It’s perfect for those looking for a more hands-on approach rather than trying to do everything on your own.

Facet Wealth Review

Name: Facet Wealth

Description: is a next-generation company offering professional financial planning services at affordable prices targeted to young professionals.

Overall

4.1

• Pricing
• Customizability
• Ease Of Use
• Dashboard

Summary

If you’re looking for an online financial advisor, Facet Wealth offers a compelling product at a competitive price. Due to the fixed price model, you’ll want to be thoughtful if you are just starting out since the fees will comprise a larger percentage of your investments.

Pros

• Extreme Convenience With Virtual Meetings
• Fixed Monthly Pricing
• CFPs Don’t Earn Commissions
• You’ll Get Peace Of Mind

Cons

• No In-Person Meetings (If You Care)
• Price increases have happened multiple times

• Sign Up Now!

Bottom Line

If you know you’d benefit from having an expert help you make financial decisions, Facet Wealth is a fantastic option. For as low as $150 per month (fees are based on the services you need), you’ll get a dedicated certified financial planner to help you navigate life’s financial decisions like a pro, literally.

I started Finance Plan Today with my brother because we saw an opportunity to give readers the skills and knowledge they needed in order to make better financial decisions.

Those of you who know us personally know that we grew up in poverty. We were raised by a single mom who struggled to make ends meet. My brothers and I worked extremely hard in school to create a brighter future for ourselves.

But one thing I learned is that it doesn’t matter if you went to Harvard, have a Ph.D. in accounting, or are a rocket scientist, it’s still stressful to make financial decisions.

And not everyone has the confidence or time to do it all on their own. If that sounds like you, then seeking professional help might just be the best decision you can make.

For those who love reading our site but still want some extra help, we can’t recommend Facet Wealth enough.

Facet Wealth Overview

Overall Rating	4.1 out of 5.0
Account Minimum	$0
Pricing	Plans start at $100 per month, although the average customer pays closer to $150-$200 per month ($1,800-$2,400 annually).
Payments	All plans are subscription based and are billed automatically on a monthly basis.
Dedicated CFP	When you sign up, you'll have a single dedicated Certified Financial Planner to work with.
Lifestyle and Expense Planning	All plans include lifestyle and expense planning which includes developing a budget to meet your goals.
Investing Expertise	Your CFP will work with you to develop an optimal investment strategy. The days of stressing over investments are over.
Cancellation Fees	None
Other Benefits Included:	Financial education program On-demand access to the Facet Wealth online portal Flexibility to increase range of services on-demand, so Facet Wealth can grow with you.
Schedule Your Free Call

What Is Facet Wealth?

Facet Wealth is a next-generation financial services company aiming to make expert financial advice available at affordable prices. The company’s secret sauce boils down to three components: its proprietary technology platform, transparent pricing, and their focus on service. 

Their proprietary technology platform redefines financial life management and enables the company’s Certified Financial Planners (CFPs) to deliver a game-changing client experience at an affordable price.

All financial advisors at Facet Wealth have the CFP designation which is generally recognized as the highest standard in the personal financial planning industry.

Facet Wealth’s transparent pricing means that you know exactly what to expect at a given price point. And Facet Wealth empowers its in-house financial planning team to only focus on providing the best financial planning services by aiming to eliminate conflicts of interest. In fact, your dedicated CFP is not even involved in determining the price you’ll pay so that their primary focus is simply helping you.

Traditional investment advisors receive commissions from the products their customers use. In addition, financial advisors at traditional firms are required to generate new business and find new customers, which takes their focus away from providing the best service possible to their existing clients.

Facet Wealth eliminates both of those problems.

In fact, their certified financial planners receive a base annual salary and bonus based only on customer satisfaction. No commissions from recommending specific products. Additionally, they are not responsible for recruiting new customers, so nearly 100% of the financial advisors’ time is spent advising clients. The CFPs are not even involved in determining the pricing of your plan, which is pretty awesome as there are no awkward conversations.

How Does Facet Wealth Work?

Facet Wealth is a full-service financial planning firm but differs from a traditional financial planning company in that all meetings take place virtually. If you’ve ever been on a skype or Facetime call, then the meetings will feel familiar to you.

In order to work with Facet Wealth, you simply schedule a complimentary introductory video call to learn more.

During the call, a client relationship manager will answer your questions, describe the process, and assess your needs. During that call, they’ll get a sense of the services you require and determine your price.

Based on that initial video call, they’ll also assign you a dedicated financial planner who will work with you to create a rock-solid financial plan. Part of what Facet Wealth does really well is match you with the CFP on their team who is the best fit for you. Your CFP will be assigned based on their expertise and the scope of services that you need, as well as any preferences you indicate. 

All of your meetings will take place via video call.

Your first call with your dedicated CFP will consist of getting to know each other so that you can start to build a relationship with them. They’ll want to make sure you have all of your questions answered and feel comfortable before the heavy lifting begins.

After this video call, your CFP will send you a list of questions and request a few docs that they’ll need prior to your next meeting.

With regards to the onboarding process, one Facet Wealth user that I interviewed said:

“The onboarding process was very smooth. I liked that I didn’t discuss pricing with my actual CFP and that their focus was simply on helping me. The process never felt rushed and the pacing felt just right. I think my relationship manager and CFP both did a really nice job of making sure my husband and I always felt comfortable and confident with the process. The cherry on top was the beautiful Facet Wealth dashboard I can use to check in on my finances.”

You’ll have more meetings initially then they’ll taper off as you get settled.

From there on out, you’ll meet on a regular cadence with your CFP to get your plan established and do the initial push to get you moving in the right direction before the meetings taper off as you settle into things. The best part is that you can schedule a meeting with your financial planner as often as you need to. That means that if you have a child and need to expand the scope of your services to include planning for future educational expenses for your little one, you can rest assured you can meet with your CFP to handle that.

If you travel a lot for work (or fun!), don’t worry. One user said they had their introductory call with Facet Wealth while traveling in Africa! Just remember that you must be a resident of the U.S. in order to be a Facet Wealth Customer.

Facet Wealth Is Best For You If:

• You have a household income of at least $70,000 or have $50,000 saved between savings, checking, 401(K), IRAs or other financial accounts
• Have less than $1,000,000 to your name
• Are unsure of how to best manage your money
• Have a 401k and aren’t sure if it’s invested properly
• Don’t have the time, energy, or interest to DIY
• Are going through a life transition and want help navigating the process from a financial standpoint
• Are feeling anxious about money and would sleep better at night having a professional keeping an eye on your finances
• You know what you need to do financially but have a hard time translating it to actionable steps
• You have absolutely no clue about anything related to personal finance and just need help
• Travel a lot for work and need to call your CFP from the road

Getting Started With Facet Wealth Is Easy

Getting started with Facet Wealth is easy. You simply schedule a complimentary introductory video call to introduce yourself, explain your goals and financial concerns, and learn about how Facet Wealth can help you.

You can schedule your preliminary call here: Schedule Free Call Now.

Ongoing Planning and Advisory

After your initial call with a Facet Wealth relationship manager, you’ll be partnered with a certified financial planner who you will work with exclusively.

Your first call with your advisor will give your CFP the opportunity to introduce themselves and explain how their planning process will work. I love that they focus on making the process actionable so that you always feel like you are making progress. They’ll also begin to collect any information they need to create a solid financial plan for you. Afterward, you’ll check-in with your advisor as needed to answer questions, evaluate how you are doing, and provide any additional guidance needed.

You can expect to meet via video-call with your CFP regularly for the first several months until your plan is finalized and you feel comfortable with the planning decisions. Thereafter, you’ll have meetings scheduled every 6 months to check-in, but they’ll be available to you should you need anything in the interim.

How Much Does Facet Wealth Cost

Pricing

Facet’s financial planning and consulting fees are negotiable, but generally range from $1,800 to $8,000 per year on a flat fee basis, depending upon the level and scope of the services required. If a client determines to engage Facet to provide discretionary investment management services, such services shall be considered in determining the client’s final financial planning and consulting fee. Other factors considered include, but are not limited to the level and scope of the overall investment advisory services to be rendered and the complexity of the engagement.

A beautiful thing about Facet Wealth is that they’ve moved away from the legacy pricing model in the financial planning industry. However, we must note that they recently increased prices from starting at $40 per month to roughly $150 per month ($1,800 per year). 

Historically, pricing in the financial planning space was based on the number of assets managed. This means that if you worked with a CFP who charged you a fee of 1.25% of AUM (assets under management) and you had a portfolio worth $175,000 you would pay $2,187.50 per year regardless of the number of services you needed.

In fact, if your portfolio grew to $225,000 you would end up paying an extra $625 even though you didn’t use any additional services. Alternatively, some traditional advisors charge a flat fee to create a plan for you, but it usually wouldn’t include ongoing support or guidance.

With Facet Wealth, you pay a flat monthly fee based on your services, regardless of how large or small your portfolio is. Though your level of usage probably does have a positive correlation with the level of service you’ll need.

You’ll have access to your advisor on-demand so that you will always have your financial questions answered as they arise.

Asset Management Is Optional And Included In The Price.

You also don’t need to transfer any assets to Facet Wealth to work with them. They can still create a solid plan for you and give you ongoing support and guidance even if you don’t want them to handle asset management for you. Asset Management doesn’t come with an additional cost so you can always opt into it at any time.

Facet Wealth is able to offer comparatively lower prices than traditional advisors because their proprietary technology and process allow their advisors to more efficiently create thorough financial plans.

The best part is that your CFP is NOT involved in setting prices nor compensated based on the number of services you use. Their focus is always on helping you with your financial needs instead of focusing on up-selling you additional products you might not benefit from.

Is It Worth The Price?

Whether you need or want a CFP to help you navigate your finances is a personal decision, but many people believe the peace of mind alone is well worth it.

For some, the fees are well worth it if you feel completely lost, and having a CFP guide you would give you the confidence to start investing your money and making sure you have the appropriate life insurance policies in place for you and your loved ones.

Their starting price is likely less than you pay on a bunch of other things that are much less important.

How much will Facet Wealth Cost Me?

Historically, the average young professional on Facet Wealth’s platform paid $2,400 per year. However, your plan will depend on the number of services you’ll use. The fee is reviewed annually and adjusted up or down based on the services you’ll need.

As a rough guideline, young professionals just beginning their careers will likely be well served with the services they’d receive at the lower end of the $1,800 to $8,000 per year range.F. This includes setting cash flow goals (determining which student loans to pay off first, setting up a budget, etc.) and making sure you have renters insurance and other basic things sorted out (like contributing to a Roth IRA). Your advisor will also guide you on how to start investing and which investments are appropriate for you.

