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MoneyWise Matters is a weekly blog published each Wednesday by the Office of the Indiana Secretary of State. Here we discuss money related topics including; debt reduction, budgeting, saving strategies, scam alerts, investment fraud prevention and investor insights. You don’t want to miss out on this helpful information, hit subscribe for email updates (above) so you’ll be notified when we publish a new post.  


5 Reasons Why Your Budget Isn't Working

5 Reasons Why Your Budget Isn't Working

 

By Kelly Griese

Wednesday, September 18, 2019

First things first… why do we budget? For many people, budgeting is a scary word. For some of those people, the idea of doing math is the scariest part. But budgeting is less about math and more about record keeping and self-control. The basics of budgeting are easy. 

Simply put, a budget is a plan for your money. It’s a document of money coming in and money going out. Keeping track of your money’s movement can help you avoid spending more than you earn. It can also help you plan for long- and short-term goals. Sometimes it can be hard to plan ahead, but doing so now can help you avoid the horrible feeling of NOT being able to make ends meet. 

If you have never budgeted before, a good way to start the process is by printing our free budgeting worksheet and instruction guide. You can find the PDF here

If you’re struggling with budgeting, take a look at some of the common problems below. 

 

1) You left zero room for error. 

A lack of flexibility in your budget, especially when you first begin, is sure to lead to problems. Those problems can include emergencies. If your budget doesn’t include contributions to an emergency fund, make that change immediately! Once you solve that problem, add a little wiggle room to some other categories of your budget. Expenses tend to rise and fall, and your budget needs to be able to roll with the punches. IF you spend less than normal one month, put the surplus into savings. It will come in handy the next time you go a little over budget.

2) You haven’t clearly defined your goals.

Without goals, how can you possibly hope to prioritize your spending? Most budgets require some degree of sacrifice. Figure out what it is you want to accomplish with your money and work toward those goals. The rest of your expenses will likely need some trimming. If saving for higher education is a must, how much do you really need to spend on entertainment? If your career aspirations require you to be up-to-speed on current events, maybe you do need cable, internet, and a daily newspaper, but do you also need to dine out for lunch every day of the week? Probably not.

3) You forgot you have a personality. 

Are you a saver? Are you a spender? Your budget is unique. That’s why you can’t simply copy someone else’s. It should match your personality and lifestyle, as well as your goals. If you are the sort of person who enjoys shopping and has a casual attitude about money, then be sure to build a cushion into your discretionary spending category. If your budget includes other people, such as a spouse and children, you’ll need to take into account all of their personalities as well.

4) You aren’t being honest with yourself.

Once you commit to budgeting, you absolutely must keep track of every cent you spend… especially in the beginning. Until you have a realistic picture of your spending habits, you won’t know how much of your income should be devoted to each budget category. The place where most people slip up is with their “discretionary” spending. You probably have your rent or mortgage payment memorized down to the last penny. It’s likely our biggest bill each month, and paying it is required. But what about all those little purchases you make each day? A morning coffee, an afternoon snack, a trip to the movies with friends, or an impulse purchase on Amazon. Discretionary spending accounts for all the stuff you don’t need. It also accounts for all the stuff you are LIKELY to buy.  Be honest with yourself. Keep good records of your spending the first few months you budget. It will help you identify problem areas and work to correct them. You can print a copy of our spending log to begin the process. The spending log can be found here

5) You didn’t pay yourself first.

Saving for the future is an essential part of every budget. This can be hard when you’re barely making ends meet. It requires discipline. It also requires you to think beyond your need for immediate gratification. We crave the “high of the buy.” Spending money now can make us feel good in the short term, but in a few years, when we really want something big, the money won’t be there. If you’re still working when you’re in your 80s, you’ll regret not paying yourself first. Set aside room in your budget for saving and investing, no matter how small, and work on growing that category over time. 

Be sure to check out the Personal Finance 101 section of the Indiana MoneyWise website to learn more about budgeting. There you will also find information about credit cards, debt management, retirement planning, investing, and more. 

Recent Posts


Recent Posts

5 Reasons Why Your Budget Isn't Working

5 Reasons Why Your Budget Isn't Working

 

By Kelly Griese

Wednesday, September 18, 2019

First things first… why do we budget? For many people, budgeting is a scary word. For some of those people, the idea of doing math is the scariest part. But budgeting is less about math and more about record keeping and self-control. The basics of budgeting are easy. 

