3 Simple Questions To Ask Yourself In The Dressing Room That Will Blow Your Mind And Save Money

It’s amazing how much money slips through our fingers.

Once I started tracking my spending, I found my frequent trips to discount retailers added up. Buying a dress or blouse for $25 – $30 seemed like no big deal but take all together, the purchases added up to $120 – $150 a month. Until I started tracking my spending, I didn’t even realize I was spending so much money on “extras.”

I wondered:

Was this really the best use of my money?

Was I getting great value from shopping?

Was I buying because of the perceived discount rather than something I needed or really wanted? As my mother-in-law used to say, “Am I going broke saving money?”

Most of the time, the answer was no to 1 and 2 and yes to 3.

Now I hold onto my money! I think twice before whipping out my credit card. You have to be pretty fabulous to make it into my closet today.

Before I make a purchase, I do this “3 Question Dressing Room Drill.” I ask myself these questions and you can, too:

1. Would I buy this item at triple the price?

2. Do I ABSOLUTELY love it?

3. Would I get rid of something else to own this?

If the answer is yes to all 3 questions, consider a purchase (if you have room in your shopping budget that month.) If the answer is no, walk away.

It feels so-o-o-o- good to walk away, doesn’t it?

Check out Ep 12 Tightwad Tuesday Video: Dressing Room Drills

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No Retirement Plan At Work? A Lousy One? Here Are 5 Ways To Make Up For It And Retire On Time

Though workplace plans can be imperfect, it’s undeniably easier to save for your golden years when your employer offers a retirement account.

Unfortunately, not all workers have access to a retirement plan at work. According to 2016 research by Pew Charitable Trusts, over one-third of private sector workers (who are not self-employed, farmers, or in the military) do not have access to an employer-sponsored retirement plan.

Moreover, an employer match is a huge incentive for workers to save. According to the Employee Benefit Research Institute’s 2017 Retirement Confidence Study, nearly 3 out of 4 workers who were not saving in their retirement plans would welcome a match. The survey found workers would be somewhat more likely to save if they were offered one.

Incentives can entice us to change our behaviors. But not all employers offer plans, and when they do, they don’t always offer a match or profit-sharing contribution.

Granted, it’s easier to fund your retirement when your employer provides a plan, but if yours doesn’t, all is not lost. You can replicate some of the benefits employers provide to increase your retirement savings and confidence.

Here are 5 ways:

1. Invest money from every paycheck.

One of the greatest benefits of an employer retirement plan is payroll deduction. It’s much easier to have $400 a month taken out of your paycheck before it hits your checking account than it is to write a check once a year for $4,800.

How to DIY: If you can’t do payroll deduction for an investment, do the next best thing. Set up an automatic transfer from your checking account into an investment account. Set the withdrawal for a day after your paycheck deposit. Invest in an IRA, a Roth IRA, a mutual fund, or a brokerage account earmarked for your retirement.

When you sign up for an automatic transfer, you are making one decision. When you don’t, you have to decide each month. This means every single month you have to determine how much you’d like to invest and in what fund, which turns one decision into 12 decisions each year.

The likelihood that you’ll stick to the monthly investment is higher when you set it up on autopay than if you do it manually each month.

2. Set reminders.

One reason people with employer plans take better steps toward investing for retirement is that their HR departments and their plan provider likely remind them.

How to DIY: Send yourself reminders by simply putting a task on your calendar — write a note on a future date or set a reminder on your phone.

Set quarterly reminders to review your investment allocation. Follow retirement writers — like me, John Wasik, and Richard Eisenberg with Next Avenue — and subscribe to our updates so you are always learning.

3. Increase your savings percentage at regular intervals.

Many employers have a 401(k) plan benefit called “auto-escalation.” This feature allows employees to increase their retirement plan contribution percentage automatically at regular intervals, such as once a year.

