Money Talks Blog by Oxford Planning Group

A Little History

By now most people have heard of Bitcoins and how those that were fortunate enough to invest in them at the right time may have made great profits. Bitcoins were the first established cryptocurrency and today there are currently more than 1000 different types of cryptocurrency, but Bitcoins are still the most commonly known name. Bitcoins became available to the public in 2009 and rivals started coming out in 2011. Over this time the price of bitcoins had been rising; however, in 2013 the price crashed. It wasn't until 2017 that we saw the huge growth in Bitcoin price before a steady decline in 2018. New cryptocurrencies are continuing to come out and more people are getting interested in learning about what they are exactly.

How are they Purchased?

Purchase directly from an exchange

• Expensive
• Number of risks:
  • Viability of the exchange
  • Legitimacy of exchange
  • Cybersecurity threats

Purchase through private fund (accredited investors only)

• Illiquid & expensive

You typically need to create a “wallet” before you can purchase any cryptocurrency. You register your identity and bank details to transfer money to buy cryptocurrency and the cryptocurrency is held in your “wallet”.

Potential Upside

• Decentralized – no single bank or single administrator. No “middleman” and no Federal Reserve.
• Reduced risk of manipulation from authoritarian governments
• Blockchain shows promise to transform major elements of the financial system
• Some experts claim that bitcoin will do to banking as email has done to the postal system
• Crypto assets challenge the model of state‐issued money and the dominant role of central banks
• Controlled by function of mining
  • Performed by “miners” – software solves math in exchange for currency
• Instant settlement of payments globally

Potential Downside

• Extremely volatile
• Short History
• Considered an Alternative Asset Class- allocations should be very small
• No central bank control which means no oversight – may present an unfair competitive advantage derived from lighter regulation (regulatory arbitrage ‐ when firms capitalize on loopholes in regulatory systems in order to circumvent unfavorable regulation)
• Touted as non‐taxed, but IRS Notice 2014‐21 provides the it be treated as property for federal tax purposes (investment income)
• Due to the mostly anonymous nature of the peer to peer electronic cash system, potential to facilitate illicit activities
  • NY Dept of Financial Services recently sent subpoenas to Bitcoin businesses requesting their policies to prevent money laundering and ensure consumer protections

End Notes

If you're really interested in cryptocurrencies and are considering investing in them, do your research! Find a specific one you want to consider and look into how long the currency has been around, how long the company has been operating, and volatility. Consider how much you are willing to risk for the investment because there are still many questions about safety and stability for any cryptocurrency.

Will cryptocurrency be the currency of the future? We think for now it is too soon to tell, and a lot of caution should be used with them.

Our generation has grown up in the height of social media, with the good and the bad. Social media has made it easier than ever to stay connected with friends and family. However, studies have shown that social media could be changing our spending patterns. 

How many times do you get onto Facebook or Instagram and see pictures from trips and wish you had an upcoming getaway? How many adds do you see in a typical day of social media usage?

Sneaky Advertising

Companies realize that social media can be a huge advantage for their marketing. Not only with the direct Ads you see but also through people's actual posts. Influencers, actors, and models are all targeted by companies to try to get them to advertise their product. What some people don't always realize is that they get paid to promote these products and may not always be giving honest reviews. Social media platforms are starting to create rules for these types of posts that require disclosure if the post was sponsored.

Schwab's 2019 Modern Wealth Survey found that 49% of millennials reported spending money on certain things due to something they saw on social media.

Take a look at the accounts you follow and see if any of them do more "advertising" than others. Do they post a lot of pictures with certain products as the highlight? Do they always link the clothes they are wearing in the description? Some people just genuinely want to share a cool product that they love. However, you need to be cautious when it's coming from someone with a big social media following.

Before you buy something, take a couple of minutes and think about:

• If you really need or want that item?
• Can you afford it without sacrificing something else?
• Are there cheaper alternatives of the same quality?

Do your research! If you see something advertised and really want it or do actually need it that's okay! Just make sure there aren't cheaper alternatives just as good and make sure what you're buying is good quality for the price.

Does it spark Joy?

Taking some advice from the now famous KonMari expert, think hard about your purchases. Sometimes it's useful to think about it for a week. If by the end of the week you still think it's worth it to you to spend the money, then go for it! Our brains can convince us that we really need things, when in fact the product just looks cool so you start rationalizing how much you need or want it. I know I'm not the only one to buy something just for it to be used once and then sit in a corner, never to be touched again.

