Money Tips They Wish They Learned In School

People Are Sharing The Money Tips They Wish They Learned In School

BuzzFeed    Sun, August 4, 2024

Adulting is a headache even on a good day; there are so many different ways to mess up, and of course, no instruction manual. I think we all wish we had a class or two in school that would have prepared us better for navigating the maze that is taxes, insurance, and mortgages.

The next best thing to that, though, is asking advice from the older and hopefully wiser folks who have already stumbled through. So I turned to the BuzzFeed Community to ask: "What are the things you wish someone had told you about finance when you were starting out and knew absolutely nothing?"

People banded together to share the game-changing advice that made the biggest differences in their finances, and here's what they had to say, along with Redditors from the r/personalfinance community.

1."Put your savings in a high-yield savings account! I was over 40 before I realized this. Now, I wish I had put the money I had saved to buy a house into a high-yield account. I sat on that money for years in a traditional savings, earning little interest. It makes me so mad that I didn't know about it then.

That additional savings accrual could have been so helpful in home renovations and items we didn't even know we needed when we bought the house (like new appliances)."

2."When I first started working, money was very tight, so I decided not to contribute to my 401(k), thinking I'd do it once I was on my feet. I ended up putting it off until I was about 30. It was an incredibly dumb move, and I missed out on so much employer match money and interest income." —axj66

3."Take advantage of 401(k) plans offered by employers. Most offer a 'match' — which is basically free money added to the account by the employer. Always put in at least how much the company will match. if they match the first 5% you put in, then put in at least 5%.

You don't get taxed on the money you put in until you withdraw in retirement, so your taxes are lower on your check, too. There are usually rules about when the match money becomes yours (vesting schedule), but keep an eye on that date if you are considering switching jobs; I've seen people lose thousands of dollars because they left a job three or six months before they were either fully vested or at least a milestone."

"If/when you switch jobs, do NOT get tempted to just take the money out and blow it. Besides the taxes and penalties for using it, that couple thousand dollars (that was already not really in your pocket all along) will be a nice chunk of money down the line. And time does move faster the older you get..."

—Anonymous, 49, Missouri

4."'Give every dollar a job...' Having $1000 in my checking account with no purpose meant I had $1000 to spend, and I often did." 

"Having $1000 in my checking account and knowing that...$100 has to go for the week's groceries $400 has to be set aside for property tax in March   $150 has to go for the wife's birthday next month  $50 needs to be set aside for fuel for the week  $300 has to be there for the car payment next week  ...makes me feel like I'm broke, and I don't spend dollars I'll soon need for other things."  –u/ItMadeHimMean

5."Many banks will let you open extra accounts for no cost and maybe even link them together. A $1000 paycheck with direct deposit and auto transfers means putting $500 into a bills account, $300 into savings, and only $200 in my spending account. If I don't see the money in my account in the first place, I don't get as tempted to spend it."  —u/Theta_Zero

6."If you buy something on sale, you still bought it.Instead of thinking I got $30 off on this $100 dollar appliance, think, 'I spent $70 dollars on this appliance.' That $30 off is easier to justify than the $70 spent, especially if it is a niche item that doesn't get much use. That being said, if you can get a great deal on something you will use regularly — get it."  –u/NotSpendingOnSales

7."Paying for services annually instead of monthly. You can often save 20-30% by paying annually." —doofenshmirtzevilinc

To Read More:  https://www.yahoo.com/finance/news/people-sharing-money-tips-wish-034603176.html

11 Money Moves You Should Make Soon To Be Ready for 2025

11 Money Moves You Should Make Soon To Be Ready for 2025

Laura Beck   Sat, August 3, 2024   GOBankingRates

As we approach the final stretch of 2024, it’s more important than ever to position yourself for financial success in the coming year.

Whether you’re looking to achieve specific goals, optimize your tax situation or prepare for potential changes that a new year and election might bring, now is the time to take action. GOBankingRates consulted financial experts to bring you actionable advice on the money moves you should consider making.   Here are 11 money moves you should make soon to be ready for 2025.

Leverage Debt as a Tool for Growth

Dutch Mendenhall, a leader in alternative investments and financial education, thinks there needs to be a major shift in how we think and talk about debt.

“Frame your debt as a tool for growth rather than a burden,” he shared. This approach means changing old habits and shifting the focus from paying off debt to leveraging it for investments. “Presuppose that every action you take today will pave the way for a stronger financial future,” he said.

