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Apache is functioning normally

February 28, 2024 by Brett Tams

Depending on where you work, you may be able to save for retirement in a 457 plan or a 401(k). While any employer can offer a 401(k), a 457 plan is commonly associated with state and local governments and certain eligible nonprofits.

Both offer tax advantages, though they aren’t exactly the same when it comes to retirement saving. Understanding the differences between a 457 retirement plan vs. 401(k) plans can help you decide which one is best for you.

And you may not have to choose: Your employer could offer a 401(k) plan and a 457 plan as retirement savings options. If you’re able to make contributions to both plans simultaneously, you could do so up to the maximum annual contribution limits — a terrific savings advantage for individuals in organizations that offer both plans.

Key Points

• A 457 plan and a 401(k) are retirement savings options with tax advantages.

• Both plans have contribution limits and may offer employer matching contributions.

• A 401(k) is governed by ERISA, while a 457 plan is not.

• 457 plans allow penalty-free withdrawals before age 59 ½ if you retire, unlike 401(k) plans.

• 457 plans have special catch-up provisions for those nearing retirement.

401(k) Plans

A 401(k) is a tax-advantaged, defined contribution plan. Specifically, it’s a type of retirement plan that’s recognized or qualified under the Employee Retirement Income Security Act (ERISA).

With a 401(k) plan, the amount of benefits you can withdraw in retirement depends on how much you contribute during your working years and how much those contributions grow over time.

Understanding 401(k) Contributions

A 401(k) is funded with pre-tax dollars, meaning that contributions reduce your taxable income in the year you make them. And withdrawals are taxed at your ordinary income tax rate in retirement.

Some employers may offer a Roth 401(k) option, which would enable you to deposit after-tax funds, and withdraw money tax-free in retirement.

401(k) Contribution Limits

The IRS determines how much you can contribute to a 401(k) each year. For 2024, the annual contribution limit is $23,000; $22,500 in 2023. Workers age 50 or older can contribute an additional $7,500 in catch-up contributions. Generally, you can’t make withdrawals from a 401(k) before age 59 ½ without incurring a tax penalty. So, if you retire at 62, you can avoid the penalty but if you retire at 52, you wouldn’t.

Employers can elect to make matching contributions to a 401(k) plan, though they’re not required to. If an employer does offer a match, it may be limited to a certain amount. For example, your employer might match 50% of contributions, up to the first 6% of your income.

401(k) Investment Options

Money you contribute to a 401(k) can be invested in mutual funds, index funds, target-date funds, and exchange-traded funds (ETFs). Your investment options are determined by the plan administrator. Each investment can carry different fees, and there may be additional fees charged by the plan itself.

The definition of retirement is generally when you leave full-time employment and live on your savings, investments, and other types of income. So remember that both traditional and Roth 401(k) accounts are subject to required minimum distribution (RMD) rules beginning at age 72. That’s something to consider when you’re thinking about your income strategy in retirement.

💡 Recommended: 5 Steps to Investing in Your 401k Savings Account

Vesting in a 401(k) Retirement Plan

A 401(k) plan is subject to IRS vesting rules. Vesting determines when the funds in the account belong to you. If you’re 100% vested in your account, then all of the money in it is yours.

Employee contributions to a 401(k) are always 100% vested. The amount of employer matching contributions you get to keep can depend on where you are on the company’s vesting schedule. Amounts that aren’t vested can be forfeited if you decide to leave your job or you retire.

Employer’s may use a cliff vesting approach in which your percentage of ownership is determined by year. In year one and two, your ownership claim is 0%. Once you reach year three and beyond, you’re 100% vested.

With graded vesting, the percentage increases gradually over time. So, you might be 20% vested after year two and 100% vested after year six.

All employees in the plan must be 100% vested by the time they reach their full retirement age, which may or may not be the same as their date of retirement. The IRS also mandates 100% vesting when a 401(k) plan is terminated.

457 Plans

A 457 plan is a deferred compensation plan that can be offered to state and local government employees, as well as employees of certain tax-exempt organizations. The most common version is the 457(b); the 457 (f) is a deferred compensation plan for highly paid executives. In certain ways, a 457 is very similar to a 401(k).

• Employees can defer part of their salary into a 457 plan and those contributions are tax-deferred. Earnings on contributions are also tax-deferred.

• A 457 plan can allow for designated Roth contributions. If you take the traditional 457 route, qualified withdrawals would be taxed at your ordinary income tax rate when you retire.