Check out the survey listed below for some more statistics and information on how social media is impacting our generation's spending!

2019 Modern Wealth Survey: 

https://www.aboutschwab.com/modernwealth2019

With summer right around the corner, everyone is getting excited to enjoy the warm weather and go on vacation. Here are a few tips on how to plan for your own trip.

Plan early!Set a budget and start saving for the trip or maybe you already have some savings for vacation. Determine a realistic amount you feel comfortable spending (you don't want to undo all that relaxation time by stressing about finances when you return).

Consider the cost of:

• Lodging
• Transportation: Gas or airplane ticket
  • Local transport: Can you drive? Do you need to take a bus, train, ect.?
• Food (groceries and eating out)
• Daily Activities
• Shopping (souvenirs)

Location & Transportation

Obviously, the first decision should be where you want to go. Staying closer to home is generally a cheaper option because driving can often be a lot more affordable than flying. Consider the cost of other transport during your trip. Do you need to take a bus anywhere or a train? If you’re luckily enough to go somewhere that you can walk most places, then this cost will be minimal.

Lodging

Do you want to stay in a hotel, apartment, or house? Lodging can be the biggest expense for a vacation (unless you're camping!). If you’re looking for a really cheap option, consider camping with some friends. Some camp sites even have cabins you can rent if you’re not too keen on tent sleeping.

If you choose a hotel, look around at the best prices for places in the area you are staying and make sure to read the reviews as well. Consider going on a trip with friends and renting a place together either through a local rental service or Airbnb! This can cut down on the cost of a trip by a lot.

Food

Do you love to eat out? Plan specific nights you want to eat out and other nights make simple meals that are easy to prepare to save money. Taco night is always a great go-to for vacation, set out ingredients and let everyone make their own! Pack snacks and small sandwiches for day adventures if you don’t want to eat out for lunch.

Daily Activities

If you’re not the type to just sit on the beach all day during vacation, consider looking on sites like Groupon or even Airbnb for activity discounts during your vacation. You can find some cool options that you may have not even thought about before and save money.

Travel Points

If you happen to have a credit card that gives you travel points, look into different options and see how many of them you could use for your upcoming trip!

Weekend Getaway

If you don’t want to or can’t take a full week off of work, consider just doing a weekend trip. They can give you the break you need while also being more affordable. Take off one or two days to give yourself some extra time and find a destination not too far away to get the most out of your time. 

Going Off Season or “Shoulder” Season

Peak season for summer vacation destinations is mid-June to August. April to mid-June and September through October is known as Shoulder Season. This is when the weather is still warm but there are a lot less people vacationing, and prices are usually cheaper! Look at the prices for hotels and house rentals during these times to compare to what you would pay mid-summer.

Hopefully some of these tips can help you plan the vacation you deserve. Having fun while not breaking the bank is the best kind of relaxation there is!

There are tons of different credit cards available today, many offering some type of reward or benefit with them.  What's the best one to have, though? That really depends on your personal spending habits.

Each credit card sponsor company will have descriptions for each card that should include:

• Annual Fee
• Annual Percentage Rate (annual rate charged for borrowing money)
• Rewards
• Foreign Transaction Fees
• Fraud Coverage
• Other important details: account alerts, autopay features, Apps for your account

To determine which type of card is best for you, figure out what you spend most of your money on. Some cards offer more rewards for dining out or traveling, while others just give a percentage of purchases back in cash. It's a good idea to keep notes of the benefits of each card you look at to compare and decide which will be the best for you. Some companies even have calculators for how much you can earn in rewards by estimating your monthly spending on your credit card.

If you pay your card off fully every month:

• Cash Back Cards
• General Rewards Points
• Travel or hotel Points
• Gas Points
• These cards offer a variety of rewards, if you really can’t choose between two, see if one gives a better sign on bonus

If you have credit card debt or usually carry a balance:

• Balance Transfer Cards
• Low Interest Credit Cards
• Check out the credit card pay off calculator here on the site as well:
  • https://www.oxfordplanning.com/resources/calculators?view=calculator&id=10

If you travel a lot:

• Airline specific cards
• Generic airline miles cards
• See our previous Seasoned Savers blog post on reward miles
  • https://www.oxfordplanning.com/blogs/blog/entry/credit-card-reward-miles-not-always-what-they-appear-to-be

Retail Cards:

• Usually easier to get if you are just starting out and don't have much credit history
• Having multiple store cards could hurt your credit though

Things to look out for:

• Cards that have an annual fee- some waive the fee at first and then you have to start paying one after the initial year is up
• High APR- even if you pay off your card on time every month, you could always forget at some point

It can be a little overwhelming with the amount of credit cards available today. Take your time, make comparisons, and slowly determine which is best for your personal needs.

