We want you to make better decisions. You may find links on this page that will take you to partner websites. This may lead us to earning a referral commission. Do you need money now? See the following for more information.
How we make money.
This quote by Shaang Saavedra, panelist at Moms & Money in May may have rung in your ears:
She said, “Money’s like a knife.” It can be deadly if you misuse it. It will provide you with food for the rest your life if you use it well.
It sounds scary. It’s not. You will be able to use it in a way that suits your goals the more you learn.
NextAdvisor was established one year ago this month in partnership with TIME to assist readers in taking control of their money in one of the most difficult times in recent history. It has been complicated. Our latest national survey shows that the majority of Americans still feel anxious about money after a year of long-term unemployed, unprecedented stimulus spending, numerous financial cliffs, and a year of severe economic hardships. Many of us have struggled with the legacy of racism, discrimination, and inequity that pervade our financial system as well as every day money transactions. The housing market has gone insane.
We’ve remained focused on the small, specific actions that you can take now, through all of it.
Saavedra said, “You’re only learning.” “You are just collecting data about how you behave in the past. We then take the next step, little by little. We are a bit afraid to change our mindset.
We brought 50 smart money moves last year. Here are 40 expert-approved ways that you can take control of your finances today, even if it’s scary. It is time to move.
Illustrations by Elisa Faye
Purchase an index fund
Where would you invest $500 if you only had $500 right now? An index fund is the answer. This fund is a large group of stocks designed to track the whole market. This strategy allows you to bet on all companies, not just one. Another advantage of index funds is their low fees. Study after study has shown that index funds outperform high-fee stockpickers. It’s easy.
Create a passive income stream
It doesn’t need to be impossible to make money while you sleep. It’s easier than ever to make passive income, and our NextAdvisor contributors have been making a living. You can improve your financial situation by looking at ways to increase income. You can count as one investing in the stock market on your own or through an 401(k) plan. Jannese Torres Rodriguez, a contributor to this article, has listed seven other options that you might not have thought of. She has made money from each one.
Find your “freedom gap”.
This number could also be called “the gap between your monthly incomes and your monthly expenses”, but that’s not as entertaining. The freedom gap is a great way to get to the point. This strategy is to determine how much money you have left each month after all your bills are paid. Once you have that number, $750, you can use those funds to help you reach your goals. 250 dollars could be used to pay off debt and $250 towards savings. $250 can go toward index funds investments. $250 would go toward paying off existing debt. $250 would be used for investment. The greater your freedom gap, and the more you can accomplish — the more power you have and the more money you can build wealth and eventually achieve financial independence. Credit to Mahlet Amaha, a NextAdvisor contributor and creator of @blackwomxnarewealthy, for the turn of phrase.
Name your beneficiaries in one hour
This is the gateway drug to estate planning. 60% of Americans have never created a will. This is partly because it can be daunting. Jill Schlesinger is a NextAdvisor contributor and a CFP. There’s an easier way to start if you want to make a winning move today. It is easy to name a beneficiary for your financial accounts (e.g. 401(k), 403(b),s traditional and Roth IRAs and brokerage accounts) online in less than 15 minutes. You have peace of mind: even if there is no will, naming a beneficiary on your financial accounts will ensure that your assets are not subject to legal probate and will go directly to the person you choose.
Download YNAB or one of these apps
Any help is welcome. A good app will help you manage your money and integrate financial management into your everyday life. Personal Capital allows you to track your networth for free and provides graphs and charts that help you visualize your goals. Acorns is an easy way to get started investing. YNAB, also known as You Need a Budget is a favorite among our experts and contributors. You can use it to create a zero-based budget, which is a great way to reduce expenses and increase discretionary income. You can get a free trial version.
Find out if your salary is too low…
Do you feel comfortable having an awkward conversation? NextAdvisor contributor Erin Lowry asked seven career- and negotiation experts what secrets they had for negotiating a better salary. They all agreed that it was important to have information on the salaries of your peers and colleagues. Sometimes, asking is the best way to find out. These conversations can help you determine if you are underpaid and provide the information you need to support your case. Lowry has a copy-and paste script that can help you break the ice.
