Unexpected Habits Of A Frugal Millionaire
Unexpected Habits Of A Frugal Millionaire
jeff@debtfreedr.com
When you hear about someone being a millionaire, you typically don’t picture them as being frugal. The phrase, “Frugal millionaire” is not something that typically goes together such as a peanut butter and jelly sandwich does. But, if you’ve read books such as “The Millionaire Next Door” and Chris Hogan’s new book, “Everyday Millionaires,” you’d have a different outlook on how millionaires actually live.
Occasionally, when someone hears that a person is frugal, they automatically think that they’re cheap. Being frugal and cheap are two different things. So, before we discuss the habits of a frugal millionaire, let’s look at the difference of being frugal versus cheap.
Unexpected Habits Of A Frugal Millionaire
jeff@debtfreedr.com
When you hear about someone being a millionaire, you typically don’t picture them as being frugal. The phrase, “Frugal millionaire” is not something that typically goes together such as a peanut butter and jelly sandwich does. But, if you’ve read books such as “The Millionaire Next Door” and Chris Hogan’s new book, “Everyday Millionaires,” you’d have a different outlook on how millionaires actually live.
Occasionally, when someone hears that a person is frugal, they automatically think that they’re cheap. Being frugal and cheap are two different things. So, before we discuss the habits of a frugal millionaire, let’s look at the difference of being frugal versus cheap.
What Is Frugal Living?
Frugal living is simply being intentional with your money. It’s mainly practiced by those who aim to:
cut expenses
have more money
get the most they possibly can from their money
Frugal people understand that paying more doesn’t necessarily mean better value. Again, just because someone is frugal, doesn’t mean they’re cheap.
Are Frugal People Cheap?
I know cheap people and I can tell you firsthand that they’re NOT fun to be around. Cheap people think that EVERYTHING is overpriced.
The bottom line is that these are people who don’t like to spend money. They complain to everybody about how much stuff costs.
Unfortunately, many cheap people I know also lack honesty and moral principles.
The reason I wanted to differentiate between being frugal and cheap is that the majority of research on millionaires concludes that they’re frugal. They put people above money and are known to give to worthy causes.
If you’re not yet a millionaire (keep reading the DFD posts and you’ll soon be one!) and want to know just how many exist out there, let’s move on to some stats…
Millionaire Statistics
Here’s a few millionaire stats you may not know about from millionairefoundry.com:
There are 42.2 million millionaires worldwide, up 2.3 million over the last 12 months.
Of those, 41% or 17.3 million individuals are in the United States
This means that 7% of the U.S. adult population are millionaires
Approximately 14% of U.S. households are in the millionaire club
If you’re a millionaire, you’re in the top 0.6% of wealth for the world’s population
The nine cities with the most millionaires, in decreasing order are Tokyo, New York City, London, Paris, Frankfurt, Beijing, Osaka, Hong Kong, and Shanghai
Current projections are that 1,700 new U.S. millionaires are made every day
Let’s find out what it takes to become a frugal millionaire…
7 Unexpected Habits Of A Frugal Millionaire
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The No-Sweat Way to Protect Yourself From Financial Disaster
The No-Sweat Way to Protect Yourself From Financial Disaster
By: Laura Goldstein Jun 29, 2015
hat nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress.
And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
The No-Sweat Way to Protect Yourself From Financial Disaster
By: Laura Goldstein Jun 29, 2015
hat nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress.
And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
Do It One Essential Expense at a Time
Aim to cover three months of one regular bill, like your mortgage, suggests RBC Wealth Management financial adviser Darla Kashian. Then move on to three months of utilities, then car payments, and so on. This approach gives you the satisfaction of crossing one more potential problem off your list.
Once you've hit three months of all essentials, make your new goal doubling your account to get to six months. Why so long? "When things get rough, your emergency fund enables you to make good choices, where you don't have to rush into a job you don't want or dip into a credit card," says Certified Financial Planner Board consumer advocate Eleanor Blayney.
Get It Out of Your Hands
Looking at your budget may help you find places to trim, but for big savings goals it may be easier and more sustainable to simply stash money away with each pay-check, just as you do with your 401(k), and live on what's left. Set up automatic deposits to a separate account just for your emergency money.
