Money Talks Blog by Oxford Planning Group

Happy Halloween everyone! Hopefully you get to enjoy some candy and fun tonight. Today's post is about financial fears, how they can affect your day to day life, and simple ways to ease your worries about some of these challenges. First, check out this infographic from a recent survey on Wallet Hub by John S Kiernan:

2019 Halloween Spending & Financial Fears Survey

https://wallethub.com/blog/halloween-spending-survey/53821/

As the survey shows, money was the top category that scares people (even over politics, yikes). With the biggest financial fear being unplanned emergencies, followed by lack of retirement funds. As a recent college graduate, there are many financial issues that can be cause for distress. Sometimes it seems like there are so many factors to think about when it comes to my money, it can be a little overwhelming. So, let's address a couple of common "fears" for young adults just starting out.

Scarcity mindset

With a small paycheck coming in, sometimes it can seem like spending money on "non essentials" is always a waste of money. This is especially true if you have a lot of bills to pay, debt, and high price items you are trying to save for. However, it's okay to treat yourself sometimes and spend money on activities that keep you happy. You risk burn out creeping in if all you do is work and stress about money. Make time to do things you enjoy and treat yourself occasionally.

FOMO

Love doing stuff with your friends but not the price you pay to do it? This is kind of the opposite of the scarcity mindset. When you are young and see your friends doing all sorts of fun things and they invite you to do them as well, it can be hard to say no and miss out on the fun. If you are worried that you spend too much money with friends when hanging out, try suggesting options that don't cost much money. Hiking is an awesome option if you enjoy the outdoors, the weather is perfect for it right now. You could also try out a girl’s night where everyone brings wine and an appetizer. Those fun wine painting classes can be done easily (and cheaper) at home if you pick up a few supplies from the craft store.

Debt

Student loans keeping you up at night? Get all your loan information together and determine how much you need to be paying off each month. Research the best options for student loan repayment and work it into your budget.

Big Expenses

When you are just starting out, the idea of having enough money to buy a car or a house can seem insane.  Start by doing some research and figuring out how much you would need for your purchase. Then, set yourself a goal of how much to save and by when. Then, looking at your budget see how much you can reasonably set aside each month towards your goal. If you aren't able to set aside as much as you would like, the next time you get a raise, put the extra money from that towards your goal.

With any of these issues, including the first I mentioned, it all comes down to proper planning. Having a solid emergency fund to fall back on can ease a lot of worry. Starting to save for retirement at a young age (the younger the better) will encourage you to keep it up as you and your salary grow. Even if you can only put away a small amount each month, get into the habit of doing so. Review your savings plan when you get a raise or a new job and see if you can be putting any more away.

Fears go away when you face them head-on.  The best time to start tackling them is right now.  Happy Halloween!!

Health insurance as a young adult is so important. As I mentioned in a previous post, keeping up your insurance when you are young and don't have a lot of money is one of the best things you can do for yourself. When you are on a tight budget, it can be hard to think about paying for multiple types of insurance each month. Realistically though, if you get into an accident and your car is totaled or you require a hospitalization, you will be so happy for that insurance.

Does your job provide health insurance? If so, it's typically cheaper to go with your company plan than it would be to search on the open marketplace. However, if you want to search for an alternative plan you can.

Open Enrollment Friday, November 1- Sunday December 15, 2019

Health Insurance Marketplace:

• For those who do not have insurance through a job, Medicare, Medicaid or CHIP
• If you have insurance through your job, plans through the marketplace will be full price unless your coverage at work does not meet certain standards

Insurance offered through an Employer:

• Often cheaper because they are group plans
• Choose between plans available through your employer

Individual Plans:

• Plan is not tied to a job
• Can choose the insurance company you want and choose a plan with the doctors and hospitals you prefer
• Change plans during open enrollment on the open marketplace

Basic Health Insurance Terms to Know:

• Copay: predetermined rate (flat dollar amount) you pay for health care services in addition to what is paid by the insurance company
• Deductible: amount you must pay before an insurance company will pay a claim
• Maximum Out of Pocket Cost:the maximum you have to pay for covered services during the year (note the word covered here)
• Premium: Monthly amount paid for the insurance coverage
• Coinsurance: percentage of the claim payment that the insured must pay

Health care is expensive. Many people avoid going to the doctors because of the cost of health care. However, this can lead to some conditions going undiagnosed and you risk getting really sick. Most insurance will cover preventative care at little or no cost to you. So even though you are young and healthy, take advantage! Keep up with yearly doctor's appointments and get your flu shot.