Maximize Tax Shelters and Retirement Contributions

“Prime yourself by maximizing tax shelters and contributing to retirement plans now,” Mendenhall said.

Elaine King, MBA, CFP, founder of Family and Money Matters and expert at Annuity.org, echoes this sentiment, saying, “Make sure you are at max with your 401(k) and your IRA if you qualify. If you’re in your 40s, then you should consider a Roth IRA.” She reminds investors to add their spouses and children if they have earned income.

Diversify Your Investment Portfolio

Both Mendenhall and King are big on the importance of diversification.

“Diversify your portfolio to balance risk and reward, aligning investments with your personal financial personality,” said Mendenhall.

King adds that this is the time to reallocate, and everyone should ensure their portfolios continue to be diversified.

Audit Auto-Payments and Subscriptions

Josh Richner, founder of FaithWorks Financial, points out a crucial step often overlooked: “The Consumer Financial Protection Bureau (CFPB) has identified and called out deceptive tactics used by companies to trap consumers into subscriptions.”

He adds that while CFPB is focused on eliminating these practices, people should regularly audit their auto-payments and subscriptions. Small, forgotten charges can accumulate over time, and can impact your budget.

Verify Accuracy of Medical Debt Reporting

https://news.yahoo.com/news/finance/news/11-money-moves-soon-ready-120141946.html

5 Unnecessary Bills You Should Stop Paying in 2024

5 Unnecessary Bills You Should Stop Paying in 2024

July 1, 2024   Crystal Mayer

According to Forbes Health, improved finances was the second most popular resolution for 2024. Their research indicated that 38% of people wanted to get their money affairs in order over the next year. So if you, like many, have a New Year’s resolution that involves saving money, now is the time to take a look at your finances.

Many times, however, sticking to a budget is easier said than done. You may start with the best intentions but struggle to say no when it comes to going out to eat with friends or adding something new to your cart. One way to save money without completely depriving yourself is to look at your expenses and see if there is anything that you currently pay for that you no longer use.

GOBankingRates asked experts to weigh in on common things that people should consider cutting in the upcoming year. Here are the five unnecessary bills you should stop paying in 2024.

Subscription Services

Nearly all of the experts agreed that subscription services are the leading culprit when it comes to unnecessary expenses. Today, there are more subscriptions available than ever. A few years ago, it may have only been a magazine subscription or two, but now there is a monthly service for everything. From streaming to meal prep, you have convenience at your fingertips — but it will cost you.

Sofia Perez, content manager and owner of CharacterCounter.com, suggested people look to free alternatives. She explained, “Entertainment lovers think nothing of renting a movie from a streaming platform, but if they have access to a public library, they should know many new releases are found at these locations for free.”

She added, “Again, planning is everything, and it is more convenient to sit on one’s couch, search and push play. But those expenditures undoubtedly add up, especially during winter months and binge-watching marathons.”

Gym Memberships

While you may have joined the gym in January with the best of intentions, it isn’t worth the bill you pay each month if you don’t use it.

Kenan Acikelli, CEO of Workhy, agreed that people need to look at their subscriptions, including gym memberships, to cut costs.

He noted, “In 2024, consumers should reevaluate their subscriptions and recurring expenses. Often, people pay for services like underutilized gym memberships, multiple streaming platforms or premium internet packages that exceed their actual needs. Another area to consider is automatic renewals for software or apps that are rarely used.”

“Evaluating and trimming these unnecessary expenses can lead to significant savings, helping individuals allocate funds more effectively towards their financial goals,” he said.

Unused Insurance Policies

https://www.gobankingrates.com/saving-money/savings-advice/unnecessary-bills-you-should-stop-paying/?utm_term=related_link_1&utm_campaign=1279854&utm_source=yahoo.com&utm_content=2&utm_medium=rss

6 Ways To Improve Your Financial Outlook, Despite High Costs

6 Ways To Improve Your Financial Outlook, Despite High Costs

G. Brian Davis  Thu, August 1, 2024  GOBankingRates

Some financial experts refer to inflation as the “silent tax.” You don’t see it come out of your paycheck or savings, but it drains their value nonetheless.

Inflation also impacts everyone across the financial spectrum. The rich, poor, and everyone in between notices the effects of inflation.

