This post is a weekly roundup of the best personal finance advice from around the web. I follow a lot of the personal finance bloggers on the internet and select the best posts every week for this roundup. I’ve summarized the posts below but there’s still a ton of detail within each article. Click through to the posts and be sure to tell the blogger where you heard about their blog.
I’m always looking for new blogs to follow in crowdfunding, peer lending and personal finance. Let me know if you find one worth following.
Personal Finance and Kids
I found this one last but had to put it first on the list. Next to valuing an education, teaching kids good financial habits is about the best thing you can do. Jason relates 15 financial tools and resources for teaching kids about personal finance he found at the National Educator Conference. The post includes descriptions for five apps and links to ten other resources.
- Money Mammals – is a series of apps, DVDs and kits that help teach young kids about money and planning
- FamZoo – is a vitual family bank that teaches kids giving, saving and good spending habits. Virtual accounts can be created that deposit earnings once chores are completed.
Rules were Made for Breaking!
I love it when personal finance ‘rules’ are questioned and this post offers different points of view for five big ones. No one-size-fits-all when it comes to meeting your financial goals and you need to tailor-fit the rules to your own situation.
- Saving at least 10% of your income can be tough for some people and not a big enough goal for others. A lot of people are disappointed and forego saving all together when they can’t hit the ‘rule’ while others are not saving enough to meet their goals.
- Max out your 401K contribution is a great start for your retirement planning but it’s usually not enough. A lot of people max out their plan and think it will take care of all their investing needs. Employers have been cutting back on 401K matching and you’ll likely need to invest more to reach your target in retirement.
- Pay off debt before saving or investing – This one is the worst! There are so many debt-haters out there that this one gets perpetuated too much. Debt is a tool to buy assets and can be a great resource when rates are so low. Sure, pay off high-interest debt but you will never find cheaper money than a 4% home mortgage. Besides, shopping is too much fun. Too many people wait to pay off all their debt and never end up saving at all.
- Avoid credit card debt can be a good ‘rule’ to follow if you cannot use cards without overspending. Credit cards are another tool and not the problem. The problem is poor spending habits and avoiding credit cards won’t solve it. Fix your spending habits and enjoy cash back and rewards on your cards.
- Buying is better than renting – this one really depends on your own financial discipline. Home values really only appreciate (over the long-term) at about the rate of inflation, so you’re not gaining much as an investment. With the added expenses like taxes and maintenance, you’re probably not saving as much as you thought. On the other hand, a mortgage is a great way to force yourself to save. If you have trouble saving and investing then making that monthly payment will help build your nest egg.
Habits are so Hard to Keep
Natalie provides some great personal finance habits to build though I would argue a little on a couple. It’s so hard to build good financial habits. Most people start out with a budget and give up after a few weeks. Set a commitment to follow your budget for just three months. It’s easier to put a time-goal on it and by three months, you will have built some good habits.
- Pay yourself first – This is a great one and is very manageable with a little budgeting. Instead of listing your expenses out first in a budget then figuring out how much you have left for saving and paying yourself. Decide how much you want to save and throw in a little to pay yourself, then design your budget around what’s left and cut expenses to get there.
- Avoid debt – this one I’ve got to argue a little. You don’t need to avoid debt completely to reach your financial goals. In fact, debt can be one of your most powerful tools to get there but you have to use it responsibly. Avoid high-rate debt and don’t overdo the credit card spending. Mortgages and debt that helps you buy assets can make good financial sense.
- Check in on your finances regularly – While the author checks her finances weekly, I would say monthly is probably enough for most. You need to go over your budget and make sure you’re not getting off course before you go too far.
- Use cash and avoid credit card balances – this is kind of a repeat to the avoid debt habit but worth repeating. Credit cards can be a good point-of-sale tool if you don’t want to carry a lot of cash but are lousy if you can’t pay them off every month.
Setting Personal Finance Goals
Allison set one financial goal for 2014, to maintain her finances where she left off in 2013. Before you think this is unambitious, she saved $20,000 the year before by working two jobs. Also, her ‘maintenance’ goal included paying off credit cards every month, contributing to her IRA account and paying down student loan debt so it really wasn’t just maintenance.
An honest post that talks about what she accomplished and what she could have improved. Helps to reflect on your own 2014 goals and get ready for 2015.
Getting More Money at Work
Negotiating a better salary is something we all say we’re going to do then get chicken after the offer. The Money Under 30 blog helps with 5 steps to negotiating a better starting salary.
- Decide your number – know what you need and what you want before the offer. You might not get as much as you want but accepting a job for less than you need will be financially painful down the road.
- Understand your value – So you’ve asked for a higher amount and then have nothing for when they say, “why should we pay you more?” Know what others in your position are making and have an answer for why you should be making more.
- Don’t be too eager – The company has spent months trying to find the perfect candidate and you got the offer. They’re not going to close the door because you ask for a day to consider it. We’ve all been there, you just got an offer and you’re so excited the only thing you can squeak out is, “Yes! Thank you!” Then you start thinking about it, regretting that you said yes to such a low salary and feeling disenchanted with the job before you even start. Take your time and negotiate.