How to DIY: Set a reminder! If you want to increase your savings percentage by 1% at the beginning of each year, simply set up a recurring reminder in your email, your reminders app, or your online calendar.

4. Save on income taxes.

If neither you nor your spouse have a retirement plan at work, contribute to a traditional IRA. You are eligible regardless of your income. You can invest up to $5,500 if you are under age 50, and an additional $1,000 “catch up” contribution if you are age 50 and over.

No one is going to give you a “match,” but the I.R.S. may help, since they do allow a tax benefit. If you invest in the traditional IRA, your contribution may be tax deductible.

For example, if you invest $5,000 in an IRA and your adjusted gross income before the IRA contribution is $50,000, your AGI changes to $45,000 instead. If you are in a 25% federal and 5% state marginal tax brackets, you’d save 30%, in this case $1,500, in taxes on your $5,000 investment.

The funds grow tax deferred until you take them out after age 59½ (or earlier, for some exceptions).

How to DIY: You aren’t replicating a match, but at least you get a little help from our friends at the I.R.S.

Bonus: Get a side gig.

Find ways to supplement your income. It will help you save more today and earn a few dollars for extras in retirement. What do you love to do that you could monetize?

Are you bilingual? Tutor students to become fluent in the written and spoken word. Do you play an instrument? Start a trio on the side to play events and weddings. You may end up getting fed well and paid well. Have an in-demand skill? Teach a class at the local adult learning center. Do what you love and charge for your expertise.

In a card game, you can only play with the hand you’re dealt.

Make the most of what you have. If you don’t have a retirement plan at work, replicate one as best you can and take control of your finances.

This story originally appeared on Nancy’s Forbes.com contributor page as 5 Ways To Make Sure You Retire On Time When You Don’t Have A Plan Through Work.

One Big Money Mistake Couples Often Make Before Having Their First Child

When you have a child, your priorities change. This may seem obvious, but it caught me by surprise when I was a new mom.

My career had always brought me a great deal of satisfaction. I had always loved working, so I had no idea how much I’d want to stay home with my baby during those early years.

When my son was four months old, I went to drop him off at childcare to head off to a business meeting. At the childcare center, I rocked him in a rocking chair and suddenly, tears started rolling down my face. I just couldn’t leave him that day. Finally after about 20 minutes, I packed him back up and headed home instead. Right then, I decided my plans needed to change.

Since my husband and I were already saving half of my income, we could pivot so I could stay home at least part time. Our financial situation provided choices. So I made a strategic work move to go part time for a few years to spend more time with my baby and yet not drop completely out of the workforce.

Keeping one foot in the financial planning profession helped me stay current on technology, retain my financial planning clients, and stay connected to my business network. Even though I sometimes had baby slobber stains on the shoulder pads of my suits during those early years, I was still in the game.

Looking back, I am so grateful that I didn’t have high overhead expenses that forced me back to work full time right away. Instead, I got the awesome opportunity to be both a stay-at-home mom and a financial planner.

I’ve seen many couples fall victim to “lifestyle creep,” when living expenses rise as income does. These couples lose the flexibility to make changes as their priorities change — whether it’s to stay home with a new baby, start a new business, change careers, or weather a round of layoffs.

Here is my advice to new couples starting out:

1. Keep your overhead low.

Use the “50-20-30” budget rule to keep fixed expenses low:

50% for necessities (a.k.a. overhead)
20% for financial priorities (aka paying off debt, saving, and investing)
30% for extras (a.k.a. fun)

An affordable starter home may make you much happier than a large home (with a high mortgage) that requires two incomes to maintain.

The lower your overhead, the more flexibility you have. If you can live on one income because you have low fixed expenses, you’ll be in better shape when times get tough or you choose not to work outside the home for a while.

Use this budget calculator from Quicken to check your budget statistics.

2. Track your expenses

Lifestyle creep can sabotage your financial goals. If you feel like your expenses might be rising without your realizing it, start tracking every dollar that flows through your household. Then only spend where it counts the most.