• Since this is an employer-sponsored plan, both traditional and Roth-designated 457 accounts are subject to RMDs once you turn 72.

• For 2023, the annual contribution limit is $22,500, and $7,500 for the catch-up amount for workers who are 50 or older.

One big difference with 457 plans is that these limits are cumulative, meaning they include both employee and employer contributions rather than allowing for separate matching contributions the way a 401(k) does.

Another interesting point of distinction for older savers: If permitted, workers can also make special catch-up contributions for employees who are in the three-year window leading up to retirement.

They can contribute the lesser of the annual contribution limit or the basic annual limit, plus the amount of the limit not used in any prior years. The second calculation is only allowed if the employee is not making regular catch-up contributions.

Vesting in a 457 Retirement Plan

Vesting for a 457 plan is similar to vesting for a 401(k), but you generally can’t be vested for two full years. You’re always 100% vested in any contributions you make to the plan. The plan can define the vesting schedule for employer contributions. For example, your job may base vesting on your years of service or your age.

As with a 401(k), any unvested amounts in a 457 retirement plan are forfeited if you separate from your employer for any reason. So if you’re planning to change jobs or retire early, you’d need to calculate how much of your retirement savings you’d be entitled to walk away with, based on the plan’s vesting schedule.

457 vs 401(k): Comparing the Pros

When comparing a 457 plan vs. 401(k), it’s important to look at how each one can benefit you when saving for retirement. The main advantages of using a 457 plan or a 401(k) to save include:

• Both offer tax-deferred growth

• Contributions reduce taxable income

• Employers can match contributions, giving you free money for retirement

• Both offer generous contribution limits, with room for catch-up contributions

• Both may offer loans and/or hardship withdrawals

Specific 457 Plan Advantages

A 457 plan offers a few more advantages over a 401(k).

Unlike 401(k) plans, which require employees to wait until age 59 ½ before making qualified withdrawals, 457 plans allow withdrawals at whatever age the employee retires. And the IRS doesn’t impose a 10% early withdrawal penalty on withdrawals made before age 59 ½ if you retire (or take a hardship distribution).

Also, independent contractors can participate in an organization’s 457 plan.

And, as noted above, 457 plans have that special catch-up provision option, for those within three years of retirement.

457 vs 401(k): Comparing the Cons

Any time you’re trying to select a retirement plan, you also have to factor in the potential downsides. In terms of the disadvantages associated with a 457 retirement plan vs. 401(k) plans, they aren’t that different. Here are some of the main cons of both of these retirement plans:

• Vesting of employer contributions can take several years, and plans vary

• Employer matching contributions are optional, and not every plan offers them

• Both plans are subject to RMD rules

• Loans and hardship withdrawals are optional

• Both can carry high plan fees and investment options may be limited

Perhaps the biggest con with 457 plans is that employer and employee contributions are combined when applying the annual IRS limit. A 401(k) plan doesn’t have that same requirement so you could make the full annual contribution and enjoy an employer match on top of it.

457 vs 401(k): The Differences

The most obvious difference between a 401(k) vs. 457 account is who they’re meant for. If you work for a state or local government agency or an eligible nonprofit, then your employer can offer a 457 plan for retirement savings. All other employers can offer a 401(k) instead.

Aside from that, 457 plans are not governed by ERISA since they’re not qualified plans. A 457 plan also varies from a 401(k) with regard to early withdrawal penalties and the special catch-up contributions allowed for employees who are nearing retirement. Additionally, a 457 plan may require employees to prove an unforeseeable emergency in order to take a hardship distribution.

A 457 plan and a 401(k) can offer a different range of investments as well. The investments offered are determined by the plan administrator.

457 vs 401(k): The Similarities

Both 457 and 401(k) plans are subject to the same annual contribution limits, though again, the way the limit is applied to employer and employee contributions is different. With traditional 401(k) and 457 plans, contributions reduce your taxable income and withdrawals are taxed at your ordinary income tax rate. When you reach age 72, you’ll need to take RMDs unless you’re still working.

Either plan may allow you to take a loan, which you’d repay through salary deferrals. Both have vesting schedules you’d need to follow before you could claim ownership of employer matching contributions. With either type of plan you may have access to professional financial advice, which is a plus if you need help making investment decisions.

457 vs 401(k): Which Is Better?

