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10 Reasons Why Saving Money Is Important Post-COVID

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The pandemic has shown us all that life can change in the blink of an eye. One day you can be employed, and the next you can lose your job through no fault of your own. This crisis is a salient reminder of why saving money is important. If you have a financial cushion, you’ll be able to weather challenges better.

Even after the coronavirus passes, you should still keep topping up your savings account to cover unexpected expenses like car repairs and medical bills. Saving up will also enable you to splurge on vacations and other wants without going into debt. 

Before you go on and read about the top ten reasons why saving money is important,  start saving by signing-up to these savings apps.

AppFess and minimum:Best for:
Digit30-day free trial period. $5 per monthSetting aside automatically
Acorns$1 per monthSpare change investing.
Qapital$3 membershipLetting you set rules to automate savings.

Here are the top ten reasons why saving money is important in a post-COVID world. 

Top 10 Reasons Why Saving Money Is Important

1. Career Changes

Studies have shown that four in ten jobs that went away during the pandemic may never come back. The industries that have been affected most are retail, restaurants, transportation, and warehousing. 

If you’re in one of these fields, it may become increasingly difficult to find work as the number of available jobs shrinks. Saving extra money now can give you the cushion you need to retrain for a new career. 

2. Emergencies

The pandemic has reminded us all that emergencies can happen at any time for reasons that are out of our control. Saving and building an emergency fund is important if you want to be financially prepared for unexpected events like health problems and unemployment. 

3. Retirement

If a recession occurs toward the end of your working years, you may be forced to retire early.

Many workers in their fifties and sixties struggled to find new jobs after getting laid off during the pandemic. To provide for their families, some seniors took Social Security early, causing them to lose hundreds of dollars per month in retirement income. 

To prevent this from happening to you, it’s important to have a robust emergency fund that can carry you through extended job loss. 

It’s also a good idea to save a little extra money for retirement. That way if you are forced out of the workplace due to a recession or age discrimination, you’ll still have a big enough nest egg to live comfortably during your golden years. 

4. College Funds For Your Kids

Many of the jobs that aren’t coming back after the pandemic are ones that only required a high school education. In the future as automation increases, it may be even more important to have a college education to stay competitive in the job market. 

Setting your kids up with a college fund can give them the leg up in life they need and help them cover rising college costs without taking on lots of debt.

5. Buying a Home

Surprisingly, there was a big housing boom during the pandemic that caused home prices to rise substantially. If you want to be able to afford a home or investment property in this hot real estate market, you’ll need to start socking away some cash for a down payment. 

6. Transportation Costs

If you’ve been telecommuting during the pandemic, you’ve probably saved a lot of money on gas and car insurance because you’re not driving to work. To prepare for increased transportation costs when you go back to the office, it’s a good idea to put the cash you’re saving now into a sinking fund. 

If you have a fund set aside for car maintenance, you won’t need to worry or go into debt every time your car needs repairs. 

7. Pay Off Debt

Tightening up your budget can help you put more money toward your debt and get it off your plate sooner. 

Once you finally pay off your student loans or credit cards, you’ll feel a huge sense of relief. You’ll also be able to allocate more money toward savings and investments once your debt is gone, which will help you achieve your financial goals sooner.

8. Vacations

After being cooped up at home for months, you’re probably itching to take a vacation! Creating a vacation fund will enable you to take a nice trip once the pandemic ends without racking up credit card debt.

9. Medical Expenses

The coronavirus is an important reminder that even young, fit people can have a health emergency. Putting extra money in your HSA will help ensure that you can afford to see the doctor the next time you’re feeling unwell.

10. Peace of Mind

One of the biggest reasons why saving money is important is peace of mind. Having a financial cushion is incredibly reassuring because you know you can weather whatever challenges come your way. 

Although it’s difficult to live below your means and delay gratification so you can save money, it’s definitely worth it to have a comfortable, financially secure life.