To continue reading, please go to the original article here:
https://money.com/collection-post/save-money-emergency-fund/
How To Never Worry About Money Again
How To Never Worry About Money Again
The No-Sweat Way to Protect Yourself From Financial Disaster
By laura goldstein
Building a bigger rainy-day fund may feel daunting. Start by breaking it down into manageable chunks.
That nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress. And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
How To Never Worry About Money Again
The No-Sweat Way to Protect Yourself From Financial Disaster
By laura goldstein
Building a bigger rainy-day fund may feel daunting. Start by breaking it down into manageable chunks.
That nagging feeling that a bit of bad luck—a medical emergency or a layoff—could derail your finances is widely shared. A new survey from the American Psychological Association found that 54% of people rated paying for unexpected expenses a very or somewhat significant source of stress. And people across the income spectrum tend to be underprepared. A Pew Charitable Trusts analysis finds middle-income households typically have the equivalent of 20 days of income to tap, and even high earners have just 52 days. Building a bigger rainy-day fund may feel like a daunting task, given all your expenses and savings goals, but you can start by breaking it down into manageable chunks.
Do It One Essential Expense at a Time
Aim to cover three months of one regular bill, like your mortgage, suggests RBC Wealth Management financial adviser Darla Kashian. Then move on to three months of utilities, then car payments, and so on.
This approach gives you the satisfaction of crossing one more potential problem off your list. Once you’ve hit three months of all essentials, make your new goal doubling your account to get to six months.
Why so long? “When things get rough, your emergency fund enables you to make good choices, where you don’t have to rush into a job you don’t want or dip into a credit card,” says Certified Financial Planner Board consumer advocate Eleanor Blayney.
Get It Out of Your Hands
Looking at your budget may help you find places to trim, but for big savings goals it may be easier and more sustainable to simply stash money away with each pay-check, just as you do with your 401(k), and live on what’s left. Set up automatic deposits to a separate account just for your emergency money.
Any employer that offers direct paycheck deposit can allow you to split the money between multiple accounts. Many banks will also allow you to give your accounts a nickname to match your goal—make this one “emergency” or even “Don’t touch this!” as a little extra reminder of how important this fund is for you.
Make It a Little Bit Inconvenient
To add another speed bump between you and your cash stash, consider opening an account at a bank other than the one you use for your everyday money. Ally, one of MONEY’s Best Bank picks, has a high-yield savings account that doesn’t include a debit card or checking.
To continue reading, please go to the original article here:
http://money.com/money/collection-post/3938823/save-money-emergency-fund/
Five Freedoms
Five Freedoms
Jonathan Clements
FOR THREE YEARS, I lived on Roosevelt Island, in the middle of New York City’s East River. It’s a wonderful place—a quiet, friendly, low-crime oasis in the middle of one of the world’s largest, most frenetic cities. During my time there, the Franklin D. Roosevelt Four Freedoms Park opened on the island’s southern tip. The park is named after a 1941 FDR speech, where he articulated “four essential human freedoms”: freedom of speech, of worship, from fear and from want.
FDR’s speech was inspiring. Managing money is altogether more prosaic. Still, I’d argue that our pursuit of money is also about a hunger for freedom—with five dimensions:
Five Freedoms
Jonathan Clements
FOR THREE YEARS, I lived on Roosevelt Island, in the middle of New York City’s East River. It’s a wonderful place—a quiet, friendly, low-crime oasis in the middle of one of the world’s largest, most frenetic cities. During my time there, the Franklin D. Roosevelt Four Freedoms Park opened on the island’s southern tip. The park is named after a 1941 FDR speech, where he articulated “four essential human freedoms”: freedom of speech, of worship, from fear and from want.
FDR’s speech was inspiring. Managing money is altogether more prosaic. Still, I’d argue that our pursuit of money is also about a hunger for freedom—with five dimensions:
1. Freedom from fear. We all want a sense of financial security—and yet all too many folks lead fragile financial lives. If our income barely covers our expenses, we may be okay if it’s a typical month. But so few months turn out to be typical.
