40% of Americans Are Taking a Massive Retirement Risk

Saving for retirement is a long and thoughtful journey. It takes decades of consistent saving to see your nest egg grow to a healthy size, and it’s not something you can achieve overnight.

However, when it comes to retirement planning, a good chunk of the population is taking a huge gamble — literally.

Image source: Getty Images

Roughly 40% of Americans think winning the lottery would be a good retirement plan, according to a survey from financial company Stash. The idea is even more popular among younger workers, with nearly 60% of millennials saying winning the lottery is a reasonable way to prepare for retirement.

You may dream of becoming an overnight millionaire, but the odds of winning that much money are shockingly abysmal — somewhere around 1 in 300 million for huge jackpots like the Mega Millions or Powerball, making it far more likely for you to be struck by lightning or give birth to quintuplets than to win the lottery.

So why do so many people think playing the lottery is the best way to prepare for retirement? Probably because for those who are struggling to save anything at all, even the terrible odds of winning seem better than the odds that they’ll be able to save enough on their own.

Preparing for an expensive future

It’s no secret that Americans are struggling to save. In fact, three-quarters of millennials in the survey admitted that they’re living paycheck to paycheck — which makes it more understandable why so many are banking on hitting the jackpot to fund their retirement.

Saving for retirement when you can barely pay rent may seem impossible. But if you put it off until later, it will be even harder to catch up. Because of compound interest, if you sock away even a few dollars now, that money will snowball over time and grow into significant savings. The longer you wait, the less time your money has to grow — meaning you’ll need to save more each month to see your savings grow as much as they would had you started saving earlier.

If you don’t save for retirement, your golden years may not be quite as comfortable as you’d hoped. You’ll likely end up depending on Social Security benefits to make ends meet, and considering the average monthly check amounts to roughly $1,300, you may have to pinch pennies to get by. Especially as you get older and will likely be spending more on healthcare costs in retirement, Social Security alone probably won’t cut it.

Even if you’re strapped for cash right now, if you’re creative with how you spend your money, you may be able to find a few areas where you can save more. And although you may not be able to save a lot right now, it’s better than saving nothing at all and hoping the lottery will solve all your problems.

Finding money in hidden places

The best way to figure out where you can save more money is to create a budget to first see where all your money is going. While it may seem like you have absolutely nothing to spare to put toward retirement, chances are you can cut back somewhere. Sometimes, you don’t even fully realize how much you’re spending each month until you see it written out in front of you.

Once you have an idea of how much you’re spending and what you’re spending on, see where you can cut back. Some expenses — such as your mortgage or rent, loan payments, etc. — may be fixed, but you may be able to cut back on variable costs like groceries, gas, and dining out.

Take an initial pass at your budget to see what can be cut right away. For example, maybe you find that you’re still paying for that subscription service you rarely use. Or perhaps you’re going out to lunch every day at work when you could start packing a lunch at least a few times each week.

Next, start chipping away at some of the essential costs. For example, while you need to buy groceries every month, you may be able to save some money by joining your store’s rewards program or clipping coupons. Or maybe you could open up a new credit card that offers cash back or other rewards, so you can still save money even while buying the essentials. You may only save a few dollars each trip to the store, but it adds up.

Also, if your employer offers matching 401(k) contributions, be sure to contribute at least enough to earn the full match — otherwise, that’s free money you’re leaving on the table. With matching contributions, you can potentially double your savings just by putting money in your 401(k), which can go a long way when you’re stretching every dollar.

If you’re in a more dire situation (i.e. you’re just a few short years away from retirement with next to nothing saved), you may need to make more significant cuts. While saving an extra $100 or $200 per month is better than nothing, it won’t be enough to build a nest egg that will last through retirement. In this case, in addition to making budget cuts and pinching pennies, you may choose to downsize your home to save several hundred dollars per month on mortgage payments, or you may move to a less expensive neighborhood to cut down on property taxes. This isn’t a decision to be made lightly, but if you’re seriously behind on your savings, you do have options.

For many people, saving for retirement is something you know you should be doing, yet it often feels like an impossible goal — so much so that winning the lottery seems more realistic than building up your savings on your own. But even if you don’t have much money to spare, it’s much wiser to put that extra cash toward your retirement fund instead of a lottery ticket.