So in the wake of high inflation over the last few years, how can you improve your financial outlook no matter where you fall on the socioeconomic spectrum?

Retirement Planning: Whether you're planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor -- even if you're not wealthy.

1. House Hack

Housing makes up the greatest expense for nearly everyone on the planet. It therefore offers the single greatest opportunity for saving money — especially if you can knock it out entirely by house hacking.

“House hacking involves buying a multi-unit property with up to four units, using traditional mortgage financing,” explained Lane Forehetz, founder of Fast Lane Real Estate. “An FHA loan, which requires only 3.5% down, can make this affordable, often needing less than $10,000 out of pocket.”

“By living in one of the units and renting out the others, you can offset your mortgage or rent payment, significantly increasing your monthly savings,” Forehetz said. You can use the future rents from the other units to help you qualify for the mortgage.

Not ready or interested in buying a new home? Seamus Nally, CEO of TurboTenant, recommended finding ways to house hack your current home.

“For example, turning a room or section of your home into an Airbnb lets you get started without the financial undertaking of traditional real estate investing. With a consistently profitable stream of passive income like that, the money earned can be used to move you upwards financially, helping you do things like pay off your loans, building your savings, and kicking off your investment journey.”

2. Meal Plan To Reduce Grocery Spending

Grocery costs have risen a staggering 25.8% since the last presidential election. That’s pinched most Americans, whose paychecks have not kept pace.

“I plan meals ahead for the week and only buy the groceries that I need for those meals,” said Annie Cole, money coach and founder at Money Essentials for Women. “This has helped me cut hundreds off my monthly grocery bill versus walking through the store without a plan.”

“I buy a lot of affordable staples (rice, potatoes, vegetables) and plan meals around them. When I do buy more expensive items like meat, I’ll use portions of it across multiple meals,” she added.

3. Research Food Assistance

Cole continued to explain that more people qualify for various types of grocery assistance than they realize. “Low-income individuals may qualify to receive a monthly meal stipend from the Supplemental Nutrition Assistance Program (SNAP).”

To Read More:  https://www.yahoo.com/finance/news/6-ways-improve-financial-outlook-151055662.html

5 Money Mistakes Even Financially Savvy People Make

5 Money Mistakes Even Financially Savvy People Make

Cindy Lamothe  Thu, August 1, 2024  GOBankingRates

No matter how great you are at managing your finances, no one is immune to making the occasional money mistake — and some of these can be dire.

“It’s important to recognize that some seemingly minor errors can have significant long-term effects,” said Michael Ashley, finance expert and founder of Richiest.

While everyone has financial blind spots, the good news is you can learn about them before they cause you problems. Here are some of the top money mistakes even the most financially savvy folks make.

Earning passive income doesn't need to be difficult. You can start this week.

Neglecting to Regularly Review and Adjust Financial Plans

One common mistake, according to Ashley, is neglecting to review and adjust your financial plans regularly. “Many people assume that once they’ve set up a budget or investment plan, they don’t need to revisit it.”

However, changes in income, expenses or life circumstances can render old plans obsolete, potentially leading to missed opportunities or financial shortfalls.

Underestimating Small, Recurring Expenses

Another frequent issue is underestimating the impact of small, recurring expenses.

While a small subscription service or daily coffee might not seem like a big deal, Ashley said these expenses can add up over time and erode savings if not monitored carefully. “This can be particularly damaging in the long run, as the cumulative effect of these small expenditures can be substantial.”

Failing To Diversify Investments

According to experts, some people also make the mistake of relying too heavily on a single investment or income source.

“Diversification is a fundamental principle of financial management, and failing to spread out investments or income streams can leave you vulnerable to market fluctuations or job loss,” said Ashley.

He explained this lack of diversification can result in significant financial risk and instability.

“Truth is, thinking that you are good with money is one of the easiest ways to let your guard down and put yourself in a situation where you steadily miss out on financial advancement opportunities,” said Mafe Aclado, finance expert and general manager at Coupon Snake.

In her experience, one of the most common money mistakes people make — even when they are generally good with money — is failing to diversify their investments. Particularly frugal people, for example, have some good habits, like avoiding impulse spending, but they also avoid all but the most familiar and safe investments.

She said these people lay all their financial eggs in one basket. “And what makes this a huge money mistake is by concentrating all their investment[s], they run a huge risk of loss if the investment performs badly.”