Cut back on expenses that don’t bring your life meaning. For example, going to lunch is not a top priority for my husband and me. So we brown-bag it every day and steer our resources toward purchasing plane tickets to visit our kids or bring the grandkids here.

When you are a new parent, expenses that you’d never dreamed of start to crop up. If baby gets a cold, you’ll need a suction cup because he can’t blow his little nose yet. You’ll also need to purchase baby shoes for kids who can’t even walk yet.

Track every dollar you spend and trim where you can. Buy gently used items where it makes sense, such as play sets, furniture, and bikes. Buy new for items such as car seats and shoes.Put your dollars where they count the most.

3. Open a 529 college savings plan and let the family know

I do an exercise with my financial planning clients to draw out their true priorities. We lay out cards with different goals written on them, and the clients put them in order of importance. I’ve noticed that their grandchildren often make it into the top three.

Grandparents, aunts, and uncles may wish to contribute to your child’s college fund for holidays and birthdays. For example, just recently, since she loves making jewelry, we gave our 7-year-old granddaughter a kit to make little bracelets out of beads and little rubber bands which cost about $20. Then we quietly contributed $100 to her 529 college savings plan. She went crazy over the craft supplies, and her parents appreciated the deposit.

Just remember, when you are first starting out as a couple, plan your financial life with the ability to pivot. By keeping your overhead low, spending where it’s needed and trimming where you can, and allowing others to help, you have flexibility to make changes when life changes.

That way, you’ll never paint yourself into a corner.

This article was posted on Nancy Anderson’s Forbes contributor blog under the title:
Many Couples Make The Same Mistake Before Having Their First Child — Here Are 3 Ways To Avoid It.

New Parents: Here Are Your First Two Money Moves When Baby Arrives

I’ll never forget holding my infant son in my arms and rocking him back to sleep in the middle of the night by the fireplace. In that moment, life stood still for me.

Whenever I think of those early days, that wonderful memory of holding my tiny boy comes back to me as if it were yesterday, even though it was 28 years ago.

Your life will change a lot in your first year as a parent. As with most life milestones, there are a couple of very important financial moves to make during that time.

Before you do anything else, such as starting a college fund, make sure to put some protections in place for you and your spouse, the family’s breadwinners.

1. Review your life insurance policies to make sure you have adequate coverage.

If you’re not sure how much you need, you can run a life insurance needs analysis yourself or talk with an insurance agent to determine the amount based on your income, assets, and future needs and goals. Go to LifeHappens.org for a needs-analysis calculator.

Another way to determine the amount of coverage you want is your “human life value.” Obviously, you are more than just your salary, so the term may seem odd, but the calculation can be helpful.

This formula takes into account the amount of your future earnings, your tax bracket, life insurance already in force, and how much you have already saved. Check out a human life value calculator here.

Take an inventory of how much life insurance you have individually and in your group policy at work, if applicable. Then fill the gap between that and what you calculated. You may be able to increase your group term coverage at work, because having a baby counts as a life event. This may allow you to make a change in your benefits during the year, instead of having to wait until open enrollment.

2. Protect your income with disability insurance.

If you ever get sick or hurt, your family may still need your income. Don’t count on qualifying for Social Security disability insurance, as the requirements are steep: You have to be severely disabled, and must be unable to work for a year or have a condition that will likely be fatal.

Instead, find out if you have a group disability plan through your employer and/or look into an individual disability policy. After a waiting period (depending on your plan it could be 30-90 days), benefits start if your injury or illness leaves you unable to do your job.

Check the definition of disability on your policy. It could be defined as not being able to fulfill the duties of your “own occupation” (best) or “any occupation” (not as good). Some policies will pay a benefit if you can’t do your particular job for a certain time period, such as two years, and then the definition switches to “any occupation.”