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Why giving your grown kids money is a terrible idea

As a parent, you know full well that the check writing usually doesn’t stop when your kids reach adulthood. In fact, the financial demands of parenthood may seem never-ending.

But a new study sheds light on just how extensive that lingering financial support is, how damaging it can be to your finances, and the degree to which parents, out of love, are willing to sabotage their own security.

Merrill Lynch reports that 79% of parents with adult children between the ages of 18 and 35 provide financial support to their grown kids, spending an average of $6,600 a year per child.

The estimated $500 billion parents fork over each year in total is double what Merrill Lynch estimates the same group is setting aside for retirement annually.

Do you think parents should give their adult children money?

Even more startling: Parents are making this tradeoff with eyes wide open. More than 7 in 10 of all parents surveyed—those with young as well as older kids—say they have consciously put the kids ahead of their own need to save for retirement.

Among parents of grown kids, 82% are prepared to continue down that path, reporting that they stand ready to sacrifice their own finances to help an adult child.

“Parents might say helping children stand up on their own two feet and go out into the wide world is a priority,” says Surya Kolluri, managing director at Merrill Lynch. But, he adds, it is important to “take a step back and consider what are all my financial priorities and how do I keep them in balance?”

What exactly parents are financing 

The Merrill Lynch survey of more than 2,500 parents, conducted in partnership with Age Wave, a research firm focused on the impact of an aging population, found that parents of kids age 18 to 35 help with a wide array of expenses. 

Those include food and groceries (60% of parents help), car payments (47%), the cell plan (54%), even footing at least some of the bill for vacations (44%).

Sometimes this means covering a portion of the expenses, other times it’s the whole bill. For example, a third of these parents pay their adult children’s entire cell phone tab; one out of five pay for vacations in full.

These outlays can come at a cost: The study reports that half of parents of adult kids say they are willing to raid their savings to help, more than one in four say they stand ready to raid their retirement accounts, and another quarter of say they will take on debt if needed.

How helping can hurt

Emotionally, this financial support makes all the sense in the world. The kids get older, yet they never stop being your kids. But this is a critical juncture where letting your head have a say in things can be vitally important. 

If you are getting a late start on saving for retirement, or you’ve run the numbers and would like to save more, the empty nest years are an unparalleled opportunity to catch up. That can be a lot harder, if not impossible, when you are still supporting your kids.

What’s more, putting your kids’ needs before your own increases the likelihood you’ll have to rely on them for financial support down the line. Another Merrill Lynch study found that nearly 70% of caregivers provide financial support for an elderly family member, spending an average of $7,000 a year.

Something else to think about: More parents are moving in with their kids, as the percentage of parents living in an adult child’s home has doubled since 1995 to 14%.

How to find a better balance

“We are going to be parents for life,” says Kolluri. But your role as a parent changes over time. “There is a life stage up until age 18, and then there is a life stage after age 18,” he adds. 

Recognizing that transition can help you to reevaluate your financial relationship with your grown child and set some boundaries on your support. Around half of the survey respondents with older kids say they wish they had done a better job of that.

Kolluri suggests you keep reminding yourself: “Those boundaries are going to help me, the parent, manage the rest of my life, which is saving for retirement, paying off my house, saving for my health.” 

When you have a heart-to-heart with your kids about money—and you should—here’s how to reset the financial expectations:

Establish needs vs. wants. Making sure your kid isn’t subsisting on a ramen-only diet is one thing, but helping to pay for vacations? Or pitching in so they can buy a nicer car, when that money could be used to pay down your mortgage or save more in your IRA or 401(k)?

Keep your support to the essentials, such as rent and groceries, not the extras like Uber rides and dinners out.

Make it formal. Rather than replenishing an empty bank account any time your son or daughter asks, agree upfront how much support you’ll provide every month, and transfer that money regularly. Only break that budget in the case of a true emergency.

Set an end date. Have a plan for when the financial support will stop, perhaps pegged to a milestone like when graduate school ends, or a year or two from now. 

Those great adults you’ve raised are bound to appreciate your need to find the right balance between supporting them today and nailing your own financial security.