If you’d like to have your advisor actually handle your investments for you (instead of simply guiding you), a higher tier of service that includes investment management will be ideal.

At the other end of the spectrum, Facet Wealth is equipped to handle small business retirement planning and charitable planning. 

Facet Wealth works with clients of all sizes, but they founded the company to support American families that often fell through the cracks, accounts that are ‘too small’ for traditional investment advisors.

Facet Wealth’s Technology Platform

As a customer, you’ll have all of your financial information listed in your Facet Wealth dashboard. You can see an example of a dashboard below. Highlights include an overview of your financial accounts, family information, action items, and select financial metrics like your credit score.

Facet Wealth refers to your financial plan as your Blueprint. This is the document that your CFP will assemble to help guide you to your financial goals. You can see an example of a Facet Wealth Blueprint below.

Facet Wealth Highlights

• Facet Wealth’s investment philosophy is centered around low-cost ETFs in order to minimize fees and maximize diversification. This is the same approach advocated by investing legends like the late John Bogle.
• Financial planners at Facet Wealth must have the CFP designation, meaning their advisors have in-depth training and expertise to handle the financial complexities of your financial situation.
• All Facet Wealth CFPs are fiduciaries, which means they are required to act in your best interest and place your needs before the company’s.
• You are charged a flat monthly fee regardless of the size of your portfolio, which means there are no surprises or unexpected fees. Your fee is reviewed annually and will be adjusted up or down based on the services you use or don’t use.

Facet Wealth FAQ

Get Your Free Intro Call Now

Click here to schedule your introductory call with Facet Wealth.

As one customer told me, “I pay less for Facet Wealth than I do for my phone bill, and you have no idea how much less anxiety I have in my life now thanks to my CFP.”

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post Facet Wealth Review (2022) appeared first on Finance Plan Today.

According to the Bureau of Labor Statistics, the typical American spends $100 per month on their mobile devices and services. That’s over $1k just to stay connected per year. 

The good news? There are alternatives to spending thousands on something so needed. That’s where we come in. And to be clear, all of these plans come with unlimited talk and text but have varying amounts of data.

What is Mint Wireless?

Mint Mobile is a Mobile Virtual Network Operator (MVNO) that uses T-Mobile towers. MVNO is a term for a mobile phone network that doesn’t own the cell phone towers themselves. They simply operate on the infrastructure that the cell phone network provides. 

Mint Mobile doesn’t own or build the cell phone towers themselves; however, Mint can operate at a lower cost than major cell phone networks. 

Since Mint Mobile doesn’t build cell phone towers, they do not spend as much money on materials, labor, and upkeep. This low overhead means that Mint Mobile passes these savings to customers with more affordable pricing.

Read a full Mint Mobile Review.

What is Cricket Wireless?

Cricket Wireless, like Mint Mobile, is a Mobile Virtual Network Operator (MVNO) that uses AT&T cell towers.

Mint Mobile and Cricket Wireless are “alternative carriers,” meaning that they’re not the ‘big four’ wireless service providers that are commonly used in American households, AT&T, T-Mobile, Verizon, and Sprint.

Switching to an MVNO can save you money because they lease coverage from one of the more extensive networks and resell it to customers.

Read a full Cricket Wireless Review.

How Are Mint Mobile and Cricket Wireless Different?

Other than being on different networks, Cricket Wireless and Mint Mobile have different plan structures altogether.

Unlike Cricket Wireless and most other cell phone companies in the ‘big four’ who charge a monthly price, Mint Mobile plans are prepaid every three, six, or twelve months. “Bulk” purchasing saves you more money in the long run with Mint Mobile. All Mint Mobile plans also include unlimited nationwide talk, text, and data. Unlimited international texting is also included in all plans.

Cricket Wireless offers a more traditional approach. Unlimited talk and text plans with varying degrees of data. All plan prices are flat fees, with taxes and fees included. You only pay $30 per month if you choose the $30 monthly plan. 

Most plans from Cricket Wireless come with unlimited talk, text, and 2G data. Prices vary depending on how much data you choose for your specific plan.

Plans offered by Cricket Wireless + Mint Mobile

Cricket Wireless Plan Options:

Mint Mobile Plan Options:

Pros & Cons of Mint Mobile

The largest trepidation when considering converting to Mint Mobile, Cricket Wireless, or an ‘alternative’ mobile provider is service disruption or degradation. 

As previously stated, Mint Mobile operates on T-Mobile’s infrastructure and Cricket Wireless operates on AT&T’s infrastructure. This means that as long as you’re in an area with reliable T-Mobile or AT&T service, you should get dependable Mint Mobile service.

There’s no argument here that alternative service providers have less coverage than the large mega-networks based on the coverage maps.

Just like any other phone company, check the coverage in your area. For the majority of households living within a couple of hours of a large metropolitan area, you should not have a problem with Mint Mobile or Cricket Wireless.

As a warning, if you are currently living paycheck to paycheck, purchasing a plan in “bulk” will be challenging. Paying upfront translates to larger savings over time; however, not everyone has large amounts of money set aside for a bulk phone service purchase.

If you’re one of those people who look forward to phone upgrades perks, Mint Mobile is not the right option for you.

Pros & Cons of Cricket Wireless

If you are a low-income earner or live paycheck to paycheck, Cricket Wireless is a better option for you, as you do not have to pay for your service upfront. 

You will lose savings in the long run; however, it is still better than overpaying for other ‘big four’ providers.

To reiterate, Cricket Wireless relies on the same exact infrastructure as AT&T. The service is the same at a much lower cost. 

Cricket Wireless also offers affordable upgrades, unlike Mint Mobile. According to Cricket’s website:

To upgrade your phone:

• You must have an existing line of service with Cricket
• You must have a Cricket monthly rate plan that costs $30/mo or more
• The upgrade phone must be new and purchased from a Cricket store or online at cricketwireless.com
• You can upgrade your phone only once every 90 days
• A $25 device upgrade fee applies to phone upgrades in Cricket stores and online

How Does Cricket Wireless Pricing Compare To Mint Mobile?

Let’s take a look to see how the costs between the two platforms compare.

Cricket Wireless 10GB vs. 3 Month 10GB Mint Mobile Plan

Cricket Wireless 10GB vs. 6 Month 10GB Mint Mobile Plan

Cricket Wireless 10GB vs. 12 Month 10GB Mint Mobile Plan

With Mint Mobile, you begin seeing savings immediately. A modest $20 savings each month, but at 100% more data. 

Over the full year, you are looking at $240 in savings. Over five years, you are talking $1,200. 

If you have more than one phone in your family, the savings will be more massive

Final Verdict: Do We Prefer Mint Mobile Or Cricket Wireless?

Here at Finance Plan Today, we love both Cricket Wireless and Mint Mobile and would recommend either company. If you can get good Mint Mobile service and can afford to pre-pay, they are a solid option. Paying in bulk could save hundreds, if not thousands of dollars per year on a single bill. 

We urge you to check the reception of each company network in your area. Choose the plan that will work best in your geographic location.

No matter what you choose for yourself or your family, we prefer Mint Mobile and Cricket Wireless over the “big guys” any day.

You can sign up for Mint Mobile here, and you can sign up for Cricket Wireless here.

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post Mint Mobile vs Cricket Wireless – Which Service Is Right For You appeared first on Finance Plan Today.

Enter: Blooom, a wealth management tool designed around analyzing your IRA and 401k retirement account for free.

The CEO and Founder of Blooom, Chris Costello, spent years following the traditional finance industry business model catered to the wealthy. Think clients with $1M investment portfolios.

But stacking the cash wasn’t always the lifestyle Chris led. He came from humble beginnings, with the financial habits of his parents barring his family from services that would have helped enhance their financial lives.

It is because of his parents’ plight that he decided to shake up the industry and create Blooom. 

Why should only wealthy people have access to professionals? 

Why must “normal” people resort to ‘DIY’ finances and make costly mistakes?

After all – don’t they need the most guidance? 

Blooom exists because “Very few people age 50 and younger will receive any kind of a pension in retirement, so this makes getting your retirement savings right all that more critical. Like it or not, the 401k, or workplace retirement account, has become the most important piece of American’s retirement savings. Most people will not inherit millions, win the lottery, or sell a business for millions. The vast majority will need to intelligently save their way to a comfortable retirement.”

And intelligently saving money should not be reserved for the ultra-wealthy. 

With around 80 million Americans in the category of needing financial help, not qualifying for it in the traditional model, and not interested or confident enough to get it done themselves, Blooom has stepped in to save the day.

Blooom Review

Name: Blooom

Description: is an automated wealth management service that analyzes your IRA and 401k retirement accounts to make sure you're properly invested.

Overall

3.6

• Pricing
• User Experience
• Ease Of Use
• Customer Service

Summary

If you’d like to make sure that your retirement accounts are invested properly, Blooom could be the perfect solution for you. In my opinion, the highlight here is the free account analysis that Blooom offers. You can simply connect your IRA and 401k and get helpful tips free of charge. No obligations or commitment is necessary! This is perfect for those of you who are happy with the DIY approach to your money. If you’d like a little more hand-holding, they offer that too.

Pros

• Free Account Analysis
• Easy Account Integration
• Standardized Annual Fee

Cons

• No Phone Support
• Paid Tier of Service Is Costly For Those With Smaller Portfolios (less than $4,500 for DIY plan or $12,ooo for Standard plan)

• Get Free Analysis

Blooom At A Glance

Overview	A service that will analyze your 401k, 403b, 401a, and 457 account for free and make sure it's invested appropriately. FREE analysis with custom recommendations. There's no catch. Just free advice you can use! If you would like for Blooom to manage your retirement investments for you, they will do it for a flat fee of $120.
Features	Free 401k analysis, taking into account your goals and risk tolerance. Blooom will identify whether you are investing in the most optimal investments your 401k offers.
Account Minimum	$0
Pricing	Free 401k analysis (no commitment necessary). $120 annual fee if you want them to manage your retirement accounts for you.
Requirements	Must have an employer-sponsored retirement account. Blooom only manages 401k, 403b, 401a and 457 accounts.
Get A Free Analysis

Bottom Line

Blooom’s mission is to ‘help the un-helped.’ To lend a hand to those who don’t own private islands, or have offshore bank accounts in the Philippines. Blooom is a service directed at those who NEED guidance when it comes to retirement investing. Everyone will get older, everyone needs money to live out their ‘golden years’ in comfort, and everyone should know how a 401k can work for them during their working years, regardless of if they own a yacht or not.

Chris decided to put all of his years in the financial industry in one basket: the basket of helping people just like his parents. People just like you.

