While it's possible to be frugal with many aspects of your lifestyle, there are certain events and possessions that will require you to spend a substantial amount of money. Thus, a wise course of action is to begin saving well ahead of time while thinking about your goals for the future. This way, you'll be able to maintain a stable financial state even when faced with those large expenses. The following are a few major life purchases that you should plan for.
Marriage is a joyous occasion that many people look forward to. However, a wedding can be quite expensive, often costing thousands of dollars. Your family and your future spouse's family will often contribute to covering this, but you should still prepare to spend a good deal of your own money on the ceremony. If you're in a serious relationship and are considering marriage, you should plan where the funds for the wedding will come from and take the necessary actions to accumulate them. It's also crucial to discuss financial matters with your partner, since your property will merge once you get married.
A New Car
Automobiles remain one of the top modes of transportation. As a result, you may want to purchase a new car at some point in your life. Although you may be fine with an old or used vehicle at present, you may one day be motivated by a desire to acquire something nice for yourself or by the practical needs that arise as you raise children. Whatever the case, obtaining a new car is a major life purchase that you should plan for.
In addition to setting aside funds to eventually put towards a vehicle, you should also aim to build you credit score. This is because your credit score will determine your available car loan options. The higher your credit score, the more you may be able to lower your interest rates on your car.
Owning your own residential property is a worthy objective that you may hope to make a reality one day. Ideally, you should save about 20 percent of the total cost of a house before you buy it. This will allow you to make a larger down payment and thereafter face less interest on your mortgage.
As with acquiring a car, the mortgage options that you'll have can change based on how strong your credit score is. You'll want to increase your score as much as possible in the years leading up to buying a house so that you can get more favorable interest rates. In addition to contemplating down payments and mortgages, you must also remember that you'll need to deal with property taxes, insurance, maintenance and repair fees, and sometimes homeowners' association charges.
It's also necessary to hire a real estate agent to help you with the buying process. There are different types of real estate professionals. You should know how to distinguish between buyer's agents and seller's agents so that you can obtain favorable prices on homes as well.
During open enrollment or when you start a new job, you may find that your company offers the chance to enroll in a Flexible Spending Account (FSA - registered trademark). It might seem annoying to have money deducted from your paycheck at first, but it can actually save you money on health care expenses in the long run.
An FSA is an account that takes money from your paycheck and puts it into a special account that you can only spend on certain healthcare items or eligible medical services.
You can use an FSA for copays for visiting the doctor, prescriptions, and even for services like new retainers or glasses. Some of the FSA-eligible expenses you might not even think about include sunscreen, condoms, and tampons.
Parents and children of elderly might be familiar with Dependent Care FSA, a similar pre-tax benefit used to pay for things like after school programs and even adult daycare.
The money taken out of your paycheck is pre-tax, meaning that while you can't spend the money on just anything, if you are able to estimate your medical expenses for the next year, you can avoid paying payroll taxes on up to $2,750.
If you've had your eye on LASIK surgery (eye – LASIK, get it?) you can include extra money in your FSA contribution for the next year and pay no taxes on the money from the FSA you use to pay for the surgery.
Many plans allow you to access the full year's contribution on January 1st. This means you can use the FSA as an interest-free loan for medical expenses. The money is going to be deducted from your paycheck anyway, so why wait?
The big downside to an FSA is that you usually can't change your contribution mid-year. So, if you run out of money in the FSA funds in July, you'll have to use regular after-tax dollars to pay for qualified goods and services.
Conversely, put in too much, and you might be scrambling in December to find eligible expenses to spend the money in your FSA account. An FSA is use-it-or-lose-it – you have to spend all the money that year or poof, it's gone. However, if you have funds remaining in your account at the end of the plan year, there is a grace period of two months and 15 day. That means you have until March 15th to spend money from the previous year.
To decide how much to contribute to an FSA, I recommend a few steps:
- Look at your qualified medical expenses that happen on a regular basis. If you know you're going to have a $20 copay every week for therapy or a $35 copay every six months for a checkup, take note of it.
- Think about any big procedures or items you might want in the next year. If you're thinking it's about time for new prescription sunglasses, be sure to set aside some money for that.
- Do some research about what FSA-eligible items you use regularly and get a rough estimate as to how much you might spend on them. I usually check out the FSA Store to get an idea of the different categories. If you're addicted to a certain lip balm or have been dying to try light therapy for your acne, try to get a ballpark idea of how much you're going to spend next year. I don't know what guy needs to hear this, but you probably do not need that many condoms even if they are tax-free.
