It’s Financial Wellness Month

The new year is truly upon us and January is Financial Wellness Month. Wellness means different things to everybody, so contemplate what it would mean to you to be “well” financially. It could be understanding your investments, knowing how to save or create a spending plan, confirming if you are on track for retirement, comprehending all the options for a college savings plan or paying down debt. 

There are a lot of different choices to start you on your way to wellness. For tracking expenses, consider using an app. Research which ones have the features you may need (recurring costs, link to your bank account, sharing data) and then find the one that is easy for you to use.

For learning about topics you are interested in, consider your current brokerage, mutual fund or investment company. Many have short (5 minute or less) videos about various topics along with short articles. There may also be videos on streaming services. Be aware that these options often want to help you to invest your money. 

Your employer may also offer free, in depth, unbiased classes on a variety of subjects. Employers are realizing that morale and productivity increases when employees are physically, mentally and financially well. If your employer does not offer financial wellness as part of the benefits package, they may need a nudge or many requests to include financial classes. 

Whatever area you feel the need to explore to create your feeling of wellness, there is a great resource out there to help you.  If it feels overwhelming, just take it in small, bite size pieces. The financial knowledge you gain will build on what you already know. You will become an informed financial consumer and feel “well.” Happy January.

Take a Peek at Data Privacy Day: January 28th, 2020

January 28th is Data Privacy Day! The purpose of this day is to raise our awareness of our online data privacy, which here at Financial Knowledge we take very seriously. When it comes to your personal finances, proetecting your identity online is key to preventing identity theft.

Passwords are often the first line of defense for data privacy. Update these on a regular basis and do not use passwords that would be easy for someone to guess. A strong password has at least 10 characters but should be as long as possible. The length of a passsword is directly related to strength… the longer the better. If you have too many passwords to remember, considering using a password manager program so all you are required to remember is the one that opens that program.

Remember these tips regarding your online passwords:

1. The longer the better
2. Change frequently
3. Use a password manager
4. Never share your passwords
5. Do not recycle old passwords

If you have too many passwords to remember, considering using
a password manager.

To prevent malware from being uploaded to your computer, never open attachments you are not expecting, or click on popup ads. Delete emails and advertisements that seem fishy. Your bank, financial institution or the IRS will NEVER send you an email asking you to click on a link to confirm personal information such as social security number or account number. 

Although we all like sharing on social media, avoid over sharing. If a “friend” starts asking you questions about your high school or first pet, be aware that these are often answers to questions designed to protect your information. Don’t answer and delete the connection to that person. 

It takes some vigilance to keep yourself safe online but over time it will become second nature. Having your identity stolen is no fun so take the steps to protect yourself. Start today!

National Cut-Your-Energy-Costs Day

January 10 is Cut Your Energy Costs Day and at Financial Knowledge, we are all about cutting costs in order to increasing savings. There are a number of ways you can easily and cheaply cut energy costs without sacrificing comfort.

Your parents were right – turning off the lights as you leave a room and closing a door will help with your energy bill. In addition, opening the blinds or curtains during the day in winter to get natural light and possibly heat, then closing them to trap that heat at night. During the summer, leave the windows covered if you are in an area of extreme heat – it will help cool down your home during the day.  It helps, no matter the weather, to leave a window open a little occasionally to air out a room, get a little cross breeze in summer and reduce mold and condensation in winter. 

Turning down the thermostat is also a free, easy to do way to cut energy costs. Set the temperature lower during winter and enjoy wearing extra layers. Finally, you will get to use that lovely sweater your Aunt made for you five years ago. Turn off the heat, or down dramatically when you leave your home for the day.  In summer, set the thermostat higher so the air conditioning does not power on when you are gone. 

Run your washing machine fully loaded—without overloading—rather than partially-full which will help save on energy costs.

Run your dishwasher only when fully loaded. It is amazing how one more dish can always fit in. Do the same with your washing machine – run it fully loaded without over loading it. Choose the appropriate water temperature for the load as not everything should be washed in hot water. Along that idea, if your hot water is scalding, consider turning down the temperature on the hot water heater. A few degrees will not make a difference to your comfort but will to your energy bill. 

When driving, make sure your tires are inflated to the correct air pressure and you are not carrying a lot of extra weight around in the car. Both these will help your mileage per gallon.  Next time you buy a new vehicle, consider one that gets better gas mileage than your current vehicle. 

A little money can be spent on insulating around windows that open. Foam tape is easily applied around the windows and will cut down on any draughts on poorly fitting windows. In addition, adding a door sweep to an exterior door can stop draughts. A rolled up towel can be used for interior doors. 

There are many more ways to save on energy costs but some of them, such as installing solar panels, are not cheap or easy ways and may take a while to see benefits. 

Start with the little things and soon work up. The monthly savings can go towards your financial goals. Happy National Cut Your Energy Costs Day.

There Could be Magic in 2019s 401(k) Plan

We don’t often get the chance to say “no, thank you, don’t give me that, I will have it later.” Maybe with dessert, but “later” could be just an hour. We do get to say that when it comes to our pay aka wage aka compensation with a 401(k) plan.

This is an employee sponsored, deferred compensation plan and you voluntarily say, “no, no, I will have it later.” It being a portion of your wage and later being (generally) after age 59.5. To be able to participate, your employer has to have a plan set up and your contributions are made each pay period. No make up in December with a check, it all has come from your pay on a regular basis. You can change the amount at any time. 

The magic of the 401(k) is you can defer compensation of up to $19,000 this year if you are younger than 50. For those lucky enough to be 50 or older, $25,000 is the 2019 maximum contribution amount. “The people I saw most comfortable in retirement were those who contributed as much as they could to their retirement plans,” said Andrea Roland CFP®, an instructor with Financial Knowledge. “It may not have been the maximum, but it was their maximum for their income and budget.”

This plan is made more magical if your employer also contributes to your account. It is called matching or profit sharing, both also known as free money. Some plans require tenure up to five years in a plan to receive all this free cash into your account. The company contribution becomes yours.  Now is the time to email, call or walk into your payroll department and request to increase your contribution to your 401(k) account. Your 65 year old self will be happy you did!

2019 is here!

Although the calendar year of 2018 is over, there are still a few tax deductions you can take advantage of that are retroactive. Although not all of these will be available to everyone, it’s a good idea to review your options.

If you have a health savings account and haven’t contributed the maximum amount for 2018, you still have time! Although you can do this through payroll deductions, it can be topped up to the maximum allowable for the previous year by the time you file your taxes. Contact your HSA administrator to obtain instructions on how to contribute for 2018.

Have you funded an individual investment account for 2018? Keep in mind, there are adjusted gross income limits for contributing to these type of accounts. The AGI limit is higher for a Roth IRA. Don’t forget that an account can be funded for a non-working spouse, assuming the household income falls below the AGI limits. The tax software you or your tax preparer use will be able to tell you the amount you can contribute to an IRA (or not).