Blooom “Saw an opportunity to make an early and quicker impact with people who never wanted to be their own money manager by building a solution to fix the 10s of millions of poorly invested 401ks.

What Is Blooom?

When you think of 401k’s, Roth IRA’s, HSAs, Stocks, Bonds… your eyes might just gloss over. This stuff can be complicated, and the information out there isn’t exactly presented in an easy-to-digest way. 

That’s why Blooom prides itself on not being complicated when it comes to managing your 401k employer account and IRA.

Blooom was founded in March 2013 in Kansas. Since then, they have blossomed into a powerhouse company providing ALL Americans with affordable, simple, and accessible 401k management options.

Their company began in a basement, graduated to a garage, and eventually got to where it is today: Managing $3B of 401k accounts in every state, with 30 employees.

The founders of Blooom managed money and investments for the uber-wealthy for YEARS and decided that their efforts would be best spent helping people that were turned away by Wall Street.

According to their website: “Our method was developed by a Certified Financial Planner to maximize your retirement options. Based on decades of market data, we have created an algorithm to optimize almost any 401a, 401k, 403b, or 457 accounts.”

Blooom is independent, which means they put customers first.

Blooom is not associated with any big banks or financial institutions, so the customer is #1. There’s no sleazy car-salesman pitch to get you to put more into your account, and there’s no moving your account. They really are about what’s best FOR YOU.

Blooom doesn’t assume you know every single acronym or term in the investment world. They don’t present you with confusing information, and they believe you deserve to know what’s in your 401k. That’s it.

Blooom is different because it doesn’t play into the financial industry. They’re rebels… and we like it. Blooom began so that people who have been neglected by the industry could get help. They created technology to help people actually take control of their retirement. They are changing the culture of investing by “putting people first.”

How Does Blooom Work?

To begin the FREE IRA and 401k account analysis, you answer a few simple questions about your current account, Blooom takes your answers and uses them to find the right allocation for appropriate investment strategies for your individual account(s). 

When you securely link your IRA and 401k  accounts to Blooom, their algorithm researches the best diversification for you. According to their website, this makes confusing and messy funds available to you, simple to understand. 

Next, they give you an in-depth overview for free. This account analysis covers where your investment currently is versus where it should be.

This analysis is thorough, personalized, and free. Boom.

Pricing

After the free assessment, Blooom offers 3 tiers of service.

The Essentials tier is $95 per account per year and it only includes a personalized portfolio so that you know how to optimize your investments.

If you would like for them to automatically optimize your accounts, you will need to jump up to the Standard or Unlimited tiers.

The Standard tier is $120 per account per year, while the Unlimited tier is $250 per year for an unlimited number of accounts. That means once you have 3 accounts, it makes sense to jump up to the Unlimited tier. These upgraded tiers also give you advisor access so that you can feel confident that your investments are right for you.

No hidden fees. No penalties. And no account movement. Just simple investment management that you can easily access and understand.

Blooom Is Best For You If:

If personal finance or monitoring your IRA and 401k account just… ‘isn’t your thing.’

We’re all busy, and while some people love to pour over spreadsheets and graphs in their day to day, that may not be you. If checking ‘the market’ and figuring out your options for smart investment returns isn’t your cup of tea, Blooom is for you.

If you like simplicity

Blooom is easy to start, easy to manage, and easy to use. You can monitor your own accounts with suggestions from Blooom, OR you can jump to a paid tier to give Blooom the reigns. If you don’t want to spend hours trying to figure out a complex website or what the hell is going on with your retirement account, Blooom is for you.

If you are not a millionaire or billionaire

You CAN use this service no matter what your net worth is – however, it’s designed to help Americans that may not have access to this service otherwise. If you have a 401k account with your employer and you aren’t bringing in a ‘Wall Street Sized’ paycheck, Blooom is for you.

Getting Started With Blooom Is Easy:

As advertised, Blooom is easy to use and understand. To get an analysis AND professional financial advice from Blooom is completely FREE. 

1. You begin by answering a few questions about yourself: Name, DoB, all that jazz. 
2. Then, you create a Blooom profile by providing your email and a chosen password.
3. After you sign up for an account, you answer a few simple questions about your IRA, 401k, 401a, 403b, 457, or TSP.
4. Your IRA, 401k, 401a, 403b, 457 or TSP is then securely linked to Blooom. They analyze your account, give you feedback, and appropriate next steps.

THAT’S IT

How Much Does Blooom Cost

Blooom’s initial analysis of your IRA, 401k, 401a, 403b, 457, or TSP is FREE and open to anyone – after that, you’ll choose a paid plan.

Their plans start at $45 per year per account and go up to $250 per year per account for their unlimited plan.

This easy-to-understand service is perfect for people who don’t want to be in the weeds of their 401k. By using Blooom, you don’t have to continually worry about the right trades, if your 401k is doing the most it can do, or if you’re getting slapped with hidden fees.

It’s meant to be a seamless 401k and IRA investing experience for anyone who needs it!

Blooom Pricing

Pricing Overview

Blooom has 3 tiers of priced services.

The DIY tier is $45 per year per account. It includes a personalized portfolio, but you’ll make the trades yourself and you won’t have advisor access.

The Standard tier is $120 per year per account. With this tier, they will place trades for you and give you access to an advisor.

The Unlimited tier is $250 per year for an unlimited number of accounts. Since this pricing isn’t per account, it is a no-brainer for those who fancy the Standard plan but have more than 3 accounts. this plan includes everything in the Standard plan except you also receive priority advisor access.

The initial IRA, 401k, 401a, 403b, 457, or TSP analysis is FREE. Anyone can have their account looked at by Blooom. 

Customer Service

If you want to contact Blooom, you have to do it via email. It would be nice if it were possible to call them.

With that said, I emailed their support team to assess their response time, and I got a friendly reply in four minutes. Literally 4 minutes. Not bad.

Blooom Pros and Cons

The Pros Of Using Blooom

• Their free retirement account analysis is extremely helpful and offers valuable insights into your IRA, 401k, or other employer-sponsored retirement accounts.
• Blooom integrates seamlessly with all of the largest retirement account providers, which means it’s a breeze to get set up and get your free account analysis.

The Cons Of Using Blooom

• Blooom doesn’t offer phone support, so you have to email them if you need help. With that said, they are very responsive.
• At this time, Blooom is unable to manage your HSA.
• The free account analysis guides you as to what your target asset allocation should be, but it doesn’t make specific investment recommendations.
• Blooom has changed its pricing structure seemingly every year over the past few years, so that’s something to keep an eye on.

Service Highlights

By far, the #1 best thing Blooom offers is the free account analysis. It means you can simply connect your IRA and 401k and get helpful tips free of charge. No obligations or commitment is necessary! This is perfect for those of you who are happy with the DIY approach to your money.

Might as well get free helpful tips from experts at no cost, right?!

Blooom FAQ

Does Blooom Analyze IRAs too?

Yes! Blooom has expanded its service beyond 401ks to include IRAs.

Is there a cancellation fee?

Blooom accounts can be canceled at any time directly online after your account has been processed. You’ll receive a refund for time not used.

What if I have a 403(b)?

No problem. They offer 403(b) analyses! IRA, 401k, 401a, 403b, 457, or TSP analysis, monitoring, and management are available through Blooom!

Will Blooom manage my Roth 401(k)?

Right now, Blooom only manages traditional 401k accounts. If you have a 401k or other employer-sponsored retirement account managed through Blooom, their advisors are available to assist you with any number of financial questions you may have, including general advice on how to invest your IRA. 

What if I just started investing, and my 401(k) barely has anything in it?

Blooom helps all 401k participants, no matter the size of your 401k account.

With that said, if your 401k has a relatively small balance, you might end up paying a high percentage of your portfolio in fees to Blooom.

I personally wouldn’t use the DIY plan if I had under $4,500 in assets, the Standard plan if I had under $12,000 in assets, or the Unlimited plan unless I had 3 separate accounts with a combined value of less than $25,000.

At what point does it make sense to use Blooom?

The free Blooom account analysis is perfect for someone with an employer-sponsored retirement account.

The paid account management service Blooom offers is perfect for the person who has a growing 401k and has absolutely no interest in managing it or doesn’t feel comfortable doing it. They’ll essentially take their recommendations and implement them for you. That means that you don’t have to worry about ever managing your 401k again.

Ready For A FREE 401(k) Analysis?

Get your free account analysis now and see how you are doing!

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post Blooom Review (Updated): The Virtual 401K and IRA Advisor You Didn’t Realize You Needed appeared first on Finance Plan Today.

If you’re filling out a W4 form, it likely means you have a new job or have gone through changes to your financial situation.

If the reason you’re filling it out is a new job or an addition to the family, congratulations! Don’t forget to also sign up for your job’s 401K retirement plan AND open an IRA.

Regardless of the reason why you need to fill out a 2021 W4 Form, you’ll be happy to know that the W4 has been refreshed and redesigned to make it easier than ever to fill out.

The days of wondering whether you should be claiming ‘0’ or ‘1’ are over! The W4 no longer asks about allowances.

This article will explain what the 2021 W4 is and how to fill out the 2021 W4 Form. 

What Is The W4 Form And Why Was It Redesigned

The 2021 W4 Form needs to be filled out by all new employees and existing employees who want to update their withholding. The form makes sure your employer can withhold the correct amount of federal income tax from your pay.

If you are happy with your withholding and you already submitted a W4 to your employer during a previous year, you do NOT need to update the form. Only do so, if your tax situation has changed.

Having too little withheld means you’ll likely owe tax when you file your tax return and may owe a penalty. Have too much withheld and you will generally be due a refund.

The redesign eliminates allowances. This change aligns with the changes from the 2017 Tax Cuts and Jobs Act. The changes make the Form simpler to complete and easier for workers to accurately let their employer know how much tax to withhold.

Trust me, it’s a LOT easier now.

What Does the 2021 W4 Look Like & Where Can I Download It

The 2021 W4 Form consists of 4 pages, and you can download a 2021 W-4 Form Printable PDF copy here.

Page 1 consists of the actual Form itself. This is the only page that must be returned to your employer.

Page 2 includes instructions (see below).

Page 3 comprises the Multiple Jobs Worksheet and Deductions Worksheet.

Finally, Page 4 has a set of withholding tables to be used in conjunction with Page 3.

How To Fill Out A W4

Now that you have your W4 Form ready to be filled out, let’s go through each step so that you can get this over with and move on with more important things in your life, like watching reruns of Buffy The Vampire Slayer, or choosing a low-cost online financial advisor to help you save and invest your money like a pro.

