Since college tuition is increasing at a very fast rate, if you have kids, it helps to start thinking about saving for college when your kids are young. One of the best savings vehicles for college is a 529 plan. A 529 plan is a savings account that provides tax benefits when you use the money for your children’s K-12 or college tuition. Basically, the earnings you get from investing your money in a 529 plan are not taxed at all if you withdraw the funds to pay for K-12 school (up to $10,000 per year) or college tuition.
Since nearly every state offers a 529 plan, and you don’t have to sign up with the state’s plan where you live, how do you decide which state plan to go with? First, it helps to look at your home state’s plan to see if you get any special benefits for being an in-state resident. Many states offer state income tax deductions for the amounts you contribute to an in-state 529 plan. For example, in Alabama if you contribute $10,000 in one year to an Alabama 529 plan, and you are married filing jointly you can deduct the entire $10,000 contribution on your state tax return. Also, some states such as Arizona and Kansas offer tax deductions for contributions made to ANY 529 plan in any state, not just your home state.
If you live in a state that offers a 529 plan but doesn’t provide any tax benefits to in-state residents, it won’t help to just invest with a plan in your state. It’s better to look around and find the best plan available. Some things to consider are: 1) Fees (how much does the plan charge?) 2) Types of investments offered (i.e., what kinds of mutual funds or stocks can you invest in), and 3) Ease of use (i.e., is it fairly easy to set everything up online, including automatic contributions, beneficiary designations, etc.).
To view some ratings of 529 plans, you can visit https://www.forbes.com/advisor/student-loans/best-529-plans/ or https://www.morningstar.com/articles/1062917/the-top-529-education-savings-plans-of-2021.
We are currently seeing record high prices for many basic consumer goods, and these high prices may stay high until the demand for them drops a little and supply chains are fixed. Here are a few things you can do to help keep your finances in good shape during this time.
- Create a budget and stick to it. To stay within a budget, you may need to cut down on unnecessary things to ensure you can still pay all of the bills. Consider buying more generic brand items at the grocery store, using an app such as gasbuddy to find the cheapest gas, and cutting out streaming services you don’t use. Here’s a link to a helpful budget calculator online: https://www.quicken.com/resources/calculators/budget-calculator
- Consider getting another job or working more each week. Jobs are plentiful right now and wages are going up. Websites such as flexjobs.com and taskrabbit.com are great for perusing for side gigs or finding work-from-home jobs.
- Compare prices before you buy and use coupons where possible. Websites such as groupon.com, freeshipping.org, and retailmenot.com provide easy search options to check for coupons from different retailers. If a website has a coupon code field, there may be a coupon out there you can use to save money.
- Postpone vacations and/or take them during an off-time. It may be that prices will start falling in another 6 to 12 months and you could save quite a bit of money by going a little later.
If you have been keeping up with the latest financial news, it probably seems as though everything is going terribly. Inflation is at its highest in 40 years, gas prices are sky-high, buying a home is difficult to afford, interest rates for loans are creeping up, etc. But there’s actually a lot of good news—here are a few positive developments.
*The U.S. Economy added over 430,000 new jobs in March, 2022 and the unemployment rate is now around 3.6% (historically very low)
*Worker pay in the U.S. rose 5.6% since March of last year.
*U.S. gas prices peaked in mid-March, 2022 and are now declining. The current national average is $4.23 per gallon.
*U.S. household credit card balances remain $71 billion lower than they were prior to the pandemic.
*The summer tourism industry may be rebounding: U.S. travel bookings are up 58% for this upcoming summer compared to last year.
Now that U.S. gas prices are at their highest levels in decades, it helps to think about how to save money on gas. Here are some tips.
*Combine trips. Plan your trips so if you have to pick up a child from school, go to work, and/or run errands, do them all at the same time on the same trip.
*Check gas prices in your neighborhood or on your commute route to see which gas stations offer the best values. Gasbuddy.com and Waze provide gas pricing information.
*Use other methods of transportation if possible. Try to walk, ride a bike, use a bus, carpool, or share an Uber ride.
*Remove heavy items from your car so you get the best mileage possible.
*Don’t speed too much. Traveling above 60 miles per hour means you are not using your gas efficiently and will decrease the miles per gallon you get for your gas.
*Turn your car engine off when waiting. It saves gas money and helps the environment.
*Pay for your gas with cash rather than a credit card. Often the price per gallon is cheaper when you use cash.
Couples who may want to improve their relationship may see a therapist to work on communication, intimacy, etc. But did you know that there are therapists specifically for people who need help with the emotional aspects of dealing with finances? These types of therapists are financial therapists and they can help clients understand how to get out of bad patterns, communicate better about money, and plan for a strong financial future.
If you are someone who has a difficult time saving money, or has trouble working out financial issues with your spouse, meeting with a financial therapist could be beneficial. Financial therapists can also help people understand some of the underlying reasons why they feel anxious about their finances or why they get into bad habits with their money.