How This Graphic Designer Travels the World on $50K

A recent study found that 74 percent of Americans go into debt in order to travel. I’m not surprised; between the rising costs of airfare, eating out, and extracurricular adventure activities, it’s easy to go over budget.

But what if you could trade your talents for travel around the world without shelling out your savings? That’s part of the strategy Abbey Ley, 33, employs to visit international destinations like Switzerland, Bali, and Australia. A freelance graphic designer, illustrator, and animator, she makes around $50,000 per year, a good chunk of which goes toward taxes, retirement, student loans, and business expenses. A few years ago, Ley started using her talents to afford travel while staying within her strict budget. Here’s what we all can learn from her process. 

Outside: How do you manage your freelance income and your savings?
Ley: I keep an active text document on my computer where I track my monthly bills and review it every few days. I have most of my monthly bills on auto-pay, so I never have to worry about late fees. For larger payments, like my student loans, I mark the withdrawal date in my calendar so I make sure to have enough funds in my account. In that same doc, I keep track of active clients and the amounts of projects affiliated with each one (when the deadline is and when I expect to be paid). To project monthly income, I total those up, but it often fluctuates; sometimes clients will put projects on hold or I’ll receive payments later than expected. Since my income is so inconsistent, I keep an emergency fund in savings, where I accrue 2.2 percent interest as long as my balance is at least $2,000. This is the fund I typically draw from for my travel adventures.

How did you get started on your current career path?
Early on in my career, a few years after moving to New York City, I worked as the art director for Wanderlust, a series of yoga, wellness, and music festivals. The events take place at different mountain resorts across North America, and traveling was an incredible perk of the job for most of the staff. My job designing, though, didn’t require me to work on-site at the events, so I had to get creative to make a case for my travel expenses to be covered. I took on the role of organizing teams of photographers at each event, took lots of photos myself, and helped run our social-media accounts. I didn’t get paid extra for doing this work, but getting to travel made it worth it. These experiences solidified my love for travel, and I realized that working on the go with a laptop thrilled me much more than sitting in an office. A few years later, I saw a listing to intern abroad in Switzerland for three months as a designer, and I jumped at the opportunity. The pay was low, but I saw value in having flights and housing paid for. The hours were full-time, but I took on freelance projects alongside the job in order to fund adventure-filled weekend trips all around Europe.

(Abbey Ley)

What money-saving tricks or tips did you use on your recent trip to Bali and Australia?
I originally planned the two-week trip to Bali because my friend owned a meditation and yoga-retreat center in Bali, and she let me stay there for free in return for branding and graphic-design help. I traveled in late January and February, which is the off-season, so flights were much cheaper than they would be in the summer. I also stayed with a friend in Brisbane, Australia, so that took care of lodging expenses. When I wasn’t hosted, I booked lodging via Airbnb. Homestays in Bali are very affordable in comparison to the U.S., so I was able to stay in a few beautiful places for about $30 per night. Food is also pretty cheap (and delicious) in the country. 

Australia is more expensive, so while staying with my friend in Brisbane, I shopped at the farmers’ market and grocery store and utilized his kitchen to cook meals instead of going out all the time. When I left Brisbane to explore Melbourne and Sydney on my own, I booked my own room in shared Airbnbs (and made some great new friends). I also stayed outside the central business district in areas that were less expensive. One money-saving idea that I decided to do a bit last-minute was to take an overnight train from Melbourne to Sydney, which saved me a night of lodging. Even though I didn’t book a sleeper car, I was still able to get some decent shut-eye.

What tips would you offer someone who wants to figure out how to use their talents to trade for travel?
There are so many careers that can be done remotely and so many opportunities to travel for work. You probably have a skill or two that is worth value to someone else, if you think about it. Figure out what you’d most like to do, and research to find out all you can about it and the location you want to travel to. Reach out to people who are doing or have done what you want to do, and ask them questions. For women, there’s a Facebook group called Girls Love Travel that has been a great resource for me.

Save up in preparation for your trip, especially if you are trading your services or volunteering in exchange for travel. When agreeing to trade or volunteer your time, be realistic about the duration of time you can commit to. If you’re able to take on paid work while trading or volunteering, that will help. If not, look for opportunities that provide something of value to you (travel, housing, or meals).