The first thing that you need to know, is that the easiest way to fill out the form is to use the IRS’s withholding estimator. Their calculator works best on desktop (Mac or PC) so that you can export the completed form. I’ve had less success on mobile.

All you do is follow a sequence of steps and you can then download a pre-filled 2021 W4 Form. It’s that easy.

Now, let’s move on to the steps to filling out the form if you’d rather DIY.

Step 1: Enter your personal information.

This step is self-explanatory. The only thing that might be less straightforward is step 1c, which is where you need to select your filing status.

Your tax filing status refers to how you will file your taxes at the end of the 2021 tax year. So if you are single and don’t expect to get married this year, you’ll file taxes Single.

If you are confused about this, check your taxes from last year and see what your previous filing status was. Assuming no significant life changes occurred or are expected, you’ll likely file taxes the same way!

Step 2: Multiple Jobs or Spouse Works

The beautiful thing about steps 2 through 4 is that you ONLY need to fill them out IF they apply to you.

That means that if none of the steps apply to you, you can skip straight to Step 5 to sign and wrap things up.

Complete step 2 if you (1) hold more than one job at a time, or (2) are married filing jointly, and your spouse also works.

The easiest way to fill this step will be to use the IRS’s tax withholding estimator on a Mac or PC. Alternatively, if your household only holds two jobs in total, and both have similar pay, you can check the box for Step 2(c) and proceed to Step 3.

To use their estimator, you’ll need to make sure you have your and your spouse’s most recent pay statement and any info on other sources of income.

Once you’re done using the IRS’s estimator, you can head back here to see how to proceed.

Step 2(b): Use the Multiple Jobs Worksheet

If you prefer not to use the estimator tool or you can’t get it to work, you can use the multiple jobs worksheet. Follow the instructions on the Form and input the final result in Step 4(c) as an extra withholding.

Step 3: Claim Dependents

Like Step 1, Step 3 is also relatively simple. If your income will be $200,000 or less ($400,000 or less if married filing jointly), follow the steps listed in the Form.

As an example, let’s assume your household income will be $300,000, you will file married filing jointly, you have three kids under the age of 17, and you also support your elderly mother financially.

Under this example, your total for step 3 will be $6,500. This is because you have three qualifying children, so 3 x $2,000 = $6,000. You also have one other dependent, which gives you an additional $500. As a result, $6,000 + $500 = $6,500.

Simple enough.

Step 4: (Optional) Other Adjustments

Follow the directions for Step 4(a) if you have non-job income for which you’d like to have tax withheld. 

Step 4(b)

Use the Deductions Worksheet on Page 3 if you are NOT expecting to claim the standard deduction. If you aren’t sure what this means, then you are likely going to claim the standard deduction (the vast majority of people claim the standard deduction). If you aren’t sure, you can use last year’s taxes as a guide or as your accountant.

Step 4(c) was already discussed above in Step 2(b) with regards to the Multiple Jobs Worksheet. Finally, let’s move to the final step!

Step 5: Sign Here

Step 5 is required to complete and submit your 2021 W4 Form, and you simply need to sign and date the Form.

It’s important to realize that you must complete the Form honestly and accurately since this Form is a legal tax document, and you can face penalties of perjury if you do not complete it honestly.

Don’t cheat, kids.

Dream Big Dreams

And remember, if you need help with your finances, there’s no shame in seeking help. It might just be the best thing you do for your financial future. A solid resource you can check out is Facet Wealth. They are an award-winning online-only financial advisory firm offering professional financial advice for affordable prices.

The best part is that it’s all done via video calls so you don’t even have to leave home. Prices start at $100 per month which means you can get expert help for less than you spend during a night out on the town.

Overall Rating	4.1 out of 5.0
Account Minimum	$0
Pricing	Plans start at $100 per month, although the average customer pays closer to $150-$200 per month ($1,800-$2,400 annually).
Payments	All plans are subscription based and are billed automatically on a monthly basis.
Dedicated CFP	When you sign up, you'll have a single dedicated Certified Financial Planner to work with.
Lifestyle and Expense Planning	All plans include lifestyle and expense planning which includes developing a budget to meet your goals.
Investing Expertise	Your CFP will work with you to develop an optimal investment strategy. The days of stressing over investments are over.
Cancellation Fees	None
Other Benefits Included:	Financial education program On-demand access to the Facet Wealth online portal Flexibility to increase range of services on-demand, so Facet Wealth can grow with you.
Schedule Your Free Call

*Disclaimer: Finance Plan Today is a financial publisher that does not offer personal financial advice or tax advice.

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post The 2021 W4 Form and How To Fill Out A W4 appeared first on Finance Plan Today.

But with the U.S. being a top 10 country in terms of average income, where is all of that money going?

Let’s dig into where the average American family is spending their money and what they could possibly do turn things around.

Average Household Expenses And Income

To begin, the U.S. Bureau of Labor Statistics publishes the average expenditures and income for households.

The most recent data published was for 2017 since it takes a lot of time to tabulate the data for an entire country.

You can see the data below.

The Average U.S. Household Income Is $73,573

The first thing that jumps out is the average income before taxes of $73,573, which is higher than I expected it to be.

It’s important to note that this is before taxes, so, unfortunately, that means that the average household isn’t actually bringing home over $70K in cash every year since a big chunk will go to taxes.

Protip: Update your W4 Form with your employer if you’d like to see your paycheck increase in size and have fewer taxes taken out. Over the course of the year, you’ll pay the same amount in taxes, but you’ll get your money sooner so you can invest it right away instead of waiting for a refund the following year.

The Average Federal Tax Rate is 20.5% For U.S. Households

If you’ve ever started a new job and were surprised by how low your paycheck was compared to what you were expecting, then you’re very familiar with the effect that taxes have on your income.

The average federal tax rate for a family earning $73,573 is 20.5%. That means that over $20 dollars are collected for every $100 earned. Making $80 when you were expecting $100 can be a tough pill to swallow, but taxes are a part of life.

However, this only takes into account federal taxes. Once you take into account state-level income taxes, even more money is taken out.

State Taxes Shouldn’t Be Ignored

Unless you are the lucky resident of one of the seven states with no income tax, you will pay state income tax. The seven states with no income taxes are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

If you don’t live in those states you’ll pay anywhere from a low of 0.36% all the way up to 13.3%.

For this article, I used an estimated average state income tax of 4.5%. This brings the total tax rate for federal + state income tax to 25%. That’s ¼ of your income going straight out of your pay.

Once taxes are taken into account, this number drops to $55,180. If alarm bells aren’t going off in your head yet, they should be.

As you can see in the data table, the average annual expenditures are $60K, which means that the average family is spending more than they are earning.

That’s nearly $5K in the hole. The average American owes $6,354 on their credit card, so you’d think a household with at least two individuals would have closer to $13K in credit card debt alone. Add in a car loan, student loans, etc., and it’s clear that there’s a deficit.

Average Annual Household Expenditures In More Detail

Now that we see that American families are spending roughly $5K more than they earn on an annual basis, let’s dive into the details to get a better picture.

American Households Overspend On Housing, Cars, And Food

As you can see in the chart above, the largest three expenses for American households are Housing (36% of take-home pay), Transportation (17.4% of take-home pay), and Food (14.0% of take-home pay).

For that reason, these spending categories need to be looked at more closely.

Average Household Expenses: Housing Detail

We’ve written about how you should aim to spend no more than 30% of your take-home pay on rent or mortgage expenses, and in that regard, the average household is doing quite well. The average household is spending 21.6% on shelter.

However, when you combine that with the 14.5% spent on non-shelter housing expenditures, it ads up to 36%, or over ⅓ of take-home pay. Ouch.

This means that Americans spend ⅔ as much on housing-related expenses like utilities, housekeeping supplies, and furniture as they do on their actual rent or mortgage.

To me, this is an area where you can cut back drastically to save some real money.

Focus on taking shorter showers, spending more time outside so you aren’t at home with the lights on, and reading books instead of watching TV.

Doing things like turning the thermostat down when you aren’t home may seem tedious, but once you’re used to it, it becomes second nature. Doing these things also have secondary positive side-effects. For example, air drying more of your laundry will make your clothes last longer and leave your colors more vibrant.

Consuming less energy, in general, is better for the environment as well. So you’ll not only be helping your bank account but also your neighborhood and planet earth.

The point to all of this is that a lot of small changes and small savings will add up to a meaningful amount when you combine them. It may seem silly to save $50 a month, but when you do it repeatedly and then over a long period of time, it will mean tens of thousands of dollars easily.

But, just like building a budget, don’t cut out things like homeowner’s insurance or renter’s insurance, which can save you thousands if disaster strikes. Cut expenses that aren’t doing anything useful for you.

Average Household Expenses: Transportation Detail

Put simply, our country has a car problem.

The average monthly car payment for a new car in the U.S. is $551 per month for 69 months. That’s $38,019 for a car. For the average family.

Look, I don’t have anything against nice cars. But when your vehicles are costing you 17.4% of your take-home pay, it’ll make it extremely hard to save and invest your money.

A vehicle loses value quickly and you don’t need to spend $38,000 in order to get a safe and reliable car that can get you and your family around comfortably.

The average household is spending $798 on transportation. This likely includes more than one vehicle. But even after taking insurance, gas and maintenance into account, it’s a lot to be spending considering they are spending more than they are making each month.

If you are in need of a new vehicle, consider shopping used. You can buy a pre-owned car for a fraction of the price. An older car will also mean you’ll spend less on insurance, and you’ll also feel less obligated to wash it regularly which will also save you money.

You’ll also want to pay attention to the gas mileage before you buy a car. If you drive 12,000 miles per year (a pretty standard amount), the difference between 23mpg and 28mpg would be $250-$350 depending on the price of gas.

If you are dead set on leasing a new car, at least make sure you know how to get the best deal possible.

Average Household Expenses: Food Detail

$644 in food per month for a family comes out to about $150 per week in food. Depending on where you shop, $150 at the grocery store might only buy you a handful of items. On the other hand, it can get you a whole LOT of food.

If you like to dabble in fine dining, then $150 might get your family a single meal. However, spending $644 per month on food for a household is not very frugal. And if you are trying to find ways to save on food this is a big one.

Most households will be able to cut out $25 per week by creating their weekly menu based on the items on sale (make sure you review the circular for your local stores), and cutting down on beef and other cuts of meat.

No, you don’t need to be a vegetarian, but eating fewer portions of meat during the week means you’ll be eating more fruits and veggies and your family doctor will be happy when they see your cholesterol dropping.

Saving $25 weekly means you save $100 per month or $1,200 over a year, which is a lot.

What A Revised Household Budget Might Look Like

If you are wondering what a few changes will do to the average family’s ability to save money and pay down debt, look below for an example.