We face frequent financial shocks, some large, some small. The car breaks down. The roof needs to be replaced. We lose our job. If we have scant savings and little financial breathing room in our monthly budget, such shocks can leave us scrambling to cover the bills and send our anxiety soaring.
As I mentioned last week, a Consumer Financial Protection Bureau study found that the sum we keep in liquid savings—meaning cash, checking accounts and savings accounts—has a huge impact on financial well-being. The price to escape much of our financial fear? All it may take is a few thousand dollars tucked away in the bank.
2. Freedom from financial dependence. We’re all dependent on other folks. Even billionaires need others to produce the goods and services they consume, to buy the investments they sell and to purchase the products their businesses make. But there are degrees of financial dependence—and the more dependent we are, the shakier our financial life can seem. I don’t like being financially dependent on others, and I can’t imagine many do.
Don’t get me wrong: When the day comes, I won’t have any qualms about claiming my Social Security check. But I would never want to be entirely dependent on a government program, a charity or family members.
Even working for others strikes me as a form of financial dependence, though it’s one most of us can’t avoid. It’s terrible to feel our livelihood hinges on a capricious boss. True, if we’re unhappy, we can always take our labor elsewhere. But switching employers is a costly, anxiety-inducing business.
3. Freedom from financial obligations.
To continue reading, please go to the original article here:
Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
By Kentin Waits
Maybe your lottery numbers finally came in. Maybe a favorite aunt remembered you in her will. Heck, maybe one day while you were shootin' at some food, up through the ground came bubblin' crude — oil that is! Texas tea! (See also: 50 Smart Things to Do With Your Tax Refund)
Whatever the source, you're the lucky beneficiary of a financial windfall. Revel in it and protect your new-found wealth by avoiding these six dumb moves.
1. Act Impulsively
Receiving money unexpectedly is exciting, and it can send even normally down-to-earth folks straight into the stratosphere. In those dizzying weeks and months following a financial windfall, we're really not ourselves, so making big decisions during that time is usually a terrible idea.
Stop! Don't Make These 6 Dumb Mistakes With Your Financial Windfall
By Kentin Waits
Maybe your lottery numbers finally came in. Maybe a favorite aunt remembered you in her will. Heck, maybe one day while you were shootin' at some food, up through the ground came bubblin' crude — oil that is! Texas tea! (See also: 50 Smart Things to Do With Your Tax Refund)
Whatever the source, you're the lucky beneficiary of a financial windfall. Revel in it and protect your new-found wealth by avoiding these six dumb moves.
1. Act Impulsively
Receiving money unexpectedly is exciting, and it can send even normally down-to-earth folks straight into the stratosphere. In those dizzying weeks and months following a financial windfall, we're really not ourselves, so making big decisions during that time is usually a terrible idea.
Instead of spending or investing immediately, take a time out. Collect yourself. Adjust to your new wealth for six months or a year and just let the cash sit in a money market account or CD. Remember, high emotion and sound decision-making usually don't mix.
2. Buy a New Car
Even if you're paying cash, there are many reasons to avoid buying a new car. Not only is it the most cliché thing you can do with a windfall, but it's also one of the quickest ways to lose roughly 25% on every dollar you spend.
The minute you sign the paperwork and drive off the lot, that new car becomes used. Depreciation takes a quick and silent bite out of your new ride. Let someone else absorb that financial hit; buy a pre-owned late-model car that's still under warranty.
3. Loan Money to Friends and Family
Making loans to friends and family is a sure way to take the wind out of your financial windfall. Loans have a curious way of never getting repaid, and once your bank balance dwindles, hard feelings can set in and slowly erode relationships.
To continue reading, please go to the original article here:
6 Worst Purchases To Make in an Economic Downturn
I’m a Financial Planning Expert: 6 Worst Purchases To Make in an Economic Downturn
Heather Taylor Wed, July 12, 2023
More than half of Americans are pausing upcoming purchases due to economic uncertainty.
In the Planning & Progress 2023 Study from Northwestern Mutual, 60% of Americans surveyed said they are postponing plans and purchases. Thirty-six percent are postponing daily purchases including dining out, buying new clothes and buying tickets for events. Twenty-nine percent said they’re waiting to invest in large purchases or projects. Even major life decisions are on hiatus with 29% of Gen Z postponing changing their jobs.