- I like to then add a small gross up for incidentals that may pop up (nobody plans on spraining a wrist) and any random expenses you might have (if you have to pay for parking at the hospital or something, you can use your FSA). The specific amount depends on how comfortable you are of running out of your FSA if something comes up and how much extra you can afford to set aside each week from your paycheck.
- Add that all together and that's how much you should set aside in your health care FSA.
Once you have your limited purpose FSA, you can use the FSA mobile app for deadline reminders and eligibility checks.
You can retain hundreds of dollars a year in tax savings by paying your medical expenses with money from your FSA all while keeping you healthy. If your employer offers one with your health insurance benefits, I definitely recommend enrolling. Spend more on your health, and less on the internal revenue service.
We're all taking steps towards helping the environment. Such as recycling more diligently, using reusable bags, and quitting plastic straws.
Luckily, all of these steps don't cost too much money. Turns out, there's another step you can take that actually saves you money. Sounds a little too good to be true, but Arcadia Power can help you cut the cost of your energy bills, all while finding a more green alternative.
There's no catch, no extortionate bills, no 30-year commitment, and no need to install solar panels on your roof. You're probably wondering how this is possible.
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Firstly, Arcadia looks at your monthly bills and determines what your energy usage is. Then, they automatically shop around to find the best monthly rate in your area that's sourced from renewable energy, like wind and solar. They don't change your utility, just get you a more sustainable bill.
Arcadia isn't a power provider, but they work on your behalf to make sure that the energy being proved by companies is being partly sourced from green suppliers, as well as getting you the best deal possible.
50% of your electricity will come from renewable alternatives.
It doesn't cost you anything because Arcadia is paid by your provider after they secure you a green energy supplier.
It only takes 2 minutes to sign up, and it's a totally free service! Acadia's mission is to make green energy sources not only more accessible but more affordable, too.
Whether you're renting or you're a homeowner, Arcadia is an easy way to do more for the environment. And again, it saves you money. Everybody wins!
Everyone knows it's important to build credit, but where do you start?
If you've never had a credit card before, the number of options can be intimidating. Luckily, there are plenty of cards designed specifically for first-timers. Some reasons you may want one of these cards are if you've never had a U.S. loan or credit card under your name, have had one for less than 3 years, or irresponsibly handled your credit in the past. While these cards function the same way as other credit cards (you borrow money from a financial institution to make purchases, then you pay off your debt after a specific period of time), there are a few things that set them apart:
- Low credit limits
- High interest rates
- Limited (if any) rewards
- Upfront fees or deposits
Essentially, these cards are designed to help you learn about credit, build credit, and prove your ability to pay back your credit card company. Here are a few of the best starter credit cards available.
This card offers a cash-back earning rate that's nearly 50% higher than the market average, though it does charge an annual fee, so it's best for people who intend to use it regularly.
- 1.5% cash back for all purchases
- $39 annual fee
- No fee for international use
- Available to people with limited/fair credit
We love this card because it doesn't charge any of the fees for first timers that so many credit cards do. Also, in the first six months of opening this card, you earn 3% cash back on up to $2,500 of gas, grocery, and drugstore purchases.
- APR: 12.65% - 22.65% variable
- Intro purchase APR 0% for first 6 months
- No annual fee
- Foreign transaction fee: 3%
- 1% cash rewards for each $1 spent on non-everyday purchases
- Must have a Wells Fargo bank account and be a student to apply
This is a great option if you're worried about not being approved for a credit card, because no credit check is required to get this card. All that's required is that you're at least 18 years old and can afford a $200+ security deposit, a $35 annual fee, and monthly bill payments.
- 3% foreign transaction fee
- $200 minimum security deposit
- $35 annual fee
- Average APR
This card is specifically designed for people with no credit or very little credit. It's a no frills option that's a very solid choice for building credit.
- No annual or monthly fees
- Potential for a higher limit after 5 months
- 0% introductory APRs
- No foreign transaction fees
This is another simple card great for building credit. Unfortunately, this card does require an initial $200 deposit upon opening.
- No annual fee
- No foreign transaction fees
- Security deposit of at least $200
- Features a dollar-for-dollar match program for all cash back rewards
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