Connect with us

Market Insider

9 Questions To Ask Financial Advisors Before Hiring One

Published

on



You wouldn’t trust just anyone with your kids, your mental health or even your hair, so you should be just as picky when it comes to the person who manages your money. But with so many financial advisors out there, it can be tough to know if you hired the right person for the job.

One way to find out: Before you sign on, ask advisors a few probing questions to find out if they have your best interests at heart and understand what you need as a client. Here are nine to get you started.

“You don’t want to be seen as just a commission check for someone in sales or a guinea pig for someone brand new to the industry.”

– Michael Mustian, founder, WisePath Advisors

1. How do you get paid?

There are many ways financial advisors get paid for their services, including commissions from selling certain funds, insurance commissions, charging a percentage of assets under management, flat fees and hourly fees.

“Understanding of how a financial advisor gets paid will help clear up whether they are working in your best interests or not,” said Charles Ho, a certified financial planner and the founder and CEO of Legacy Builders Financial. That’s because advisors who earn money by selling you certain investments or products will likely give you biased advice that benefits their wallet above yours. Fee-only advisors, on the other hand, don’t have any conflict of interest when it comes to managing your portfolio.

He added that asking advisors how they’re paid can help you weed out inexperienced professionals. “There are many financial advisors who are so new and still drinking the Kool-Aid of whatever firm they are at that they don’t have a clear understanding of how clients are being charged fees,” he said.

2. How many clients do you work with?

Finding out the size of an advisor’s client base can tell you a lot about what kind of service you can expect to receive. For instance, if advisors have a lot of clients ― say, over 200 ― they’re most likely financial salespeople and not financial planners, said Michael Mustian, an accredited asset management specialist and the founder of WisePath Advisors. They need to continually get more clients in order to make a living, which he said poses a conflict when trying to do what is in the best interest of the client.

On the other hand, if advisors don’t have many clients ― fewer than 40 ― they may be just getting started and may not have much experience. He said the sweet spot is 75 to 100 clients for one advisor, though a person can handle closer to 150 with a team for support.

“The big reason this is important is … if you are having someone put together a plan for you today, you really want them for the long haul to make the necessary adjustments,” Mustian said. “You don’t want to be seen as just a commission check for someone in sales or a guinea pig for someone brand new to the industry.”

3. How do you track success for your clients?

If you pay an advisor to manage your investments and grow your wealth, you want to make sure you’re getting results. When meeting with potential advisors, you should find out how they measure and track client success over time.

Jirayr R. Kembikian, a certified financial planner with Citrine Capital, said it’s important to look at not only the quantitative financial metrics but also the behavioral changes you’re working together to improve. “Review these metrics at least on an annual basis to determine if the relationship is successful or needs to be modified,” he said.

4. How is your money invested?

You probably wouldn’t want to visit a nutritionist who eats nothing but pizza and fries or a doctor who smokes two packs a day. So when it comes to financial advisors, you want to know that they practice what they preach. That’s why you should ask advisors how their money is invested.

“If they are not willing to tell you or show you how their own money is invested, then maybe they don’t completely believe what it is that they are telling you,” said Michael Troxell, the principal and founder of Modern Financial Planning. “That would be a good indicator whether to continue the discussion or not.”

5. What does your ideal client look like?

Financial advisors have varying areas of expertise and investment styles. One advisor could be a great fit for one client while a poor match for another. That’s why you should ask advisors you’re considering working with what their ideal client looks like.

“If they provide a general answer like ‘I work with anyone and everyone who needs financial help!’ and you are just looking for general advice, they are probably a good fit for you,” said Ron Strobel, a certified financial planner and the founder and CEO of Retire Sensibly. “However, if you’re looking for specific advice like help with complex stock options or splitting up your assets due to a divorce, you may want to keep looking and find an expert in those areas.”

6. Are you a fiduciary 100 percent of the time?

A fiduciary is a person who is legally and ethically required to act solely with your best interests in mind. Just about anyone can call him- or herself a financial advisor, but only certain professional designations are held to a fiduciary standard, such as certified financial planners and registered investment advisors. Others, such as stockbrokers and insurance agents, are not.

“A common response from a dually registered agent might be a sidestep answer, such as ‘When I am managing your investments, yes, I am always a fiduciary,’” said Justin Chidester, a certified financial planner at Wealth Mode Financial Planning in Logan, Utah. “But it doesn’t address the fact that there are still aspects to their advice and what they do where they may not be a fiduciary, such as selling you an investment product in the first place or perhaps an insurance policy.”