An article from CNBC states that 49% of millennials spend more on eating out than they put into retirement accounts. How many times have you cooked something only to go out to dinner the next night and forget about the leftovers until they've gone bad? I know I have, many times. Not only is this a waste of great food, it's a big waste of money.

Meal prepping has become popular over the last couple of years and there are tons of books, blogs, and videos about it.  

Let's start by looking at three questions:

• How much do you currently spend on food?
  • Take note on your major spending areas. Is most of your food money going to groceries, eating out, or coffee?
• How much do you want to be spending on food?
  • Set a goal to reach for each week or month and build your meal plan around that.
  • Cut out easy things for yourself like coffee from Starbucks or fast food.
• How much actual "prepping" do you want to do?
  • There are different levels to this. You don't have to go all out like some people do.

Make a Plan:

• Pick out the meals you want to have for the week (how many breakfast, lunch, and dinners do you need?)
  • You can easily google "Meal Prepping for… and insert you budget and get tons of recipes, just use key words added on for your ideal meals like "vegetarian" "quick" "healthy".
  • YouTube has tons of great videos for meal prepping or just cooking in general that take you step by step through the recipes.
• Put together a grocery list.
  • Find recipes that share ingredients to prevent waste and overspending.
  • Use your grocery store’s app (if they have one) to get an estimated total for your shopping
• Plan your days to eat out.
  • Instead of eating out when you just didn't feel like cooking, save it for nights when you want to do something special or just have some fun and relax.

How much to Prep:

• If you looked at the third question from earlier and sighed at the thought of meal prepping everything you are going to eat, break it down a little! Prepping can be as easy or labor intensive as you want.
  • Try simple breakfasts like oatmeal or muffins and sandwiches for lunch for a little so you mainly have to focus on prepping dinners.
  • Or instead of cooking everything one day, you could do all the chopping and marinating and save the actual cooking for the day of.
• Pick a time and day to do your prepping & plan out what you want to get done.
  • Maybe you just want to cut up all the veggies you need for the week and cube some chicken to marinate.
  • Basically, do however much or little prepping you want that will make you more likely to stick to your plan.
• If you find yourself getting overwhelmed, look for easy recipes.
  • YouTube, Pinterest, and apps are my go to for easy recipes.
  • The Tasty app has a search for 30 minute or less meals and 5 ingredient or less meals.
  • Use frozen vegetables for easier cooking! I hate chopping onions, so I buy them pre-chopped and frozen and I am 10 times more likely to cook with them.
  • Lastly, Crockpot recipes are a true lifesaver.

Meal Subscription Services

• Meal services have been popping up all over the place, I’m sure you’ve seen the ads about how easy they make cooking and how much time they save.
• While these can take save you time, they won’t save you much money.
• I looked at three popular brands and each had servings around $9-10 (which isn't cheap compared to buying your own ingredients).
• While I would not consider these a good option over grocery shopping and meal prepping yourself (you can make the meals much cheaper) – it could be a good option once in a while if you choose this over going out to eat at a mroe expesive resturant. 

Overall, be flexible and realistic. Meal prepping can take some time, but it can also save you a lot of time and money later!

April is designated as Financial Literacy Month in the U.S., so I thought this topic would be fitting for the blog today.

Financial literacy is the ability to understand personal finance and economics and in turn be confident in making financial choices for one's self to achieve your goals.

Most people recognize that finances are important for personal well-being as well as the well-being of an entire family unit. However, it seems all you hear about the younger generations is how wasteful we are with money or how most of us are not interested in learning about finances.

A 2018 study conducted by Charles Schwab about financial literacy in young adults found that the average young adult owed around $8,000 in debt, used their parents as their primary source for financial information and were not financially independent but it was their top goal.

Another study conducted by Charles Schwab back in 2009 found that 2/3 of young adults in the study considered financial fitness more important to them at the moment than physical fitness. About the same amount of young people ranked financial priorities such as eliminating debt more important than things such as getting a car or paying for graduate school.

These studies show that young adults are interested and see the importance of financial literacy; but they don’t always know where to start when trying to learn.