Know your value
Women make an average of $.82 for every dollar that a man earns. This gap is even wider for Latinas and Black women, as well as Native American women. For Vanessa Menchaca-Wachtmeister, a tech professional who managed to double her salary in two years, that statistic inspired an aggressive negotiation mindset. “The real game-changer was seeing through the female feeling that I’m not worthy of my money and going hard with my negotiations,” Menchaca-Wachtmeister said during a Latina Women on FIRE event hosted by NextAdvisor. I imagined it as this: How would a straight white male, who is the king of the world, take on this challenge? You can read on to learn her negotiation strategies.
We knew that we had to download this controversial trading app, which became one of Apple’s most downloaded apps of the year. Farnoosh Turabi, a financial journalist who hosts the podcast “So Money,” was asked to share her experiences with Robinhood over six months. The app is fun and easy to use but it’s focus on short-term trading instead of long-term investing will be costly. A low-fee brokerage like Vanguard is a better option for investors who have time and compound interest.
Calculate your FIRE number
They are known as the million-dollar babies. NextAdvisor spoke to two mothers who have invested so early for their children that they are virtually guaranteeing their retirement. The key is compound interest: even a small investment can grow exponentially over a long time. Contributor Mahlet amaha plans on investing her $2,000 Child Tax Credit each year in a brokerage account with her 2-year old son as the beneficiary. Even if she ends her contribution at 18 years old, the $36,000 contribution will grow to $8 million by the time her son reaches 65. Take a look at the math. Next, read Financial Advisor Dominique Broadway — whose 18 month-old daughter Dawsyn is currently on track to become a millionaire by age 16 — for more information on how you can get started.
Subscribe to the Money Newsletter
Get good money advice. Email newsletters are growing in popularity. Some of our favourite financial minds are sending you free advice and news straight to your email. NextAdvisor contributor Jill Schlesinger’s “Jill on Money” is a favorite because of its relatable questions. The Wall Street Journal offers an email challenge that allows you to interact with your money. Each week, there are prompts. Find out our top 10 favorite websites. The NextAdvisor newsletter is also a good option.
Use your airline miles
You may be thinking about going on vacation again and you are aware that airfare prices have risen back to pre-pandemic levels. It may have been some time since you checked the balances on your points and miles programs. We analyzed the data on Southwest, American Airlines, United and Delta and found that the value of miles earned with these four airlines ranges from 1.2 to 1.5 cents. This will help you plan a trip to maximize your miles.
Learn more about crypto…
Most financial experts agree that investing in cryptocurrency is too risky to recommend without a lot of caveats. Everyone agrees that you need to learn more about cryptocurrency. Digital currencies have the potential to disrupt our financial system and change the way we use money every day. If you are “crypto-curious” about digital currencies and want to find out if there is a place in your long-term financial plan, you should first know what you’re purchasing. It’s a great place to start is learning about blockchain technology, which underlies all cryptocurrency.
Ask yourself these questions.
You might be searching for ways to add crypto to your investments if you have gone from crypto-curious and crypto believer. Financial experts offer some guidelines. The volatility of crypto and its lack of a track record suggest that it should not exceed 5% of your portfolio. This is only if you have checked other boxes, such as contributing to traditional retirement savings or getting out of debt. These four questions will help you determine if you are ready.
Contact your auto insurance company
It’s worth looking at your fixed monthly expenses once in a while to see where savings can be made. If you haven’t called your auto insurance in over a year, this strategy might be worth a shot: Call them and ask for a low-mileage discount. Many people don’t drive as much as their policies believe. You might not even need to call. Jannese Torres Rodriguez claims she was able update her annual mileage online and receive immediate savings. She says, “I believe there’s a lot room for negotiation.” “The last thing they want right away is to lose you business.”
Verhandeln you bill
Did you know that you can negotiate your internet bills? Rent? How much are medical bills? Many financial transactions can be negotiated if you know the right person to ask and how to ask. This is a lesson that we learned last year after the COVID-19 pandemic. Many banks and lenders were willing to offer more favorable terms to customers who had been affected. Erin Lowry (author of the Broke Millennialbook) spoke to three people who negotiated a bill last summer and asked them how they did it. These are their top tips.
