Category Archives: Personal Finance

Mind Over Money

When I graduated in the spring of 2015, I thought I had it all figured out. I had some money saved, a job lined up and an apartment to move in to. College had been a blast, but I felt mature and ready begin my life as a real adult. I was going to succeed and it was going to be a breeze.  

Now, a year and a half later, I sit here writing my first post for my brother’s finance blog. See, I used to think this blog was dumb. I didn’t understand what BeatingBreakEven really meant and always thought my brother was wasting his time talking about money so much. But after switching jobs in June for a salary raise and signing a new lease, for rent that was $200 dollars less a month, I realize I am exactly where he was. I am broke, have no concrete plans for my future and am extremely unsure of myself.

In the past few months I have been thinking a lot about my life and who I want to be. I’ve thought about what to do next in my career, thought about what city I want to move to and thought about how to save more money. I’ve also spent a lot of time contemplating my inner motives, my deepest fears and my varying levels of self esteem. In this process of psychological discovery, I have begun to understand just how powerful our minds really are. They can be our biggest tool for success and the biggest obstacle.

I have started to experience first hand how becoming more aware of my thoughts and psychology can really help me achieve my goals. I mean don’t they say that you can achieve anything you put your mind to? Mastering your mind will not only make you a happier person, but will keep you on track to reaching your long term goals. Since many of my goals are financially based at the moment, I went through last month’s credit card statement to recount my recent purchases. Besides food, almost everything I bought was unnecessary. Nails, makeup, new shoes, drinks at the bar, etc. Practically everything on there were things I bought to feel better about myself. For many of us millennials, our credit card statements are a long list of our deepest insecurities resurfacing as impulsive spending habits. It’s actually pretty scary. Working through my insecurities and understanding the motives behind my purchases has started to help me say no to a lot of things I normally would have swiped for without thinking twice.

If we want to change our spending habits, we first have to change our thoughts. Seems simple and intuitive on the surface, but our minds are really unexplored territory for many young adults. We millennials do not spend enough time understanding our needs, wants and desires and instead, act on impulse as a way to band aid our immediate emotional challenges. We are impulsive because we do not take enough time to think and we spend because we don’t want to feel. We really need to learn how to understand our thoughts and be okay with our emotions, so we can make healthy, logical financial decisions.

FOUR Financial Lessons from the Homeless

New York is one of the biggest financial capitals of the world. Finance is everywhere in this city, whether in the billion dollar hedge funds that are making million dollar deals or the restaurant owners calculating bar tabs, brunch receipts or tenants saving for the unruly rent they owe their landlords at the start of each month. 

One lesson I have learned from observing the homeless on my street, is that being a pure minimalist has its benefits. These people carry with them only what they need and nothing more. It would be inefficient to carry around dead, excess weight. We as millennials need to understand why excess is bad and recognize how our spending habits are based on desire instead of necessity. If we all became more aware of the things that we buy and their ability to clutter our lives, we might start to realize that material goods do not help us meet our goals or delay the process.

The second lesson we can learn from the homeless is how we can market ourselves well to attract the attention of others. I regularly encounter homeless individuals on the subways and in the streets. They are holding signs that tell their story or are yelling at passengers about their specific misfortunes. Many of them have had a lot of practice doing this, so they know what works and what doesn’t. They are forced to put their best foot forward and try and try again to sell the bystanders on a few dollars of investment into them. They are essentially pitching themselves to an audience of investors, like you see startups do on Shark Tank. When you want money for an investment or business, or are trying to land the perfect job, you need to market yourself to your best ability. This means looking the part and connecting with the given audience on a personal and real level. The homeless live it everyday. Their survival depends on it.  Since yours doesn’t, if you were to apply the same sincerity and passion into improving your current state, you would likely get very far.

The third lesson is utilizing the resources around you to the best of your best ability. I was in the train station one time and a homeless man was cleaning all of his clothes in the bathroom sink. Since the station is a public facility, this was free to him. He was being resourceful. I also see many homeless people using public places for shelter or the public library for entertainment to pass the time and read or subway seats as beds. We as millennials also have boundless resources around us that will cost us little to no money to utilize things such as books, mentors, the internet, newspapers, other people in our field willing to help us if only we just ask. Many of us do not use these resources to our advantage as we should.