You’ll see the original numbers next to the proposed numbers.

As you can see, this takes us from losing nearly $5,000 per year to making nearly $1,000.

A swing of $5,744 per year!

If you don’t have your own budget, you can use this template to get started.

Now, is saving $864 per year enough for retirement?

No. But it is a great start.

To take the exercise further, you can further cut expenses, or you can focus on increasing your income.

I am super excited about trying to increase your income because there’s no limit there. It’s tricky saving your way to financial freedom because you’ll need to always spend money on food, shelter, healthcare, etc.

But if you start a company or find a lucrative line of work, the sky is the limit when it comes to your earning potential. I am not delusional enough to think that anyone who works hard will become a multimillionaire, but picking up a few extra hours at work and earning some more money will go a long way to help the average household accelerate their ability to reach their financial goals and start investing.

Have you taken a look at your household expenditures to see how they compare to the average? Where are some areas where you are better than average or areas where you could use some extra work? Let us know in the comments below!

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post Average U.S. Household Expenses And What We Can Learn From Them appeared first on Finance Plan Today.

To be 100% honest with you, I didn’t know what a 401K was when I started working. I also didn’t start funding my roth IRA until two years after I started earning money because I didn’t realize what I was missing out on. And this was after spending 4 years at the best finance program in the world.

In reality, personal finance often seems like a DIY project. You read the directions online, maybe watch a few videos, read some articles and then venture out on your own and hope you don’t make mistakes. The difference between a DIY home project and your money is that the stakes are a lot higher when it comes to your finances. And making a mistake can set you back several years.

The Basics Of Personal Finance Are Easy To Understand

The honest truth is that the basic concepts of personal finance are extremely simple.

1. Spend less than you make.
2. Take advantage of retirement accounts.
3. Save as much as you can and maximize your income.

Heck, simply making a budget and sticking to it is half the battle.

A lot of personal finance sites like my own show everything you need to do in detail. Yet, I still get daily emails from readers asking for help. They feel stuck under a mountain of debt, unmotivated by a low salary, or overwhelmed by all of the information out there.

Even Though The Basics Are Simple, The Amount Of Information Out There Makes Things VERY Confusing.

When you Google the phrase ‘how to budget’, over 1.7 billion search results are returned. It’s hard to even wrap my mind around that number. No wonder you feel lost.

I regularly receive emails from readers who feel stuck, unmotivated or lost. My response to them is usually the same. I reiterate the basic steps outlined above and explain how they need a budget and to try to increase their income. But for a lot of people, understanding the steps isn’t enough.

A lack of confidence or understanding of the topic is enough for some people to want to avoid it altogether. Not everyone loves personal finance. They might know it’s important but they don’t enjoy it. They don’t enjoy learning about it, reading about it, or even thinking about it. Or maybe they already have so much going on and just don’t have time for financial planning.

Don’t Neglect Your Finances Out Of Fear.

But the funny thing is that when you have health problems, you visit the doctor, or the dentist when your tooth is bothering you, but when you’re hurting for money you internalize the despair and feeling of helplessness. Even if you want to seek help, a lot of people out there will tell you paying a financial advisor is a waste of money.

The steps to effective financial planning are relatively simple. So why pay to have someone help you manage your money? Using that line of thinking, why would you ever pay for eggs at a diner or restaurant? The steps to making eggs are pretty simple. Heat a pan, add some oil or butter, crack an egg and voila. If you want it to have a more robust flavor just add more butter, salt and pepper. No need to pay someone else to do that for you.

Or just maybe, you still order eggs or a sandwich because someone else is less likely to make a mistake preparing the eggs for you. Or because you have a finite amount of time and don’t want to spend it frying an egg at that moment. Maybe cooking just isn’t fun for you.

I am not here to vouch for the financial planning world, but rather reflect on the oft-expressed philosophy that there’s no place to pay for financial advice unless you’re mega-rich. In truth, the industry is being transformed by upstarts who charge modest fees and eschew commissions in order to better align incentives between advisor and client. Companies like Facet Wealth come to mind.

We Always Recommend Facet Wealth To Those Who Need Help

We recommend Facet Wealth to our personal friends and family who ask us for advice finding a financial advisor. Actually. And guess what? They couldn’t be happier to finally be able to sleep at night knowing they aren’t making financial mistakes doing it on their own.

Traditional financial advisors charge a percentage of assets managed which leads them to only seek and serve high net worth clients. Facet Wealth leverages technology in order to serve low net worth clients. Does this mean that everyone should be hiring a financial advisor-as-a-service firm? Not exactly.

If you are earning minimum wage and have a lot of student loans to pay off, you’ll need to save every penny you can in order to make ends meet. But if your household income is $70,000+ or you have over $50,000 saved, it could make sense to take a closer look if you don’t feel confident investing and managing your money.

Regardless of how you ultimately navigate your financial journey, it’s important to remind yourself that very few people feel 100% confident in managing their money, and that includes those with finance degrees.

If you’re ready to feel less financial stress, schedule a free intro call with Facet Wealth now.

Another solid option for online financial planning services with lower than average fees is Vanguard Personal Advisor Services. They do have a $50,000 minimum requirement, and you can learn more below.

You Can Also Seek A Local Financial Advisor

Companies like SmartAsset make it simple to find a local financial advisor if you’d rather work with someone in person. They simply have you fill out a survey to learn about you, collect some contact information, and then send you a list of local advisors.

You can read our full SmartAsset review to learn more about finding a financial advisor near you.

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post When Does It Make Sense To Have A Financial Advisor? appeared first on Finance Plan Today.

Let me explain why.

The other day I had a dream that I was lost and wandering through a jungle. It was one of those dreams where I was seeing myself in the third person as if I was in a movie. Except instead of jumping from tree to tree like Tarzan I was terrified that I wouldn’t be able to find my family. The jungle was swelteringly hot and humid. For some reason, I was barefoot and it looked my feet were getting battered by the raw terrain.

Out of the corner of my eye, I noticed that there was a shiny canister in the distance. As I approached I realized it was actually a phone. Finally, I would be able to call my wife and call for help.

But that’s not what happened. I just looked at the phone and unsure of how to use it, I just left it there on the ground. I was horrified as I watched myself walk away from the phone in my dream. Sadly, I didn’t even spend two minutes to try to see how it worked. In the dream, I kept trying to scream to myself to walk back and call for help. I woke up sweating and glad it was just a nightmare.

Is that something you would do? Would you walk away from the phone instead of using it to call for help? I woke up before anything happened to me, but let’s just say I don’t think anything good was going to happen.

Humans Have A Tendency To Favor Convenience Over Efficiency

As I reflected on it, I realized that the dream I had was a perfect metaphor for so many of the decisions we make as human beings. We’ve been essentially hard-wired to optimize for convenience instead of efficiency.

This leads us to make decisions that are actually not in our own best interest. How does this tie into high interest savings accounts or getting a high interest rate? Well, most people I speak with who have a decent amount of money saved up either keep it in their checking account or standard savings account.

When I asked them if they are aware that high yield savings accounts pay much higher interest rates they usually say yes. In one extreme example, a close friend confided that they had $200,000 sitting in their checking account. They didn’t know how to start investing their money so it just sat there for years.

Let’s just say that I walked them through the process of opening a high interest savings account and an investment account.

If you don’t have a high-interest savings account, you need to stop what you are doing and open one. You can quickly open an online savings account that offers competitive interest rates in minutes. CIT Bank is a perfect example of a solid option for a high interest account.

Bank	APY %	Minimum Deposit
	0.45%	$100
	0.3%	$0
	0.4%	$0
	0.25%	$0
	0.15%	$0
	0.15%	$1
Updated: 6/29/2020

What Is A High Interest Savings Account, Anyway?

A high-interest savings account is a deposit account offered by a financial institution that offers a higher interest rate than a traditional savings account. Yup, it’s that simple.

High-interest savings accounts are typically offered by online banks like CIT. These online-only banks use the money they save from not having to have physical local branches to offer interest rates that may be as high as 200+ times greater than what a typical traditional bank is able to offer.

These accounts are essentially the same as standard savings accounts except they have higher savings rates. You can still use them for direct deposit and mobile banking like you normally do. The best accounts also have no monthly maintenance fee, no minimum balance, and a low minimum deposit. If you are a member of a credit union, that is also another place to inquire about a high yield savings account.

Keep in mind that savings accounts cap the number of monthly withdrawals and don’t have a debit card or ATM card so you’ll want to keep a checking account linked to it.

What Is Considered High Interest?

The mega-banks like Chase, Bank of America, and Wells Fargo offer savings accounts that start with super-low interest rates ranging from 0.01% APY to 0.04% APY. APY stands for Annual Percentage Yield and is the effective annual rate of return.

These numbers are extremely low. These mega banks also love charging a monthly fee.

In fact, if you’ve read our article on how to pick investments, you’ll remember that index funds with fees in the 0.04% range are solid choices for their low fees.

However, when it comes to earning interest, you want to find an account with the highest number possible.

To put 0.01% interest into context for you, let’s assume for a second that you’ve built an amazing budget and have been saving and investing for retirement like a champ. In fact, you’ve been able to save up $1,000,000! You’re a millionaire.

So how much interest would that $1 million earn if you put it into a savings account that only earned a savings account rate of 0.01%? $100 per year. A HUNDRED bucks! That’s it. That’s about $8.33 per month in return for letting them hold you million dollars.

You don’t need to be a rocket scientist to know that’s pathetic.

In comparison, the leading high-interest savings accounts are earning at least 1%.

If you think 1% still sounds low, just remember that it’s 100 TIMES larger than 0.01%. In other words, for every $1 you’d earn with a rate of 0.01% APY, you’d earn $100 with a rate of 1%!

And this ignores the effect of compounding which means the difference would only grow over time since you’d be earning interest on the money that you made off of previous interest.

Do you even need more reasons to transition to an online bank?

How Do You Open A High-Interest Savings Account?

Opening a high-interest savings account is very similar to opening any other kind of savings account, except the process typically has to be completed entirely online. You can open one now at CIT Bank.

You’ll want to fund your account by making an online transfer from an existing checking or savings account. Your new bank will walk you through the process and it’s super easy.

Some banks will have a required minimum balance, while others won’t. The ones we list below have a low minimum balance requirement, a low initial deposit, a high APY, and no account fee.

Which Banks Offer High Interest Savings Accounts?

This list includes some of our favorites.

• CIT Bank
• Varo Savings Account
• Marcus by Goldman Sachs
• Synchrony Bank
• Ally Bank

Are High Interest Savings Accounts More Risky Than Traditional Low Interest Savings Accounts?