I’m a Financial Planning Expert: 6 Worst Purchases To Make in an Economic Downturn
Heather Taylor Wed, July 12, 2023
More than half of Americans are pausing upcoming purchases due to economic uncertainty.
In the Planning & Progress 2023 Study from Northwestern Mutual, 60% of Americans surveyed said they are postponing plans and purchases. Thirty-six percent are postponing daily purchases including dining out, buying new clothes and buying tickets for events. Twenty-nine percent said they’re waiting to invest in large purchases or projects. Even major life decisions are on hiatus with 29% of Gen Z postponing changing their jobs.
Two-thirds of U.S. adults (67%) surveyed said they expect to enter a recession this year and 78% expect it to have a high or moderate impact on their near-term finances. To help you avoid unwise spending, GOBankingRates spoke to four financial planning experts to find out which purchases are the worst to make in an economic downturn.
Kitchen Remodel
A kitchen remodel is the kind of purchase that is considered “nice to have.” Purchases and life moves during an economic downturn should shift from wants to needs only, said Jay Zigmont, PhD, CFP and founder of Childfree Wealth.
If the kitchen remodel is a want, the “need” would be repairing the roof of your house to prevent any damage.
New Car
If the purchase of a car isn’t immediately necessary, Joyce Rojas, MBA and CEO of Money Mindset Wealth Management, recommends holding off on buying a new car. One of the biggest incentives to waiting, Rojas said, is the price of automobiles typically comes down during a recession.
Consider adding more money to your emergency fund in the interim. Rojas suggested having at least four months’ worth of expenses and even more if you’re able to set this money aside. Those who don’t have an emergency fund should not plan any purchases.
Homes
Buying a home, according to the Northwestern Mutual study, is being postponed among nearly every generation including Gen Z (23%), millennials (18%) and Gen X (12%).
Kendall Meade, CFP at SoFi, has seen people delaying the purchase of a home at this time. During times of uncertainty, especially for those concerned about potential job loss, Meade said it may make sense to delay buying a home until you have a solid financial foundation.
Starting a Business
Both millennials (15%) and Gen Z (22%) are pausing any plans to start their own business.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/m-financial-planning-expert-6-120008600.html
How to Find Your Money ‘Why’
How to Find Your Money ‘Why’
By Katherine Fusco March 9, 2022
There are lots of reasons to spend money, some good, some bad, most compelling. Of course, this is by design. Not spending money, though… that’s a trickier thing. The reasons not to spend—or to save, if you’d like to put it more positively—are often vague, rooted in a fuzzy sense of what one should do.
When people are tired or temptations are especially aggressive (hello, holiday season!), the vague thought: I should pay off my debt, crumbles in the face of beautiful store displays or delicious scents wafting from strategically open bakery doors.
How to Find Your Money ‘Why’
By Katherine Fusco March 9, 2022
There are lots of reasons to spend money, some good, some bad, most compelling. Of course, this is by design. Not spending money, though… that’s a trickier thing. The reasons not to spend—or to save, if you’d like to put it more positively—are often vague, rooted in a fuzzy sense of what one should do.
When people are tired or temptations are especially aggressive (hello, holiday season!), the vague thought: I should pay off my debt, crumbles in the face of beautiful store displays or delicious scents wafting from strategically open bakery doors.
More than this, advertising often appeals to our sense of self, frequently tying products to concepts or feelings that we truly believe in. How many bath bombs have been purchased on credit cards in the name of self-care? How many unused vitamins and supplements under the name of wellness?
Pink things for breast cancer awareness? Maybe an embarrassment of water bottles and reusable bags under the name of environmentalism, even though the environmental thing would be shopping less overall? Against all these compelling, ego-supporting reasons to shop, the vague adulting calls to save more and spend less don’t stand a chance.
Just as advertisers know to tap into your sense of self through fairly specific identity appeals—Are you a dog-loving hiker? Here’s a four-wheel-drive station wagon—you can also meet your own financial needs by developing your own money mantra, or “why.”