Save and Invest Like This to Become Financially Independent

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Financially Independent

Unfortunately, many Americans feel obtaining financial independence is impossible, so they don’t try to achieve it.  Instead, they live day to day, buying their cars, furniture, clothes, and everything else on credit.  They have debt and think that it’s just a way of life.  But it doesn’t have to be.  If you want to live differently, save and invest like this to become financially independent.

How to Save to Become Financially Independent

One of the first steps on the path to financial independence is to stay out of debt.  However, that’s not enough to get you where you want to be in a few decades.  You must also learn to save regularly.  Try these strategies:

Always Pay Yourself First

If you put money in savings whenever there’s leftover money, you’ll probably never put money in savings.  Instead, flip that way of thinking.  Save money first.  When you start saving, go ahead and start small.  Maybe you only set aside $20 per paycheck.  The important quality here is establishing a habit of saving.  As your finances improve and you earn more, start saving more.

One of the best ways to save is to use an app that automatically saves. Here are some apps you can use. Start by signing up to one of these and it’ll change your financial situation forever.

AppFess and minimum:Best for:
Digit30-day free trial period. $5 per monthSetting aside automatically
Acorns$1 per monthSpare change investing.
Qapital$3 membershipLetting you set rules to automate savings.

Make Some Sacrifices

Financially Independent
Photo by Wynand van Poortvliet on Unsplash

For many people, achieving financial independence requires some sacrifices.  For instance, for the first 14 years of our marriage, we had only one car.  My husband took the train to work every day.  Sure, doing that was sometimes inconvenient for him, but we saved so much money not paying for a second car and the additional insurance premium, maintenance, and gas.  If we ever move to a location with good public transportation again, we’ll likely go down to one car again.

Delay Gratification

In addition to making sacrifices, those who achieve financial independence also learn to delay gratification.  You’ll likely not make too many impulse buys.  If you want a new dishwasher, for example, you’ll save to pay cash and take the time to shop around and pay the best price.  If you want a nice new car, you might way a decade or more to buy it, instead driving the car you currently have until it dies.  That’s okay.  Once you achieve financial independence, you’ll find your sacrifice and ability to delay gratification worthwhile.

Create Sinking Funds & an Emergency Fund

One of the most important things you can do to keep yourself out of perpetual debt is to create sinking funds and an emergency fund.

Sinking Funds

Sinking funds should be set aside for the yearly and semi-yearly expenses like house insurance, car insurance, property taxes, HOA dues, and other budget items that are paid ever six months or yearly.  Likewise, you should have sinking funds for random expenses that don’t occur at a set time such as medical bills, car repairs, home repairs, etc.  When you create these funds, you can easily pay the bill when it’s due without it affecting your regular monthly budget.

Emergency Fund

When you have sinking funds, when you’ve planned for the irregular expenses you face every year, your emergency fund can then be used for true emergencies.  Depending on the stability of your job, experts recommend that you have three to six months’ living expenses in your emergency fund.  This fund is only used for true disasters such as job loss or medical bills should someone in your family face a serious illness.

By having both sinking funds and an emergency fund, you buffer yourself from the unexpected expenses that can derail so many budgets.

Try These Savings Apps

AppFess and minimum:Best for:
Digit30-day free trial period. $5 per monthSetting aside automatically
Acorns$1 per monthSpare change investing.
Qapital$3 membershipLetting you set rules to automate savings.

How to Invest to Become Financially Independent

While saving is important, investing is equally important on your path to become financially independent.

Use Apps

Be smart. Use these apps to get you started on investing. Some of these are for beginners while others are for seasoned investors. Start by signing up.

Platforms:Fees and Minimum:Best for:
RobinhoodFreeBeginner investing
Acorns$1 per month
Spare change investing
The Motley Fool$99 for the first year.Stock advising

Start Early

Financially Independent
Photo by MayoFi on Unsplash

The single best thing you can do to become financially independent is to start investing early.  Teens can even invest in a Roth IRA if they have a regular job.  The amount you need to invest, should you start at a very young age, is much less than if you start investing twenty years later.  However, if you are older and haven’t actively invested much, now is the time.  There’s no better time than now.