First off test your own knowledge with this short quiz:

http://www.usfinancialcapability.org/quiz.php

Now watch this video and read a bit of this article to see how peers around your age answered the same types of questions:

https://www.cnbc.com/2017/09/19/94-percent-of-americans-failed-this-financial-literacy-quiz.html

Where to start? Personal Finance!

Step 1: Savings

Check out some of my previous posts on this blog to learn some basics about financial literacy such as how to budget, best types of savings accounts, and how to understand retirement plans. 

• Create a budget if you do not already have one
• Determine if you have the best type of savings account for yourself
• Invest in your future self with company sponsored retirement plans!

Step 2: Debt

Look at credit card statements, student loans, car loans, ect. and determine the best way for you to pay them off.

Step 3: Goals

What are you future goals? Is it to have your own, a specific car in the future, or maybe you want to start your own business! Start saving now! Build up an emergency fund and start building up money towards your personal goals.

What’s Next? Further Your Knowledge

Next, use some of the resources listed below to begin learning about other topics to improve your financial literacy further. Find a topic that interests you, you think would be personally beneficial, or just something you have heard a lot about and have questions on. The more you know, the better off you will be.

Resources:

Beginners’ Guide by National Endowment for Financial Education:

https://www.smartaboutmoney.org/Portals/0/Resources/Your-Spending-Your-Savings-Your-Future.pdf?ver=2012-09-14-134128-837

Resources for College age and Beyond for Financial Literacy Month:

https://jumpstartclearinghouse.org/resource/search/results/?grade_levels=Adult-Consumer&grade_levels=college-young-adult&page=1&page_size=8&price_high=1000&price_low=0

• Some of these are free and some are not, price is listed right next to the quick look link for each

2009 Study

https://www.schwabmoneywise.com/public/file/P-4065778/

2018 Study Results

https://www.schwabmoneywise.com/public/moneywise/tools_resources/literacy_survey

What is the stock market?

• The stock market is made up of a network of exchanges with stocks listed on specific exchanges
• Market indexes track performance of a group of stocks and are used as a benchmark for performance
  • Common indexes: S&P 500, Nasdaq, Dow Jones Industrial Average
• Many factors can affect whether the stock market is up or down, so it is very hard to predict changes to stock values

What are stocks and bonds?

• Stocks are a way for companies to raise funds and for investors to potentially grow their money
  • When you purchase stock, you purchase a small piece of that company (a share)
• Common Stock pays dividends but are not guaranteed and the amount is not fixed
  • Dividends: regular payments to stockholders
• Preferred Stock pay fixed dividends and holders are first to get paid and receive a liquidation of assets, over other stockholders, if company goes bankrupt
• Within those categories stocks are further broken down into various sectors
• Bonds are debt with an agreement to pay interest while the company uses the money
  • Have maturity dates where principal investment is paid back
  • Good for investors who want income (in the form of interest payments)   

Stock and Bonds vs. Mutual Funds

• Individual stocksor bonds:
  • Takes significant time to do proper research on individual stocks and build a well-diversified portfolio
  • Additionally, trading costs can be higher for an individual investor
  • Learn how to research stocks efficiently if you really want to get into individual stocks
• Mutual Fund & ETFs: Group of stocks and/or bonds professionally managed
  • Easier to build a diversified portfolio
  • Generally, have steadier investment returns as the return is not reliant on a single stock or bond
  • If you have a 401(k) you are most likely already investing in stocks and bonds through mutual funds available in the plan

What to Consider Before Investing in Stocks :

• Put in enough money to a 401k to get the employer match and maximize the value of tax deferred assets
• Make sure you are paying for adequate health insurance and consider other coverage such as disability and life insurance depending on your personal situation and other employer benefits you have available
• Pay off any debt you have or have a plan to pay off that debt in coordination with other goals
• Start an emergency fund- you don’t want to have to sell stocks at a loss to pay for an emergency
• Learn the basics of investing instead of just picking stocks that look interesting

You’ve Decided to Invest, Sit Down and Make a Plan :

• Determine your reason and timeline for investing
  • Are you investing to bulk up your retirement funds that you won’t need for 30 years? Or maybe trying to save for a house that you hope to purchase in ten years? Long term goals are usually the best when dealing with the stock market
  • If you have a short-term goal that you really need money for, the stock market may not be the best option
• Assess your risk tolerance (this should correlate with your timeline)
• Are you the DIY type or do you want someone else to manage the process?
• Diversification is the key to success: build a broad portfolio (either on your own or with the help of an advisor) by investing in different stocks, across different sectors and investing in mutual funds and ETFs
• Have patience!

