This Map Reveals How Much Money You Need to Save to Retire by 35 in Every State


What You Need Saved to Retire By 35

Alabama: $1,546,362
Alaska: $2,252,234
Arizona: $1,689,607
Arkansas: $1,527,377
California: $2,367,866
Colorado: $1,851,837
Connecticut: $2,295,381
Delaware: $1,806,965
Florida: $1,710,317
Georgia: $1,580,879
Hawaii: $3,260,131
Idaho: $1,622,299
Illinois: $1,651,638
Indiana: $1,553,265
Iowa: $1,579,153
Kansas: $1,551,539
Kentucky: $1,639,558
Louisiana: $1,606,766
Maine: $2,000,260
Maryland: $2,231,524
Massachusetts: $2,229,798
Michigan: $1,556,717
Minnesota: $1,781,077
Mississippi: $1,491,134
Missouri: $1,529,103
Montana: $1,827,675
Nebraska: $1,636,106
Nevada: $1,877,725
New Hampshire: $1,839,756
New Jersey: $2,110,715
New Mexico: $1,579,153
New York: $2,312,639
North Carolina: $1,630,928
North Dakota: $1,718,947
Ohio: $1,605,041
Oklahoma: $1,503,215
Oregon: $2,233,250
Pennsylvania: $1,698,236
Rhode Island: $2,084,827
South Carolina: $1,687,881
South Dakota: $1,691,333
Tennessee: $1,542,910
Texas: $1,577,427
Utah: $1,725,850
Vermont: $2,022,696
Virginia: $1,744,834
Washington: $1,886,354
West Virginia: $1,596,411
Wisconsin: $1,670,623
Wyoming: $1,537,732

How to save money with personal finance apps, debt hacks, and more

Put down the latte and listen up: If you’re like the millions of Americans living paycheck to paycheck, saving money needs to be on the top of your to-do list. Like, stat. 

Understanding personal finance can be intimidating. You know how much money you make and you’re trying to save a little bit here and there, but the reality of mounting student loan bills and other living expenses can weigh heavily on millennials — which is why it’s difficult to think of the bigger picture.

Listen: a personal finance app (or two or three) can be your best friend in terms of getting smarter about how you save — and spend — your money. (We recommending starting with YNAB, but more on that later.)

Believe it or not, about 66% of people between the ages of 21 and 32 have nothing saved for retirement, according to a survey by the National Institute on Retirement Security. It’s no wonder that millennials are finding it difficult to buy a house

Although retirement is still a very long way off for this generation, it’s important to be mindful of the future so you can find a clear path towards financial freedom for the end of your career, a vacation, or even an unexpected expense or accident. 

The basics of personal finance and savings might be lost on some people who feel that it’s near-impossible to save when most of their money is gone within days of getting a paycheck. The cycle begins again and you just feel stuck trying to keep your head above water. However, financial freedom is very reachable through careful money management, budgeting, expense tracking, and getting smart about saving, investing, and building credit.

The good news is that it’s never too late — or too early — to get smarter about your finances. After all, the tools you need to help you along your financial journey just might be in your pocket. 

Here’s a step-by-step guide to saving money by using smartphone finance apps and other clever hacks:

1. Create a budget

Knowing how much money you make is not the same as spending it wisely. 

Staying organized is key to your financial freedom and budgeting apps like Mint and YNAB can help you create a budget and stay within your means every month. Mint is a free app (that’s a very important word) that you can customize and tweak to fit your income and help you set your financial goals down to the penny.

If you’re still unclear on how much you should save every month, Mint can also set your budget based on your income. It can create limits and categories on your spending habits, which you can override at anytime, while the app can connect you to your bank accounts, credit cards, and lenders to give you a full picture of your finances.

Meanwhile, YNAB, which stands for You Need a Budget, takes your monthly spending and expenses to the next level with an in-depth look at every dollar in your bank account. In fact, one of the rules for YNAB is every dollar needs a purpose, so you know it’s serious about budgets and making sure you stay on track instead of “winging it” from month-to-month. 

With YNAB, you define what’s important to you and how to achieve your goals with good financial spending and saving. The app keeps you on track to use your money on the important things in life like rent, food, medical expenses, and more. It can even account for any unexpected expenses and emergencies without putting a strain on the other things going on in your life.

YNAB has a 34-day free trial available, but afterwards it’s $6.99/a month. 

2. Track your spending and expenses

Now that you have a realistic and workable budget, you have to stick to it. Smartphone apps like Quicken can take your path to financial freedom to the next level. Quicken can track all of your spending habits by just taking a photo of your receipts, which automatically puts your spending into categories, dates everything, and tracks the amounts deducted from your balance with your approval.  

