How to Invest in Gold

Confusion and uncertainty will always be a part of investing’s rollercoaster ride. Whenever the market experiences a downward trend, the demand for gold increases as people seek out “safe” investments. According to the World Gold Council, the price for gold during the first quarter of 2020 shot up to almost its highest point in the […]

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How to Invest Like Mark Cuban

Mark Cuban’s advice is universal: Focus on eliminating debt, saving money, and living cheaply. Here’s more advice from the man worth $4.1 billion.Mark Cuban’s advice is universal: Focus on eliminating debt, saving money, and living cheaply. Here’s more advice from the man worth $4.1 billion.

The post How to Invest Like Mark Cuban appeared first on The Dough Roller.

FHA vs. Conventional Loans: Which Is Better?

When it comes to affording a new home, you have a few types of home loans to choose from. Prospective homebuyers often compare the FHA vs. the conventional loan when researching loans. Each loan type has certain stereotypes associated with…

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What to Know Before Buying a Foreclosed Home

If you’ve been keeping your eye on real estate home listings, you might’ve seen more foreclosed properties for sale at a reduced price.  With record levels of unemployment and underemployment, many homeowners are falling further behind on their mortgages. Currently, there’s a federal moratorium on the most common mortgage programs through December 31, 2020. Unless […]

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HIPPA (Health Insurance Portability and Accountability Act)

With the growing use of paperless forms, electronic information transfers and storage has become the norm. This is true about our medical information as well. So, how do we know that our sensitive medical records are being kept private? Thanks to a federal law entitled Health Insurance Portability and Accountability Act (HIPAA), health plans, health […]

HIPPA (Health Insurance Portability and Accountability Act) is a post from Pocket Your Dollars.

How to Make Better Financial Decisions

Woman learning how to make better financial decisions

A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:

Concurrently: Saving for two or more financial goals at the same time.

Sequentially: Saving for one financial goal at a time in a series of steps.

Each method has its pros and cons. Here’s how to decide which method is best for you.

Sequential goal-setting

Pros

You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It’s also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.

Cons

Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that’s time that interest is not earned.

Concurrent goal-setting

Pros

Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.

Cons

Funding multiple financial goals is more complex than single-tasking. Income needs to be earmarked separately for each goal and often placed in different accounts. In addition, it will probably take longer to complete any one goal because savings is being placed in multiple locations.

Research findings

Working with Wise Bread to recruit respondents, I conducted a study of financial goal-setting decisions with four colleagues that was recently published in the Journal of Personal Finance. The target audience was young adults with 69 percent of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans.

Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…,", “after I [action],” and “as soon as…,” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others.

The top three financial goals reported by 1,538 respondents were saving for something, buying something, and reducing debt. About a third (32 percent) of the sample had outstanding student loan balances at the time of data collection and student loan debt had a major impact on respondents’ financial decisions. About three-quarters of the sample said loan debt affected both housing choices and retirement savings.

Actionable steps

Based on the findings from the study mentioned above, here are five ways to make better financial decisions.

1. Consider concurrent financial planning

Rethink the practice of completing financial goals one at a time. Concurrent goal-setting will maximize the awesome power of compound interest and prevent the frequently-reported survey result of having the completion date for one goal determine the start date to save for others.

2. Increase positive financial actions

Do more of anything positive that you’re already doing to better your personal finances. For example, if you’re saving 3 percent of your income in a SEP-IRA (if self-employed) or 401(k) or 403(b) employer retirement savings plan, decide to increase savings to 4 percent or 5 percent.

3. Decrease negative financial habits

Decide to stop (or at least reduce) costly actions that are counterproductive to building financial security. Everyone has their own culprits. Key criteria for consideration are potential cost savings, health impacts, and personal enjoyment.

4. Save something for retirement

Almost 40 percent of the respondents were saving nothing for retirement, which is sobering. The actions that people take (or do not take) today affect their future selves. Any savings is better than no savings and even modest amounts like $100 a month add up over time.

5. Run some financial calculations

Use an online calculator to set financial goals and make plans to achieve them. Planning increases people’s sense of control over their finances and motivation to save. Useful tools are available from FINRA and Practical Money Skills.

What’s the best way to save money for financial goals? It depends. In the end, the most important thing is that you’re taking positive action. Weigh the pros and cons of concurrent and sequential goal-setting strategies and personal preferences, and follow a regular savings strategy that works for you. Every small step matters!

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How To Create A Budget Friendly Spread For Fourth Of July

Nothing says summertime like a BBQ, and getting friends and family together for some food and friends for the Fourth of July is the perfect way to celebrate. I’m usually the host for these get-togethers, and even though I absolutely…

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