To Read Full Story:

https://www.yahoo.com/finance/news/5-money-mistakes-even-financially-160055894.html

These Are the Top 4 Questions High Net Worth People Ask

I’m a Financial Advisor: These Are the Top 4 Questions High Net Worth People Ask Me

Nicole Spector  Thu, August 1, 2024   GOBankingRates

Money can be complicated, and it doesn’t necessarily get any less so if you have a ton of it. In fact, it can get even more complex. Even high net worth individuals have stumbling blocks and points of confusion.

GOBankingRates spoke with financial experts who manage high net worth clients to learn about the most common money-related questions people with a lot of wealth ask — and the best ways to answer them.

Retirement Planning: Whether you're planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor -- even if you're not wealthy.

‘Will I Outlast My Wealth — Or Vice Versa?’

In the world of high net worth clients, Charlie Massimo, SVP and financial advisor at Wealth Enhancement Group, sees one critical concern looming especially large: The question of whether they will outlast their wealth — or vice versa.

“Surprisingly, many high net worth investors find themselves uncertain when faced with this pivotal question,” Massimo said. “There is an approach which is simple yet profound: We guide them to set specific, tangible goals and not vague aspirations like outperforming the market, but concrete objectives, such as generating $300,000 post-tax income by age 65.”

From there, Massimo crafts a plan tailored to support these goals, ensuring that every financial decision aligns with the client’s big plan rather than market ups and downs.

 ‘Can I Retire?’

Even high net worth individuals are wondering about whether a comfortable retirement is feasible for them. Katherine Fox, CFP, founder of Sunnybranch Wealth, often hears the question: “Can I retire?”

“The answer to this question depends on two factors,” Fox said. “How much money you have saved and how much income you need every year.”

Many of Fox’s clients are in their 20s, 30s and 40s and looking to retire early.

“They can usually accomplish this goal within their ideal timeframe, but it means taking a deep dive into their current and future spending and understanding what tradeoffs may come with an early retirement,” Fox said. “The ‘safe’ rule of thumb is that if you plan to withdraw 4% or less from your portfolio each year, your investments can support your lifestyle in retirement.”

Yet this rule of thumb, Fox noted, glosses over the important aspects of retirement planning for young, high net worth individuals.

“Retirement expenses are rarely static, and many wealthy people expect to maintain their current standard of living in retirement,” Fox said. “If the market was down significantly for several years, withdrawing 4% per year may not pay for your lifestyle expenses, and withdrawing more than that may mean you run out of money too soon.”

To Read More: https://www.yahoo.com/finance/news/m-financial-advisor-top-4-120053016.html

Bank Refused ‘Deteriorated’ Bills

Bank Refused ‘Deteriorated’ Bills

Sacramento senior, 66, found $6,000 that she lost, Bank Refused ‘Deteriorated’ Bills — how to deposit damaged money

Bethan Moorcraft  Tue, July 30, 2024  Moneywise

Mary Venegas was “flabbergasted” when she finally found an envelope containing $6,000 in cash buried beneath some cardboard boxes in her backyard.

The Sacramento senior thought the money was long gone after losing it four years ago and was “just so happy” to find it, since she’s living on a fixed income and had overdue utility bills to pay.

How does one come to lose a cash fortune in their backyard?

“I don’t know… I’m just a 66-year-old woman who’s very forgetful,” Venegas told CBS News Sacramento, explaining that she’d originally planned to use the money to pay her taxes.

But when she went to deposit the money, Bank of America refused to accept her cash because the bills were “deteriorated,” dirty and water damaged after their four-year stay outside.

Here’s what happened — and what you can do if you have damaged or mutilated money.

Government Examination

Venegas thought her recent money struggles were solved when she found $6,000 in cash — money that is rightfully hers.

When the bank refused to take the money — which was mostly $100 bills — she found that her deposit may have had to undergo a thorough examination by the Bureau of Engraving and Printing (BEP), the government agency that prints money (referred to as Federal Reserve notes) and redeems mutilated currency notes.

The BEP defines mutilated currency as notes that have been “damaged to the extent that one-half or less of the original note remains, or its condition is such that its value is questionable.”

Currency notes can be mutilated in many ways, including by fire, water, chemicals, explosives, animals, insects, rodent damage and petrification or deterioration by burying. In Venegas’ case, the cash was likely damaged by water and the corners were clearly eaten away by an insect or animal.