7. How do you communicate with clients?

Everyone has different communication styles, including when working with a financial advisor. You might enjoy frequent phone calls and emails or prefer a more hands-off approach.

“It’s fair to expect regular communication from your financial advisor, but ‘regular communication’ is subjective,” said Leah Hadley, the president of Great Lakes Investment Management in Cleveland. “Would you like a quarterly phone call? Do you prefer to meet in person, or do virtual meetings fit better into your schedule? Does your advisor meet with clients quarterly, semiannually or annually?” she said. Find out how your advisor prefers to communicate with clients and ensure it meets your expectations.

8. What is your investment philosophy?

According to Vid Ponnapalli, a certified financial planner and the founder of Unique Financial Advisors, different financial advisors have different investment philosophies. Essentially, an investment philosophy is a set of guiding principles that helps advisors make proper financial decisions. “It explains what goes into the process of choosing appropriate investments for a given situation of their clients,” he said.

For example, advisors might say their philosophy is to focus on long-term investing, a globally diversified portfolio and low-cost exchange-traded funds. The advisors could explain that their choice of investments depends on factors such as the client’s risk tolerance or tax situation.

It’s important to ensure your advisor’s philosophy aligns with your values and goals. At the very least, he or she should have one and be able to explain it to you.

9. How will you make sure I understand and follow through on your advice?

Financial advisors typically create comprehensive financial plans for their clients, which cover all the major elements of personal finance, said Kevin Mahoney, a certified financial planner and the founder and CEO of Illumint. “Too often, though, advisors deliver this tedious, unfamiliar information in a lengthy, legal-like document,” he said.

Understandably, clients can feel overwhelmed by their plan and become paralyzed by the many daunting tasks in front of them. “Add a demanding job or young children to the mix, and it’s unlikely that the client will change much about their financial circumstances,” he said. So before hiring an advisor, you should confirm that he or she understands the type of communication, assistance and accountability you need to achieve results.



Source link

قالب وردپرس

Market Insider

7 Things You Can Learn From The FIRE Movement

Published

on

By



Meet the FIRE movement, a lifestyle system followed largely by millennials that’s focused on the goal of achieving financial independence and retiring early.

FIRE adherents are uber-savers ― they save 50 percent or more of their income ― who strive to stop working for others sooner rather than later. They aren’t interested in gaining more wealth in order to have more to spend; it’s quite the opposite. They are intent on living their best lives for less. And it starts by rethinking their relationship with money, with an eye to achieving financial independence.

Adherents closely track their spending and consider every purchase in terms of opportunity costs. Dollars spent are equated to “hours of life energy,” a phrase coined by Vicki Robin, the now 72-year-old co-author of the 1992 bestseller Your Money or Your Life who has unwittingly become an idol of the FIRE movement. So if you earn $300 a day and want to buy a $100 pair of shoes, you should ask yourself whether those shoes are really worth nearly a third of a day of your precious time on Earth, as Time explained in a piece earlier this month.

FIRE devotees gather in multiple forums, camps and retreats, and, of course, they write blogs, and more blogs. There is also a growing FIRE subreddit called /r/financialindependence that now has more than 365,000 subscribers. There, followers discuss strategies, techniques and lifestyles with the goal of simplifying and redesigning how they live so they can reduce their overall spending and instead save and invest their money for the future.

Success stories are celebrated, tips are shared and there is much conversation about separating needs from wants and how to find contentment with less. Those interested in gaining wealth for the purpose of excessive consumption are in the wrong subreddit, for sure.

But it quickly becomes clear reading the forum that while FIRE is a lifestyle choice, it is not one totally free of issues. Those who adhere to a “financial independence, retire early” philosophy sometimes struggle finding partners who share their values and approach to money, and are often misunderstood by family members who conflate the idea of not wanting to work until a traditional retirement date with being “lazy” or “unambitious.” Community acceptance among like-minded people seems to be one reason the subreddit thrives.

The message of the FIRE movement is this: Let’s blow up the idea that we should work for 40 to 45 years of our life before having fun and getting to do what we want. Why spend the bulk of our healthy years working for someone else?