The importance of considering our feelings and values when it comes to money has gained traction in the field of economics. As the journal Applied Economics reports, “individualized cultural values measures do indeed explain part of the financial behavior of households.” Becoming more concretely aware of cultural, familial and personal values might thus be an important key to better personal finance.
Here are a few techniques to use for getting in touch with your money “why”:
1. Tap into your core values.
What’s most important to you? Unlike with the next two exercises, you’re allowed to be a bit vague here. You might find yourself naming things like “beauty,” “health,” “community,” “family” or even something grander, like “justice.” Faced with spending decisions, you might ask yourself whether a purchase supports your core values. Now, sometimes the answer is an obvious “no.
To continue reading, please go to the original article here:
10 Things You Didn't Know About Millionaires
10 Things You Didn't Know About Millionaires
Egstark Kara Brandeisky
When you think "millionaire," John D. Rockefeller might spring to mind. But most American millionaires look more like your neighbor. The seven-figure club is chock-full of surprises
Thanks to rebounding real estate prices and a bull market in stocks, millionaires have been staging a comeback since the financial crisis. The number of American households with more than a million in assets has hit 9.6 million, according to the Spectrem Group, finally surpassing the pre-recession high of 9.2 million. (And that’s a million bucks without counting your primary residence.) ...
10 Things You Didn't Know About Millionaires
Egstark Kara Brandeisky
When you think "millionaire," John D. Rockefeller might spring to mind. But most American millionaires look more like your neighbor. The seven-figure club is chock-full of surprises
Thanks to rebounding real estate prices and a bull market in stocks, millionaires have been staging a comeback since the financial crisis. The number of American households with more than a million in assets has hit 9.6 million, according to the Spectrem Group, finally surpassing the pre-recession high of 9.2 million. (And that’s a million bucks without counting your primary residence.) ...
If you want to join their ranks, take this quiz to figure out your best path, then adopt one of these seven strategies to get there. But first, get to know your future peers.
1. Millionaires Are Most At Home In Maryland
Maryland has more millionaires per capita than any other state—7.7% of all households—according to the Phoenix Global Wealth Monitor. New Jersey, Connecticut, and Hawaii are also packed with millionaires, and oil-rich North Dakota is gaining fast, jumping from No. 43 to No. 29 in the 50-state ranking in one year.
2. One In 21 New Yorkers Is A Millionaire
Walk down New York City’s Fifth Avenue, and you’re bound to brush past a few millionaires. Some 4.6% of the city’s residents are worth $1 million or more, according to another take on the millionaire population by Spear’s. Monaco, Zurich, and Geneva are the only cities that can claim more rich folks per capita.
3. For The First Time, A Majority Of Members Of Congress Are Millionaires
Congress has more millionaires than ever, according to an analysis of financial disclosure reports by the Center for Responsive Politics.
At least 268 members of the House and Senate are worth $1 million or more. The richest is former businessman turned legislator Rep. Darrell Issa, R-Calif., who has an estimated net worth of $464 million, the Center found.
4. Millionaires Fret About Retirement Too
Almost a third of millionaires worth $5 to $25 million worry about being able to retire when they want to, the Spectrem Group found. And 44% of those with $1 million and $5 million in assets have the same concern.
5. Millionaires Are Not Necessarily Super Savers
To continue reading, please go to the original article here:
Weird Ways Our Brains Control Our Money Habits
Weird Ways Our Brains Control Our Money Habits
Written by Kristin Wong | Published: 09 July 2014 – Updated: 20 November 2018
I'll admit it. I'm a sucker for money psychology studies. And it's not just because I write about money. On a sheer curiosity level, they're fascinating. But they also serve as a great reminder that money is more about mind than it is about math.
It's interesting to see exactly how our brains work when it comes to habits like spending and saving. And not only is it interesting, it can be helpful too. Understanding how we're wired helps us have a better understanding of our own individual money habits. This is why articles on sneaky marketing tactics are so popular — they're helpful! It helps to know how our subconscious is manipulated to spend more so we can consciously do something about it.