Is there anything we can do from home to prepare for a long trip?
I always cancel subscriptions I don’t use or can live without. Trim is a great mobile app to help with this. Before I go on vacation, I try to double down on the number of meals I make at home. (I always save a surprising amount of money not going to restaurants.) I try to do this on the road, too.  

Finally, I rent out my Brooklyn apartment on Airbnb while I’m gone, even if it’s just for a couple weeks. For my Bali and Australia trips, I hired a friend who lived in my building to check on the place between guests. It took a good amount of communication and maintenance, but we figured it out in the end, and in addition to the extra income, I liked helping facilitate other people’s travel.

An Echo Press Editorial: Easy ways to save money

As part of Financial Capability Month, the Minnesota Department of Commerce is reminding Minnesotans about basic low-cost measures people can take to reduce energy use, cut utility bills and put more money in their pocket. Here are a few ideas:

• Use a programmable thermostat to reduce your heating and cooling costs.

• Turn off computers and monitors when not in use.

• Plug home electronics, such as TVs and DVD players, into power strips and turn the strips off when equipment is not in use.

• Turn off lights and fans when nobody is in the room.

• Close your fireplace damper when not in use.

• Take short showers and use low-flow showerheads.

• Turn your hot water heater down to 120 degrees F.

• Wash only full loads of dishes and clothes, and air dry both when possible.

• Replace incandescent lights with much more efficient lighting, such as light-emitting diodes (LEDs).

• Look for the Energy Star label when purchasing new appliances, lighting, and electronics.

• Have a home energy assessment to identify ways to make your home more energy efficient (weather-strip doors and windows, seal air leaks, add insulation, and more).

• Go to work via carpool, use public transportation, or telecommute.

The commerce department points out that simple behavior changes such as turning off lights, air drying clothes outdoors and setting your hot water heater at 120 degrees don’t cost you anything. But applied together, they can shrink your utility bills and grow your bank account over time.

Here’s an example: Replace an old energy-hog refrigerator with a new high-efficiency model. The new refrigerator will likely pay for itself in seven or eight years via energy savings, and you will enjoy additional energy savings for the life of your appliance.

Likewise, a properly installed and operated programmable thermostat will pay for itself in as little as one year with energy savings, according to the commerce department.

For more energy-saving tips, check out the Minnesota Department of Commerce Home Energy Guide (.pdf) or the U.S. Department of Energy’s Energy Saver Guide(pdf).

Why You Should Save For Retirement Over Education: Money in 60 Seconds

What should be a bigger priority for me: saving for my children’s education or saving for retirement?

This one hurts me. It hurts me to say this, because I’ve got children, and I really like ’em a lot. It’s gotta be your retirement. I know that doesn’t feel right as a parent, but if you have to make a choice, there are scholarships and there are loans for college. Nobody ever got a scholarship for retirement. And so this is one where you need to strap your oxygen mask on before assisting others, and — as much as it hurts me — to put yourself first.

The stock market’s had a good year so far. Is now a good time to invest?

Yeah! Wow, what a difference. Remember December? I remember sitting, December 24th, when the market was down like 2.4 or 2.5% and it was just like [choking sound]. And it’s up 16% since then. Now it feels like, gosh, maybe this isn’t a good time to invest. But let’s be perfectly clear: You have no idea. And anybody who says they have an idea has no idea. No one knows where the market is going from one week or one year to the next. There are just too many factors into it. So you want to — for those of you who are familiar with the term — dollar-cost average. For those of you who aren’t, you want to invest through up markets and down, a bit out of every paycheck, sometimes it’ll be lower, sometimes it’ll be higher, and then it evens out over time which doesn’t feel sexy, but actually is very sexy. It’s very sexy in order to earn market returns, because most folks don’t.

And go deeper on topics like cybersecurity and artificial intelligence at Microsoft on The Issues.

Here’s The Bizarre Reason Self-Driving Cars Might Not Cut Down Traffic After All

We know that self-driving cars are promising to make the roads safer and give us more time to relax, but the energy-saving and pollution-cutting benefits are also important. Now a new study suggests those benefits might not be as big as we thought.

The problem, according to researchers from the University of Michigan, is that autonomous vehicles will be so convenient and so efficient that we might all start spending more time in our cars.