For Short Term Goals (3-5 years) Consider:

• Individual bonds
• CDs with maturity dates less than 3-5 years
• Money Market Accounts

For Long Term Goals Consider:

• A diversified portfolio including Cash, Bonds, and Stock Funds
  • Amounts in each asset class will vary depending on your timeline and risk tolerance

Take Away Note:

• If you have read over what to do before investing and decided that you have enough extra funds to invest in the stock market, start researching now! The stock market is complex and learning as much as you can will help you and your investments in the long run.

What’s a credit score and how much does it really matter? 

A credit score is a number given to an individual that represents their ability (based on previous payment history) to repay a loan.   And yes, it REALLY matters - a lot. 

Do you have a credit score?

• As stated above, a credit score is based on history. So, if you have never had a credit account, there is no history to create the score from. This does not mean you have a score of 0, it simply means you just don't have a score at all.
• If you have a credit card, but it is a joint account with your parents, that won't provide a history for yourself.

The two major US credit scoring companies are FICO and VantageScore. Quick breakdown of rankings:

Credit Score Rankings

Excellent: 800-850            Good: 700-749         Poor: 600-649

Very Good: 750-799         Fair:     650-699        Very Poor: 300-599

What affects your credit score:

# 1: Payment history

• AARP states that just one late payment on a credit card can drop your credit score 100 points. Yikes.This is true even if you have a long credit history and have never missed a previous payment.

# 2: Credit Utilization Rate: percent of total credit limit that you have as a balance.  Most sources recommend staying below 30% utilization of your credit limit. Meaning, you need to make sure you are paying off your credit card every month don't have an outstanding balance of more than 30% of your available credit.

So - if your credit limit is $5,000, try to stay below $1,300 each month

    Other factors: how long you have had credit and what kinds of credit have you have had?

What your credit score affects:

• Ability to get a credit card
• Ability and rate for a car loan or mortgage
• If you can rent the apartment you want to rent
• The article below describes how credit scores can be used to determine risk for car insurance,

https://wallethub.com/edu/car-insurance-by-credit-score-report/4343/

How to keep/build a good credit score:

• Pay your bills on time- all the time!
• Keep your credit utilization balance below 30%
• Don't open too many credit cards. Store cards may cause your FICO credit score to drop.    Resist the temptation of store clerks offering to help you “save extra money today”. 
• Taking a small car loan can help build up good credit as well
• Save separately for emergencies to avoid having to put the money on credit cards
• Check your credit at least once a year at all 3 bureaus to make sure there are no errors or fraud
• Credit builder loan to help build credit as well as build your savings (use as a last option because it ties up your money while you pay off the loan)

UltraFICO score

• Currently in the pilot phase for consumers, estimated full launch by mid-year
• FICO states that the UltraFICO score gives you the ability to enhance your credit score by choosing to securely link your checking, savings, and money market accounts
• Has potential to be a good option for those with no credit score or a low credit score

Where to find your credit score? 

This is the only actual free site to check your credit score authorized by Federal Law.  Be sure you’re on the right site – many have very similar sounding names:

http://www.annualcreditreport.com

• Free once a year from each of the three major credit bureaus - it's a good idea to check your credit score 2-3 times per year by checking once a year each

You work hard for your money – don’t lose the benefits of keeping that good credit score!    

Thinking about getting a pet? Let's walk through the true cost of having one. To keep things simple, in this blog I am going of focus on the cost of having a dog and use mostly average prices. Pictured above are our very much loved family dogs Finn & Haley.

One- Time Fees:

• Initial Price: Cost depends on age and breed and whether you want to adopt a rescue or adopt from a breeder.
  • Maryland SPCA adoption fees for dogs range from $125 to $325 plus $25 for mandatory microchipping
  • According to an article by Forbes, adopting from a breeder can range anywhere from $500 to $3000
• Neutering/spaying: Cost varies. Many vets offer puppy packages that can reduce the cost for shots, visits, and spaying or neutering. Vetstreet.com states that at private vet practices, the procedures can run from $100-$600.
  • There are plenty of low-cost spaying/neutering clinics available with a quick google search; however, don't go that route just to save money. Do your research. They must skimp on many things to be able to provide the procedure at a low cost
  • Question to ask yourself: Which price point allows me the standard of care I am looking for, for my pet?
• Crate: $40 to $50 for a heavy-duty crate that can grow with your puppy
• Shots: Puppy shots series can average $120, plus annual shot fees

*If you aren't adopting a puppy, the dog you adopt may already be spayed/neutered and have most of its early shots already so some of these costs may not apply.