For more information regarding the Health Insurance Marketplace go to:

https://www.healthcare.gov/

Have you seen an ad for some type of subscription service today? Most likely the answer is yes. From streaming services to clothing companies, it seems like everyone has made a subscription service. A study by Forbes found that among the most popular subscription services in 2018 were Ipsy, Dollar Shave Club, and Amazon Subscribe & Save. While a couple dollars a month for a service seems fine, most of them add up to at least a $100 a year and having multiple subscriptions can mean hundreds of dollars spent over the year.

Do you really need it?

• Think about the Latte Factor here (discussed in the "Worried About Your Latte?" post previously).
  • That small number builds up over the months and if you have multiple subscriptions, think about cutting down to save money throughout the year.
• Subscription services know how to market their products these days. Their ads make it sound like such a great deal that you can save so much money with. But realistically, take a step back, and ask yourself "Do I really need or really want it?"
• I've found myself logging onto some sites because I've seen an Ad that looked really cool. They show the product value as double what you pay, and everything looks so neat. Then I really think about it and I realize I wouldn’t use half the stuff in the box. It's the fun of receiving the package and looking at everything that draws me in, but I realize I'd rather save the money to buy myself one thing I really want later on instead of a bunch of random things I don't really need.

Too Good to Be True?

• I see more and more monthly clothing boxes popping up. Some of them seem like such as good deal at first. You need to look at all of the small print though. Most automatically charge you for their service at the beginning of the month and a lot do not have an opt out option.
• Ask yourself if you would really be spending that much money on clothes from their website each month. It might be worth it if they are clothes you really enjoy, and you won't be buying other clothes. However, you need to look at the quality of the clothing as well before signing up.

Not All Bad

• This post isn't supposed to make you cut out every single subscription, it's simply to try to get you to look and see if you really need all of the ones that you currently pay for or are considering getting.
• Cable packages can be pricey, $12 for a Netflix subscription per month would save you money compared to an entire cable package.
  • With so many streaming services popping up now though, try not to get hooked on too many because you'll just pay more and more each month.

Every couple of months, re-evaluate if you are still enjoying the service. Before getting another subscription see if it can replace an existing one to offset the cost. Overall, if you just stick with the subscriptions you really need or really want and they fit within your budget, go for it and enjoy.

For more facts about how much the "subscription economy" has grown check out this article by Forbes:

• https://www.forbes.com/sites/louiscolumbus/2018/03/04/the-state-of-the-subscription-economy-2018/#40490b1453ef

It's officially fall! Doesn't quite feel like it yet, but we'll get there soon hopefully. With the holidays fast approaching, now is the perfect time for some fall cleaning and preparation.  Why should we save our big cleans for spring? Fall and winter are jam packed with holidays and events, so it's a perfect time to get organized. I recently read a book that inspired me to finally tackle cleaning out my closet. The book was about spending less and appreciating the clothes you already have by getting rid of what you don't wear. When I was done, it felt so nice to have everything organized and I could actually find the clothes I wanted to wear.

Here are a couple of suggestions for some fall cleaning for yourself:

• Look back on your budgeting
  • How have you done with your budget and goals throughout the year?
  • Are there any goals that you haven't made a lot of progress towards?
  • Re-evaluate your goals and make adjustments.
  • Be kind to yourself and realize that life happens, so if you haven't gotten as far along with a goal as you wanted, figure out why and see if you can change anything to help yourself achieve it.
• Clean out your closet as well!
  • As we go into a new season, take note of anything that has seen better days and may need to be replaced. This way, if you are shopping, you'll already know what you do and don’t need.
• Looking towards the end of the year
  • Are there activities that you do every year or a certain one you just really want to try this year?
  • It's a great idea to look ahead at the next couple of months to see if there are big or small events that you should budget for.