Even if retiring at a young age isn’t necessarily your goal ― or you’re in a job that hardly pays enough to save at all ― there are lots of practical tips to take from FIRE that will help you save and manage your money. Here are a few:

1. Make saving money your default action.

Most people treat savings as whatever is left over after all their monthly expenses are paid. Reverse that and fund your savings first, said FIRE devotee Justin McCurry, a transportation engineer who retired in 2013 at age 33 and now has $2 million in investments with his house paid off.

McCurry lives in Raleigh, North Carolina. His wife retired a few years after he did, and the couple has three children. Two of them will be attending college in less than five years, an expense McCurry already has covered.

He says success all starts with your approach to spending. Here’s what it should look like, he told HuffPost: When you get paid, immediately put half of it in a savings/investment vehicle, and then whatever you have left is what you will live on.

And, yes, people living in high-rent areas like New York City and Los Angeles are going to struggle with this, he allowed. “But you really can’t spend 50 percent of your income on housing” and expect to retire early, he said.

2. Use a money tracker to know what you spend.

Just like keeping a food journal of what you eat for a diet accountability program, FIRE adherents track what they spend. You should know where every dollar goes, McCurry said.

He uses Personal Capital to track all his spending as well as all investments. It provides a summary of all income, expenses and investments on one screen ― and, yes, it is free.

3. Having a social life can cost a lot of money but doesn’t have to.

Many of us socialize around food. We eat out and drink with friends as an evening’s entertainment. It’s a budget-busting behavior, and it’s one that’s hard to change.

Newbie FIRE starters, unsure how to engage with friends in other ways, are advised to get out in front of the problem and start organizing less-expensive activities for their friend group. Hikes, bike rides, a beach picnic, board games and concerts in the park are all free. So are programs at the public library, many events at local colleges and just binge-watching TV at home with friends.

Begin by tackling work-arounds for eating and drinking out, like a potluck meal or enjoying drinks in someone’s home. Be creative: How about an Instant Pot potluck? Or a wine-tasting at which everyone brings a different bottle to find the best bargain for under $10?

If you do go out for drinks, bring enough cash for just one drink and nurse it. If you go for dinner, order an appetizer only or get a reasonably priced dinner and drink water. If a friend wants to “just grab dinner,” be ready to suggest a couple of places and talk them up as “hole in the wall” joints with great food but low prices.

If you need further motivation to cut down on dining and drinking out, just look hard at how much you spend each month at restaurants and bars. For what a glass of wine with dinner costs in a restaurant, you could likely buy a whole bottle. Apply the “what is it worth to you” question here: Is the act of having someone else pour the wine and wash out the glass really worth paying three times what you would spend if you did that yourself?

Be the one who issues the invites for less-expensive activities, advised a subreddit poster. Ultimately, the poster added, you just may need to make more friends ― ones with less-expensive tastes.

4. Do it yourself whenever you can. And if you can’t, offer to swap services.

Mow your own lawn, clean your own house, walk your own dog and make your own lunch instead of having UberEats deliver it. When you pay for convenience, you are spending money that could be saved.

Instead of paying for a ride to the airport, ask a friend to drive you and promise to repay the favor when they travel. Exchange pet sitting services. Help your neighbor’s son with his homework if he helps you paint the garage.

Learn to change your own oil, fix your own sink leak and refinish your own table.

When you change your money priorities to funding your savings first, you will have less to spend on convenience, and doing things yourself will ease the pain of paying someone to do things for you.

5. Shop just for necessities, and do it smartly.

End recreational shopping, both online and in stores. Don’t buy things just because they are a good deal; buy only what you need and will actually use. Having a bad day is not an excuse for binge-shopping.

You can borrow books from the public library for less than it costs to own them. Hit thrift stores before you buy something new. Garage sales are also great for shopping on a budget. Organize a clothing exchange with your friends or at your children’s school. Never buy new clothes for a single-use occasion, like a wedding, a ski trip when you live in a warm climate or a dress-up outfit for your child. Instead, try to borrow what you need or make due with what you already have.

FIRE followers also suggest that for gifting occasions, ask for gift cards that can be traded or exchanged. They also buy them for themselves when they are on sale or cost less than the stated value.

6. Kids don’t have to be budget-busters.

The estimated cost of raising a child from birth through age 17 is $233,610, or as much as almost $14,000 annually, the Department of Agriculture says. That doesn’t include paying for college, and it may actually be higher in urban areas.