The longer the benefit period, the better the policy. A great policy will pay a disability benefit for many years, up to age 65, and a basic policy will pay a benefit for at least two years, as long as you are disabled for that whole period.

If you don’t have any disability insurance, your family would need to scramble to make up for your lost income if you had to stop working.

You don’t have to do it alone. Get some help from an experienced insurance agent or Certified Financial Planner™ Professional to point you in the right direction.

So before you start funding college for your little one and planning all kinds of great vacations and adventures to show them the wonders of the world, get protected.

Late at night, when you wake up to feed your little boy or girl, wrap them up, hold them tight, and rock them gently until they fall back asleep in your arms. Savor that moment, because if you are like me, you’ll remember it fondly for the rest of your life.

This post appeared first on Forbes.com under the title, New Parents: 2 Crucial Money Moves To Make Within Your Baby’s First Year

New Parents Dilemma: Should I Save For My Child’s College Or My Retirement?

This story originally appeared on Forbes.com as New Parents: Which Comes First, Saving For Your Kid’s College Or Funding Your Retirement?

Saving for college before funding retirement seems like a no-brainer for new parents.

When a new baby is born, you may think, “College is only 18 years away, while retirement is way down the line!” You may even think you’ll never retire at all, so why worry about it now? You certainly don’t want your kids burdened with student loans like you were.

This knee-jerk reaction could pose problems later. Regardless of your gut instinct, saving for retirement comes first.

You may be wondering why a financial planner is discouraging new parents from saving for college — aren’t planners always telling people to save for their goals?

Not when it comes at the expense of their own retirement.

Here’s why you should prioritize saving for retirement over saving for your children’s college educations:

Retirement is harder to fund.

It’s exceptionally challenging to create an income stream to last 30, 40, or even 50 years. College expenses last only four years and often come during a parent’s highest-earning years.

There are no scholarships, grants, or loans for retirement, either. College funding is an investment in a growing asset — your child’s earning potential. Conversely, retirement funding relies on depleting assets — it is a spend-down plan.

Just because college may come first chronologically doesn’t mean it should be funded first.

Financial planning isn’t linear. People have multiple goals that compete for savings and investment dollars. Rather than immediately opening a 529 plan for a new baby, parents should take a step back and come up with a strategy for meeting both goals, with retirement at the forefront.

Here are 7 ideas on how to fund your own retirement and help your child pay for college expenses:

1. Flip flop the “401(k) delay.”

Fund retirement as early as possible — don’t delay early in your career, like many people do. When your child is in college (and you’ve got a solid retirement balance), then delay. If necessary, temporarily suspend contributions to your retirement plan during your child’s college years and use the extra income to pay educational expenses.

2. Fund retirement first to take advantage of a lifetime of compounding interest.

Starting early makes a monumental difference. According to the JP Morgan Guide to Retirement, an investor who starts funding their retirement at age 35 and funds $10K per year for 30 years until age 65, earning 6.5% interest, would have an account balance of $919,892.

Contrast this to an investor who starts at the beginning of their career at age 25 but only invest for 10 years and then stops contributing altogether. They only put in $100,000 in total (instead of $300,000) but at age 65, their account balance is actually higher at $950,558 than our contributor who started ten years later.

Starting early can make a huge difference in funding a successful retirement.

3. Plan to pay out of pocket.

Though not always the case, your peak earning years often hit when your kids are in college. Plan to earmark earnings and bonuses for college funding, and reduce your retirement savings at that point.

4. Choose investments that do double duty.

A 529 plan is great, don’t get me wrong. The earnings can be withdrawn tax free for qualified college expenses, and some states even allow a write-off on your state tax return for your contribution. The account, however, is one dimensional — it can only be used for college expenses. Consider investing in accounts that have more flexibility and can provide multiple benefits.

A Roth IRA, for instance, can double as a retirement funding vehicle and college savings account if needed. Anyone can withdraw their contributions with no penalty or taxes at any time. However, if funds are used for qualified college expenses (such as tuition and books,) the IRS allows some special exceptions where account holders can also withdraw the earnings without a penalty.