Make an emergency fund…
While personal finance is personal, there are some things that cannot be changed. According to all experts, financial wellness is built on the principle of saving money for unexpected events or opportunities. It is a good idea to save a few months worth of expenses in high-yield savings accounts, so that it can earn interest until you actually need it. Your emergency fund will help you keep your finances in order.
Perhaps one for your parents?
Protecting our financial well-being is not enough for some people. We want to help our parents and other members of our community when they are in need. Jannese Torres Rodriguez, a Latina money expert, was a frequent contributor to NextAdvisor’s article about a family emergency fund. She discovered a powerful financial tool that helped her and other women of colour uphold their values of community support, without derailing their money plans.
This is one of those items that is not mandatory but highly recommended. While renters insurance does not cover your apartment or house, it will protect you and any belongings in it. Standard policies will cover you and your belongings “if anyone becomes injured in your apartment or there is a break-in or theft, or other incidents.” Your renters policy will cover you if your house is broken into or your dog bites another person. This comes at an average monthly cost $42 per month.
Whole life insurance is not for you
“If your financial adviser recommends you buy whole-life insurance, then you don’t need one.” Jeremy Schneider, the millionaire behind Personal Finance Club, says that you have an insurance agent. Experts agree that term life insurance is more sensible than whole life insurance. This provides financial protection, but with a lower fixed cost. You can save money and invest at a higher return rate than a whole-life policy. Continue reading to learn more about life insurance and the people who need it.
Calculate your child’s tax credit
This one is for parents: The March stimulus package included a new, improved Child Tax Credit. This one, unlike the previous version will partially be paid out in cash throughout 2019. For tax year 2021, families who are eligible will receive up to $3600 per child. Half of this amount will be issued prior to the end of the calendar year. Take a moment to determine how much money you owe and what you plan to do with it.
This calculator is saved for later.
To believe compound interest, you must first see it. Investor.gov’s calculator is the best way to see how your money grows over time. You can enter a starting investment and any monthly contributions. Then, you will instantly see how compound interest will multiply your investments over time. You can use the numbers to calculate how much you should be investing each month to reach your FIRE goal or other goals. Keep in mind that index funds which track the stock market have historically provided a 7% annual rate of return.
Open a Roth IRA
You can find many accounts that help you invest. But a Roth IRA is different. Any money you put in it will be tax-free for life, as long as you follow certain conditions. This means that all compound interest earned is yours to keep without capital gains taxes. NextAdvisor contributor Rebecka Zvaleta is our resident Roth ambassador. She explains why she loves them so deeply.
Invest in your contributions
This is a beginner’s mistake that many money experts have pointed out to us. We feel compelled to share it. Investing involves two steps: First, you contribute funds (such as to a 401k, traditional or Roth IRA or brokerage account) and then you invest these funds. Tori Dunlap, 27, says that without the second step, your money will be in “financial purgatory”. She is on track to retire with $6 million in her investments. You don’t have to be stuck choosing investments. Instead, buy an index fund that tracks the entire market or a target fund that is based on your retirement date.
Learn how to invest
It takes practice to master it. The stock market is a clear path to wealth. With persistence and the right accounts, an index fund investor can almost guarantee to be ahead. Although it is possible, it takes some time and effort. We have compiled our top online investing tutorials and courses so that you can browse them. There are many options available, some of them free. Find out which learning method is best for you.
Plan to pay off student loans
Due to COVID-19 policy changes, federal student loans have been in an amazing state of limbo over the past year. There are no payments due or interest accruing until September 30, 2021. Millions of people have had the opportunity to breathe easier and make more money, while others used the interest freeze as a way to increase their principal payments. The freeze could be ending soon and student loan forgiveness is unlikely to increase. It’s time to gather all your information and create a plan.