It behooves parents to ask why kids cost so much. Who hasn’t seen a toddler play more with a cardboard box than the toy that came in it?

Without question, children will cost money. It is not surprising that in a survey of FIRE followers on Reddit, 77 percent said they didn’t have and weren’t planning to have children.

Raising your kids to be savers will do all of you a favor. They really don’t need to upgrade their phone every time Apple releases a new one, nor do they need expensive summer camps, designer clothes they outgrow in two months or the latest and greatest electronic games.

Instead, spend time with them, McCurry says, which, if you retire early, you will be able to do in spades. When we spoke to him, he had just spent two weeks volunteering at his kids’ school on a project.

“I never would have been able to do that if I wasn’t retired,” he said.

7. Yes, you can still travel ― but do so more frugally.

There is no place like home when it comes to staying on a budget. But who wants to do that when there is a whole world out there waiting to be explored?

FIRE adherents travel, and they stay with friends or relatives, do house-swaps and use discounted gift cards, for example.

“I bought $200 worth of Airbnb gift cards for $173 at Raise.com [a gift card buy/sell exchange] when they offered 10 percent off sitewide,” said McCurry.

Another reader tip is to get loyalty rewards whenever you can. Many cruise lines offer special pricing for repeat customers who join their cruise membership programs. Some use ebates.com to book travel (and shop) to get further discounts.



Source link

قالب وردپرس

Continue Reading

Market Insider

7 Things You Can Learn From The FIRE Movement

Published

on

By



Meet the FIRE movement, a lifestyle system followed largely by millennials that’s focused on the goal of achieving financial independence and retiring early.

FIRE adherents are uber-savers ― they save 50 percent or more of their income ― who strive to stop working for others sooner rather than later. They aren’t interested in gaining more wealth in order to have more to spend; it’s quite the opposite. They are intent on living their best lives for less. And it starts by rethinking their relationship with money, with an eye to achieving financial independence.

Adherents closely track their spending and consider every purchase in terms of opportunity costs. Dollars spent are equated to “hours of life energy,” a phrase coined by Vicki Robin, the now 72-year-old co-author of the 1992 bestseller Your Money or Your Life who has unwittingly become an idol of the FIRE movement. So if you earn $300 a day and want to buy a $100 pair of shoes, you should ask yourself whether those shoes are really worth nearly a third of a day of your precious time on Earth, as Time explained in a piece earlier this month.

FIRE devotees gather in multiple forums, camps and retreats, and, of course, they write blogs, and more blogs. There is also a growing FIRE subreddit called /r/financialindependence that now has more than 365,000 subscribers. There, followers discuss strategies, techniques and lifestyles with the goal of simplifying and redesigning how they live so they can reduce their overall spending and instead save and invest their money for the future.

Success stories are celebrated, tips are shared and there is much conversation about separating needs from wants and how to find contentment with less. Those interested in gaining wealth for the purpose of excessive consumption are in the wrong subreddit, for sure.

But it quickly becomes clear reading the forum that while FIRE is a lifestyle choice, it is not one totally free of issues. Those who adhere to a “financial independence, retire early” philosophy sometimes struggle finding partners who share their values and approach to money, and are often misunderstood by family members who conflate the idea of not wanting to work until a traditional retirement date with being “lazy” or “unambitious.” Community acceptance among like-minded people seems to be one reason the subreddit thrives.

The message of the FIRE movement is this: Let’s blow up the idea that we should work for 40 to 45 years of our life before having fun and getting to do what we want. Why spend the bulk of our healthy years working for someone else?

Even if retiring at a young age isn’t necessarily your goal ― or you’re in a job that hardly pays enough to save at all ― there are lots of practical tips to take from FIRE that will help you save and manage your money. Here are a few:

1. Make saving money your default action.

Most people treat savings as whatever is left over after all their monthly expenses are paid. Reverse that and fund your savings first, said FIRE devotee Justin McCurry, a transportation engineer who retired in 2013 at age 33 and now has $2 million in investments with his house paid off.

McCurry lives in Raleigh, North Carolina. His wife retired a few years after he did, and the couple has three children. Two of them will be attending college in less than five years, an expense McCurry already has covered.

He says success all starts with your approach to spending. Here’s what it should look like, he told HuffPost: When you get paid, immediately put half of it in a savings/investment vehicle, and then whatever you have left is what you will live on.