It sounds like a strange side-effect, but let’s hear them out for a minute.

The new research actually backs up many of the positives that will go alongside the self-driving car revolution, but the team warns that we need to be smarter about calculating how much they’ll improve traffic flow and cut down on energy use.

“The core message of the paper is that the induced travel of self-driving cars presents a stiff challenge to policy goals for reductions in energy use,” says one of the researchers, Samuel Stolper.

Stolper and his colleagues looked at data on existing travel behaviour and economic theory, in particular the “rebound effect” – the idea that when people save money on travel, they travel more, thus offsetting any benefits.

Of course, self-driving cars don’t just save on fuel. Their efficient route-planning and driving styles promise to save people time too – you’ll be able to spend car journeys reading, or watching movies, or catching up on some work.

This is the first study to look at both fuel cost and time cost, the researchers say, and they warn that a perceived time cost saving of 38 percent or higher could be enough to encourage people to travel in their cars more, cancelling out some of the energy savings.

“Thus, much higher energy efficiency targets are required for self-driving cars,” says one of the team, Ming Xu.

So if self-driving tech is going to make car journeys cheaper, more fun, and more convenient, we’ll all be spending more time on the road. Our cities might not end up being as free from traffic jams as we thought.

Having crunched the numbers, the researchers predict households will spend between 2 and 47 percent more time in their cars – and the wealthier you are, the more driving you’re likely get your robot car to do, the study suggests.

While we all get used to the idea of having software algorithms and hardware sensors get us from A to B, it’s crucial that we know just how much of an impact this new type of vehicle is going to have on society and the environment.

The researchers note the improvements in “safety, energy efficiency, and time utilisation” that self-driving cars will bring, but warn against a backfire effect – a net increase in energy consumption overall, and the potential pollution that brings with it.

“Backfire – a net rise in energy consumption – is a distinct possibility if we don’t develop better efficiencies, policies and applications,” says lead researcher Morteza Taiebat.

The research has been published in Applied Energy.

Half the public thinks subscription boxes will save them time, but cost more money

Additional data shows that only around one in five US adults have tried them

While major media outlets, from USA Today to The Today Show, Harper’s Bazaar to Esquire, continue to compile their own lists of subscription boxes, recent data from YouGov RealTime shows that the majority of American consumers have never tried them.

For instance, 80% of US consumers ages 18+ say they’ve never subscribed to a service that regularly delivers health and hygiene products, such as razors or shampoo, to their home. A similar number of people say the same about companies that provide beauty and cosmetic products (80%), as well as groceries and meal kits (81%). When it comes to delivering household goods, such as paper towels and laundry detergent, 85% of shoppers say they’ve never subscribed to such a service.

That said, younger adult consumers appear more open to the idea of subscription boxes than the general public. Nearly half (47%) of US consumers ages 18-34 say they’re either very likely or somewhat likely to consider subscribing to at least one of the four aforementioned types of services. For all US adults, that percentage of interest stands at 33%.

Overall, the top perceived potential benefit of subscription boxes is that they save consumers time from shopping (48% of US adults think this). Other advantages US adults see in these services is that they’ll never run out of a product they need (39%) and that they don’t have to remember to manually buy the products themselves (33%).

For the most part, younger consumers are aligned with the general public on the potential benefits of subscription boxes. US consumers ages 18-34, however, are slightly more likely than the average American adult to think subscription boxes are good for simplifying their budget (26% vs. 18%), saving money by subscribing in bulk (36% vs. 29%), and providing an ability to try new products they wouldn’t otherwise (26% vs. 20%).

As for the potential drawbacks, 53% of shoppers worry it would ultimately cost more money to have a subscription box than not, while 52% show concern that they may not use the products quickly enough and end up with more than they need.

Much like the potential benefits, younger consumers are mostly in agreement with the general public about the potential disadvantages of subscription boxes. The greatest divide occurs over the question of using the products quickly enough: 42% of shoppers ages 18-34 say they consider it a potential drawback, compared to 52% of the general public.

Photo: Getty

Learn more about YouGov RealTime research

5 Money-Saving Hacks To Increase Your Home Value

Trying to improve the value of your home can seem like a daunting task. Determining not only how many improvements needs to be done, but what you actually can afford is difficult for a first-time renovator. On top of that, how will you know what changes have the biggest impact on home value?