Take Advantage of a Company Match

An easy way to begin investing is to take advantage of your company’s retirement match.  This is essentially free money to help you become financially independent!  For instance, if you’re employer matches the first 4% of your salary that you invest, that means you should invest at least 4% because then with the employer’s match, you’re investing 8% of your salary for the price of 4%.  If you make $100,000 and invest $4,000 a year (4% of your income), and your employer matches that, you’re now investing $8,000 a year.  That is a huge bonus!

Always Rollover Your IRA

If you leave a job, always rollover your IRA.  When you’re young or you only have a small amount in your IRA, cashing out the money is tempting.  After all, you have plenty of time for saving for retirement.  However, that money can grow and grow if you take it with you and roll it over.  You’ve already done the hard work of investing.  Now, roll it over so it can keep working for you.

Hire a Professional If Need Be

For many people, the idea of investing is scary or intimidating, so they just don’t do it.  However, you can never achieve financial independence if you don’t invest.

There are plenty of free resources available to teach you about the many different investing options, but if you still don’t feel comfortable investing, hire a financial planner.  Yes, you will pay money in fees, which isn’t ideal, but paying fees is better than not investing at all.

Invest No Matter the Economy

Likewise, many people invest money, but then, when the economy crashes, they panic and pull out their money.  This is a sure strategy to avoid financial independence.

The savvy investor ignores the highs and lows of the market and stays the course with investments.  There will always be ebbs and flows, but remember that overall, through the years, people make money by investing.

You’ll do even better if you train yourself to see the stock market lows not as proof you’re losing your money, but as a perfect opportunity to invest more.  You’re likely able to buy stock at the lowest price.  When the economy rebounds, you’ll make more money.

Apps To Try

Platforms:Fees and Minimum:Best for:
RobinhoodFreeBeginner investing
Acorns$1 per month
Spare change investing
The Motley Fool$99 for the first year.Stock advising

Final Thoughts

Achieving financial independence isn’t easy.  However, follow these steps, and you’ll be well on your way.

What would you add to this list to help people gain financial independence?

Read More

How to Make a Plan for Financial Independence

Reached Financial Independence–Now What?

Passive Vs. Active Investing

30 Day Money Saving Challenge: Save $100 in One Month with Quarters

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30 day money saving challenge
Now that the new year is underway, people across the country are striving to make their resolutions a reality. If your goal is to increase your emergency savings (or even start your first emergency savings account), a quick money challenge can be an excellent option. While popular approaches like the 52-Week and 365-Day challenges are great choices, they do require a full year commitment. If you want to start with something shorter, this 30-day money saving challenge might be right for you.

How to Save $100 in a 30 Days

If you want to start slow or simply have a need for a quick $100, you can painlessly get the money you need with a 30-day quarter challenge. This approach is great for individuals who are living paycheck to paycheck, as the daily deposits never exceed $7.50.

On day one, deposit $0.25 in your savings account, the value of one quarter. Then, on day two, you deposit two quarters instead of one, making your deposit into your savings account $0.50 and bringing your balance up to $0.75.

As you proceed with the challenge, you just add $0.25, or one quarter, to the deposit amount from the previous day. On day 10, your deposit will be $2.50. On day 20, you’ll reach $5.00. Finally, your day 30 deposit is only $7.50.

You can also remember the amount by recognizing that the number of quarters you deposit matches the day of the challenge. For example, on day 10, you would deposit 10 quarters, which have a value of $2.50.

At the end of the challenge, you’ll have $116.25 in your account. Plus, if you put the money in a high-yield savings account, you might even earn a little bit of interest too.

If you would rather do the challenge in cash, you can place the appropriate number of quarters into a jar at home instead. However, you won’t earn any interest this way, and you might have to wrap up your change in rolls before depositing it into a savings account.

