stands alone. Be honest about existing debt, from the beginning, so there are no surprises down the road.
  • Drafting a Budget Together: Lay out your joint income and expenses – both combined and separate. Once the two of you have a realistic idea of your cash flow, work together to create a monthly budget that works for both of you.
  • Planning for the Future: Be candid about your long-term financial goals. If you want to retire to a secluded log cabin in the mountains or travel the world with your significant other, communicate those dreams so that you can prepare for the future together.

Read Burns’ full blog post here with more details.

For more guidance on ensuring you and your partner clarify your goals and get on the right track together, talk to a CERTIFIED FINANCIAL PLANNER™ professional today or visit www.letsmakeaplan.org

ABOUT CFP BOARD

Certified Financial Planner Board of Standards, Inc. is the professional body for personal financial planners in the U.S.  CFP Board sets standards for financial planning and administers the prestigious CFP® certification – one of the most respected certifications in financial services – so that the public has access to and benefits from competent and ethical financial planning.  CFP Board, along with its Center for Financial Planning, is committed to increasing the public’s awareness of CFP® certification and access to a diverse, ethical and competent financial planning workforce. Widely recognized by firms as the standard for financial planning, CFP® certification is held by more than 83,000 people in the United States.

SOURCE Certified Financial Planner Board of Standards, Inc.

Related Links

http://www.cfp.net