Simply put, a budget is a plan for your money. It’s a document of money coming in and money going out. Keeping track of your money’s movement can help you avoid spending more than you earn. It can also help you plan for long- and short-term goals. Sometimes it can be hard to plan ahead, but doing so now can help you avoid the horrible feeling of NOT being able to make ends meet. 

If you have never budgeted before, a good way to start the process is by printing our free budgeting worksheet and instruction guide. You can find the PDF here

If you’re struggling with budgeting, take a look at some of the common problems below. 

 

1) You left zero room for error. 

A lack of flexibility in your budget, especially when you first begin, is sure to lead to problems. Those problems can include emergencies. If your budget doesn’t include contributions to an emergency fund, make that change immediately! Once you solve that problem, add a little wiggle room to some other categories of your budget. Expenses tend to rise and fall, and your budget needs to be able to roll with the punches. IF you spend less than normal one month, put the surplus into savings. It will come in handy the next time you go a little over budget.

2) You haven’t clearly defined your goals.

Without goals, how can you possibly hope to prioritize your spending? Most budgets require some degree of sacrifice. Figure out what it is you want to accomplish with your money and work toward those goals. The rest of your expenses will likely need some trimming. If saving for higher education is a must, how much do you really need to spend on entertainment? If your career aspirations require you to be up-to-speed on current events, maybe you do need cable, internet, and a daily newspaper, but do you also need to dine out for lunch every day of the week? Probably not.

3) You forgot you have a personality. 

Are you a saver? Are you a spender? Your budget is unique. That’s why you can’t simply copy someone else’s. It should match your personality and lifestyle, as well as your goals. If you are the sort of person who enjoys shopping and has a casual attitude about money, then be sure to build a cushion into your discretionary spending category. If your budget includes other people, such as a spouse and children, you’ll need to take into account all of their personalities as well.

4) You aren’t being honest with yourself.

Once you commit to budgeting, you absolutely must keep track of every cent you spend… especially in the beginning. Until you have a realistic picture of your spending habits, you won’t know how much of your income should be devoted to each budget category. The place where most people slip up is with their “discretionary” spending. You probably have your rent or mortgage payment memorized down to the last penny. It’s likely our biggest bill each month, and paying it is required. But what about all those little purchases you make each day? A morning coffee, an afternoon snack, a trip to the movies with friends, or an impulse purchase on Amazon. Discretionary spending accounts for all the stuff you don’t need. It also accounts for all the stuff you are LIKELY to buy.  Be honest with yourself. Keep good records of your spending the first few months you budget. It will help you identify problem areas and work to correct them. You can print a copy of our spending log to begin the process. The spending log can be found here

5) You didn’t pay yourself first.

Saving for the future is an essential part of every budget. This can be hard when you’re barely making ends meet. It requires discipline. It also requires you to think beyond your need for immediate gratification. We crave the “high of the buy.” Spending money now can make us feel good in the short term, but in a few years, when we really want something big, the money won’t be there. If you’re still working when you’re in your 80s, you’ll regret not paying yourself first. Set aside room in your budget for saving and investing, no matter how small, and work on growing that category over time. 

Be sure to check out the Personal Finance 101 section of the Indiana MoneyWise website to learn more about budgeting. There you will also find information about credit cards, debt management, retirement planning, investing, and more. 

The Best Way to Save for Higher Education

The Best Way to Save for Higher Education

 

By Kylee Hale

Wednesday, September 11, 2019

The Best Way to Save for Higher Education 9.11.19 postWhether you’re a parent or you yourself are looking to obtain a degree it's easy to get sticker shock from reviewing education costs. With a price tag that's constantly rising, it may seem impossible to pay upfront or even someday pay off financial aid loans. Future students should apply for scholarships, grants and even consider schools with lower tuition fees. But two things ring true in nearly every situation - it's never too early or too late to start, and a dollar saved now is better than one borrowed later. With this, I want to bring light to the beauty of Indiana’s 529 Plans, which might just be your best friend in paying for higher education.  

Named for Section 529 of the federal tax code, 529 Plans are to post-high school education as 401(k)s and similar options are to retirement. 

Earnings on 529 investments are tax-deferred, and become tax-free when used to pay for qualified higher education expenses.

