Searching for personal finance tips to improve your financial positions and to avoid cash problems ? Many of people have tax-deferred investments like 401(k)s on which you pay no taxes until retirement—when tax brackets are assumed to be lower. But retirees are taxed on their retirement income when they start drawing money out of their 401(k)s and IRAs, and they can really take a bite from seniors living on fixed incomes. Warns financial advisor Saranovitz, “You must have a tax-efficient withdrawal strategy from your portfolio.” For example, you could move taxable stock investments into bonds before retiring; buying municipal bonds from your home state could help you avoid paying federal, state, and local taxes.
This philosophy has been around for some time now, but I didn’t really come across it until reading the book Rich Dad, Poor Dad. Sounds somewhat controversial, but having this mindset will keep you on your savings targets. Too many times you pay everything else first, then by end of the month, there is hardly anything for you to save. If you reverse the roles, you are more money conscious to pay your bills on time and reduce frivolous spending. Find extra info on Personal Finance Advices.
If your employer has a 401(k) plan and you don’t contribute to it, you’re walking away from one of the best deals out there. Ask your employer if they have a 401(k) plan (or similar plan), and sign up today. If you’re already contributing, try to increase your contribution. If your employer doesn’t offer a retirement plan, consider an IRA. You’ve heard it before: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.
Have an Emergency Fund: If you lost your job tomorrow would you have enough money to live off while you look for a new one? If not then you’re not alone. This study found that although Americans are doing a better job at saving, around 24 percent of them (57 million people) don’t have an emergency fund. Now I don’t want to be a negative Nancy or a Debbie downer, but emergencies happen all the time. They may not happen to you, but it’s always good to be prepared. You can’t predict an emergency, but you can prepare for one. The best way to do so is to set up an emergency fund of 3-6 months living expenses. That means if you lost your job tomorrow, you’d be able to live off your emergency fund for 3-6 months while you look for a new one. Net worth can seem like a tricky topic, but it’s quite simple. Your net worth is how much money you are worth. If you were to sell everything you own, then pay off everything you owe, how much money would be left? Visit: aspiretomoney.com.