In fact, Quicken is probably the most in-depth of all the financial apps on this list because it’s so feature rich. The app can track and record your expenses and investments, create easy-to-read spending reports, and can pay your bills online. Once you sync the app to your bank account, you can even transfer funds from one account to another with the desktop version of the app. It can even predict and forecast your cashflow for the upcoming month, so you can get a better idea of all of your finances.

One of the best things about the app is that it’s completely searchable. You can search through all of your spending habits, expenses, and reports to get easy access of your personal finances. The Quicken app is also easy to understand and use with a very intuitive interface that even works offline when you don’t have a data connection.

In addition, the app sends you notifications and alerts when your bank balance is getting low and if you’re over-budget for the month, so you don’t over spend. Think of the Quicken app as your personal accountant inside of your pocket that you don’t have to feed or clothe. 

The Quicken app works with Android and iOS mobile devices and it’s free with the purchase of any Quicken product. 

3. Manage your debt

According to ValuePenguin, over 44 million millennials are in crippling debt upwards of $33,000 — mostly from student loans from financial institutions. In fact, most millennials are putting off “life milestones” like starting a family and homeownership because their massive debt is in the way, while some are forced to move back home with their parents just to stay above water. Getting out of debt is not an easy feat, but if you have the right tools and a little bit of optimism, you could be debt-free sooner than you think.

Smartphone apps like Debt Payoff Planner can help ease your burden with a bird’s eye view of how much money you owe, along with reasonable step-by-step methods and techniques to get out of debt faster. The app can track your debt payments and give you a time frame to financial freedom. This means you can track your progress and feel better about your money situation with a real game plan. The best part about this app is that it’s completely free.

Another good idea? Transfer your debt to a credit card with a 0% APR introductory period and get aggressive with those payments. That way, you won’t be paying any interest and you can pay down the debt faster than if you were just making the minimum payment every month. 

The BankAmericard® credit card by Bank of America offers a 0% introductory APR period on both balance transfers and purchases for 18 billing cycles, after which a variable 15.24% to 25.24% APR will apply based on your creditworthiness. The BankAmericard® credit card has a $10 or 3% (whichever is greater) transfer fee and no annual fee. 

4. Get smart about saving money

“A penny saved is a penny earned.” This phrase is commonly attributed to Benjamin Franklin, who is believe to have *coined* it during the 18th century. If Mr. Franklin were around today, he’d probably enjoy using a smartphone app like Qapital (pronounced Capital), a fun way to save money by turning it into a game.

Once you download the app, start an account with Qapital and link a bank card with a checking account and begin to set your financial goals. Why are you saving money? Maybe you’re planning a trip to Paris, or want concert tickets for the summer, or are looking to buy a car. After you set your goals, add the amount you want to save. 

Say you want to save $1,200 for a new laptop. Now that you’re all set, you can set up the “rule” for saving. Qapital sets “round to the nearest dollar” as the default, but you can pick and choose how you want to save. If you picked the default, every time you use your bank card, the app rounds the amount to the nearest dollar and adds it to your account automatically. So if you buy something for $5.62, Qapital will take .38 cents from your bank card and add it to your account. You can then transfer your savings into a bank account to start all over again. So you’re saving money without even realizing it.

The app has other “rules” like the “Spend Less Rule,” where you can save the difference if you spend less on one of your favorite expenses and activities, or the “Guilty Pleasure Rule,” where you save money when you do one of your guilty pleasures. You set the goals and the rules, and Qapital helps you save.

Qapital is available for iOS and Android.

5. Start investing — like right now

Now that you’ve managed to save some money, maybe it’s time to invest it and gain some personal capital. If you know next to nothing about investing, Robinhood is a good place to start. This smartphone app gives anyone free access to the stock market. 

For years, buying and trading stocks were only for the wealthy and people in the know. You had to hire a stockbroker who would have to facilitate any purchases and trades on your behalf, while also taking a slice of the pie as commission.

However, Robinhood is a completely free way to enter and get 24/7 access to the stock market game with zero fees and commissions. In addition, Robinhood supports cryptocurrency like Bitcoin, Etherium, Dogecoin, and more. Crypto is supported in 30 states for now, while the app plans to gain support in more locations across the nation. This finance app is a great way to build a solid stock portfolio and net worth, while gaining confidence in investing and using cryptocurrency.

Robinhood is available for iOS and Android.

6. Build your credit

Did you know only 33% of adults ages 18 and 29 have at least one credit card? About two-thirds of millennials don’t have a credit card, according to this survey, and are shy about the proposition of adding more debt on top of their student loan debt.

If you’re afraid of getting deeper into the weeds but you want to build credit, you have to get a credit card to make your credit score soar. (We recommend Credit Cards Explained for more info on this topic.) Once you sign up and are approved, download the Credit Karma app to help you manage your credit. It’s a free app that gives you access to your credit score and credit report, while it can also offer credit monitoring.