To Read More: 

https://www.yahoo.com/finance/news/sacramento-senior-66-found-6-110500798.html

You Can Now Withdraw $1K From Your 401(k) Penalty-Free — but You Still Shouldn’t

You Can Now Withdraw $1K From Your 401(k) Penalty-Free — but You Still Shouldn’t

Gabrielle Olya  Tue, July 30, 2024  GOBankingRates

As of the beginning of this year, the Secure Act 2.0 allows Americans to withdraw up to $1,000 from tax-advantaged retirement accounts to pay for “unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses” without having to worry about an early withdrawal penalty.

While this can serve as a financial lifeline, some financial experts caution against tapping into your retirement savings to cover emergencies. Here’s why you may want to think twice before making a withdrawal from your long-term savings.

Retirement Planning: Whether you're planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor -- even if you're not wealthy.

The Downsides to Making an Emergency Withdrawal From Your Retirement Fund

If you need money ASAP, making an emergency withdrawal from your retirement savings might seem like a no-brainer.

“A hardship withdrawal can give you immediate access to the money you need without having to worry about paying it back,” said Mindy Yu, director of investing at Betterment. “This can be a lifesaver if you’re facing urgent, dreadful financial challenges, like unexpected medical bills or the threat of foreclosure on your home. However, an emergency withdrawal from your retirement savings can have several downsides and long-term impacts.”

It’s important to keep these downsides in mind before taking out any funds.

Reduced Retirement Funds

“The most immediate impact is a decrease in your retirement nest egg, reducing the amount of money available when you retire,” Yu said.

Delayed Retirement

If you rely on these withdrawals too often, you may not be able to retire when you want to.

“Reduced funds may result in having to work longer to compensate for the shortfall,” Yu said.

Missed Earnings Potential

Money in your retirement savings account compounds over time, so when you withdraw funds, you also miss out on that money’s future earnings.

“Emergency withdrawals can disrupt the time your money is invested in the market, affecting long-term savings goals,” Yu said.

“Because of these reasons, careful consideration and exploring other financial avenues are crucial ahead of deciding to withdraw from your retirement savings,” she noted.

Alternatives to Tapping Into Your Retirement Savings

https://www.yahoo.com/finance/news/now-withdraw-1k-401-k-150125060.html

These Are the 6 Most Common Money Questions

I’m a Financial Influencer: These Are the 6 Most Common Money Questions I’m Asked

Nicole Spector  Tue, July 30, 2024   GOBankingRates

With general financial literacy and better financial planning exploding on social media, millions of folks are turning to financial influencers to get their money questions answered without breaking the bank.

What are people the most curious or confused about? What are they reaching out to financial influencers to find out about? And how do financial influencers answer their queries or point them in the right direction?

GOBankingRates spoke with Jeff Sekinger, a financial innovator and entrepreneur, and the CEO and founder of Nurp LLC. Sekinger courts a following of 1.1 million on Instagram.

These are the six most common money questions he’s asked — along with how he answers them.

Retirement Planning: Whether you're planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor -- even if you're not wealthy.

‘How Might a Trump Presidency Impact the Economy?’

Sekinger is constantly spammed with burning questions about money. A common one recently revolves around Trump. Specifically, if Trump is re-elected, how would his presidency impact the economy? More specifically, which markets, sectors and companies could benefit?

“A Trump presidency could have significant implications for the economy and markets,” Sekinger said. “Some investors are optimistic that Trump’s policies, like tax cuts and deregulation, could boost the economy and markets. Others are more cautious, citing concerns about Trump’s trade policies and potential geopolitical instability.”

According to Sekinger, companies that could benefit from a Trump presidency are the energy, financial and defense sectors.

“On the other hand, companies in sectors like healthcare and technology might face headwinds,” Sekinger said.

‘What Do I Need To Know To Be A Successful Young Investor?’

Everyone on the path to financial freedom needs to be investing. Investing can be complex, and naturally, people have questions. Commonly Sekinger is asked what you need to know to become a successful young investor.

“As a young investor, time is on your side,” Sekinger said. “Take advantage of compound interest by investing as early as possible, even if it’s just a small amount each month. Consider contributing to a Roth IRA or your employer’s 401(k) plan. Also, educate yourself about investing and avoid getting caught up in get-rich-quick schemes.”