And, yes, people living in high-rent areas like New York City and Los Angeles are going to struggle with this, he allowed. “But you really can’t spend 50 percent of your income on housing” and expect to retire early, he said.

2. Use a money tracker to know what you spend.

Just like keeping a food journal of what you eat for a diet accountability program, FIRE adherents track what they spend. You should know where every dollar goes, McCurry said.

He uses Personal Capital to track all his spending as well as all investments. It provides a summary of all income, expenses and investments on one screen ― and, yes, it is free.

3. Having a social life can cost a lot of money but doesn’t have to.

Many of us socialize around food. We eat out and drink with friends as an evening’s entertainment. It’s a budget-busting behavior, and it’s one that’s hard to change.

Newbie FIRE starters, unsure how to engage with friends in other ways, are advised to get out in front of the problem and start organizing less-expensive activities for their friend group. Hikes, bike rides, a beach picnic, board games and concerts in the park are all free. So are programs at the public library, many events at local colleges and just binge-watching TV at home with friends.

Begin by tackling work-arounds for eating and drinking out, like a potluck meal or enjoying drinks in someone’s home. Be creative: How about an Instant Pot potluck? Or a wine-tasting at which everyone brings a different bottle to find the best bargain for under $10?

If you do go out for drinks, bring enough cash for just one drink and nurse it. If you go for dinner, order an appetizer only or get a reasonably priced dinner and drink water. If a friend wants to “just grab dinner,” be ready to suggest a couple of places and talk them up as “hole in the wall” joints with great food but low prices.

If you need further motivation to cut down on dining and drinking out, just look hard at how much you spend each month at restaurants and bars. For what a glass of wine with dinner costs in a restaurant, you could likely buy a whole bottle. Apply the “what is it worth to you” question here: Is the act of having someone else pour the wine and wash out the glass really worth paying three times what you would spend if you did that yourself?

Be the one who issues the invites for less-expensive activities, advised a subreddit poster. Ultimately, the poster added, you just may need to make more friends ― ones with less-expensive tastes.

4. Do it yourself whenever you can. And if you can’t, offer to swap services.

Mow your own lawn, clean your own house, walk your own dog and make your own lunch instead of having UberEats deliver it. When you pay for convenience, you are spending money that could be saved.

Instead of paying for a ride to the airport, ask a friend to drive you and promise to repay the favor when they travel. Exchange pet sitting services. Help your neighbor’s son with his homework if he helps you paint the garage.

Learn to change your own oil, fix your own sink leak and refinish your own table.

When you change your money priorities to funding your savings first, you will have less to spend on convenience, and doing things yourself will ease the pain of paying someone to do things for you.

5. Shop just for necessities, and do it smartly.

End recreational shopping, both online and in stores. Don’t buy things just because they are a good deal; buy only what you need and will actually use. Having a bad day is not an excuse for binge-shopping.

You can borrow books from the public library for less than it costs to own them. Hit thrift stores before you buy something new. Garage sales are also great for shopping on a budget. Organize a clothing exchange with your friends or at your children’s school. Never buy new clothes for a single-use occasion, like a wedding, a ski trip when you live in a warm climate or a dress-up outfit for your child. Instead, try to borrow what you need or make due with what you already have.

FIRE followers also suggest that for gifting occasions, ask for gift cards that can be traded or exchanged. They also buy them for themselves when they are on sale or cost less than the stated value.

6. Kids don’t have to be budget-busters.

The estimated cost of raising a child from birth through age 17 is $233,610, or as much as almost $14,000 annually, the Department of Agriculture says. That doesn’t include paying for college, and it may actually be higher in urban areas.

It behooves parents to ask why kids cost so much. Who hasn’t seen a toddler play more with a cardboard box than the toy that came in it?

Without question, children will cost money. It is not surprising that in a survey of FIRE followers on Reddit, 77 percent said they didn’t have and weren’t planning to have children.

Raising your kids to be savers will do all of you a favor. They really don’t need to upgrade their phone every time Apple releases a new one, nor do they need expensive summer camps, designer clothes they outgrow in two months or the latest and greatest electronic games.

Instead, spend time with them, McCurry says, which, if you retire early, you will be able to do in spades. When we spoke to him, he had just spent two weeks volunteering at his kids’ school on a project.

“I never would have been able to do that if I wasn’t retired,” he said.