Credit Karma can also give you information on how to improve your score, including what factors are contributing to good and bad scores, and what kind of products and services can help you achieve exceptional credit.

Credit Karma is available for iOS and Android.

7. Find a financial coach

Everyone needs some coaching to get them through hard times. Breaking through to financial freedom and happiness could be just an app download away with Joy, a financial coaching and savings app for iPhone. 

Once you create an account, you’re asked to sync your checking account so you can rate your purchases and transactions. If spending money on an item makes you happy, it’s a high value purchase. If it makes you sad, it’s a low value transaction. (It’s basically like the KonMari method of finance.) Joy then tries to make connections between your mood and outlook and how that relates to your spending, which should prompt you to save more money. In fact, Joy is also a bank of sorts because you can open a Joy savings account that’s FDIC (Federal Deposit Insurance Corporation) insured.

In addition, Joy offers savings strategies by tracking your spending, as well as money coaching to help you reach your financial goals — along with a steady stream of articles about finance, happiness, and self care. 

Sorry Android users, Joy is only available for iPhone.

5 Unique Ways to Save Money This 2019

Saving money is an easy thing to do – if you can find the will to press on. For many people, saving money is an arms race. It shouldn’t be like that! A savings journey is a marathon wherein you need to bide your time and continue saving even if you feel bored. To keep things interesting, you may need new ideas.

Here are some unique ways to help you save money:

Set Achievement Milestones

Achievements are some of the quick ways to measure someone’s success. People think that achievements are only tied down to academic and professional career paths. They are somehow right, but the achievement system can be used for many areas – like saving money.

To create a personalized achievement system, you need to set the conditions. For example: if you’ve saved a certain amount this month, you gain a merit. Collect enough merits and you can treat yourself to a nice reward. You will notice that this system is more effective with an accountability partner. After all, it’s convenient to have someone remind you about your recent savings journey.

Don’t put unrealistic amounts in your achievement system. As much as possible, connect the milestones to your current cash flow. As your earnings increase, you can then put up new milestones.

Make Custom Money Jars

Human beings love to categorize stuff. Whether it’s all about heavy equipment or fun snacks for the day, categorization led to different creative ideas. Who would’ve thought that categorization can make saving more interesting than ever?

If you love tinkering with stuff, you should try making custom money jars. They work in a simple manner: you need to fill the personalized jars with varying amounts of money. One jar might contain only hundreds, while another can be set aside for coins. Another different way is to label the jars with specific events and moments in your life. This will keep you inspired to save money as often as possible. If you owe a loan from a licensed moneylender SG like Cash Mart, you can also make a separate jar towards repayment.

Of course you are not limited to jars! You can try different boxes or containers. As long as you can save money, the purpose is intact.

Collect Specific Bills Strictly

To amp your savings habit by a moderate notch, you can try the “specific bills challenge.” Just keep in mind that this challenge might cause a drastic change to your spending habits. It’ll take time to adjust, so don’t be too hard on yourself!

The specific bills challenge is, as its name goes, about collecting specific bills. You begin by setting the rules of the challenge and naming the bills to be collected. If you value hundreds, then you must save hundreds whenever you can. You may need to forego that order of Caramel Macchiato or Blueberry Cheesecake to save the recent hundred bill in your hand. Doing this challenge requires a deep sense of discipline.

Your personal journal can be quite handy with this challenge. List down the bills that you’ve collected for the week, and create a personal tally board. Your brain will love seeing the numbers go up! And of course, your savings account will love the effort as well.

Be a Discount Hunter

Contrary to what people think, it’s not embarrassing to hunt for discounts. In fact, it may be one of the wisest financial strategies that you can do. So if you want to save money consistently, you need to wear a cape and become a professional discount hunter.

To become a discount hunter, you have to take note of details like the offers of various merchants in your location. Avail these discounts whenever possible, and don’t forget about them. You should also learn how to haggle like a real pro. Grocery rebates and coupons can help to a certain degree. Just be wary of some discounts because you might end up spending more money down the road.

Your discounts will be like a trickle first, and the amounts that you can save are variable. Just stick to the habit – you’ll be rewarded soon enough.

Do a Cumulative Savings Challenge

Just like the specific bills challenge, the cumulative savings challenge remains grounded on strict rules. This challenge might be a bit difficult to maintain, but its flexibility is innate. If you’re having a hard time maintaining the cumulative savings challenge, you can stretch the duration or change the rules entirely.

A cumulative savings challenge is all about increasing your numbers periodically. You can set a specific amount for one week, and double it for the next week. As the weeks go by, the law of compound interest will kick in and you might end up rolling in wads of cash. There are many factors that can affect the success of this challenge. First, your debts might hamper the speed of money accumulation. Of course you have to prioritize your repayment plan with your lender for fast payday loans in Singapore. Second, your spending habits need to change. Some things can be sacrificed, while others must be prioritized. It’s all about balance.