Financial therapy may even be covered by some insurance plans. To learn more about the field and/or connect with a financial therapist, you can go to: financialtherapyassociation.org
Do you have any New Year’s resolutions that involve improving your finances? If so, you are not alone, as more than half of all Americans report that their resolutions include goals related to finance. One thing that may be helpful to do is to take a quick online course to learn about money management. Here are a few free ones that provide helpful info:
https://www.coursera.org/learn/family-planning: this course provides an in-depth discussion about all of the basics of financial planning, from learning about compounding interest to choosing investment options to setting up a rainy day fund. It is a long course but you can choose the topics you would like to learn about.
https://www.khanacademy.org/economics-finance-domain/core-finance/taxes-topic#taxes: Khan Academy provides several free courses in the area of financial management. This one focuses on taxes and how they work. Since everyone has to pay taxes and the tax system is so complex, this course helps explain tax rates, progressive taxation, and the alternative minimum tax.
These times are challenging, but there are also new opportunities for saving money. Here are a few ideas.
- If you are now working from home instead of commuting, use your one or two hours a day that you used to spend in the car to do something lucrative. You could take on a side gig at upwork.com or call your home/auto insurance company or credit card company to see if they could provide better rates.
- Look into applying for pandemic related assistance if needed. You may be able to get help with your rent, added food stamp benefits, paid sick leave and/or student loan deferrals. This website provides helpful information: https://www.usa.gov/covid-financial-help-from-the-government
- Book staycations or local trips that don’t require paying for airfare.
- Cancel anything you no longer use. If you don’t go to the gym or listen to your music streaming service, cancel your memberships. If there are magazines you don’t read or TV streaming channels you don’t watch, cancel those as well.
- If you are driving less, eating out less, traveling less now, think about continuing that trend when things return to normal so you can continue saving money in the future.
According to a recent poll, money is one of the top three things couples fight about. Oftentimes, one spouse will have a different spending style than the other, and this can cause long-term conflicts. Here are some ideas about how to overcome and/or prevent financial conflicts:
1-Talk openly about your finances. It helps to communicate your own needs and also to listen openly to your spouse to hear about his/her needs. A person who hides his own spending from his spouse can cause his spouse to feel resentment.
2-Consider establishing separate budgets for personal expenditures. If both partners agree on an amount that each person can spend on personal items each month, then both people can spend within the budget and be transparent about the amount they are spending.
3-Meet periodically to discuss goals. It helps for couples to meet once or twice a year to plan out financial goals. For example, if your goal is to save a certain amount for retirement, are both partners contributing to their 401k plans and how much money is being contributed? If the goal is to save to buy a new home, how much is each person saving and where is the money saved going to be invested in the meantime?
Open communication and establishing goals help a great deal toward creating successful money management for couples.
Think you are spending too much of your hard earned income on gas? Here are five easy ways to save money.
- Check to see what grade of gas your car needs and then go with the cheapest one. If your car only needs the regular grade of gas but you use middle grade, it could save you around 35 cents per gallon on average to switch to regular, according to the U.S. Energy and Information Administration.
- Do your research on the gas you are buying. Many gas companies mix in a small percentage of a liquid called ethanol into the gas to save money because it is cheaper than gas, but it reduces your fuel efficiency. So while one price may seem cheaper, if that gas has ethanol, then it could actually not be a better value.
- To find out what is the best value for gasoline, you need to factor in price, ethanol content, and also the distance from where you live. While one gas station may be 10 cents per gallon cheaper than another, it doesn’t make sense to drive ten miles to get there.
- Another additional way to save money on gas is to see what gas stations offer reward programs that could apply to you. If a gas station has a partnership with a grocery store you regularly shop at, then you could save a lot of money by entering your grocery store membership number.
- Consider using an app such as Gasbuddy that posts up-to-the-minute information on gas prices in your area. Then you’ll be able to see which nearby gas stations have the best prices.
Think you are spending too much to take a domestic flight? If you want to save money, then reducing how much you pay for airplane tickets is a relatively easy way to put some cash back into your pocket. Here are five easy ways to save money on airplane tickets:
- Don’t wait until the last minute to buy a ticket. Just recently I took a flight from Los Angeles to Sacramento and paid $59 each way booking four months ahead. Some friends of mine who went on the same flight only the day after and booked less than two months before the flight date paid around $110 each way. And at the airport I talked to someone on my flight who said he paid more than $200 because he booked it just days before the flight date.
- Always compare flight prices among the many airlines that offer the flight you are looking for. Never go with the first one you see because there are enough different airlines that there could be a better deal out there. Kayak.com, expedia.com and airline websites such as Southwest.com or Delta.com are good places to search.
- Travel as lightly as possible, and consolidate your clothing into the least number of bags possible so that you don’t end up paying more to check more bags. While some airlines like Southwest don’t charge you to check bags there is a limit on how many are free (e.g., with Southwest it’s two bags). Because it can cost up to $60 to check one bag, you may want to limit how many bags you check, if any.
- Compare flight prices from different airports in your area. Los Angeles has LAX, the largest international airport in the area, but John Wayne airport and Burbank airport are both within about an hour’s drive of LAX and could offer cheaper flights.