Binging every episode of “Property Brothers” and scoping out your local Home Goods isn’t going to give you all the insight you need for this project. However, there are many small and inexpensive steps you can take to increase the value of your home.

Below, we detail five easily accessible hacks to home improvements that make the largest impact on the value of your property.

1. Consult An Interior Designer

Whether your budget allows for an interior designer or not, consulting one through a preliminary assessment can be of great benefit. These appointments typically run about $200-$300, according to Home Advisor, and can give you design ideas you may have missed from your own research.

The designer will get a better feel for what your home needs by physically being there. You also can ask specific questions based on your home’s design.

2. Utilize Neutral Colors

Neutral colors are great if you’re looking to put your house on the market soon. When potential buyers visit, it’s easier for them to visualize the living space as theirs if the colors fall in a more neutral color scheme. These colors both enlarge your space and allow the imagination to run freely with what the room could be, says Open Door. Neutrals are cool, classic and inviting.

If your home is a bit older and suffering from the all-blue color fad of the 1970s, it might be off-putting to potential buyers. Not only do they have to redecorate the entire room, but it’s hard for them to see the potential in what it could be.

3. Think About Curb Appeal

Only caring about what’s on the inside is a great mantra for finding your soulmate, but not increasing the value of your home. If you want to make home improvements that count, you’re going to have to think about the curb appeal of your property.

According to USA Today, there are small, yet effective, changes you can make include to your home’s exterior. These include replacing patchy grass, planting a new tree and adding green shrubbery that doesn’t take much maintenance to keep up.

Some experts recommend taking a photograph of your house, changing the composition to black and white and then inspecting your home. By doing this, you’ll be able to see any clear cracks or dents that need to be fixed in terms of outer cosmetic work.

4. Maximize Your Space

Design the layout of each room to make the most of the space you have. If there is any clutter, look into shelving units or designating a space for items that typically lay around.

Get rid of any clunky furniture or heavy curtains that take up too much space or limit the amount of light coming into the room. Cover your windows with thin shades or curtains that easily let light in and can be adjusted. Look into installing wall mirrors or a large floor mirror to give the illusion of a bigger room, says HGTV.

5. Focus On The Bathroom And Kitchen

If you’re strapped for cash and, after figuring out your budget only have the ability to focus on a room or two, your best bet is the bathroom and/or kitchen. These focal points of the house are very important for potential buyers as they’re areas that need to be functional and personalizable, according to Forbes.

Do your best to make renovations focus on a neutral color scheme and fixing anything that doesn’t work in these spaces. You can replace faucets, pipes, stovetops, flooring, appliances, countertops and lighting for changes that are cosmetic, practical and attractive to buyers.

7 Money-Saving Tips that Can Steer You Wrong

Online media are full of hacks for saving money, but do they really work? Naturally, some are more effective than others, but the real danger is in those that may actually become bad money habits.

Money saving tips to avoid

Here are some seven things people do to save money, but might actually cost them more in the long run:

1. Succumb to credit-card rewards

Credit cards market their rewards because it emphasizes what they give back to the customer not what they can cost. If you are someone who routinely carries a credit-card balance — even if only for a few months after holiday shopping — you should focus more on interest rate than on rewards. After all, rewards are a one-time, low-percentage rebate on what you spend; interest is an ongoing high-percentage expense on everything you owe.

Bottom line: If you are in the habit of carrying a credit-card balance, the best money-saving advice is to focus on getting the lowest interest you can rather than on credit-card rewards. Better yet, build your savings account balance and make important purchases in cash.

2. Spend to maximize credit-card rewards

Some websites love first-person stories with money-saving tips like “how I financed our honeymoon with credit-card rewards.” That might sound savvy until you consider the sheer amount of spending required to rack up that amount of reward credit. Chasing rewards can turn into a bad money habit.

Earning rewards for spending you were going to do anyway is worthwhile; but if your spending starts to be driven by the idea of earning rewards, this may be costing rather than saving you money.