Annual/ Monthly Fees:

• Toys: Varies for each pet owner. If you have a toy shredder like my family, you could have to replace them every month. $10-$20 per month.
• Dog food and treats:Anywhere between $200-$500 per year depending on the type you want to buy
• Annual Medical Checkups: $50 to $100
• Random: pet collars ($20), leashes ($15), beds ($30), food and water bowls ($10 to $20)
• Medicine: Either for acute incidences or chronic conditions. Pets get sick and can also be diagnosed with lifelong problems. Be prepared for either and have enough emergency fund money for your pet to pay for them.
• Grooming: Certain breeds require regular grooming because they don’t naturally shed or maybe you don't have enough space in an apartment to bathe your dog at home. Also, if you aren't comfortable clipping your dog’s nails that is another fee to consider.
• Pet Sitting: Do you have friends or family that can stay with your dog if you go on vacation? If not, you will need to look into having someone dog sit or find a place to board them. Also consider vacations that you can bring dogs on. Boarding a dog averages about $35 a night for a medium size breed.

Emergency Fees:

• If you are unfortunate enough to have a pet need urgent medical attention, the cost can hit hard. If it is outside of normal veterinary practice hours, an emergency vet is probably your only option. The fees for emergency vets can add up quickly (our puppy ate a bee and cost us $1000 one weekend). Dogs and puppies alike get into random trouble all the time so once again make sure you have an emergency fund for your pet.

Other Costs:

• Training classes: Whether you are a first-time dog owner or have a rambunctious puppy like we did, classes are awesome for socialization and help with training. Prices vary per company and number of sessions.

Time:

• One really big consideration before adopting a dog is time. What kind of hours do you work? Will you need a dog walker or some type of doggie day care while you’re at work?  If you like to go out multiple times a week after work or maybe you have a side hustle to help make some extra money, adding a pet will change that routine a lot.  

In my opinion, a dog is so worth the cost - as long as you have the extra cash and time to spend!

Author: Kirsten Eddy, Junior Portfolio Analyst 

As a young adult, it can be daunting to try to find information about the best way invest for the long term – specifically retirement accounts.  I know, it’s easy at this stage to think “I have tons of time to start thinking about getting my finances in order!” and - it's hard to sort through all the information out there to get down to the basics of what you need to know.

In this blog, I'm going to break down four retirement accounts (there are many more) and give you some facts to help you understand your options. This is by no means meant to be a comprehensive list of information. My goal for this post is to create a starting point that you can use to jumpstart further research into the type of account or accounts that will best work for you.

Types of retirement accounts:

401(k) and Traditional IRA: Contributions are made before being taxed (saving you taxes upfront) and your money grows tax deferred

• The money is taxed when you withdraw it for retirement
• 401(k)’s are sponsored through employers; however, not every employer offers one
• An IRA is a good choice for people who do not have access to a 401(k) or other retirement plans at work

Roth 410 (k) and Roth IRA: Contributions are made with money from your paycheck that has already been taxed, so it’s tax free to withdraw during retirement if certain criteria are met.

• If you believe you’re in a lower tax bracket now than you will be later, it’s smart to choose the Roth option and pay the taxes now instead of later.
• Not everyone qualifies for a Roth account, you must meet certain salary requirements.

Where to Start: Does your employer offer a 401(k)?

• If your employer does offer a 401(k) plan take advantage of it, especially if they offer a match. Put in enough money to get the maximum match. If you have maximized your 401(k) contribution and still have more you want to put into savings, review whether you are eligible to contribute into a personal IRA or Roth IRA. Depending on your income you may or may not be eligible to do so.

What to Know About Your 401 (k) Plan:

• Employer's 401k plan documents: What you need to find out -
• When you can contribute
• Company match- is there one? And if so, what are the rules
• How much can you contribute
• Investment options offered
• Maintenance costs and fees
• Roth options- if available, do you qualify and is it a good option for you currently?
• What happens to your money if you leave the company
•  If your employer offers a 401(k) match, put in enough money to get the maximum match
• Bonus note: you are lowering your taxable wage base in the process

What to Know About Your IRA Plan:

• Opened individually at a brokerage or bank
• Without access to an employer available 401(k), an IRA is a smart choice to start your retirement savings
• Do you qualify for a Roth IRA?
• Do you qualify for full, partial, or no deduction of taxes based on your salary?