No! One beautiful thing about the banks offering high-interest savings accounts is that they still play by the rules and regulations of the traditional retail banks.

This means that their accounts are FDIC insured up to $250,000 per depositor. We have both personally had high-interest savings accounts for that past decade and the safety or security of our accounts has never been an issue.

Not even at the height of the financial crisis.

When Is The Right Time To Open A High Yield Savings Account?

Yesterday!

But seriously, now is the right time. If you are thinking about it and don’t have a high-interest savings account then you are leaving money on the table.

Unless you’re the kind of person that enjoys feeling parched on a scorching summer day and would walk away from free ice-cold water.

Some of you might be worried that you don’t have very much money, but the awesome news is that several of the banks that offer the highest interest rates have no minimum balances.

How Much More Interest Could I Get From A High Yield Savings Account Compared To A Normal Savings Account?

Let’s face it, this is the reason that you’re even considering opening a high-interest savings account. And when money talks, we listen.

So how much money in interest have you been missing out on if you have a savings account or checking account that earns virtually nothing? Let’s explore an example.

Let’s assume there are two identical people. Perhaps they are twins…

Both start with $250 in the bank. In addition, they are able to deposit and save an additional $250 per month thanks to having an airtight budget. (Use our free monthly budget template)

Ignoring interest, they’ll have $500 saved at the end of month 2, and so on, until they have saved $15,000 by the end of the 5th year. This doesn’t include interest.

The only difference between them is that one of them has a high-interest savings account while the other just has a normal low-interest savings account.

Assume the high-interest savings account earns 2.1% APY compared to 0.01% APY with the traditional low-interest savings account.

How much more does the person with the high-interest savings account have after 5 years? Let’s see.

As you can see in the example above, the person with the high-interest savings account was able to save an extra $811.56.

Not too bad for doing absolutely nothing for it besides switching bank accounts.

The Pros Of High Interest Savings Accounts

The Pros

• High-interest rates mean you’ll make more money in interest
• Online-only banks tend to have fewer fees and lower limit requirements
• Many online banks offer 24/7 customer service via calls or emails
• Around the clock access via online banking

The Cons

• No physical branches mean you can’t talk to a specialist in person if you need help
• It may take a few days to transfer the money to a checking account so that you can withdraw it

Can I Keep All Of My Money In A High Interest Savings Account?

As attractive as it may seem, there’s a reason why you can’t use high yield savings accounts as your primary bank account. The reason is that there is a federal law that limits the number of monthly withdrawals that you can make to 6.

So if you have 6 bills to pay on a monthly basis, or need to transfer money out more than 6 times a month you could run into issues.

Some banks will penalize you with fees if you exceed the 6 monthly withdrawals and may also convert your account to a checking account. Other banks have their own limits, so you’ll want to check first if you plan to use your account pretty actively.

High Interest Savings vs Money Market Accounts

A money market account (MMA) is the child of a savings and checking account. MMAs are structurally almost entirely the same as a savings account, except they typically offer higher interest rates and have high minimum balance requirements.

Since money market accounts also typically have interest rates that are higher than checking or traditional savings accounts, they can be an attractive alternative to high interest savings accounts. The biggest differences are that MMAs are like a hybrid of checking and savings accounts and they typically have pretty high minimum balance requirements.

What Can High Interest Savings Accounts Be Used For?

So if I am limited in the number of withdrawals that I can make on a monthly basis, how should this account be used?

The perfect use for a high-interest savings account is to save money that you won’t need to spend regularly. Do you have an emergency fund yet? These savings accounts can be the perfect place to store money for a rainy day. Or if you are saving up for the down payment on a house or another large purchase.

Remember that ideally, you’ll want to have a savings goal of having 3 to 6 months of living expenses saved for emergencies.

As you can see, switching to a high-interest savings account is a no-brainer. Not sure if your relationship with money is broken? Not having a high-interest savings account may indicate that it is.

Make sure you open your high interest savings account today to have your money start working for you!

No, it won’t solve all of life’s problems. But it’s better than walking right past a free bottle of ice-cold water on a hot summer day. If you’d like to get an even higher interest rate, check out a CD or certificate of deposit!

Looking for even more ways to save or make money?

Consider refinancing your student loans to lower your monthly payment and interest rate. Or download Robinhood or Webull to get a free stock and start investing!

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post High Interest Savings Account – Why You Need One appeared first on Finance Plan Today.

If you’ve read our guide on asset allocation then you might recognize the phrase 3 Fund Portfolio.

This investment strategy may seem simple, but the underlying principles are solid. It helps you easily create a well-diversified portfolio with low fees (expense ratio).

Let’s jump into what the 3 Fund Portfolio actually is, how it works, and how you can make your own. But first, let’s make sure we are all on the same page.

What’s an investment portfolio anyway? Your portfolio is the collection of assets that you own. If you have all of your investments at Vanguard, then that’s where you’d go to see your portfolio. Yours might even be spread amongst a few different financial institutions.

This is pretty common if you have a 401K from work with one brokerage and your IRA with another one. In that case, you’d want to take a step back and look at your overall investments to see your entire investment portfolio.

Why Investors Love 3 Fund Portfolios

The beauty of the Three Fund Portfolio lies in its simplicity and efficiency. The typical 3 Fund Portfolio contains a U.S. ‘total market’ index fund, an international ‘total market’ index fund, and a bond ‘total market’ index fund.

Investors don’t need to necessarily use mutual funds to construct their portfolio either, as an ETF portfolio offers the same benefits. As a result, the asset classes included in these portfolios are skewed to stocks and bonds. This provides diversified exposure to the stock market. The bond fund adds additional asset diversification and lowers the expected volatility of your simple portfolio.

The weight of each asset will depend on the risk appetite of the investor.

As a refresher, equity index funds are simply investments that are comprised of many different stocks. So by buying a piece of an index, you are actually purchasing small chunks of many different companies. It takes the guesswork out of having to pick individual stocks or trying to beat the market. Even the average professional on Wall Street can’t consistently beat the market, so it’s foolish to think you’ll be able to.

Where Can I Invest?

If you are ready to start investing, but aren’t sure how to get started, the first step is to open an investment account. If you have a job with a retirement plan like a 401k or 403b, you might even already have one.

Another popular retirement account is the IRA. If you prefer, you can also open a standard investment account or taxable account. Common companies where you can open investment accounts include M1 Finance, Robinhood, Webull, and Fidelity.

Once you have the account open and funded, you can select your investments based on your risk tolerance.

Is The 3 Fund Portfolio The Simplest Way To Invest?

If you are looking for the absolute easiest way to invest, you might be interested in learning more about Facet Wealth. They are a fee-only digital financial advisory company. For a fixed monthly fee, they match you with one of their certified financial planners to handle your money for you.

If you want to manage your own investments but want to have an even simpler investment plan, you can invest everything in a single target date fund or target retirement fund. Target date funds automatically adjust their asset allocation to increase the number of bonds that they contain as you approach retirement age. This is simply to lower the risk.

The dirty little secret is that many target date funds are simply the 3 Fund Portfolio masked with a clever name. The nice thing about creating your own 3 Fund Portfolio is that you will have more control and better tax-efficiency than you’d get in a target date fund.

Target date funds also tend to have very conservative allocations, so many people will prefer to have more exposure to stocks (and less to bonds) in order to have a higher chance of generating higher returns over time. Just remember that the market is unpredictable and that historical performance is not an indicator of future performance.

Your Asset Allocation Determines How ‘Risky’ Your 3 Fund Portfolio Will be

Your split between domestic stocks, international stocks, and bonds will determine how risky your portfolio is. The more bonds you have, the less risk you’ll be taking.

We love the advice shared by John Bogle, founder of Vanguard, in his incredible book, with regards to this topic. For younger investors, he recommends investing 80% in stocks and 20% in bonds. He drops this down to 70% stocks for older investors (45yrs +). For those already retired, a split of 60% stocks to 40% bonds might make more sense.

Ultimately, these are only rough guidelines, and you will need to decide what works best for you. If you have a long investment horizon and are less risk-averse, having 95% of your investments in stocks might be right for you. It’s a personal decision that must be made with your investment goals in mind. Think about how you’d react if you were to lose 40% of your portfolio in a short period of time due to a market downturn like in 2008 / 2009. If you think you might panic and sell everything then perhaps having more bonds would help settle your mind (and stomach).

Asset Allocation Pro-Tip: If you decide to invest using only 1 target-date fund, don’t just choose a fund based on your retirement date. Look into the % of the fund allocated to bonds and decide if that’s the mix you feel comfortable with. If you have a target-retirement date of 2045, but like the allocation of the 2055 retirement-date fund better, then go with that.

They are usually pretty good at picking the right year, but it’s always best to double-check. After all, this is your future we are talking about.

Sample Three Fund Allocation

Sample 3 Fund Portfolio 1

Sample 3 Fund Portfolio 2

Sample 3 Fund Portfolio 3

Sample 3 Fund Portfolio 4

Example Index Funds For A 3 Fund Portfolio

Vanguard Index Funds

*Admiral Funds Require a $3K Minimum Investment

Fidelity Index Funds

Charles Schwab Index Funds

Example ETFs In A Three Fund Portfolio

Vanguard ETFs

Blackrock iShares ETFs

Charles Schwab ETFs

Is A 3 Portfolio Great For Everyone?

No, but it would work well for most people. Especially if you want to keep your investments simple. It won’t work well for someone who has absolutely no desire to manage their own investments (nothing other than having someone else take care of it for them will).

It also won’t work for someone who would like to pick individual stocks. A portfolio made up of just 3 individual stocks is considered extremely risky since you’re putting all of your eggs in just three baskets.

The main advantages of the Three Fund Portfolio are its simplicity, low costs, broad diversification, ease of rebalancing, and the fact that it won’t underperform the market (since it’ll track the broader market). If these characteristics are attractive to you as you think about your investments, it’s certainly worth looking into!

You also need to have to be aware of any investment minimums for the funds. Some Vanguard Funds have an investment minimum of $3,000, which means might need $9,000 to invest in order to start with a Vanguard 3 fund portfolio. Alternatively, you can just use ETFs since those don’t have minimums and are traded directly on the exchanges.

Do you want to invest but simply don’t have enough money yet? If you aren’t sure how to save enough to get there, you’ll want to read our step-by-step guide to budgeting. It’ll be your first line of defense when it comes to saving and investing more of your money.

FAQs

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post The 3 Fund Portfolio appeared first on Finance Plan Today.

We’ve all been conditioned from an early age to seek more. More things. More respect and prestige. And a lot more money. But research shows that there’s a lot more to true happiness than the size of your bank account, the size of your house, or your net worth.