Want to Save $500 in 30 Days Instead?

If you want to challenge yourself, and pull together almost $500 instead of $100, then use dollars instead of quarters. On day one, deposit $1.00. Then, deposit $2.00 on day two, $3.00 on day three, and so on until you finish the 30 days.

At the end of a 30-day dollar challenge, you’ll have $465 in the bank. Plus, your largest deposit is just $30, the cost of a single fast food meal for many families of four.

Benefits of the 30-Day Money Saving Challenge

While the biggest benefit of completing the 30-day challenge is increasing the balance in your savings account, you also get more out of it than that. Along the way, you are setting good savings habits, helping you create a solid financial cushion in case of an emergency.

Plus, there is nothing to say that you have to stop after 30 days. You could always keep going, increasing your deposit by $0.25 each day until you reach a particular savings goal or hit the end of the year. Alternatively, if you are living paycheck to paycheck, you can start over each month, using the date to guide the size of your deposit. That way, your largest daily deposit never exceeds $7.75, making it much more manageable for anyone with a tight budget.

Consider Money Saving Apps

A great way to supplement your savings is the automated approach with an application like Digit.

Simply sign up and let the program analyze your checking account. The app will then make automated withdrawals which don’t impact your spending and sweeps them to an account you control. It is a super easy way to save money without a lot of effort. Click here to check it out.

In either case, you are creating an easy way to bolster your savings, ensuring that you have a health emergency fund in place at all times.

Do you have a tip for saving $100 a month? Share it in the comments below.

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If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

 

30 day money saving challenge

How to Prepare for Summer Rainstorms and Hurricanes

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How to Prepare for Summer Rainstorms and Hurricanes

A hurricane of the intensity of Harvey or Irma can damage anywhere from 25 percent to 90 percent, respectively of the homes after it hits the mainland. With this year’s storm season also expected to be above average in severity, it behooves you to know how to prepare for summer rainstorms and hurricanes.

The impact of these storms on your home can be mitigated if you prepare for them in advance. Right now is the best time to do that, as the season is technically just beginning.

You’ll want to get on this as soon as possible: Meteorologists expect up to 16 named storms, including at least seven hurricanes. With that kind of outlook, here’s how to prepare your home

Reinforce Your Home

Certain parts of your home tend to be more vulnerable to strong winds and heavy rains. If you reinforce these areas, and you improve the odds of surviving hurricanes and storms with minimal to no damage.

Begin by repairing any damage to your roof. Then reinforce it: Secure your rain gutters and downspouts to make sure they won’t be ripped off by high winds. Additionally, clean your gutters and downspouts to make sure that water flows through them freely.

Check your windows to make sure they are sturdy and consider replacing those that don’t feature the latest technologies, like double panes.

Shutters and Doors

Storm shutters can also be beneficial, as long as they securely lock into place over the windows. If you can’t afford storm shutters, have plywood available so you can cover the windows if a storm rolls in.

You can also strengthen your door by improving the hinges and locks. Make sure your door has at least three hinges and that deadbolts extend out at least one inch.

Replace any builder-grade hinge screws with three-inch wood screws to make sure the underlying framing supports the jamb.

Cover Sliding Glass Doors

Also make sure that any sliding glass doors have tempered glass, and cover them with shutters — or plywood if a storm approaches.

Moving onto other areas, look into upgrading your garage door to one made from stronger materials or improved latching mechanisms.

Look for a garage door that is approved for wind pressure and provides measurable impact protection.

Yard Maintenance

Falling tree branches can cause significant damage to your home and property. So trim your trees, making sure the limbs aren’t close to power lines or your roof.

Make sure to remove any dead branches or trees, as a dead tree is more likely to topple in high winds.

Clear away any debris from your property as well. Any object sitting in your yard can quickly become a projectile object if it is picked up and carried by high winds. By removing any items, you decrease the odds that random debris will strike your home.