The fourth lesson is that homeless people ask for what they want. If asking doesn’t work with one person, they try and try again. They are relentless because they need to survive. They will badger so many people and most of the time it works. I know because I see so many people fall prey to their tactics and reach into their pockets to grab money. Its human nature to feel empathetic towards other people and want to help them out. Ask for what you want and if you get denied ask someone else.

The final lesson to consider is that homeless people use a cash based accounting model. These days everyone is in debt. Debt is a tool, but most of the time people, especially people our age, abuse this tool. Homeless people collect cash, use that cash and simply go and try to get more when they run out. They don’t just put their purchases on a credit card. People need to realize that we should only spend what we have available. Try carrying around a specific amount of cash each day, spending only what you need and nothing more. Don’t always be putting the little things in life on a credit card because it creates bad habits that are hard to stop.

 

Take Control of Your Financial Future By Paying Yourself First

One of my most memorable lessons from my childhood was when I learned the importance of “paying yourself first.” Many of my peers and friends have complained about their money problems; bills weigh on their mind and they become stressed living paycheck to paycheck. While it is important to stay cognizant of costs and expenditures, too many people make paying their bills their number one priority.This leaves them treading water just to keep their nose out of the water. This is definitely not detrimental, but it will not leave you on top or help you reach your more long term financial goals. I’m here to tell you why it is more important to pay yourself first before paying any bills.

The common routine for many millennials is to set aside money every month for costs, such as rent, transportation, etc. and then treat the leftover money as free spending to blow. Instead, I am suggesting that you first set aside an amount, “personal bill” and then using the rest to supplement bills and other costs. Creating this kind of system will change your mindset about your money. First and foremost you will be saving and secondly, you will be more calculated and thoughtful about how you spend your earrnings. Putting your money in a personal account will prevent you from spending carelessy.

An easy way to start this spending transformation is to go to the bank and open up an account specifically for your savings goal, whether it be a car a house, business or your future. These accounts can be set up so a percentage of your weekly paycheck is directly deposited. This can also be accomplished by setting up a a pre-tax or Roth 401K account. With these types of programs, some of your “extra” money will go directly towards yoru retirement fund that you will be able to acess around the age of 65. As I’ve written about in previous blog posts, a 401k adds a percentage of your paycheck and in many situations your employer will also match your contribution up to as high as 5%.

By focusing on long term financial goals and redesigning your spending/ saving schedule, you can really improve your financial standing. Having a personal account can also bring more security and allow you agency to act on larger investment opportunities that could present themselves in the future. With this mindset, budgeting becomes a crucial component to your life. You should always be adding your savings or “profit” into your weekly and monthly budgets. You want your personal account to be a guaranteed resource you can draw on, so maintenance and continual deposits are crucial. Your other finances will naturally accommodate and adjust for this extra profit and you will in-turn become more intune and financially savvy.

A further benefit to “paying yourself first” is the secondary psychological effects from having saved money. It can be a great feeling to know that you are now controlling your own financial security and this can in-turn guide even more smart choices for how to save and invest money that comes your way in the future.

Why You Need To Look Into Tax-Free Spending Accounts Now

 If you are currently employed, you should at least take a look and see if your employer can offer you  these spending accounts and you could save more money for yourself and give less to Sam.

Flexible Spending Accounts

“Approximately thirty-five million Americans are covered by a flexible spending account (FSA).* FSAs are employer-based programs that allow consumers to set aside tax-free dollars to purchase medical products and services – from bandaids to smoking cessation programs and tens of thousands of products and services in between (FSAStore.com)”.

This is yet another program offered by your employer so you can make them work for you. Sites like FSAstore.com let users purchase everyday items such as glasses, contacts, thermometers, bandaids, sunscreen etc. basically all out-of pocket health care costs with tax-free money.

Your employer will front you up to $2,550 from your annual salary in the beginning of your plan year. The amount can be up to $2,550, but the one trick here is that you have to use all that money you set aside by the end of the year or else it will be returned to the employer. So, you have to hedge your bet that you will use the allotted money within the year time period. (FSA Calculator)

If you normally buy the many products approved for flexible spending accounts, then this is a great program and can save you lots of money (up to $1009.80). Depending on your employer, they may offer you one of two options:

  1. You may receive a “grace period” where you can get up to 2.5 extra months to use the money in your flexible spending account, or
  2. You may be allowed to carry over up to $500 per year to use in the following year (healthcare.gov).