• Gift planning
  • Gifts can be a sore spot for budgets because unless you have an exact item in mind it's hard to know exactly what you want to spend.
  • Think about any upcoming birthdays, events, or holidays that you will need gifts for and set yourself and overall budget, then start figuring out what you want to spend on each person/gift.
• Hosting
  • Are you planning on hosting family or friends for the holidays?
  • If you are on a tight budget, planning out your meal in advance will help you save money and stay on budget.
  • If you are hosting a night for friends, consider doing a pot luck where everyone brings a dish to save you time and money.

Have fun!

This time of year is packed full of fun activities and events so join in! Trying to stay on budget can make it stressful when you want to enjoy the season, so get all of your planning done early, leave some wiggle room for random things that come up, and enjoy time with family and friends.

Happy National Life Insurance Awareness Month! Hopefully I didn’t just lose everyone reading this. I know insurance of any sort is a hard topic when you're young and don't have a ton of money. However, insurance is even more important when you don't have a lot of extra cash. Trying to learn about all the types of insurance you may need and figuring out how much to get can sometimes be overwhelming. Take it one step at a time and start learning about your personal needs to see what will work best for you.

Types of Insurance:

Compulsory insurance (has a minimum requirement)

• Health insurance
  • Minimum requirement set by the Affordable Care Act.
  • Various levels of health insurance to pick between.
  • While you may think being young and healthy means you need very little health insurance, there are many things out of your control that could cost you a lot should they happen.
  • Figure out what you want your out of pocket maximum to be to see how much insurance you feel comfortable paying for.
    • In a future post I will get more into how to pick what type is best for you.
• Car insurance
  • State by state minimum requirements.
  • The minimums are often not enough coverage, so do your research to see how much you need.
  • The more coverage you have, the less likely it is a plaintiff will go after your other assets.
  • Generally, the more assets you have, the more car insurance you want.
• Home owner's insurance
  • Insurance companies will often not fully cover the cost of damage to a house unless you have at least 80% of your home's value in coverage.

Other types of insurance to consider:

• Life insurance
  • Do you have someone else depending on your income?
  • Life insurance is less expensive when you are young and healthy. 
  • If you wait and apply for life insurance later in life, you could be denied for many reasons.
  • Partially replaces your salary if you can’t work (this insurance is important for most of your working years for everything from accidents to long term illness).
    • Could you cover your expenses if you couldn't work for a while?
• Renter's insurance
  • Covers your personal belongings from possible events listed in the policy
  • If there was a fire at your apartment could you afford to replace what was lost by yourself?
• Travel insurance
  • Good idea for more expensive trips.
  • Some credit cards offer forms of complimentary travel insurance.
  • If a hurricane or illness ruins your vacation plans, would you be out a couple of thousand dollars?

An inexpensive way to get started outside of the insurance you buy yourself:

• Insurance provided through an employer, either employer paid or employer offered.
  • Fees through group plans can be cheaper, but this insurance is often not portable if you change jobs so be aware.

• Also, small amounts of insurance can sometimes be included with credit cards at no cost such as the travel insurance mentioned above. 

• If affordable, pays to get some insurance while younger as rates are cheaper and your health is still good.

It's impossible to insure for every event in life

Insure your biggest risks first that would be most catastrophic to you. Regardless of what type and how much insurance you get, always make sure you know what is covered and what type of restrictions there are. Lastly, each year or if any big events happen (like having a baby or one partner deciding to start their own business) re-evaluate your insurance needs. As you grow and life changes, your insurance needs will change as well.  Oxford Planning reviews insurance as part of your overall financial planning.  Call us with questions – we’re here to help.