For similar reasons, consider getting rid of any gravel in your yard — or replace it with shredded bark. It’s substantially lighter, so while it may fly around during a storm, it won’t cause as much damage.

If you have outside wall openings, like vents or outdoor outlets, make sure they are well sealed. Use a high-quality urethane-based caulk to seal gaps, ensuring water doesn’t seep in.

Buy Flood Insurance

Typically, traditional homeowner’s insurance doesn’t cover floods. If you don’t have any flood insurance but live somewhere that may get hit this season, seriously consider paying for it.

Although it isn’t always cheap, foregoing this type of insurance can ultimately be even more expensive. You can’t buy coverage after a disaster strikes, so you’ll want to have it in place before storms come your way.

Flood insurance provides you with funds to help you rebuild and replace your belongings if your home is affected by rainwater, overflowing rivers, and more. If you don’t know where to begin, you can contact your insurance agent. You can also find valuable information about flood insurance on the Federal Emergency Management Administration website.

Create an Evacuation Plan

You’ll want to include in the planning any family or roommates so that you’re ready for all possible emergency scenarios.

Begin by reviewing local government information regarding evacuation areas and current plans. Use that to determine a meeting point in case family members are separated during the storm. Also decide where you might go if you evacuate early — such as the homes of friends and relatives who live outside of the storm areas.

Don’t forget to include pets in your evacuation plan — keep a carrier or leash near the door along with travel-sized pet supplies. Make sure your animal companions have ID chips as well; that way, if they get loose or you can’t retrieve them, you can be reunited after the storm.

Prepare for Summer Rainstorms and Hurricanes

You’ll want to prepare an emergency evacuation kit for these situations — including such things as a first aid kit.

Stock up on bottled water and non-perishable food that don’t require cooking. Make sure you also have pet food and kitty litter or piddle pads available if you have pets.

Once you get started with amassing emergency supplies, it can become an ongoing shopping habit — so you might want to set a budget that you can stick to.

And periodically check to make sure these items are still fresh or working, as the case may be.

If you follow as many of the tips above as possible — and do it soon — you should be ready for any extreme weather that might head your way this summer.

Readers, what have you done to prepare in advance for natural disasters? Or if you haven’t done any of these things yet, what’s kept you from doing so? Please tells us all about it by posting in the comments section.

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52 Week Money Challenge

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how to do the 52 week money challenge
If you’re looking for a great way to start saving money right now that will net you over $1300 in 1 year, we’ve put together an easy system which offers a good amount of flexibility to give you the greatest chance of success. This is a hybrid of the original 52-week money challenge putting more control in your hands to deal with the inevitable financial challenges which come with daily life.

How the 52 Week Money Challenge Works

In a lot of ways, the 52 Week Money Challenge is similar to a game of Yahtzee. There are 52 weeks in the year with a dollar amount corresponding to all 52 weeks. Each week your goal is to try to save the highest amount that is still available from the bottom numbers. While the highest dollar amount is the goal, there will certainly be weeks when you aren’t able to save the full amount. Whatever amount you are able to save each week, that is the number that you write and then cross that number off the bottom. It’s fine if a particular month you’re unable to save much due to special occasions. Focus on the bigger picture and don’t worry about individual days and weeks so much.

saving challenge
Click image to enlarge or print here (pdf)
Your goal for the first week is to save $52, but even if you aren’t able to reach that amount, you haven’t failed. In this way, it is similar to Yahtzee. Whenever you roll the dice, your ultimate goal is to try to get a Yahtzee, but depending on how things are going with the rolls, you attempt to get the best number you can from the still open hands on your card. In this challenge, you’re doing the same thing, but just with the dollar amounts, you’re able to save each week.