Weird Ways Our Brains Control Our Money Habits
Written by Kristin Wong | Published: 09 July 2014 – Updated: 20 November 2018
I'll admit it. I'm a sucker for money psychology studies. And it's not just because I write about money. On a sheer curiosity level, they're fascinating. But they also serve as a great reminder that money is more about mind than it is about math.
It's interesting to see exactly how our brains work when it comes to habits like spending and saving. And not only is it interesting, it can be helpful too. Understanding how we're wired helps us have a better understanding of our own individual money habits. This is why articles on sneaky marketing tactics are so popular — they're helpful! It helps to know how our subconscious is manipulated to spend more so we can consciously do something about it.
I was impressed when April Dykman wrote about Keith Chen last year. He's the behavioral economist who studies the link between language and savings rates. Basically, Chen's findings were enough for him to assert:
“If you speak a language that doesn't distinguish strongly between the present and the future, you save a lot more because the future feels closer. If you speak a language that separates present and future events, the future feels more distant, which makes it harder to do things to care for your future self like save money, exercise, and eat better.”
Obviously, this isn't to say we should all change the languages we speak to get rid of our concept of the future. We've talked about linking our present and future selves before, and it does help to be aware that our language can be yet another barrier in doing this. But it doesn't stop there. I've come across quite a few seemingly “weird” ways our financial habits are affected. Here are three more that I came across recently.
Disorganization leads to impulse spending
Here's one advantage to being a neat freak, I guess.
Researchers from the University of British Columbia and the Cheung Kong Graduate School of Business found that a disorganized environment can lead to impulse spending. According to the Chicago Tribune:
“…in experiments the authors found that people in a cluttered room were more likely to pay higher prices for products, such as a TV or movie tickets, compared with people in an organized room, according to the study, ‘Environmental Disorder Leads to Self-Regulatory Failure.' Researchers predicted that if a person was responsible for his or her own messy environment — rather than ones created by researchers in the experiments — the effect would be even more depleting to their self-control.”
To continue reading, please go to the original article here:
https://www.getrichslowly.org/weird-ways-our-brains-control-our-money-habits/
14 Key Signs You Will Run Out of Money in Retirement
14 Key Signs You Will Run Out of Money in Retirement
Cameron Huddleston Tue, July 11, 2023
You don't want to go broke in retirement. Despite all your preparation, however, you might discover that your retirement is going to cost more than you planned.
First and foremost, you need to become aware of the reasons that the budget you have in mind could be smaller than it needs to be. If you're worried about having enough money, check out the signs that you might not be saving enough for retirement.
14 Key Signs You Will Run Out of Money in Retirement
Cameron Huddleston Tue, July 11, 2023
You don't want to go broke in retirement. Despite all your preparation, however, you might discover that your retirement is going to cost more than you planned.
First and foremost, you need to become aware of the reasons that the budget you have in mind could be smaller than it needs to be. If you're worried about having enough money, check out the signs that you might not be saving enough for retirement.
You Don't Have a Long-Term Care Plan
You could quickly run out of money in retirement if you need long-term care but didn't have a plan to pay for it. More than half of adults turning 65 today will need long-term care and about 1 in 7 will need care for more than five years, according to the Department of Health and Human Services.
If you receive care in an assisted living facility or nursing home, you'll have to shell out big bucks. The average annual cost of care in an assisted living facility was $54,000 in 2021, according to the Genworth Cost of Care Survey.
"Even the wealthiest people are at risk if they have a lot of long-term care expenses," said Dave Littell, professor emeritus of taxation at The American College.
What To Do
You can use several strategies to be financially prepared for long-term care, Littell said. Options include getting a long-term-care insurance policy or hybrid life insurance policy that will pay out if you have a long-term-care event. Another option is a longevity annuity, Littell said.
This is an insurance product that requires a lump-sum investment and will provide a steady stream of retirement income. But, you have to wait several years or until a certain age to start receiving your payout. As a result, "you can't time it exactly with a long-term care need," Littell said. Ideally, you should meet with a financial planner who specializes in long-term care planning to help you devise a strategy, he said.
You Underestimated Your Life Expectancy
Your retirement could easily be more expensive than you thought if you live a lot longer than you expected you would. About 1 in 3 65-year-olds today will live to age 90, according to the Social Security Administration.