5. Tap into your home equity to pay for college.

Your investment in your home can double as a college-funding vehicle. You may be able to take out a home equity loan or line of credit to pay for college expenses. You could pay the loan off over time, or if you downsize your home, you could use the proceeds of the sale to pay off the loan.

6. Invest in rental property now for income later.

A rental property can double as retirement income and a college-funding vehicle. Though being a landlord can be fraught with headaches, those inclined to invest in rental property obviously can use the income for whatever purpose they want. The cost of college can be offset by real-estate cash flow. Then, when your student graduates, the income can be redirected to fund retirement.

7. Start a “side hustle” now.

Your little business could turn into an income stream later. You could drive an Uber or Lyft on Friday nights or take advantage of one of the thousands of small business opportunities on the internet — anything from blogging to selling collectibles. A small side business could turn into a big income stream later to offset the high cost of tuition, room and board.

Do a little of all of the above

Your college funding strategy may end up looking like pieces of a puzzle you put together.

It could be a jumble of paying out of pocket, pulling from a Roth IRA, taking a loan against a 401(k), using a home equity line of credit, and tapping a “side hustle.”

Additionally, your student can apply for every scholarship known to man, take out a few student loans, and max out free or inexpensive units by taking AP classes in high school and courses at a community college.

It may not look pretty, but it can be done without sacrificing your retirement savings.

5 Easy Ways To Keep Some Of Your Money

When your paycheck hits your bank account, it might not look like much.

Federal, State, Social Security and Medicare taxes are taken out. Medical, dental and vision insurance and your 401(k) contribution are withdrawn before you even see your check.

Automatic deductions such as your Employee Stock Purchase Plan, car payment and transfer to savings hit, too. Your net pay looks a lot different than your gross pay. Don’t let that fool you though.

When you look at one single net paycheck, your income stream might look small but when you look at how much money you make over your lifetime, it’s astounding!

For example, if you make $50,000 and get a 3% raise each year, even if you never get a bonus or promotion, you’ll make $3.7 million dollars over your lifetime!

Even if you are at the tail end of your career, you’ll still make a lot. For example, if you have 10 years left to work and make $100K per year, you’ll make another million dollars before you retire.

Let’s face it. A lot of money flows through your hands. It might not seem like it, but it does.

The key is to keep some of it.

Check out this Lifetime Income Calculator and see how much you’ll make during your career.

If you are inspired by this idea, do something about it.

Here are 5 ways to keep some of your money:

1. Bump up your 401(k) by 1%

2. Start a Roth IRA (if you qualify)

3. Set up an automatic transfer from checking to savings or an investment account (timed to hit on payday)

4. Enroll in your employee stock purchase plan at work

5. Start a micro savings/investing plan like Acorn (an app to invest your spare change) or Stash (an app to invest small amounts in simple portfolios.)

If you need to, change your mindset. Tell yourself:

I make a lot of money, I’m going to keep some of it.

Watch Six On History Channel But Watch Out For The Negative Money Message

Love the show, Six, on The History Channel.

Hate the money message, though.

After seeing actor, Walton Goggins play Boyd Crowder on “Justified,” I’ll watch him anytime anywhere. That means I am watching — “Six” a mini-series based on Seal Team Six.

My take: entertaining show. I love the positive theme “Never leave a brother behind.”

It’s the underlying money message that really bothers me.

Let me explain:

At Ricky “Buddha” Ortiz’s daughter’s quinceanera, it comes to the attention of his SEAL team members, Buddha hasn’t told the guys he is leaving. Read: daughter needs special dance academy and government salary low so he has to take a job with private industry. Buddha’s going to an international security firm that pays top dollar.

When he tells the guys, his mates see Buddha’s move to corporate America as a “sell out.”