Indiana offers one of the most generous up-front tax incentives for 529 contributors, Hoosiers can get a 20% credit worth up to $1,000. This credit is available to each taxpayer that contributes, even better, the credit is available to account owners and third­party gift contributors, meaning parents, grandparents and others can all pitch in and reap some of the benefits.

529s are also incredibly flexible. Qualified expenses include tuition, room and board, books, fees or computers at any school that's eligible to receive federal financial aid. Whether your child wants to become a doctor or a skilled tradesperson, 529 savings can be used to help them pursue their goals. But one thing to note, is that 529 savings cannot be used to pay off student loans, so it’s better to save up before and take advantage of the tax benefits. 

Perhaps most importantly, 529 Plans are affordable and easy to use, with a variety of investment options and strategies to meet savers' needs.

Here in Indiana, the CollegeChoice 529 program consists of three different Plans:

CollegeChoice Direct CollegeChoice Advisor CollegeChoice CD
The Direct Plan features quick online account setup and a low minimum contribution of $10. The Year of Enrollment portfolios are set to automatically grow more conservative as a beneficiary gets older. The Advisor Plan offers access to a wider variety of investment options. As with any financial service involving professional assistance, the Advisor Plan comes with slightly higher fees. The CD Plan resembles a traditional bank product in that it offers principal protection. Its streamlined lineup of FDIC-insured options includes one-, two­and three-year fixed rate certificates of deposit (CDs) and a savings account.

All three of these 529 Plans share the same core benefits mentioned above - and all three represent a meaningful investment in a child's future. 

The cost of higher education isn't going to suddenly plummet overnight, but when used properly, 529 Plans can help parents and all students prepare for the significant challenge of financing it.

For more information about the CollegeChoice 529 Direct Savings Plan, call 1.866.485.9415 or visit www.collegechoicedirect.com to obtain a Disclosure Booklet, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. 

For more information about the CollegeChoice Advisor 529 Savings Plan, contact your financial advisor, call 1.866.485.9413 or visit www.collegechoiceadvisor529.com to obtain a Disclosure Statement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. 

For more information about the CollegeChoice CD 529 Savings Plan, call 1.888.913.2885 or visit www.collegechoicecd.com to obtain a Disclosure Statement. The Federal Deposit Insurance Corporation (FDIC) generally insures, with respect to each FDIC-insured institution, deposit accounts that are held in the same right and capacity up to the maximum amount set by federal law, currently $250,000. 

 

Please Note: before you invest, consider whether your or the beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state's qualified tuition program. You should also consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You may also wish to contact directly your home state's 529 college savings plan(s), or any other 529 plan, to learn more about those plans' features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The above is adapted from the Indiana MoneyWise e-magazine March 2018 as written by guest author Troy Montigney. Click here to download a PDF version of the full e-magazine.

How to Spot a Con Artist

How to Spot a Con Artist

 

By Kelly Griese

Wednesday, September 4, 2019

Con artists are pretty clever. They prey upon our emotions, hopes, dreams and fears. It is important to understand that they are very good at what they do. Duping people is what they do for a living. Here are some red flags that can help you spot a con artist and avoid falling victim.

  • The seller is not licensed or registered. You can easily check with the Office of the Indiana Secretary of State through our searchable databases on the Indiana Securities Division's website. Individuals and firms in the financial services industry must meet certain requirements. Taking time to research a seller and their investment offer could save you in the long run.
  • No written information is provided. Ask for a prospectus. It is a legal document that provides details about an investment offering. The prospectus or "offer document" will contain the facts you need to make an informed investment decision.
  • The seller refuses to take no for an answer. You should be suspicious of any seller who pressures you to "act now" or says this is a "limited time offer." If they’re pushing you to make a decision immediately, it is probably because they don’t want you to find out they are selling a scam.
  • The seller is hesitant to answer your questions. Con artists seem to have an answer for everything, but if your questions make them uncomfortable, it is best to walk away. Ponzi schemer Bernie Madoff once said he only turned people away when they asked too many questions. 
  • They promise high returns with low risk. Returns and risks go up and down together. There is no such thing as a "no risk" investment. All investing comes with some risk attached. 
  • You are asked to keep this "exclusive" offer a secret. Con artists do not want to be caught. Therefore, they pick their victims carefully. They do not want you telling someone who might uncover the scam.

Finally, trust your gut. Many victims report feeling uneasy about the decisions they were making. Just know that if an offer sounds too good to be true, it is!

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