Once you are successful with this challenge, you can repeat it as much as you want. Take note of your little victories and be proud of yourself!

Conclusion

Who said saving money is a boring ordeal? By applying the strategies mentioned above, you will have fun while saving manageable amounts at every instance. It might be difficult at first and you might even be tempted to give up. As much as possible, you should do your best to tread on. Sooner or later, your savings account will grow remarkably!

Analysis | Drug Giants Can Save America Billions. But Will They?

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Nobody Cares About Your Big Idea

As an early-stage consumer VC with a laser-focus for efficiency, few things make me wince more than meeting brilliant entrepreneurs devoted to building products few people will want. They mistake novelty, whiz-bang technology and cool factor as the keys to a breakthrough startup. My advice? Humbly admit that consumers don’t care about you, your billion-dollar ideas, or the technologies behind them. All they really want to know is, what’s in it for me?

What sets successful consumer tech startups apart from the fads is how their products impact customers’ two most precious commodities: time and money. We’ve all heard the saying better, faster, cheaper; this is how to apply it with precision.

Eckhart Tolle fans will concur that all we really have is the “now,” so how does your product make each moment better? Consider music listening. Spotify entered a market dominated by iTunes with a subscription service offering access to millions of songs for a single, monthly fee. Without the decision fatigue of pondering whether each new song was worth $1 to access, customers enjoyed better listening time, filled with more, higher quality music. By the end of 2018, 96 million customers had concluded the subscription fee was worth it. Many moments are also spent deciding on and using physical goods. Buyers looking to feel better about themselves will be drawn towards platforms like Poshmark or StockX that highlight branded merchandise.

Faster is more straightforward. Consumers love to find products that deliver the same result in less time. Instacart offers one example, saving busy shoppers an hour by avoiding a trip to their favorite grocery store. This simple convenience exploited a billion-dollar opportunity. Faster can come in both big and small packages, and some of the most easily overlooked opportunities are streamlining frequently performed actions. Keyless car entry, voice assistants and touchpad scrolling are all innovations that have enhanced millions of lives by shaving just seconds off the activities we do many times every day.

To refine your features and marketing message, consider the minutes in your target customer’s week before and after adopting your product. Below is a visual aid from the time tracking app, Life Cycle. Imagine a second-by-second version of a chart such as this, tagged with context and intent, and pinpoint exactly where and how your product makes an impact.

Life Cycle provides a helpful visual timeline for estimating how the average consumer spends each hour in a day.NORTHCUBE.

Moving onto money: who doesn’t enjoy a screaming deal? Getting the same or functionally-equivalent products for cheaper can seismically shift consumer purchasing decisions. Consider resources like the Bureau of Labor and Statistics, which tracks the US consumer dollar and offers a top-down view of market sizes. Walmart grew to the Fortune #1 company by offering everyday low prices and today companies like Wish are finding success by selling direct-from-factory at prices far less than retail can offer.

Of course, a product might deliver only a partial combination of better, faster, cheaper, but the most compelling products offer all three. Uber¹ represents one of the fastest growing tech companies in history through a service that might save you 15 minutes of standing on a corner (faster) while offering a broad array of ride options (better) and lower pricing (cheaper). The trifecta also explains the rise of Roku²which effectively beat out Apple and countless others to become the leading TV streaming platform worldwide. When Menlo invested in 2008, consumers were still running to their local Blockbuster to pick out DVDs on Friday nights. Through the magic of streaming, Roku’s pioneering “Netflix Player by Roku” offered millions of great shows (better), on-demand (faster), at a much lower monthly fee than cable TV (cheaper). Now with its smart TVs, these offerings are effectively free as part of Roku’s platform bundle.

Ultimately, the hardest part can often be picking a small, single challenge to get started on. Many opportunities remain for consumer tech to make a positive impact, including addressing key issues in transportation, housing, lifelong learning, mental health and much more. None can be solved easily, but by having a crystal-clear picture of your product, it’s still possible to capture customer attention in a busy and distracted world. Consumers will always look out for their own best interests, rather than yours. When both can be met simultaneously, great new companies are born.


¹ Menlo Ventures led the Series B round of Uber in 2011 and remains a shareholder.

² Menlo Ventures was the first VC investor in Roku in 2008.

Change your screen habits from time-wasting to money-saving

Apple’s Screen Time feature can tell you more about your iPhone usage than you may care to know.

Like how many text notifications you receive, the number of hours you spend on social networking and how your total usage on any given day stacks up against your average.

The numbers don’t lie, but they can be surprising. If you find yourself wasting too much of your day on your phone or tablet, here are some ideas for how to use your time and devices for something more productive — like saving money.

DOUBLE-CLICK ON YOUR USAGE

First, be honest about how many hours you spend staring at a screen.