Contribution limits:

                                                              Below Age 50               Above Age 50

2019 Contribution Limits 401(k):        $19,000                        $25,000

2019 Contribution Limits IRA:            $6,000                          $7,000

Don't take early withdrawals!

• Roth 401(k)’s and Roth IRA’s are only tax and penalty free upon withdrawal if the account has been held for five years or longer and withdrawal is made in the event of disability, death, or the account holder is above 59 and a half years old.

• If you wish to withdrawal money from your 410k before age 59 and a half, you must pay a 10% penalty fee on top of income taxes.

Final Thoughts:

Do: Start ASAP, Increase Contributions, Rebalance Annually and Diversify

Don't: Time the market, cash out early, or Take a 401(k) loan

If you can't max out both a 401(k) and an IRA in a year, max out the 401(k) first to get the total employer match and then put as much as you can (if eligible) into an IRA.

If your employer does not offer a match, still consider maxing out your 401(k). If your 401(k) has a Roth option, consider whether you are in a lower tax bracket today than you will be in the future. If so, consider using the Roth 401(k) option.

Start saving now!If you read through this information and thought "That was useful, but I probably won't start savings for another couple of years" rethink that logic! No matter your age, you are never too young to start saving for retirement. Compounding interest is your best friend. The earlier you start saving, the easier it will be for you to accumulate a healthy nest egg.

Tools and Resources:

Take a look at our calculator to see how you can grow your retirement savings with early planning.

• https://www.oxfordplanning.com/resources/calculators?view=calculator&id=31

Further Resources for Information

• https://www.nerdwallet.com/blog/investing/best-retirement-plans-for-you/
• https://money.cnn.com/retirement/guide/IRA_Basics.moneymag/index.htm
• https://money.cnn.com/retirement/guide/401k_basics.moneymag/index.htm

Author: Kirsten Eddy, Junior Portfolio Analyst

Last week's blog touched on how to save. Let's discuss ideas on where you should keep those savings. Having a specified savings account can be beneficial to help you meet savings goals. It can be hard to look at one account and see that you have a good amount stored in it, only to realize a good portion is supposed to be for savings, not that spur of the moment weekend trip with your friends. By placing your money for savings into its own account, you can make sure you are only spending what you should. A general savings account is okay but there are better alternatives.

The most important things to think about for your savings account are when you will need access to the money (monthly or yearly?) and the annual percentage yield you are hoping for. Ideally, savings should only be dipped into for certain predetermined expenses like that new car you've needed. However, things come up unexpectedly and cannot always be helped.

If you know you will need to take money out of your savings within the next six months, consider:

High Yield Savings Accounts: Lower interest but more accessible

• Typically have a low annual percentage yield (APY); however, money can be withdrawn more easily than with other accounts
• Savings accounts have a 6 time per month limit for withdrawals

Money market Accounts: Higher interest than savings accounts but slightly less accessible

• Six time per month limit usually still applies

If you know you will not need to take money out in the next six months, year, or longer consider:

Certificate of Deposit (CD): Highest interest but penalties for early withdrawal

• Savings certificate with a fixed maturity date and specified fixed interest rate
• Must agree not to withdraw the money for a certain amount of time (times vary from six months to five years)

If you have no current savings, start small with what you can afford and start to build it up. While the APY for most small accounts won’t result in much money gained, it can add up to larger sums if you really try to stick to a savings plan per month and build up a good store. And hey, even if you only make $30 in interest over a year, that’s money you got for simply doing nothing and leaving your savings alone.

Check out our savings calculator to see how long it will take you to reach certain savings goals. You can play around with monthly savings, rate of return, and years to save.

https://www.oxfordplanning.com/resources/calculators?view=calculator&id=28

If you have a goal of savings $10,000 and already have $1,500 in savings, how long will it take to reach that goal? By putting $400 a month into savings, you can reach your goal in 1 year and 9 months. If you can put $550 into savings each month that cuts down the time by 6 months.

Important Notes: 

• Make sure that your savings plan is realistic. Make sure you are budgeting enough for groceries, rent, utilities and any other monthly necessities. If you can't meet your goal with your current budget, consider taking on a small part time job to make some extra money.
• If you decide that one of these savings accounts is for you, do your research. Different banks offer different percentage yields. Some also require a minimum amount of money to open the account or charge a fee. Shop around and look at comparisons to determine the best option for you.

Whichever type of account you choose, don’t wait-start today!