7. Yes, you can still travel ― but do so more frugally.

There is no place like home when it comes to staying on a budget. But who wants to do that when there is a whole world out there waiting to be explored?

FIRE adherents travel, and they stay with friends or relatives, do house-swaps and use discounted gift cards, for example.

“I bought $200 worth of Airbnb gift cards for $173 at Raise.com [a gift card buy/sell exchange] when they offered 10 percent off sitewide,” said McCurry.

Another reader tip is to get loyalty rewards whenever you can. Many cruise lines offer special pricing for repeat customers who join their cruise membership programs. Some use ebates.com to book travel (and shop) to get further discounts.



Source link

قالب وردپرس

Continue Reading

Market Insider

7 Things You Can Learn From The FIRE Movement

Published

on

By



Meet the FIRE movement, a lifestyle system followed largely by millennials that’s focused on the goal of achieving financial independence and retiring early.

FIRE adherents are uber-savers ― they save 50 percent or more of their income ― who strive to stop working for others sooner rather than later. They aren’t interested in gaining more wealth in order to have more to spend; it’s quite the opposite. They are intent on living their best lives for less. And it starts by rethinking their relationship with money, with an eye to achieving financial independence.

Adherents closely track their spending and consider every purchase in terms of opportunity costs. Dollars spent are equated to “hours of life energy,” a phrase coined by Vicki Robin, the now 72-year-old co-author of the 1992 bestseller Your Money or Your Life who has unwittingly become an idol of the FIRE movement. So if you earn $300 a day and want to buy a $100 pair of shoes, you should ask yourself whether those shoes are really worth nearly a third of a day of your precious time on Earth, as Time explained in a piece earlier this month.

FIRE devotees gather in multiple forums, camps and retreats, and, of course, they write blogs, and more blogs. There is also a growing FIRE subreddit called /r/financialindependence that now has more than 365,000 subscribers. There, followers discuss strategies, techniques and lifestyles with the goal of simplifying and redesigning how they live so they can reduce their overall spending and instead save and invest their money for the future.

Success stories are celebrated, tips are shared and there is much conversation about separating needs from wants and how to find contentment with less. Those interested in gaining wealth for the purpose of excessive consumption are in the wrong subreddit, for sure.

But it quickly becomes clear reading the forum that while FIRE is a lifestyle choice, it is not one totally free of issues. Those who adhere to a “financial independence, retire early” philosophy sometimes struggle finding partners who share their values and approach to money, and are often misunderstood by family members who conflate the idea of not wanting to work until a traditional retirement date with being “lazy” or “unambitious.” Community acceptance among like-minded people seems to be one reason the subreddit thrives.

The message of the FIRE movement is this: Let’s blow up the idea that we should work for 40 to 45 years of our life before having fun and getting to do what we want. Why spend the bulk of our healthy years working for someone else?

Even if retiring at a young age isn’t necessarily your goal ― or you’re in a job that hardly pays enough to save at all ― there are lots of practical tips to take from FIRE that will help you save and manage your money. Here are a few:

1. Make saving money your default action.

Most people treat savings as whatever is left over after all their monthly expenses are paid. Reverse that and fund your savings first, said FIRE devotee Justin McCurry, a transportation engineer who retired in 2013 at age 33 and now has $2 million in investments with his house paid off.

McCurry lives in Raleigh, North Carolina. His wife retired a few years after he did, and the couple has three children. Two of them will be attending college in less than five years, an expense McCurry already has covered.

He says success all starts with your approach to spending. Here’s what it should look like, he told HuffPost: When you get paid, immediately put half of it in a savings/investment vehicle, and then whatever you have left is what you will live on.

And, yes, people living in high-rent areas like New York City and Los Angeles are going to struggle with this, he allowed. “But you really can’t spend 50 percent of your income on housing” and expect to retire early, he said.

2. Use a money tracker to know what you spend.

Just like keeping a food journal of what you eat for a diet accountability program, FIRE adherents track what they spend. You should know where every dollar goes, McCurry said.

He uses Personal Capital to track all his spending as well as all investments. It provides a summary of all income, expenses and investments on one screen ― and, yes, it is free.

3. Having a social life can cost a lot of money but doesn’t have to.

Many of us socialize around food. We eat out and drink with friends as an evening’s entertainment. It’s a budget-busting behavior, and it’s one that’s hard to change.