Mike Johansson, a senior lecturer in communication at Rochester Institute of Technology, has asked his students to keep track of how they spend their time.

“Over time, I had a few students who came back to me and said, ‘I was amazed. I didn’t realize that over the course of a week I was averaging three to four hours on YouTube every day.’ It adds up,” Johansson says.

Once you’ve tracked your habits or checked your phone’s tally of your usage, make some judgment calls about which activities are (or are not) a good use of your time.

DOUBLE DOWN ON YOUR APPS

If you can’t put down your phone completely, try switching the applications you use most frequently. If you’re going to be on your phone, you might as well make it worthwhile, right?

Instead of opening YouTube, Instagram or Facebook, here are some of the apps and tools that can be a more effective use of your screen time:

— FINANCIAL ACCOUNTS. Download and check the apps for your various financial accounts. “The first app people should sign in to every day is their bank’s app and any credit card apps they use,” Robert P. Finley, a certified financial planner and the principal of Virtue Asset Management in Illinois, said in an email. “First, this process will help them better understand their daily spending, and second, help them keep an eye out for any fraud.”

— BUDGETING APPS. Similarly, budgeting apps like Mint and PocketGuard can assist in keeping your spending in check. Use these regularly to get a better handle on your cash flow and how much money you’re devoting to each category of your budget.

— ORGANIZERS. Organization tools like Evernote and OmniFocus can help, too. Open up these apps to create shopping lists to prevent you from buying extra things you don’t need, or to-do lists to ensure you pay all of your bills on time.

— COUPON FINDERS. Coupon apps, including Coupons.com and CouponCabin , compile coupons for free. Take the time to consult these before shopping to lower the amount of money you’re spending on life’s necessities, such as groceries or household supplies.

— CASH-BACK SITES. Take the extra step to use cash-back websites such as Ebates and BeFrugal to earn money back on purchases you’re already making.

— FREEBIES. Sure, social media is free, but there are other free apps that could be more educational. Libby, for example, is a reading app that uses your library card to access e-books and audiobooks for free.

DOUBLE-CHECK THE CLOCK

While these apps are helpful, it can be freeing to cut down your screen time completely. And contradictory as it sounds, your phone can actually help you limit the amount of time you spend on your phone.

Some apps help you stay off your device altogether. Flipd, for example, calls itself a “digital nudge” to discourage phone usage. Download the app to lock yourself out of your downloaded apps for a certain period of time, says Alanna Harvey, co-founder of Flipd.

“Flipd is a productivity and time management app that people use to help motivate themselves to not get distracted by their phones when they should be doing other tasks more mindfully like studying, reading and spending quality time with family and friends,” Harvey says.

If saving money is your goal, you can add financial management to that list of things to do in the real (not virtual) world. If it helps, get off your phone and spend some time with an old-fashioned paper budget, calculator, your credit card statement and checkbook.

And perhaps most importantly, start by changing your mindset. You don’t have to be tethered to your phone.

“Once upon a time, people literally would call your house, and if you weren’t there, they would call back later,” Johansson says.

____________________________________________

This article was provided to The Associated Press by the personal finance website NerdWallet. Courtney Jespersen is a writer at NerdWallet. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

RELATED LINKS:

NerdWallet: Best Budget Apps and Personal Finance Tools for 2019 https://nerd.me/budgeting-saving-tools

Copyright © 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.

Saving for Baby: Getting Your 529 Plan in Order

“Bank of Dad” is a weekly column which seeks to answer questions about how to manage money when you have a family. Want to ask about college savings accountsmortgage hacks, or how to be a little bit better with money? Submit a question to Bankofdad@fatherly.com. Want advice on what stocks are safe bets? Ask your broker. And then tell us. We’d love to know. 

I’m a new dad. I have a 401(k), a nest egg, and some money set-aside for when, like, the boiler breaks. Now, my wife and I are expecting our first. So, how do I save for my baby? What are my options for saving?  — Lawrence K., New Orleans

You’re smart to be thinking about college now. The average published cost of tuition is already $23,890 a year for out-of-state students, according to The College Board – and that’s at a public university. At the current rate of tuition hikes, you can imagine what that number will look like in 18 years.

Fortunately, there are a number of ways to start investing for higher education that can potentially save you a lot in taxes. Let’s break down the most common ones.

Fatherly IQ

What Parents Should Know About 529 Plans

These state-administered plans have become the go-to vehicle for parents trying to build up their college savings, and for good reason. The money you put in accumulates earnings on a tax-deferred basis, and you don’t have to pay tax on money that you pull out for qualified education expenses. While the money you put into the accounts is taxable at the federal level, many states offer their own income tax breaks on contributions.