If you saved enough to cover expenses for 20 years in retirement but end up living for 30 years in retirement, you'll have to find a way to stretch your savings for another 10 years.
What To Do
Littell recommended using the life expectancy calculator at Livingto100.com to get an estimate of how long you will live based on your health and family history. To reduce the risk of outliving your savings, you shouldn't rely on just one source of income in retirement.
You should also have a portfolio of diversified investments in a retirement account from which you can withdraw money over time. Additionally, you should take a balanced approach by having a source of lifetime income such as an annuity if you won't have a pension, Littell recommended. Limit withdrawals to about 4% annually to ensure your nest egg lasts long enough.
You Didn't Plan for High Healthcare Costs
To continue reading, please go to the original article here:
https://www.yahoo.com/finance/news/14-key-signs-run-money-182826965.html
10 Genius Things Dave Ramsey Says To Do With Your Money
10 Genius Things Dave Ramsey Says To Do With Your Money
Andrew Lisa Mon, July 10, 2023
Investors starting to pivot into more growth-oriented ETFs as Fed slows rate hikes: Strategist Businessman and a bestselling author. He’s also a self-made man who started with nothing and built a seven-figure net worth and a $250,000 annual income by age 26.
Now in his early 60s, he has spent many of the years between getting even richer by helping other people build wealth of their own. Here’s a look at some of the choicest wisdom and most sage advice that Dave Ramsey has doled out along the way to his legions of loyal followers.
10 Genius Things Dave Ramsey Says To Do With Your Money
Andrew Lisa Mon, July 10, 2023
Investors starting to pivot into more growth-oriented ETFs as Fed slows rate hikes: Strategist Businessman and a bestselling author. He’s also a self-made man who started with nothing and built a seven-figure net worth and a $250,000 annual income by age 26.
Now in his early 60s, he has spent many of the years between getting even richer by helping other people build wealth of their own. Here’s a look at some of the choicest wisdom and most sage advice that Dave Ramsey has doled out along the way to his legions of loyal followers.
Eliminate Debt Before You Invest
The No. 1 rule of the Ramsey investing philosophy is not to invest a dime — at least not until you eliminate all of your toxic debt, which he considers to be pretty much everything but your mortgage. Ramsey insists that you can’t build wealth when your primary wealth-building tool — your income — is tied up in monthly finance charges.
Harness the Power of the Snowball Method
Eliminating debt is easy to talk about but hard to do, which is why Ramsey is a longtime advocate of the so-called snowball method. This debt-reduction strategy requires you to attack your debts in order of smallest to largest, allowing you to chalk up quick wins that close outstanding accounts while boosting your confidence along the way.
Once it’s time to confront your truly scary debts, you’ll have momentum on your side — plus, you’ll be able to concentrate only on them now that your smaller debts are no longer nipping at your heels.
Build an Emergency Fund Before You Build Wealth
The first half of Ramsey’s top investing rule is to get out of debt. The second is to fully fund your emergency savings before you try to grow your money on the market. Eliminating debt puts you on solid financial ground; but, without enough cash in the bank to cover three to six months’ worth of expenses, you’re just one emergency away from being forced to tap into your retirement account.
Give 15% of Every Paycheck to Your Future Self
Once you’re free of debt and sitting on enough savings to survive at least a quarter of a year, Ramsey says the most important thing you can do with your paycheck is to save 15% of it — each and every pay period — in a tax-advantaged account. The best option is usually a 401(k) because every dollar from an employer match is free money, and free money is always a good thing. But if that’s not an option, a pre-tax IRA or after-tax Roth IRA are the next-best things.
Keeping Up With the Joneses Is an Unwinnable Game — Don’t Play
Sometimes the most important thing isn’t what you do with your money, but what you don’t do.
In “The Total Money Makeover: A Proven Plan for Financial Fitness,” Ramsey wrote, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
In today’s world, social media influencers literally bank on your willingness to part with your cash to show off for people you don’t even know, much less like. Frivolous spending is the bane of wealth creation; remember, every dollar you wear is one you don’t save.
Utilize Money-Saving Technology
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