3. Minimize tax withholding to access money sooner

This is the kind of clever money-saving advice that sounds good in theory but probably doesn’t work for most people in practice. The idea is that getting a tax refund is just a sign that you were paying the government too much to begin with. Imagine instead if you were able to get your hands on that money throughout the year leading up to tax time, earning interest on it in a money market account as it comes in.

For minimizing tax withholding to work in your favor, you need two things most people don’t have: a good enough handle on your tax situation to correctly gauge the exact withholding level for your needs, and the discipline to funnel the extra money in your paycheck into savings. For most people, a few extra dollars in each paycheck can quickly get absorbed into their spending habits and not be saved. In that case, it is more effective to get one refund check at the end of the tax year which can be added to savings as a single deposit or invested in a certificate of deposit (CD).

4. Let sales drive buying behavior

“I couldn’t resist. It was such a good bargain.” How often have you heard someone come home with something purchased on sale saying something like that?

When it comes to things you were going to buy anyway, looking for sales is money-saving behavior. However, if a sale prompts you to buy something you weren’t otherwise going to, it is extra spending, not saving.

5. Obsess about Black Friday/Cyber Monday

The above observation about sales applies especially to Black Friday/Cyber Monday. While there may be some good deals to be found on those two peak shopping days, they also apply the age-old sales technique of creating a sense of urgency by setting arbitrary deadlines. That often leads frenzied shoppers to buy more than they otherwise would.

Play it cool. Know in advance what you plan to buy and, if you find a great deal on Black Friday or Cyber Monday, buy it then by all means. However, filter out things you didn’t plan on buying, and if you don’t find a particularly good deal on what you planned to buy, don’t panic. Traditional and online retailers should have plenty of other sales in the weeks ahead.

6. Buy bargain brands to save money

This requires some judgment as to quality and some trial-and-error experience. From everyday disposable items like cleaning supplies to longer-term purchases like clothing and furniture, quality can matter a great deal. Buying cheap is only the illusion of saving if it results in having to replace things much more often than if you had opted for a more-expensive-but-much-longer-lasting alternative.

7. Shop for a high-interest checking account

It is a great idea to look for high-interest savings accounts or CDs; but when it comes to checking accounts, interest should be a secondary consideration to fees.

Why? According to the MoneyRates.com Checking Account Fee Survey, the average monthly checking account fee is now $13.58, which comes to $162.96 a year. Even if you could find an interest rate of 1 percent (which is pretty rare for a checking account these days), it would take an average balance of $16,296 to earn enough interest over the course of a year just to break even with the fees you are paying. The better move is to look for one of the minority of checking accounts that has no monthly fee. Only if you are trying to choose between two or more such free checking accounts should you make the interest rate a consideration.

Money saving advice has its place

There can be merit in popular money-saving tips, but only if you apply them with common sense and focus on the big picture. Don’t let money-saving advice control what you spend, just let it inform how you spend it.

How to save money in your 40s

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By the time you turn 40, the pace of your life is a lot different from what it was when you were fresh out of college or still figuring things out in your 30s.

Your biggest concerns probably revolve around striking the right balance between multiple priorities: being a good parent and partner, staying on top of tasks at work and chores at home, keeping a close eye on your aging parents and preparing for a (hopefully) not-so-distant retirement.

Let’s face it — your plate is full. And while your salary may be higher than it’s ever been in the past, saving money isn’t getting any easier.

Increasing your savings may require some hard work on your part. But with a sound strategy in mind, it can be done. Here’s what to do if you need help saving money in your 40s.

1. Pay off high-interest debt

Saving money can be difficult when a large percentage of your take-home pay goes toward bill payments. Money you could be setting aside for the future is instead needed to cover credit card payments and pay off a house and car. For borrowers in this situation, it’s best to focus on paying off high-interest debt, says Stuart Chamberlin, president and founder of Chamberlin Financial.

Chamberlin recommends targeting bad debt — like credit card debt — first. Unlike good debt (such as debt from the purchase of a home), bad debt costs you money without generating any increasing value in the future. Use a calculator and come up with a plan that will allow you to knock out your debt quickly. Make sure your plan involves making more than just the minimum monthly credit card payment.

“Once you get rid of the bad debt and set up a budget, then you can afford to set a certain amount of money aside each month,” Chamberlin says.