One of the perks of a 529 plan is flexibility — you don’t have to worry about income restrictions and there’s no cap on annual contributions. One potential downside is that your own state may not offer a great 529 plan, but feel free to explore other states’ plans if that is the case. Furthermore, you really want diversification in your account anyway, and many 529s offer index funds that don’t charge an arm and a leg in fees.

What Parents Should Know About Coverdell Plans

Coverdell Education Savings Accounts – formerly known as Education IRAs – were once a popular way to prepare for the enormous costs of college. But when 529 plans came around, Coverdells starting losing a lot of their luster.

Yes, they offer the same tax-deferred growth and tax-free distributions as a 529. But you can only contribute up to $2,000 a year; given the soaring costs of a university education these days, that just doesn’t cut it for a lot of parents. Compare that to a 529, where each parent can kick in up to $15,000 a year and still be covered by the annual gift tax exclusion (you can put in even more, though each state has a limit on the total value of the account).

Plus, with a Coverdell, individuals have to make less than $110,000 (or $220,000, for joint tax filers), in order to contribute. You can see why these accounts are no longer part of the “in” crowd.

What Parents Should Know About UGMA/UTMA Accounts

Some parents choose to set up Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts for their children’s future education. Both are essentially trusts that put you – or a separate custodian of your choosing – in control of the assets until your son or daughter reaches adulthood.

There’s at least one important advantage of custodial accounts: you can invest in pretty much any securities you want, unlike a 529. But they don’t receive any tax treatment. What’s more, custodial accounts have a bigger impact on financial aid packages than a 529. There’s also the fact that a kid can use a UTMA for whatever he or she wants when they are of age. So if an idea to quit school and hitchhike through Europe enters their mind instead, there’s no stopping them from burning through that money.

What Parents Should Know About Roth IRA Accounts

Normally, the earnings you pull out of a Roth IRA before age 59½ are subject to income taxes and a 10 percent penalty (you can always withdraw contributions to a Roth tax-free). However, the penalty is waived if the funds are used for qualified education expenses.

True as that may be, parents under 59½ don’t get the same tax benefit they would with, say, a 529, because they’re paying tax on the distributions. And pulling out your contributions can make it harder for your child to get need-based financial aid, so you have to be extra-careful when you withdraw money.

What Parents Should Know About Whole Life Insurance

Yet another option is to take out a whole life insurance policy and either withdraw or borrow against the cash value of the policy once your child heads off to college. The money isn’t counted against your child for financial aid reasons, and as long as you don’t pull out more than you’ve paid in premiums, it’s not subject to income tax.

But there’s a major knock on this approach, too. You get fairly mundane rates of return when you compare it the typical performance of a stock/bond mix over time. Unlike most investment accounts, there are also substantial upfront fees that eat away at your earnings potential.

And bear in mind that borrowing against your cash value reduces your death benefit, unless you pay it back. So while it might seem like a good way to pay for college, you could be eroding your family’s safety net in the process.

There are exceptions to every rule, of course, but you can see why the 529 is so popular. Certainly if you have unique financial circumstances, it won’t hurt to speak with a financial advisor and see if one of the alternative routes makes sense.

I have a 529 account for my daughter and realize I don’t know what I can do with it? I’ve been told they’re more versatile than I think. How can I capitalize on that versatility? — Jason C., Utica, New York

Indeed you can, thanks to the big tax law that Trump signed in late 2017. Now, you can use up to $10,000 of money in a 529 account to pay not just for college but also private primary and secondary tuition.

A word of warning, though: These investment plans are run by states, not the federal government. And as of November, 17 of them hadn’t updated their laws to comply with the tax bill.

What does that mean exactly? If you’re in one of those 17 states, it’s possible that your withdrawal for K-12 tuition could trigger state income taxes. Needless to say, you’ll want to do a little research to understand the potential impacts.

For everyone else, 529s are a pretty sensible way to help defray the cost of a private education, including the purchase of books and computers. Your money grows on a tax-deferred basis and bypasses the IRS as long as it’s used for qualified expenses.

You don’t necessarily have to put money in the account for very long to reap important benefits. Because most states offer a tax deduction for contributions, you can lower your tax bill even if you pull money out shortly after it went in.

Why you should start thinking about retirement as early as possible

We often delay financial planning when it comes to retirement because it drums up thoughts of old age and mortality. But you’re doing yourself a major disservice if you don’t prepare for it as soon as possible. A helpful way to look at saving for retirement is to reframe the idea entirely. “Think of it as saving for options in your future, like the ability to make the decision to stop working at some point or travel,” said Arielle O’Shea, personal finance expert at Nerdwallet,. “If that word is dragging you down, think about the sort of freedoms that come with it. That can help young people can identify with it.”

And yes, you should start thinking about it as soon as possible. “There is a huge advantage to starting your retirement fund early,” said Mark Sette, certified financial planner and portfolio manager at Wealthsimple. “The sooner you start, the more time you have to benefit from compound interest, the snowball effect where the interest you earn also earns interest, and the interest on that interest earns interest, and so on forever. The larger your balance gets, the more money your money makes.”