Commuter Benefits Accounts

If you are a millennial living in the city, flexible spending accounts also have good commuter benefits. I know that many New York companies have transportation reimbursement program where they will reimburse you for public transportation (this also applies to all major cities). This can be a great way to use tax-free money for your daily commute. This year, New York City increased subway fare. Even more reason to save as much as $550 (39.6% tax bracket and 116.5/month for MTA subway pass) using your commuter benefit options with your employer. Look into Wageworks.com for more information.

If you haven’t heard of a these spending accounts and are interested in saving money on things you would end up purchasing anyways I strongly recommend you look into a tax-free.

Sources:

https://www.healthcare.gov/flexible-spending-accounts/

https://www.fsastore.com

3 Resolutions To Get Your Finances In Shape This Year

It’s the start of the year all over again. “New year, new you,” you’ve heard it a million times. Everyone says it. The time to change things around and turn over a new leaf, form better habits and start living a more fulfilled life, or so you think. Everyone wants a strong body, a fit mind, to worry less, love more blah blah blah. Well what about a fit wallet? Maybe this year, it is time to start building a sturdy base for financial success that will carry you through your life. Why don’t you make this year about ramping up your PFS (Personal Financial Statement)? This is the year to start seeing less red and more GREEN. I want to share with you some of the resolutions you should make during this new year that can help you get growing!

First and foremost, save money. I cannot stress this enough. Whether it’s in a savings account, checking account, certificate of deposit, retirement account, 401k, etc. If you are only going to do one thing this year that is going to put you on the path to saving, open one of these accounts. Even if you only have a little to save, just the act will make you feel better about your future. Furthermore, if you can constantly contribute you will soon watch your money grow and mature, your financial self esteem will increase and you will become more proud of yourself and more confident in your ability to save. Start this habit NOW, so it can become second nature.

Dabble in investments. Saving money is important, but it won’t make you rich. You need your money to work for you. This is another crucial process necessary to grow your wealth. You need to make smart investments with your money, investments that will grow and give you good returns in your future. Examples of smart investments include opening a brokerage account for trading stocks, investing in business projects, friends businesses, your passions, land, properties etc. If investing is too scary of a step at this point, do some research! Learning about different opportunities can help you get your foot in the door. Read a book that will increase your knowledge in the subject or ask friends, family and colleagues about their investing experiences. Knowledge is power and the more you know the better your decision will be regarding certain investments. A book I strongly suggest above the others is ‘Rich Dad, Poor Dad’ if you haven’t read it already. It will change the way you think about money and wealth for good.
The last resolution you need to stand by is ridding yourself of impulsive spending. Take control of your money and your wallet. This is by far one of the most important resolutions because it can impact a lot of your everyday decisions. Make a list and take a hard look at what you spend, what you need and what you can live without in 2015. Do you need a Starbucks coffee everyday? How about a $5 breakfast sandwich? Can you bring your own lunch instead of paying $11/day? Do you actually need to buy new shoes every month or go shopping every weekend? Can you save by eating in? Why don’t you try cooking, it might save you money and calories! Why don’t you try fixing things that are broken or torn instead replacing them? Get creative with your life. Learn to create things instead of buying them. You are more able than you think. Don’t buy artwork for your apartment, make your own art. Stop spending money when you don’t have to or can do something for less. As the millennial generation we tend to fix problems by throwing money at them. Learn to take control of your problems and try solving them yourself before you open your wallet or pull out your card. Buy simpler foods, use less resources, buy a bigger blanket and use less heat at night. Become a minimalist and get rid of excess. Only spend money that you have and not money that you borrow. Leave your credit card at home. Once you do this, go back to the first resolution I mentioned and start saving your money!

Why you don’t have to be Gordon Gekko to Invest in the Stock Market

Before I really understood the stock market, I always assumed investing was reserved for highly intelligent finance geeks, who read textbooks on the in’s and out’s of trading. As if they specialized in a secret science, an opportunity only available for the privileged that had the wealth needed to invest and grow. Like my unrealistic, childhood dream of becoming a celebrity, the thought of trading stocks was always desirable, but always seemed unattainable. However, after attending Bentley University and living amongst many other finance majors for the first time, I started to understand what it actually meant to trade different securities in the marketplace.