‘How Can I Build Wealth While Managing Student Loan Debt?’

To Read More:  https://news.yahoo.com/news/finance/news/m-financial-influencer-6-most-140125604.html    

Their Worst Financial Blunders That Still Haunt Them To This Day

People Are Sharing Their Worst Financial Blunders That Still Haunt Them To This Day, And I Really, Really, Reeaaaally Feel Their Pain

BuzzFeed   Mon, July 29, 2024

Reddit user Dira_Jo asked the community, "What do you consider the worst financial decision of your life?" People swiftly took to the comments to share the money mistakes that still haunt them years later. Here's what people revealed:

1."Not contributing the max amount into my 401k. I worked at that company for 27 years and could’ve retired long ago."—u/parrothead_69

2."Being a tobacco user. I've told all my friends younger than me, as well as my kids, never to start using tobacco or Nicotine products. I started at 18 and am almost 45 now. I've quit a few times for a while, but a ton of stress at work and other things brought me back.

I've spent too much time and money both using, trying to quit, and dealing with ridiculous price increases and taxes that are supposed to help deter but really just squeeze more from us addicts."

"I have lived the rest of my life very responsibly, living within my means. I bought a home and then sold it once my family grew to purchase a bigger house while the market was still decent here and interest rates were low. I've invested the max in my 401k. I buy used vehicles and pay them off as soon as possible. The wasted money comes from something I know is bad for my health in the long term.

I have to admit, I have little control over it, although I keep trying. It sucks. So, any of you younger folks here, take it from me. It may seem fun, cool, or relaxing as a teen or young adult, but do yourself a favor for both your wallet and health and stay away from dipping, smoking, vaping, etc."—u/BigSarge79

3."Loaning money to friends. Or anything of financial value, for that matter. To this day, I will not loan so much as a penny without some kind of leverage against the person to pay me back. That saying about loaning people money is true. If you're going to loan money to somebody, you should do it assuming you won't get paid back. That has happened to me every single time. I will never loan money or things of monetary value ever again."—u/Busy_Ad2627

4."Letting my dental insurance lapse. I had the same plan for years, plan options changed, and I forgot to update to the new plan. I got my first cavities and root canals a few months later, and it cost thousands rather than hundreds."—u/AurelianoTampa

5."I was short on rent by $500 in 2013, so I sold 16 Bitcoins to cover the difference. Those coins are worth over a million dollars today."—u/Discokruse

6."My first trip to college. I racked up $56k in debt, and I dropped out. The cost of campus housing was more than the tuition, and the program was garbage. The school later lost its accreditation and went out of business. Students with federal loans had their balances discharged, but mine were private. I wish I had done some serious soul-searching at the time and thought longer about my goals and career path, but live and learn."—u/dackdeegan

7."My children. They're the best emotional decision ever, but the tiny accountant in my head reminds me every time I book a hotel or buy plane tickets for a holiday how much nicer of a holiday I could afford if we'd stopped at one. Don't even get me started on how much it costs to eat at a restaurant for a family of six, especially now my oldest thinks she's too grown up for the kids' menu."—u/Due-Criticism9

To Read More:

https://www.yahoo.com/finance/news/people-sharing-worst-financial-blunders-031602188.html

A Former Fed Official Finally Tells The Truth About Inflation…

A Former Fed Official Finally Tells The Truth About Inflation…

Notes From The Field By James Hickman / Simon Black 7-29-24

My sister used to be a reporter for Fox News based in south Florida and would regularly be assigned to cover NASA press conferences.

And she’s often told me about how reporters were terrified to ask any real questions. They’re not astrophysicists and don’t understand the first thing about rocket propulsion, and most of the journalists never bothered to learn even the basics of the topic.

So, the majority of the questions were very superficial; quite simply the reporters didn’t want to embarrass themselves.

This is how the media covers the Federal Reserve. Most reporters don’t have a clue about central banking, so, not wanting to look stupid, they just sit quietly and give the Fed a pass. There’s no real scrutiny.

At the same time, Fed officials are generally in lockstep with one another; it’s not like politics where the two sides constantly chastise one another. With the Fed, there is virtually no public dissent.

Even former Fed officials who have long left the bank maintain an almost mafioso code of silence.