A retirement fund will basically feel like free money once you get there. And it’ll be yours for the taking, so long as you figure out the right type of plan for you.

Where to start

After you’ve decided on the financial institution in which you’d like to invest your money (one of the largest providers is Fidelity Investments, for example), decide on the type of account, which depends largely on your income, tax bracket and employment type. According to Sette, your main account type options include:

– 401(k) or 403(b): Your employer will often match a percentage of your annual contribution, which is deducted from your paycheck.

– Solo 401(k): Great for self-employed professionals, the solo 401(k) works like a traditional 401(k), but it only covers a business owner with no employees, or that person and their spouse.

– IRA: An Individual Retirement Account, or IRA, allows you to save for retirement with a lower income tax bill since the funds you contribute to this account are tax-deductible.

– SEP IRA: A Simplified Employee Pension Plan, or SEP IRA, allows you to contribute up to 25 percent of your net income.

– Simple IRA: This allows small business employees and employers to establish an employer-contributed plan without the costs associated with a traditional 401(k).

– Roth IRA: This works like a traditional IRA, however, you do pay taxes on the money you contribute (the limit this year is $6,000), and you don’t pay taxes on the money you earn in the account. If you earn over $135,000, you might not be eligible for a Roth IRA.

Employment retirement fund

Many full-time salaried jobs come with the benefit of a retirement fund. And it might be wise to actively seek out a position or employer that offers a robust plan. It might be difficult to visualize at your current stage, but retirement will play quite a significant role in your life.

“If your employer matches contributions to your 401(k), it’s a guaranteed return on your investments, so it’s a great benefit to have. Then invest first in tax-advantaged accounts (IRAs), then taxable accounts once those are maxed out,” said Sette.

Keep in mind that 401(k) matching is part of your compensation package, so factor that in when comparing salaries from multiple offers.

Source: Andrey Popov/Shutterstock

Self-employment retirement fund

You’ll have plenty of guidance from HR or your company’s plan provider when contributing to your employment-issued retirement fund, but in this gig economy, many professionals are left to fend for themselves. “If you are self-employed, a SEP IRA is a great option since you can contribute substantially more than with a traditional or Roth IRA, about 25 percent of your income or up to $54,000.”

The benefits of opening it on your own include freedom to invest your money at an institution of your choosing, and when and how much you want to contribute. “Since every contribution is taxed now, this account gives you an immediate idea of how much you’re saving for the future, and what you’ll have when you withdraw from this account in retirement,” Sette said.

He added that every amount you contribute to your traditional IRA is deducted from taxable income as a self-employed professional, which translates to more money in your wallet.

Traditional 401(k) vs. Roth 401(k)

Now, you’re probably curious about the difference between the two most common private sector employer-issued retirement accounts. For both the 401(k) and Roth 401(k), the maximum contribution this year is $19,000, which excludes your employer contribution match. If you have a 401(k), you’ll contribute pre-tax dollars, thereby reducing your current taxable income. This will be taxed once you take it out, according to O’Shea. For the Roth 401(k), your contribution comes out of your paycheck after taxes, therefore not reducing your taxable income. Think of it this way: if two people get to retirement with $100,000, one in a standard 401(k) and the other in a Roth 401(k), the former will amount to something closer to $80,000 or $85,000, because it gets taxed when you take it out of the fund.

“The big question is you need to decide on factors most notably like what your tax rate is now compared to what you think it will be in the future,” said O’Shea. “When you’re 35, you have no idea what your rate is going to be in the future. A lot of people think it’ll go up so they pay the taxes now [in a Roth 401(k)] to avoid it.”

I Used A Money-Saving App For A Month & Ended Up Saving $200 Without Noticing

One of my 2019 goals was to get better about saving my hard-earned money and finally take charge of my lack of real approach to finances. You know, adulting 101. So, in an effort to reach that goal at the beginning of the year, I decided to try using the money-saving app Digit for the month of January to see if it would help me learn better saving and spending habits. Though the old me probably would have been too paranoid to actually download an app that has access to my precious but oft-ignored bank account under normal circumstances, the “new” me dove right in — after doing some research and learning that Digit is highly secure.

But let’s backtrack. My financial 2019 started with a bang. Well, that bang was actually just the uneventful buzz of a text message from my bank telling me there was some “suspicious activity” in my account. There were apparently two potentially fraudulent attempted charges — $200 at a shoe store, and some random attempt to buy something at a no-name mobile company. While reviewing my account, I also discovered a mysterious monthly charge from a local gym that had apparently gone through three months in a row without my knowledge — which was a sobering reminder of my painfully naïve lack of awareness about what was even going on in that bank account of mine. Oops. In any case, a new debit card was on the way, and so was a fresh start.