Go ahead and ask the happiest person you know what the reason for their happiness is. They won’t say money.

Experts agree that after you have enough to cover the basic necessities in life, all of those extra things won’t bring you a meaningful amount of extra long-term happiness. But I don’t even need the research to know that, because I have lived to experience it first-hand.

Money Didn’t Buy Me Happiness

You might be thinking that it’s easy for me to say that money can’t buy happiness because I have an MBA from Harvard University — an achievement with a high expected salary. It’s true that the average Harvard grad has a lot of wealth.

But I didn’t come from the typical background you’d expect — I grew up in poverty, raised by a widowed mom who struggled financially. We never had enough money.

Growing up poor, I was fixated on eventually making a lot of money. My childhood room had posters of Ferraris and Porsches plastered on the walls. I was convinced having money was the key to happiness.

In high school, I would study around the clock so that I could get perfect grades and go to an Ivy League University so that I could get a job on Wall Street and never be broke again.

As a kid, I was embarrassed that my family was poor and I was determined to never feel that way again.

But when I stop and reflect on those early childhood years, I realize that while I barely had more than the clothes on my back, I had an extremely happy childhood. Love, support, friends. I had it all.

Or so I thought.

Realizing How Much I Didn’t Have Was Painful At First

Going to college at Harvard and Penn exposed me to a world I could only dream of. I had the chance to drive a friend’s Ferrari. A dream come true. Getting to fly on another friend’s private jet was like a dream I could never have even imagined a couple of years earlier.

In truth, realizing how some people had so much more than me was painful. It surfaced feelings of inadequacy. But then something important happened. I got to know these friends a lot better and realized that their lives were far from perfect. They had the same fears about their futures that I had. Some also struggled with depression.

These experiences showed me that no amount of happiness can buy you happiness. After I graduated, getting an extremely high paying job on Wall Street wasn’t as fulfilling as I had hoped it’d be.

Were those experiences fun at the moment? Yes, they were incredible! They were what I had dreamt of as a kid. But the happiness and excitement of the moment always wore off. It was fleeting.

In fact, the memories of those experiences never bring me as much happiness as being reunited with my family and getting to share a meal together.

Those private jet rides were fun but by the end of the flight, I just wanted to land and get home just like everyone else.

There Is An Important Link Between Money And Happiness

Look, I am not here to deny that having money is better than not having money. Even research shows that money and happiness are positively correlated. It’s hard to maximize life satisfaction if you are hungry or don’t have shelter.

There’s also some truth to the quote that says, “it’s more comfortable to cry in the back of Bentley.” Because while it sounds a little crazy, would you rather cry in comfort or under a bridge? Everything else equal, most people would obviously prefer to have more money.

The data shows that more money does give you additional happiness. But the critical piece that most people don’t realize is that the effect of an additional dollar wears off increasingly as you have more money.

Once you get to around $70,000 to $80,000 in income, the benefit of an extra dollar becomes so small that the relative happiness is hardly noticeable. Overall happiness for the ultra-wealthy isn’t 1,000x higher than it is for upper-class Americans. The same is true for lottery winners.

Think about someone who is simply hoping to get their basic needs covered. A new pair of shoes will mean the world to them and give them happiness every time they can walk without their feet hurting. Give the same pair of shoes to a rich person and it won’t make them more happy. Material goods only really benefit fit you up to a certain point. But spending behaviors aren’t in sync with that knowledge.

This explains the hallmark of lifestyle inflation or lifestyle creep, which is based on the principle that you get used to lifestyle changes so you keep spending more money without really increasing your quality of life. You’re basically trapped on a hedonic treadmill even though you have a high household income. The one thing you are missing is the most important thing: freedom.

Freedom to dictate how you spend your time. The freedom to decide who to spend time with and what to work on. Freedom to be where you want when you want. This is ultimately what we all seek by working for financial freedom.

But you don’t need to take our word for it.

I’m Not The Only One That Knows That Money Can’t Buy Happiness

As I prepared this article, I reflected on the most impactful things I’ve seen or read in order to help convey our message to you, and I kept coming back to the same two things.

The first was the famous Last Lecture by Randy Pausch. It has racked up millions of views and it has literally changed the way I try to lead my life. I think it will do the same for you and your happiness level.

Randy was a professor of computer science who gave a lecture after he was diagnosed with stage 4 pancreatic cancer and was given only 3-6 months to live. His now-famous lecture was about achieving your childhood dreams. Sobered by the fact that he only had a few months left to live, he focused his lecture on important lessons like showing gratitude and never giving up. Faced with the reality of death at the early age of 47, he was able to clearly see which things in life were the most important.

I first saw the video when I was 18 years old and it hit me like a ton of bricks. I had lost my father to cancer when I was a 7-year-old child when he was only 46 years old. This lecture gave me the clarity to focus on the things that matter most.

It taught me to be present and enjoy the little things. Before this, I was laser focused on getting the best education and best job possible so I would never have to worry about money again. I missed out on a lot of life experiences and the opportunities to build unforgettable memories.

Your Time On Earth Is Limited, Which Means You Have The Responsibility To Make The Most Of It

He spoke of his family, building emotionally-rich experiences, finding joy, and being present in everyday life. Do you know what Randy Pausch didn’t talk about in his lecture? Money, being rich or wishing he could buy more things.

As a respected college professor, Randy wasn’t poor by any means, but he also wasn’t a multi-millionaire. He surely had disposable income but he was more focused on finding contentment and living an amazing life than on buying things he didn’t need. He mastered the psychology of happiness.

The video is long, but it’s one of the most powerful lectures you will ever listen to. And it will be the most important thing you do today.

If it doesn’t change the way you view your life and the world, then honestly, I don’t know what will. So grab a box of tissues and buckle up.

“So today’s talk was about my childhood dreams, enabling the dreams of others, and some lessons learned. But did you figure out the head fake? It’s not about how to achieve your dreams. It’s about how to lead your life. If you lead your life the right way, the karma will take care of itself. The dreams will come to you.” – Randy Pausch

More Lessons Learned From Someone Who Knows Their End Is Near

The second thing that has left its mark on me is the book Tuesdays With Morrie. It’s a memoir written by Mitch Albom in which he recounts his time spent with a former professor who is dying from ALS.

In the book, what started as a weekly chat to keep an old friend company, ended up being the most profound series of life lessons that changed his life (and mine) forever.

Tuesdays with Morrie is filled with countless golden pieces of advice, but here are two of our favorites.

1. “Without love and family, we are like birds without wings.”

2. “Money will never bring you comfort like the people you love and their tenderness.”

Both are so true. Without finding love and meaning, you’ll have a void that money can’t possibly fill. It’s just a shame that sometimes, it takes a tragedy for those lessons to be learned.

Does that mean that money can’t bring you comfort? No, and I don’t think Morrie would disagree. He is simply stating that if we only focus on money, we will miss the things that can bring us even more comfort. When my dad died from cancer when he was only 46, he didn’t have a life insurance policy. He was the main breadwinner, and as a result of him dying I grew up in poverty.

When I got married I got a term life insurance policy because I didn’t want my wife and family to also suffer from my inability to provide for them. I say that to show you that I clearly understand the value and impact that money can have on your life.

What Dying Patients Say

As you may know, my identical twin brother, Francisco, is a doctor. Through the years in medical school and residency, Francisco has talked with many dying patients, both young and old.

In his experience, it’s not the patient’s age that differentiates those who are at peace with their certain fate and those who would do anything for an extra day.

You see, regardless of their age, some patients want and need more time to repair broken relationships. Relationships with friends, siblings, children, and parents. They have regrets or unsettled business.

A common regret he has heard is not apologizing sooner and letting small disagreements tarnish relationships.

Not a single dying patient has ever mentioned wishing they would have worked more or had more material things or money. The lesson to be learned from these individuals is to prioritize relationships. Always apologize first.

Don’t let your pride get in the way. Even if you are “right”, it’s not worth losing a relationship over it. And lastly, when it comes time to face your mortality know that money and material objects won’t matter.

Even If Money Can’t Buy Happiness, Money Still Matters

So how do I reconcile this understanding that there are more important things than money, with the fact that our #1 goal with this site is to help you become wealthy and make smart money decisions?

Well, for one, life is expensive, and not having enough to pay basic bills sucks. Living paycheck to paycheck is miserable and exasperating. Not having much money or financial security is the leading cause of stress. Stress is linked to heart disease and mental health problems. Clearly, having money and understanding personal finance is important.

As a child, seeing my mom’s debit card declined at the grocery store felt humiliating. I still remember those times like they were yesterday. By the age of eight, I basically knew not to ask for anything at the store because it caused us all a lot of pain.

A few things you can do to make sure you have enough money is to seek a higher income. This could mean getting extra money by developing secondary sources of income, getting a new job, or asking for a raise at work.

A higher salary will allow you to save more money and prioritize your spending on things that will bring you greater happiness. An amazing life experience will pay dividends for years while buying a material thing will bring you a quick high that will eventually fade.

So it’s important to set and reach financial goals, but NOT at all costs. There are many ways to live your best life while living within your means.

Don’t lose sight of what matters most. Don’t neglect your family for money. And don’t lose your marriage over it. Use your money on experiences that will enrich your life instead of acquiring a ton of objects and possessions just for the sake of it.

In a couple of years, you won’t even remember the Yeezy shoes you spent $350 to buy. Or the ugly Gucci belt you thought was cool.

You only have one life and it’s a lot shorter than you realize. So go out and create the life you want. Take it one step at a time, and realize that while money is important, it’s not the most important thing. You are more than your income level!

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

The post Money Can’t Buy Happiness, Right? appeared first on Finance Plan Today.

I’m going to introduce you to six basic steps on how to invest your money. Before you think about investing a dime, we need to set the foundation. Without it, it will be difficult, if not impossible, to have a successful investment strategy.

I’ll list the steps first and then get into some detail to help you navigate each one.

They are:

1. Work from your budget
2. Determine how much you can save
3. The best accounts to start – taxable vs. tax-deferred
4. Find the best investment options
5. Diversify
6. Monitor and rebalance

Now let’s get into the details for each to get you started.

Build Wealth With Discipline

Personal finance principles are not complicated. Executing them takes practice and discipline. If you want to build wealth, you will need to do these three things:

• Spend less than you make
• Save and invest the difference
• Reduce or eliminate debt

These are common sense things. Living within our means, being disciplined about saving and investing and minimizing debt will allow us to build wealth over time. There are no get rich quick schemes that work. There are no short cuts. Doing these three things over a long period will give you the best opportunity to build wealth.

Here’s where to start.