One of the biggest game changers was when I realized that I didn’t have to be a chic trader on Wall Street, finance professional or an economics professor to trade stocks. Really anyone can do it, and I mean everyone. Even you! All you really need is a computer, access to the Internet and about $200 dollars to invest. I was very unaware of just how accessible the stock market was. My classmates were pouring money into these brokerage accounts, buying and selling stocks in the dorms, during class and even on their smart phones walking around campus. My intrigue spiked one day, when my friend told me he had been paying off his college tuition by trading securities. He was very successful in his endeavors and had even bought a car with some of his yearly proceeds (not everyone is this successful). After that I knew I had to start putting money aside so I could finally take a chance of my own, and invest myself in the market. I told myself that even if I completely failed and lost everything, it would be a great learning experience. The decision proved to be worthwhile.

My first step, which was a very important one, was to choose the right brokerage online. Obviously I had seen various commercials and advertisements for brokerages of these types, but I wanted to do some comparison before I settled. It is important to choose a company that caters to your exact personal investment needs. This is especially important because every time you trade, you have to pay a percent fee known as commission. Commission is a rate fee that is tacked on to the cost of purchasing or selling stock, and every company has a different commission rate. This rate also tends to vary depending on stock type and/or amount invested. Investors also have to pay for the options in addition to the account, such as consultations, personal attention, branch locations, etc. These additional costs can add up, so it is important to keep all of this in mind when figuring out a brokerage to use. there are many sites that can give you a breakdown of pros and cons for each site.

As a millennial we aren’t the most trusting people when it comes to other people handling our money so I skipped out on a brokerage house that offered expensive advice. I wanted to learn about the market myself. We have an endless heap of knowledge known as the internet at our fingertips. I just figured I would research all the stocks myself and this would help me understand the market better and further my knowledge. Also with such low commission rates it makes sense for us millennials because we don’t have all this extra money to just toss around, the fees do tend to add up if you trade a lot.

What I learned after my first few weeks of trading was that once you put some skin in the game, you are more motivated to learn and understand where your money is going and how the system works. It was definitely one of the big motivating factors. You tend to watch the news more and pay attention to worldly events and the market. I always wanted to know what the market was doing. You will quickly learn that stock prices are more heavily influenced by the news rather than how the company may actually be doing according to numbers. So if you pay attention you can make predictions on when you may want to buy a certain security or sell, sell, sell.

The first $200 I ACH’d into the platform bought me a learning experience that I really don’t think I could’ve gotten anywhere else. It was worth every penny. This blurb of an article is just a little piece of insight to get anyone who is thinking about trading stocks or learning more about the process to consider the benefits and the knowledge that you can gain from learning to invest and what I wish someone told me before I knew anything about investing. Good Luck!

Why You Need The App Venmo Now

So if you haven’t heard of Venmo, stop reading and look it up right now. What do you think? Every one of us millennials should be using Venmo all the time. Venmo is a practical smart phone app that allows for friend groups to keep track of finances and pay each other back instantly. Venmo is linked directly to a bank account of choice, allowing for rapid money transfers from account to account with a click of a button. Just think about how much easier this will make your life. An app like this takes the awkwardness out of IOU’s and the ‘you owe me this from god knows how long ago’ situations. With Venmo, you can split bill with your buddies, break up grocery costs with your roommates, taxi fare, drinks, dinners, shopping etc. There is even a part of the app that lets you request money owed. This is like a virtual IOU reminder for your friends letting them know how much they owe. Having Venmo is like having electronic cash right in your pocket, and the best part, payments can be accurate, down to the exact cent.

Although Venmo may not directly save you any money, considering the fact that being a mooch is no longer an option, it does allow you to be more responsible with your finances. Another benefit to the electronic component of the payment system is that all transactions are listed on your online banking account website, making spending tracking easy, especially when using mint.com as well or other budgeting resources.

Another great feature of the app is it links to your Facebook account as well. This means that there is a social component to your account as well. With every transaction you are able to send a message or details of the payment that can be posted publicly or kept private. Usually my roommates and I try and one-up each other with how ridiculous and funny we can make our comments. Facebook also makes it easy to find the people you need to pay back because your Facebook are also your Venmo friends.

Venmo will save money in the long run and allow you and your friends to be more stringent. You can keep tabs on your electronic finances. When everyone has the app, paying the bill is only as hard as drunk-texting. And we millennials have gotten very good at that. So go, download this app if you don’t already have it. You won’t regret it.