2. Set priorities

Once you knock out your high-interest debt, you’ll have to decide which financial tasks to tackle next. Should you work on growing your kid’s college fund before buying a new house? Should you focus on investing before growing your emergency fund (hint: no).

Everything can’t be done at once, so prioritize and determine what’s more important. Just make sure you’re making smart choices. Paying off your house before saving for retirement, for example, may not be the best idea.

“Accelerating home mortgage payments in lieu of saving into a retirement account is one of the biggest mistakes Americans in their 40s continually make,” says John Hagensen, founder and managing director of Keystone Wealth Partners. “Compound rates of return inside of retirement accounts can be used for income, travel and other living expenses once retired and trump an illiquid pot of money sitting inside the Sheetrock of your home.”

3. Max out employer-sponsored retirement accounts

Not everyone has access to a retirement plan at work. But if you have one, make an effort to work toward maxing out your account.

For 2019, the most you can contribute to a 401(k) and similar employer-sponsored retirement plans is $19,000, which is slightly higher than the limit set in previous years. Individual retirement account holders can contribute up to $6,000.

You’re likely earning more money than you did in your 20s and 30s. But earning more money doesn’t mean you should be spending more money.

“It’s tempting to spend that extra money, upgrade (your) lifestyle, but it’s a critical time to save for retirement,” Hagensen says. “(You) still have a long runway until retirement, allowing compound interest to work to your advantage, but often earning salary amounts that allow for sizable savings contributions.”

Unless you work for the government, you probably won’t have access to a retirement plan funded by your employer. That means it’s up to you to ensure that you’re putting away enough money for retirement and considering the kinds of costs you could end up with, like expensive medical bills.

“In the U.S., we have become nearly a ‘pensionless’ society,” says Andrew McNair, president of SWAN Capital, an independent financial services firm in Pensacola, Florida. “Therefore, the burden of retirement is on your shoulders. We must choose to save now or work late into our 70s.”

4. Start saving for your children’s college education

In addition to saving and preparing for retirement, it’s best to start saving for your children’s future. There’s no guarantee that your kids will actually go to college. But with college costs and student debt on the rise, it pays to begin saving years before your child graduates from high school.

There are multiple ways to save for college. One popular vehicle is the 529 plan, which is available in some form in every U.S. state. The benefits and downsides of investing in 529 plans ultimately depend on where you live and the kind of plan you choose. Earnings grow tax-free and withdrawals may be tax-free, too, if you use the funds to pay for education expenses. In certain states, you may qualify for a state income tax deduction. Coverdell ESAs are another option, but your annual contributions per student are limited to $2,000.

Your choices don’t end there. A Roth IRA is worth considering because you can technically withdraw your contributions penalty-free if the money is used to cover higher education expenses. Some experts even recommend using the cash value of a life insurance policy to cover college expenses and potentially maximize the amount of student aid a student can receive.

“Let’s say you’re qualifying for student aid. Life insurance does not go on the financial disclosure document when qualifying for financial aid, unlike a 529 plan, which could hinder a child based off of the asset side of the balance sheet of the parent to have the ability to qualify for various aid,” says Andrew Whalen, CEO of Whalen Financial.

5. Consider flexible spending accounts

A flexible spending account is another benefit offered by employers. Not to be confused with health savings accounts (HSAs), flexible spending accounts (FSAs) allow employees to put away money in advance for certain expenses.

Contributions to FSAs are made through payroll deductions, and a portion of the money you agree to set aside for the year is taken out of every paycheck before it hits your checking account. These contributions are considered pretax dollars and reduce the amount of income subject to taxation.

For 2019, you can contribute up to $2,700 for health care expenses including:

  • Medical services, treatments and supplies.
  • Over-the-counter drugs and medications.
  • Vision expenses such as glasses and contacts.
  • Dental expenses.

Families may consider a dependent care FSA and cover the cost of child care and after-school programs using pretax dollars. The contribution limit for 2019 is $2,500.

FSAs can be beneficial for savers with a big tax bite. But there are some things to keep in mind before signing up. Some unused dollars could be rolled over into the next year. A grace period could apply, giving you more time to use the rest of your funds. Otherwise, you’ll lose access to the unused dollars you contributed.

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