The money message here is ridiculous.

A career move from Navy Seal to a corporate security firm is far from selling out, it’s a fantastic lifetime career strategy. To become a Navy SEAL means you are part of an elite group. You have skills very few people in the world possess which absolutely should be rewarded financially.

Similar to a mechanical engineering degree, graduating top in your class at Duke Law School or specializing in underwater welding, Navy SEAL skills are highly marketable — as they should be.

The US intelligence community recruits the ranks of the SEALS. In fact, former Navy SEAL and 3 Star Admiral Robert Harwood was just offered the job of National Security Advisor in the Trump administration. He turned it down as he serves as an executive with Lockheed Martin.

Clearly a career path that starts with Navy SEALs, ends with “write your own ticket.”

The premise that a SEAL who goes to work at a corporation is selling out is preposterous. The move is a smart career strategy. Corporate executives and corporate interests need protection. Executives in industries such as energy and mining could be kidnaped and held for ransom in countries they do business with around the world.

By the way, many Americans have a vested interest in the success of such companies. We may own them in our 401(k)s (if they are publicly traded.) Look at the annual reports of the mutual funds you own in your retirement plans, the companies held at the time of report are all listed. For example, if you own an S&P 500 index fund, you own global companies such as Caterpillar, Marriott Hotels, and Ryder Systems.

Working in a high level position for any multi-nationals corporation, is far from a sell out.

That said, go ahead and enjoy the show. Just be sure to ignore the negative money messages that appear to say, “Corporations = bad” and “Strategic career moves that involve lucrative compensation packages = sell out”

Neither is true.

Making such a move is not necessarily “leaving a brother behind.”

In fact, a smart career move could simply be moving on to a new band of brothers (and sisters.)

Smart Shoppers Guide: Look Fabulous For Less Money

I used to be excited when I bought something on sale. The “deal” was my indication of success. In hind sight, I wasted a lot of money with this mindset. Price is only one part of the equation.

A better way to think about your purchases is to determine the cost per use.

For example, when I changed jobs 3 years ago, I needed a lap top bag for client appointments. Professional looking was a must and something sturdy was vital. I decided on a black Michael Kors tote so it could double as a purse. I’ve used it just about every day for three years now and it looks brand new. I anticipate it will last at least another two years.

That tote was a great purchase. It was about $250.00 at the Michael Kors factory outlet store (not on sale.) Since the purse is a classic style, made to last many seasons and goes with everything I own, it was a winner.

Let’s look at the cost per use of my designer laptop bag purchase. I’ll use it 5 days a week for 50 weeks out of the year (since I love it so much, it’s always by my side.) The tote is intended to last 5 years – after 3, it still looks brand new.

The break down:

5 days a week x 50 weeks = 250 days a year
x 5 years = 1,250 uses

$250/1,250 = $0.20

Cost per use for designer laptop tote/purse = 20 cents per use

Let’s compare my purchase to a less expensive tote that would last one season because it wouldn’t hold up to constant use or we’d get tired of it because it wasn’t fabulous.

Nice lap top tote bag for $78. This bag is anticipated to last one season.

Let’s check out the cost per use.

5 days a week x 50 weeks = 250 days per year
x 1 year = 250 uses

$78/250 = $0.24 per use

Rounded up, it costs about 25 cents a use for the bag for one year. It costs slightly more per use than the fancy bag.

So what would you rather have though, something you really love that’s special or something basic you’d need to replace each year?

I vote for fabulous.

If you take really good care of your things, and have the funds to make the initial investment in a higher quality item, you could end up either paying less in the long run or having something nicer (or both.)

Remember: The longer you keep your stuff and the more you use it, the better the cost per use — in every single case.

I still love my bag and even use it on the weekends. What about you? What was your absolute best clothing or accessory purchase? Please tell!

Check out my Tightwad Tuesday Episode 10 video on how to determine if your purchase could be considered an expense or an investment.