Follow a mom
Cool mom. We introduced you to 10 financial-savvy online creators, who discuss all things parenting as part of the “Moms & Money” digital event. Dyana King (@moneybossmama) will show you how to create a budget for the month and invest for your kids. Nicaila Matthews is a side hustle professional. Farnoosh Turabi, our friend, is a financial expert and has written about how to raise spoilt brats. You can add any of these photos to your Facebook feed and get some great advice.
The $1 rule will save you money
It can be difficult to cut expenses without feeling like you are doing some form of self-torture. One of our contributors discovered a way to cut back on her spending, without having to sacrifice the things she loves. The $1 rule. Bernadette Joy, debt coach, explains that she allows herself to buy anything she wants as long as it costs $1 per use. She’ll wear the sneakers once per week for a whole year. This sounds good. A winter coat for $75 that can be worn only a few times per season? It’s not so easy. Try it to see if it works for you.
Receive a large, fat welcome bonus
We shouldn’t get caught up in the complex world of credit card points earning and usage. Some offers are simply a good deal. Chase Sapphire Preferred(r), Card card recently offered a new welcome bonus. The travel card now offers a 100,000-point bonus to those who spend $4,000 in their first three months. If you have good credit and would be willing to spend that amount anyway, we’ve got a story about creative ways you can get those points for hotel stays and travel.
Start a joint account. Only one account is required.
A joint bank account is a great way to divide expenses between couples who live together. Suze Orman says that this is not the end. NextAdvisor spoke with Orman last month to discuss her personal experience and said that couples should not “ever, ever, never” combine their finances. Instead, she suggests that each partner contributes based on their income to a single joint account for shared expenses. Tori Dunlap (27-year-old founder and CEO of Her First $100k) says that having your own money can be empowering. She says that it strangely makes you feel more confident in your relationship.
Subscribe to the Money Podcast
Listen up. Podcasts about money are the perfect way to have a one-sided conversation. Listening to other people’s money stories, mistakes and successes is a great way to learn about them without having to reveal anything about yourself. We considered a variety of topics and styles when compiling our list of the top money podcasts. Tiffany Aliche and Mandi Whiteruff host “Brown Ambition”, a lively, often funny chat about careers, entrepreneurship and other topics. BiggerPockets money focuses on real estate investing. Farnoosh Torabi, our host, interviews high-profile guests each week on “So Money.”
Create a “noodle budget”.
It’s not something you hear all the time, but Tiffany Aliche “the Budgetnista”, explains why it makes sense. She refers to a noodle budget as the minimum amount you can spend every month. It’s like eating Ramen every day. Aliche states that knowing this number is a game changer because it helps you understand what you really need and what you can afford. You can reduce your spending in times of financial uncertainty or financial distress. There’s a middle ground you can find between your noodle budget, your regular spending, and what you call “getting a little of your noodles on.”
Start a side hustle
Jannese Torres Rodriguez is our favorite side hustle guru because she doesn’t make excuses. There are many ways to earn extra income. You can save money, pay off your debts, or even become financially independent. What’s stopping you? We asked and you replied. Jannese shares her answers to six most common reasons people don’t want to start side hustles. These include “I don’t have the time” and “I want passive income.” She also created a chart that included 15 ideas for starting a side hustle. You can see? There are no excuses.
Talk with your dollars
Recollecting this year’s fight for social justice reminds us how powerful our collective voices are. When we spend money, our dollars speak for us. Erin Lowry, a contributor to this article, researched the best ways to support the causes we care about through our daily spending. Lowry suggests buying local businesses, particularly those owned by BIPOC. Companies that support causes you care about can be found, such as Patagonia which donates 1% of its sales for environmental causes. AmazonSmile can be used to automatically trigger charitable donations every time you shop on Amazon.
Find your “Why”
The number one priority in your quest for success is to define what success means to you. Katia Chesnok (32-year-old financial advisor in Miami) advises that this is the best way to go. She paid off $40,000 in just 18 months after hitting an emotional breaking point. Chesnok defines success as having passive income and enough money to support her family. Chesnok suggests that you visualize your future life after you have achieved your goals to help you find your “why”. What are you doing this for?