The end result is that no one really criticizes the Fed. And because of this, the Fed has been able to cultivate a reputation that they’re in total control of the situation… even though their track record proves the opposite.

The Fed completely failed to predict inflation in 2020 after engaging in record money printing. Then they missed the warning signs in early 2021, then misdiagnosed inflation as “transitory” in late 2021, then still failed to act until early 2022.

Yet despite such failures, the Fed is still sticking to the narrative that they know what they’re doing. And with hardly anyone challenging them, it’s been easy to maintain a veneer of omnipotence.

But Kevin Warsh broke ranks this weekend. As a former Fed governor, he is the ultimate insider… and he penned an editorial published in the Wall Street Journal on Saturday blasting many of the Fed’s decisions.

Warsh describes how, when he joined the central bank in 2006, its entire balance sheet was just $800 billion. But in order to deal with the 2008 financial shock (yet another crisis that the Fed missed), they invented “quantitative easing”, or QE.

QE was just a fancy way to say they were conjuring massive amounts of money out of thin air. Informally we could say they were ‘printing money’, though almost all of the new money was created in digital rather than paper form. They click a few buttons, and, poof, new money.

Naturally the Fed promised to eventually unwind QE and drain all of that new money out of the financial system. But they never did.

On the contrary, the Fed embarked on THREE distinct rounds of QE between 2008 and 2013, increasing the balance sheet each time. In the end, the Fed’s balance sheet peaked at $4.5 TRILLION, more than 5x its size prior to the 2008 crisis.

And they kept it at that level for years. Even by 2020, the Fed balance sheet was still around $4 trillion in size.

So much for unwinding. And when the pandemic hit, the Fed quickly pulled out its QE playbook and embarked on a fourth round of money printing… exploding the balance sheet all the way to NINE TRILLION dollars.

Warsh eviscerates the Fed policymakers for failing to see such obvious consequences and explains that there is a very clear connection between the size of the Fed’s balance sheet, i.e. the amount of money it prints, and inflation.

“The monetary base is up 60% since the pandemic. Another measure of money, M2, is up 36% in the past four years. The inflation surge in the same period-- cumulatively about 22%-- shouldn’t have been a surprise.”

“The high priests of central bank dogma might consider it blasphemy,” he writes, but “less money printing, less inflation.” Duh.

He goes on to say, “The American people are still paying a high price for the central bank’s policy error,” and that if the Fed really wants to tame inflation, they’re going to have to slash their balance sheet, i.e. unwind most of the new money that they printed.

Fat chance.

In fact, Warsh points out that the Fed has already indicated they will NOT reduce the size of their balance sheet any longer. And Peter and I both believe the Fed will soon embark on even more QE.

Why? Because the federal government has a serious spending problem. Even the government’s own budget forecasts show an additional $22 trillion in deficit spending over the next decade.

And where will the bulk of that money come from? Most likely from the Fed. They’ll launch QE5, QE6, and beyond, to print the trillions and trillions of dollars that the US government will need to make ends meet in the coming decade.

Sure, it’s possible that the government gets real… that they cut spending, eliminate some entitlements, slash regulations, abandon idiotic green initiatives, and stop standing in the way of conventional energy.

But the window of opportunity is extremely narrow… and depends on the election this year. Plus, a lot of things will have to go right, and very little can go wrong.

So, it’s reasonable to anticipate more deficit spending, which means more Fed printing. And more inflation.

To your freedom,  James Hickman  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/a-former-fed-official-finally-tells-the-truth-about-inflation-151193/

Do I Have to Worry About Gift Tax?

If I Give My Child $30,000 Towards Their Wedding, Do I Have to Worry About Gift Tax?

Mark Henricks  Sat, July 27, 2024   SmartAsset

Imagine your child is getting married and you want to help pay for their wedding. You’ve been saving for years and now have $30,000 set aside for their big day, which you plan to hand over in the form of a check.

However, before you pass along that much cash, it’s important to understand the potential tax implications of making a $30,000 gift. A gift that size could require you to pay the federal gift tax, which can reach up to 40%. The good news is you may avoid paying gift taxes altogether, but there are reporting requirements and other limitations to keep in mind. Consult a financial advisor to minimize your gift tax obligations.

Federal Gift Tax at a Glance

The federal gift tax applies when you transfer money or property to someone else without receiving something of equal value in return. Gift tax rates range from 18% to 40% based on the size of the gift.