Newbie FIRE starters, unsure how to engage with friends in other ways, are advised to get out in front of the problem and start organizing less-expensive activities for their friend group. Hikes, bike rides, a beach picnic, board games and concerts in the park are all free. So are programs at the public library, many events at local colleges and just binge-watching TV at home with friends.

Begin by tackling work-arounds for eating and drinking out, like a potluck meal or enjoying drinks in someone’s home. Be creative: How about an Instant Pot potluck? Or a wine-tasting at which everyone brings a different bottle to find the best bargain for under $10?

If you do go out for drinks, bring enough cash for just one drink and nurse it. If you go for dinner, order an appetizer only or get a reasonably priced dinner and drink water. If a friend wants to “just grab dinner,” be ready to suggest a couple of places and talk them up as “hole in the wall” joints with great food but low prices.

If you need further motivation to cut down on dining and drinking out, just look hard at how much you spend each month at restaurants and bars. For what a glass of wine with dinner costs in a restaurant, you could likely buy a whole bottle. Apply the “what is it worth to you” question here: Is the act of having someone else pour the wine and wash out the glass really worth paying three times what you would spend if you did that yourself?

Be the one who issues the invites for less-expensive activities, advised a subreddit poster. Ultimately, the poster added, you just may need to make more friends ― ones with less-expensive tastes.

4. Do it yourself whenever you can. And if you can’t, offer to swap services.

Mow your own lawn, clean your own house, walk your own dog and make your own lunch instead of having UberEats deliver it. When you pay for convenience, you are spending money that could be saved.

Instead of paying for a ride to the airport, ask a friend to drive you and promise to repay the favor when they travel. Exchange pet sitting services. Help your neighbor’s son with his homework if he helps you paint the garage.

Learn to change your own oil, fix your own sink leak and refinish your own table.

When you change your money priorities to funding your savings first, you will have less to spend on convenience, and doing things yourself will ease the pain of paying someone to do things for you.

5. Shop just for necessities, and do it smartly.

End recreational shopping, both online and in stores. Don’t buy things just because they are a good deal; buy only what you need and will actually use. Having a bad day is not an excuse for binge-shopping.

You can borrow books from the public library for less than it costs to own them. Hit thrift stores before you buy something new. Garage sales are also great for shopping on a budget. Organize a clothing exchange with your friends or at your children’s school. Never buy new clothes for a single-use occasion, like a wedding, a ski trip when you live in a warm climate or a dress-up outfit for your child. Instead, try to borrow what you need or make due with what you already have.

FIRE followers also suggest that for gifting occasions, ask for gift cards that can be traded or exchanged. They also buy them for themselves when they are on sale or cost less than the stated value.

6. Kids don’t have to be budget-busters.

The estimated cost of raising a child from birth through age 17 is $233,610, or as much as almost $14,000 annually, the Department of Agriculture says. That doesn’t include paying for college, and it may actually be higher in urban areas.

It behooves parents to ask why kids cost so much. Who hasn’t seen a toddler play more with a cardboard box than the toy that came in it?

Without question, children will cost money. It is not surprising that in a survey of FIRE followers on Reddit, 77 percent said they didn’t have and weren’t planning to have children.

Raising your kids to be savers will do all of you a favor. They really don’t need to upgrade their phone every time Apple releases a new one, nor do they need expensive summer camps, designer clothes they outgrow in two months or the latest and greatest electronic games.

Instead, spend time with them, McCurry says, which, if you retire early, you will be able to do in spades. When we spoke to him, he had just spent two weeks volunteering at his kids’ school on a project.

“I never would have been able to do that if I wasn’t retired,” he said.

7. Yes, you can still travel ― but do so more frugally.

There is no place like home when it comes to staying on a budget. But who wants to do that when there is a whole world out there waiting to be explored?

FIRE adherents travel, and they stay with friends or relatives, do house-swaps and use discounted gift cards, for example.

“I bought $200 worth of Airbnb gift cards for $173 at Raise.com [a gift card buy/sell exchange] when they offered 10 percent off sitewide,” said McCurry.

Another reader tip is to get loyalty rewards whenever you can. Many cruise lines offer special pricing for repeat customers who join their cruise membership programs. Some use ebates.com to book travel (and shop) to get further discounts.



Source link

قالب وردپرس

Continue Reading

Chat

Trending