Stay tuned next Friday for our post about understanding you 401(k) options.

Author: Kirsten Eddy, Junior Portfolio Analyst

Have you ever looked at your bank account at the end of the month or even the end of the week and wondered how you spent so much money? It's easy to get yourself into habits like spending too much at bars on the weekend or eating out multiple times a week. If you’re looking to save money, the first step is to create a budget for yourself.

In a society where we are encouraged to be constant consumers, it can be hard to figure out how to budget and save effectively. Let's break it down into a few simple steps:

1. Calculate your monthly income
   •  Figure out your takeaway after taxes either by using your latest paycheck (if you work a set number of hours with a set rate per week) or by using a free online calculator
2. Determine all your monthly expenses
   •  This includes rent, car insurance, health insurance, student loans, gym membership, Netflix subscription, groceries, gas, ect. An easy way to do this is by looking at credit or debit card statements from the previous month and writing down what you spend your cash on. Lastly, make a needs versus wants lists. These are different for every person, your needs might be on someone else’s wants section but that’s okay.
3. Decide what to put into savings
   • Once you have subtracted your monthly expenses from your income, it's time to decide what to do with your leftover money. Start by writing out specific saving goals and put those as a priority before spending any of the “fun money” you have left after your expenses. This could mean putting a certain amount into general savings every month or getting more specific and putting some into general savings and some into specific savings for things like travel or a new car. Also consider having a separate fund for unplanned expenses like new tires or doctor's fees.
4. Divide up the rest!
   • Create some categories for yourself such as date nights, weekend fund or whatever you want to spend it on. 
5. Optional: Multiple Budgets
   • Now that you have a basic budget you want to stick to, consider creating a low, medium, and high spending budget. This is simply done by adjusting the amounts going into your savings for a specific month to allow for some extra spending. Then choose a budget to stick to at the beginning of each month. If you have a goal that you want to meet as fast as you can you’ll want to stick to the low spending high savings plan. If you are okay having it take a little longer to meet your goal and you have a couple of extra events you want to go to one month then choose to stick to your medium or high spending budget.

Where else can you save?

Now that you’ve created your budget, are you happy with how much you’re putting into savings and how much you have left to spend? If not then take a look at areas in your life where you may be able to save money. Here are just a few examples:

• Eat at home: This category is my biggest challenge. Food can really add up whether its eating out or spending too much on groceries. Take a look at how eating out for lunch daily is eating away at your cash. You might be surprised!

Let’s say it costs you $5 to make a bagged lunch to bring to work versus $12 to eat out that day. By switching to the bagged lunch for a month (twenty lunches), you’ve already saved $140.

• Memberships & Subscriptions: Are there any subscriptions or memberships that you don’t really need? Gym memberships that you rarely have time to use, streaming services for music and movies. If you’re using them, great, but they’re easy to forget about if you’re being charged automatically every month.
• Finding free activities: As fun as it is to go out on the weekends with friends, it can also be quite expensive. Maybe one night a weekend or every other weekend try out something less expensive but still fun like a BYOB board game night or free live music in your area. Invite friends over to have a pot luck dinner and share some drinks at home.
• Roommates? If you are currently living alone or thinking about moving into an apartment soon, considering roommates could save a substantial amount of money every month.
• Less “Treat Yourself”: Everyone likes to get something special after a hard day or week, but are you doing this too often? Daily trips to Starbucks or frequent shopping for things on your wants list can cost a lot. If you have something in your life that you use to treat yourself, think about if there is some way you could make it cheaper. Maybe buy the ingredients to your favorite Starbucks drink to make at home or have a girls night to do your nails. If you really don’t want to cut back because it is important to you, then that is completely fine. Just add it to your budget!

Instead of thinking of a budget as a chore, think of it as a great tool to help you reach your goals.

Tools & Apps

• Nerdwallet.com has a useful Monthly Budget Worksheet to help you get started:

                 https://www.nerdwallet.com/blog/finance/budget-worksheet/

• Hourly Paycheck Calculator After Deductions:

                  https://www.adp.com/resources/tools/calculators/hourly-paycheck-calculator.aspx

• Oxford Planning Group Lunch Cost Calculator:

                  https://www.oxfordplanning.com/resources/calculators?view=calculator&id=16

Some of the best budgeting apps:

• Mint
• Pocket Guard
• YNAB

The newest member of our office, Kirsten Eddy our Junior Portfolio Analyst, will be taking over this portion of the Blog. Stay tuned every Friday for new posts!