However, not all gifts trigger this federal tax. The IRS allows you to give away up to $17,000 ($34,000 for married couples) per year to each individual without owing any taxes on the gift. This is called the annual exclusion, and in 2024 it will increase to $18,000 per person.

However, gifts that exceed this annual exclusion aren’t necessarily taxed either. Instead, they reduce the amount of money or property you can give away tax-free over the course of your lifetime. This lifetime limit is known as the basic exclusion amount or lifetime exemption and it’s adjusted each year for inflation.

The gift tax only applies when you exhaust your lifetime exemption. In 2023, a person can give away up to $12.92 million over the course of their lifetime without triggering the gift tax (this will increase to $13.61 million in 2024). For example, if someone were to give away $13 million, they would pay gift taxes on only $80,000. And if you need additional help planning for major gifts, consider matching with a financial advisor.

How the Gift Tax Could Affect a $30,000 Wedding Gift

If you want to give a child $30,000 to help pay for a wedding, there are a few different ways it could be structured.

As a gift solely from you to your child, a $30,000 wedding gift would avoid most tax liability on its own. The gift only exceeds the $17,000 annual exclusion for 2023 by $13,000, so that’s all that could potentially be taxable if you’re single.

If this is your first time exceeding the annual exclusion, there’s more good news. In that case, the $13,000 excess would simply reduce your $12.92 million lifetime exclusion by that amount. You would not actually have to pay any gift tax unless you exceed your remaining lifetime exclusion, though you still have to fill out Form 709.

Alternatively, you could gift both your child and their future spouse $15,000 each and avoid the annual exclusion threshold (remember, you can gift up to the annual exclusion amount per year per person).

To make sure you structure your gifts in your best interest, talk it over with a financial advisor.

How to Avoid Gift Tax on a $30,000 Wedding Gift

TO READ MORE:

https://www.yahoo.com/finance/news/worry-gift-tax-pay-30-122213443.html

7 Biggest Cash Withdrawal Mistakes

I’m a Bank Teller: 7 Biggest Cash Withdrawal Mistakes I See People Make Every Day

Madeline Duley  Fri, July 26, 2024  GOBankingRates

If you have a bank account, you’re likely familiar with the process of withdrawing cash, depositing checks and handling bills. While these might seem like basic tasks, there are a few common mistakes that are easy to make when carrying out these seemingly simple financial transactions.

Find out from a bank teller if you’re making these seven common cash withdrawal mistakes — and learn how to avoid them.

Getting Bills Too Large

Although efficient and compact, large bills aren’t as versatile as you might think.

“One mistake I often see is taking out large bills to spend at local businesses, because most won’t accept them because businesses are worried about fraudulent bills,” said Haley West, head teller at Kohler Credit Union.

The usability and convenience of smaller bills are well worth the annoyance of carrying around a thicker stack of cash.

Requesting Brand New Bills

There’s nothing more appealing than fresh, crisp bills, especially when you’re giving cash as a gift. However, requesting brand-new bills might have frustrating consequences.

“A mistake members make is requesting brand new bills as they are sticky and members tend to come back thinking that we shorted them or they gave too much when they purchased because the bills were stuck together,” West said.

Neglecting To Balance Accounts

Life gets busy and it can be hard to stay on top of account balances. An easy mistake to make is withdrawing cash from an account with inadequate funds.

“A staggering 19% of all payments in 2020 were cash transactions,” said Oliver Brifman, business insurance and financial services expert at eMerchant Authority. “Yet, many customers withdraw without checking their balance, leading to overdraft fees. Always check your balance before a withdrawal to avoid the plunge into overdraft territory.”

Rushing

When you are in a rush or distracted, it’s easy to make mistakes.

“Based on my time as a bank teller, I learned firsthand how easily little mistakes can happen with cash transactions if you’re not careful,” said Steven Kibbel, former bank teller and now a Certified Financial Planner and financial advisor at Prop Firm App. “When people are rushed or distracted, they often make the mistake of miscounting bills, mixing up denominations or neglecting to double-check important details on checks.”

Save yourself the headache later by double-checking your accounts, counting your cash and remembering to breathe.

Forgetting ID

Surprisingly, the most common mistake people make when withdrawing cash is a very simple one: forgetting their ID.

https://www.yahoo.com/finance/news/m-bank-teller-7-biggest-160040491.html