1. Work from a budget

If you want to invest like a hero, you need to get the money from somewhere. The place most people get money to invest is from working. That means you need to use a budget to save as much of your money as possible. Having a budget isn’t the only way to get money (401k company match comes to mind), but everyone should be keeping their expenses lower than their income.

You need to know where your money is going every month to know to analyze areas where you might be able to reduce expenses and increase the amount available to save and invest.

Many people use spreadsheets to budget. In fact, you can find our awesome budget template here. If you’re not a spreadsheet person, consider some of the budgeting apps available. Mint and EveryDollar) are two of the most popular. Both programs allow you to connect your bank accounts to pull expenses into the app. You can then set up categories to better manage where cash is going.

If you’ve been disciplined enough to pay off your debt it’s likely you have some budgeting mechanism set up. If not, these two apps can help you get started.

Regardless of the method you use, the #1 thing you can do to accelerate your investing is to earn more money and put it to work.

2. Increase Your Income

Your budget tells you how much you can save and invest. That’s the foundation that must be in place to assure you can contribute a consistent amount to grow your wealth. However, you need more money coming in the door if you plan to really create serious wealth.

Increase income

You are never going to penny-pinch your way into an extravagant lifestyle. Having the life of your dreams is going to require that you take some risks and increase your income. This could mean working your way up the corporate ladder and earning promotions. Or it could mean starting your own company and giving yourself a shot to make a substantial amount of money.

Without taking risks, you won’t get outsized rewards.

If you love your job, look for ways to gain income outside of work. Find a side hustle or part-time work that has flexible hours and can bring in more money. The more money you make, the more you can save and invest.

Earning a few extra hundred bucks a week will translate to tens of thousands or even more money one it’s invested over a long time horizon. You might laugh at your friends who pick up extra shifts, but they’ll be the ones laughing when they have a million bucks in their investment accounts.

Emergency fund

Most of this article is related to investing, but we can’t ignore the fact that you need to take care of yourself and your family before you invest a penny. This means having an emergency fund. If money for an emergency fund is not part of your budget, it needs to be.

What’s an emergency fund? It’s money you keep in a high-interest savings, checking, or money market account that you can access in the event of an emergency. Use this money to pay cash for unexpected expenses. If your car breaks down, you have an unexpected medical bill or lose your job, don’t pay for these on a credit card. Use the cash from the emergency fund.

The emergency fund should have a minimum of three to six months of monthly expenses in it. So, if your monthly expenses are $1,500, you would keep from $4,500 (3 months) to $9,000 (6 months) in the account. If expenses are $2,000, you’d keep $6,000 or $12,000 in it.

Some people keep one or more years of expenses in their emergency fund. Whatever amount you choose, be sure not to compromise that number. Financing unexpected expenses on a credit card will put you right back into the hole you just dug out of.

If you have a partner or kids, you also need to have a solid term life insurance policy in case you die unexpectedly. One thing the COVID-19 pandemic showed us that life is fragile. If something were to happen to you, do you have enough money saved up to provide for your family? That’s why you need life insurance.

3. Finding the right type of account

Most people learning how to invest their money should start with retirement accounts first. These retirement accounts have tax benefits that normal investment accounts at places like Robinhood don’t offer.

If you have a career, it’s highly likely that your company offers its employees a 401k or 403b retirement plan. The plans offer a way for employees to contribute money every paycheck to an investment account where the money invested grows tax-free as long as it remains in the plan.

Employer Matches Are Like Free Money

In most cases, the employer contributes money to your account as well in the form of a matching contribution. They agree to match what you put into your account with their own money up to a certain percentage.

Here’s a common example. They offer to match your contribution up to 50% of the first 6%. That’s a 50% return on the first 6% you put into the plan. There is no other investment out there that offers a 50% guaranteed return. Take it and run like a bandit!

Plus the money you contribute is tax-deductible, meaning it reduces your taxable income by that amount. You pay tax on the money at the time you withdraw it at retirement It’s free money and a tax deduction. It’s truly the best investment you can make.

The IRS allows you to contribute up to $19,000 of your own money into employer-sponsored plans. That means you can put a chunk money toward saving for your retirement.

Roth IRA

You should also consider contributing to a Roth IRA. 

Unlike employer plans, contributions are not tax deductible. The money you contribute to a Roth IRA has already been taxed. You can contribute $6,000 to a Roth. Earnings on the money while it remains in the account grow tax-free.

You can withdraw contributions at any time without penalties or taxation. Earnings are a little different. If the Roth account is five years old, earnings can be taken out without paying any taxes. However, if you are under age 59 ½ at the time you withdraw, you will pay the IRS a 10% penalty.

The great thing about a Roth IRA, especially if you start one when you’re younger, is that money withdrawn after five years and when you’re over age 59 ½ is tax-free income. That’s a huge benefit when you’re calculating retirement income. Having tax-efficient or in this case, tax-free income in retirement is a major advantage of the Roth IRA.

Here’s an overview on how to open an IRA.

4. Find the best investment options

If you’re investing in your employer’s retirement plan, the options you have are the ones available in the plan. In the vast majority of plans, these are mutual funds.

Mutual Funds

Mutual funds are portfolios of stocks and bonds. They are professionally managed, offer some diversification, and a variety of choices in the types of stocks and bonds available. Most plans have a lot of choices (sometimes too many) of funds. Your benefits department can provide information to help you decide which funds to select.

For any money you’re investing outside of the employer plan, mutual funds are also a very good option. You aren’t limited to a set of funds chosen by your employer. In many cases, you can find lower-cost funds offering better performance.

There are other options to consider as well.

If you love the idea of investing in mutual funds, you’ll want to learn how you can easily build a 3 fund portfolio. It’s an easy way to build a diversified portfolio to meet your investment needs.

Individual stocks and bonds

You can also purchase individual stocks and bonds on your own. When you’re just starting out investing and have smaller amounts of money, it’s hard to diversify a portfolio of individual stocks. It takes a significant dollar amount to buy enough stocks to diversify your portfolio.

Picking stocks and bonds on your own is also riskier. There are a variety of stock picking newsletters and services to help you make the choice. Many of these services tout their ability to beat the market and provide higher returns.

If you’re just learning how to invest or just starting out, you need to know that buying individual stocks is a high-risk proposition. You can use brokers like Robinhood, Acorns, M1 Finance and Webull to start investing!

Index funds

Index funds are a specific type of mutual fund.

These index funds invest in many different stocks and bonds in bundles. The index you’ve likely heard of and are familiar with is the S&P 500. The index is made up of the largest 500 publically traded companies in the U.S. The size of the companies is based on the market value of their stock. The larger companies have a much greater impact on the return of the index.

An S&P500 index fund invests in all 500 of these companies and mimics the overall returns of the market. Humans don’t decide on how much to put into each company. Rather, the amount they put in each aligns with the size of each company in relation to the total index. There are dozens of stock and bond indexes available for investment.

Index funds are among the lowest cost funds you can own. The lower costs mean more of your money gets invested. Expenses on professionally managed funds are much higher than index funds. 

Index funds are the #1 investment recommended by professional investors like Warren Buffet because they understand that the average person doesn’t have the ability to beat the market. So if you can’t beat it, the next best thing you can do is match it.

Robo Advisors (Automated investments)

Robo advisors are a fairly new entrant to the investment landscape. They’re called robo advisors because they use algorithms to build and manage portfolios. These technologies automate the investment process. The investment vehicle most use to create their portfolios is exchange-traded funds (ETFs). ETFs are, in many ways, like mutual funds. They pool together investor money and purchase a diversified portfolio of stocks or bonds.

Top robo advisors include M1 Finance, Betterment, and Wealthfront.

ETFs also give robo advisors the ability to easily diversify their portfolios at a very low cost. Investing with one of the many robo advisors offers a ready-made, broadly diversified portfolio of stocks and bonds. Most of them require investors to complete a short risk questionnaire to determine which portfolio is a good fit.

Professional Advisors

If you love the sound of investing but would rather leave it to the pros, that’s understandable. Facet Wealth and SmartAsset are two great options for that. Facet Wealth has a team of certified financial planners who will work with you remotely to set up and execute a professional investment strategy for a fixed monthly fee.

If you’d rather meet with someone in person, SmartAsset will have you take a short quiz and match you with a local financial advisor.

5. Diversification

In its simplest form, diversification means having your money invested across different types of asset classes (stocks, bonds, cash) to help lower the risk of owning individual securities. The goal here is to increase your risk-adjusted returns. This means that it’s possible to create a portfolio that has the same expected returns as another portfolio without having the same amount of volatility or expected risk. It’s a no-brainer.

With regular monthly investments, it’s next to impossible to get proper diversification with individual stocks and bonds. And with mutual funds, you need to have a good understanding of the asset classes and how they work together.

To that end, when you’re learning how to invest or investing smaller amounts of money, your two best options are index funds or automated investment programs (robo advisors).

They allow you to invest smaller amounts of money in a broadly diversified portfolio. In the case of robo advisors, there is also some effort put into finding a portfolio that fits your tolerance for risk.

Monitoring and rebalancing

Last but certainly not least comes the need to monitor and rebalance your investments.

Monitoring, as the name suggests, means watching the investments to make sure they are doing what they said they were going to do. It’s making sure your diversification and mix of investments stay close to where you wanted it to be when you started. If it sways from that mix, you could be taking on more risk or compromising the performance you wanted when you started.

Rebalancing means that if parts of your portfolio grow or fall in value beyond what the managers targeted, you should sell the ones that have gone up and buy the ones that have dropped. In other words, bring the portfolio back into the balance (mix of stocks, bonds, cash) you designed when you started.

Rebalancing does not need to be done every month. In fact, once a year is probably enough. With markets going up and down a rapidly as they do these days, the market often rebalances the portfolio on its own with its up and down moves.

Final thoughts

My thoughts on investing were targeted to those who may be just learning how to invest. It’s also applicable to those who may have some knowledge of investments but not a lot of money to invest.

I’m one who believes that the best way to invest in today’s markets is to own the market. The best way to do that is through index funds or robo advisors. These two options are low cost. They offer an easy way to own pieces of the entire market. There are index funds available for any market, stock or bond, around the world.

Take advantage of employer plans and Roth IRAs to the extent they are available. Be consistent with your investing. Put money in regularly in good and bad markets. Keeping costs low, owning a broadly diversified global portfolio, staying invested in that portfolio, and periodically rebalancing as needed will bring you investment success.

There are no guarantees when investing. Following this formula offers you the best chance for investment success.

Camilo Maldonado

Camilo is a personal finance expert and the Co-Founder and CEO of Finance Plan Today. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.

FinancePlanToday.com

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