For example, say that you are able to save $42 the first week you begin the challenge. You would X out the $42 at the bottom of the chart and place it in the deposit line for week one and that would also be your balance since it is the first week. In week two you are able to save $18. You X out the $18 at the bottom of the chart and place $18 in the deposit line. You then would place $60 as the balance ($42 + $18) for week two. In week three you’re able to save $52 which you cross off, add and come away with a balance of $112. In week four, you have a tough week and are only able to save a single dollar. You cross it off, deposit the $1 and up your balance to $113.

Because you choose the amount to save each week in relation to your finances (always with the goal to try to save the top dollar amount still available at the bottom of the chart), you don’t fail the challenge just because you have a few rough weeks where you aren’t able to save a lot of money. We all have good weeks and we all have bad weeks and they don’t come about uniformly. By trying to save the most you can each week which takes into account the financial realities of that week, it gives you much-needed flexibility and a better chance of success compared to having a set dollar amount you must save each week that corresponds to that specific week.

Another advantage is that there is no need to begin this challenge at the beginning of the year, but you can start at any time. Week one is the first week you begin (as opposed to the first week of the calendar year). That means that if you come across this challenge in the summer, there is no need to wait half a year to begin. You can start today. Simply designate one day of the week when you will make the deposit and you are ready to go for an entire year from that point.

Get Started, Get in the Habit of Saving

The most important aspect of this challenge is that you simply begin doing it. Even if the first few weeks your saving amount is low, you are getting yourself into the habit of saving. As you become comfortable with that habit, you should find more ways to save that will help you knock off those bigger numbers always knowing that you have some small numbers there as well if finances get tight some weeks. Once in the habit, you may find it easy to save even more. There are also now kids versions of this challenge which replace the dollar amount with quarters, dimes, nickels or pennies depending on how old your child is and the amount that he wants to save.

Print the 52 Week Money Challenge by clicking here. Before you get started, also check out the 52 Week Money Challenge forum group where you can share how your challenge is going with others and both receive and provide support for others participating in the challenge.

Why Should You Save?

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Why You Should Save

There has always been importance placed on saving money, but why? If you have enough money to pay for what you need, then why do you need “excess” money to put aside? Well, everyone saves for different reasons, and if you are still looking for one, here are a few reasons you should be saving right now.

Vacation

What better reason to save than for a vacation? If you’ve wanted to go away for a while, go on a cruise or visit a city you’ve never been to, it takes some planning (and saving). You can have fun with your money, but you have to save to be able to do that.

Retirement

Even if you are young, it is never too early to start saving for retirement. No one wants to work forever, and most people aren’t able to work once they get older. Putting aside money so that you’re able to retire is important. This is often hard because you won’t see this money for many years, but it will be well worth it.

Emergency Fund

Everyone needs to have a savings account where they set aside money for emergencies. Whether it is an unexpected flat tire, car repair, medical bill or even unexpected charge on your bank account, you should always have some extra money set aside for emergencies. If you do not, many people use their credit cards if they do not have an emergency savings account, which leads to more debt, which is not ideal. Usually, you’ll want to have about $1,000 set aside in this account just in case. This will cover most car repairs and many other emergency situations. Once you use it, you need to work to save it back up.

Buying a House

Another reason to save is so that you can buy a house. Renting a home or an apartment is practically like throwing money out of the window. Sometimes, renting is all someone can afford or all they can get with their current situation, which is fine. However, if you are able to, you should save for a down payment on a home. Owning a home will pay off in the long run, so your saving efforts and the amount you spend on a home will be well worth it.

New Car

Just like a house, you can save to buy a new car, or save to pay off your car. If you currently have a car payment, your budget can become a lot more free if you set aside some money to pay off your car (or buy a car in full if you don’t have one yet). Usually, if you have the full amount to put on the car, the dealership will also strike you a deal, which is another great reason to save.

These five reasons to save are only a few. Everyone has their own reasons for saving, so it is important to discover what means the most to you. Whether it is having an emergency fund, buying a car or saving for retirement, savings is extremely important when it comes to how you are able to spend your time (and your money).