Digit

As described on Digit’s website, “Digit analyzes your spending and automatically saves the perfect amount every day, so you don’t have to think about it.” The idea is that you’ll save money without having to actively do anything at all. By tracking your usual account habits (bills, paychecks, average daily spending), Digit is able to safely and smartly snag a little bit of money here and there to store in a “Rainy Day” fund, without you really noticing that it’s doing anything. You can also create goals in addition to the Rainy Day fund and have Digit start saving money for specific things, too.

The app is so confident in its ability to do this safely, in fact, that if an overdraft ever results from a Digit withdrawal, it’ll pay the fee for you. Plus, you can set up overdraft protection, so if for some reason things get off and your account ends up dipping below zero, your Rainy Day money will funnel right back in there to make things right. There’s also no minimum balance that has to be maintained in Digit, and there’s no limit to how many times you can take money out, either.

Digit is free for the first 30 days, and then $2.99 per month after that. Here are some of the highlights from the first month of my experience:

1. I Legit Saved $234 In One Month Without Trying

Nina Kahn/Bustle

Not to spoil the suspense or anything, but let’s cut to the chase: I saved more than $200 in a single freaking month using Digit, which I’m pretty impressed by. I will say, spending felt a wee bit tighter than usual, but it definitely didn’t feel like I was $200 short at any point.

I was honestly kind of surprised that saving $200 didn’t end up feeling more difficult, given that I have tried doing automatic or manual monthly transfers to my savings in increments smaller than that many times — but I almost always end up having to undo it, or at least pull a little bit of the overly-idealistic transfer amount back into my checking to cover something.

After pondering this phenomenon, my theory is that there’s something about funneling the money out in relatively small, periodic chunks that makes saving easier to manage (at least for me). It’s almost like you suddenly picked up some weird new habit that’s causing you to incrementally spend a little more money, but it’s not like a large sum ever goes missing at once, so you kind of just adapt. OK, thanks for letting me wax fancy, feel free to send me your own theories, too. In any case, the long story short is that I saved money, and I didn’t really miss it.

2. It Doesn’t Require Much Work

Nina Kahn/Bustle

I know some people like the feeling of managing many things. But me? I just pray every day for the universe to grant me a personal assistant who can think about all my worldly affairs for me and leave me to ponder the meaning of my own existence in peace. Using this app can definitely be an interactive experience if you want it to be, but you don’t have to take advantage of those perks if they’re not your style. You can pretty much just ignore the app entirely, and check in here and there to see how much money you’ve saved without any effort. It’s a win-win.

3. I Became More Conscious About Money

Nina Kahn/Bustle

An interesting plot twist is that using an app to track my money actually helped me become more financially aware. How is this possible? Well, Digit and I were chatting a lot over the past month. Like, basically, Digit became my text message inbox’s new ride-or-die. It all started when I downloaded the app, and it immediately texted me its contact information card and a nice little hello.

Please excuse the 109 unread text messages currently in my inbox. I know it’s alarming. I’m working on it.

On Jan. 7, less than a week into my Digit journey, I was notified via text message (very convenient) of my first Rainy Day savings transfer. $6.50! An amount that I would have mindlessly spent in a heartbeat on some sort of over-the-top matcha oat milk lavender latté anyway! The message was accompanied by an enthusiastic GIF, which I appreciated:

Nina Kahn/Bustle

So, things carry on. Almost every day, Digit texts me greetings in the morning to let me know what is happening in my bank account, and updates me on the savings it’s making. Seeing these daily updates made me more aware of my spending habits, and I knew every morning exactly how much money was in my account.

Toward the end of the month, I low-key thought I was being ghosted. Digit had been silent for like, three days. Did this A.I. just butter me up with “good morning” texts and GIFs all to steal my money and run? I decided to take initiative and ask. Turns out it was still around; it just didn’t save any money for me for a few days ~for my protection~ so it stopped updating me.

Nina Kahn/Bustle

GIFs??? Winky face??? Am I dating Digit?!

And In Conclusion…

So, here’s the long and short of it. This app was extremely useful for me and I had a positive experience with it. It did its job in that it saved me what I feel is a significant amount of money in a short time without burdening me financially, and it also subsequently helped keep me on top of my finances and stay aware of my budget through its helpful texts and account/spending updates. I think I’m keeping my account even though I’ll have to pay $2.99 per month now.

That all said, if you’re someone who is already super on top of saving and budgeting and hyper-aware of what’s happening in your bank account at all times (Capricorns — I’m lookin’ at you), then honestly, Digit might not be the hugest game changer. But if you are, on the other hand, not the best at saving or paying attention to your lil’ collection of digital currency, then Digit might be an effective way for you to save some money and learn a little bit about how you spend it. Happy savings!

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