A 457 plan isn’t necessarily better than a 401(k) and vice versa. If you have access to either of these plans at work, both could help you to get closer to your retirement savings goals.

A 401(k) has an edge when it comes to regular contributions, since employer matches don’t count against your annual contribution limit. But if you have a 457 plan, you could benefit from the special catch-up contribution provision which you don’t get with a 401(k).

If you’re planning an early retirement, a 457 plan could be better since there’s no early withdrawal penalty if you take money out before age 59 ½. But if you want to be able to stash as much money as possible in your plan, including both your contributions and employer matching contributions, a 401(k) could be better suited to the task.

Investing in Retirement With SoFi

If you’re lucky enough to work for an organization that offers both a 457 plan and a 401(k) plan, you could double up on your savings and contribute the maximum to both plans. Or, you may want to choose between them, in which case it helps to know the main points of distinction between these two, very similar plans.

Basically, a 401(k) has more stringent withdrawal rules compared with a 457, and a 457 has more flexible catch-up provisions. But a 457 can have effectively lower contribution limits, owing to the inclusion of employer contributions in the overall plan limits.

The main benefit of both plans, of course, is the tax-advantaged savings opportunity. The money you contribute reduces your taxable income, and grows tax free (you only pay taxes when you take money out).

Another strategy that can help you manage your retirement savings: Consider rolling over an old 401(k) account so you can keep track of your money in one place. SoFi makes setting up a rollover IRA pretty straightforward, and there are no rollover fees or taxes.

Help grow your nest egg with a SoFi IRA.

FAQ

What similarities do 457 and 401(k) retirement plans have?

A 457 and a 401(k) plan are both tax-advantaged, with contributions that reduce your taxable income and grow tax-deferred. Both have the same annual contribution limit and regular catch-up contribution limit for savers who are 50 or older. Either plan may allow for loans or hardship distributions. Both may offer designated Roth accounts.

What differences do 457 and 401(k) retirement plans have?

A 457 plan includes employer matching contributions in the annual contribution limit, whereas a 401(k) plan does not. You can withdraw money early from a 457 plan with no penalty if you’ve separated from your employer. A 457 plan may be offered to employees of state and local governments or certain nonprofits while private employers can offer 401(k) plans to employees.

Is a 457 better than a 401(k) retirement plan?

A 457 plan may be better for retirement if you plan to retire early. You can make special catch-up contributions in the three years prior to retirement and you can withdraw money early with no penalty if you leave your employer. A 401(k) plan, meanwhile, could be better if you’re hoping to maximize regular contributions and employer matching contributions.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Source: sofi.com

Apache is functioning normally

February 27, 2024 by Brett Tams

To answer whether a $40,000 salary is good, you need to consider your perspective. For a recent grad in a small town where the cost of living is low, that might be an annual income that pays the bills. But a $40,000 salary is not typically enough for a household to live comfortably in most parts of the United States. To put it another way, a single person can live more comfortably on a $40,000 salary, but a family — with or without children — may find it more difficult.

Rising inflation has made it more challenging to get by on $40,000 in 2022, but this salary is still far above the United States Census Bureau’s poverty threshold for families of up to six people. The $40,000 figure represents earning more than the federal minimum wage ($7.25/hour).

So is $40,000 a good salary? Well, it depends.

Key Points

• A $40,000 salary may be sufficient for an individual in a low-cost area, but it may not be enough for a family to live comfortably in most parts of the US.

• Rising inflation has made it more challenging to live on a $40,000 salary, but it still exceeds the poverty threshold for families.

• Compared to the median household income in the US, a $40,000 salary falls short, but it can contribute to the median household income when combined with a second income.

• A $40,000 salary translates to a monthly income of $3,333.33, a biweekly paycheck of $1,538.46, and a weekly income of $769.23.

• Living on a $40,000 budget requires careful expense tracking, budgeting, debt management, and saving strategies. Location plays a significant role in how far the salary can stretch.

How Does a $40,000 Salary Compare to the American Median Income?

Here’s a look at how earning a $40,000 annual income compares to that of your fellow Americans.

• According to the U.S. Census Bureau, the median household income in 2020 (when data was gathered) just surpassed $67,500.

• More recently, the Bureau of Labor Statistics determined that the median weekly income of a full-time worker (salary or hourly) was $1,037, or nearly $54,000 a year.

While a $40,000 salary falls short of recent BLS definitions of the median personal income, it could successfully contribute to the Census Bureau’s picture of the median household income, when combined with a second income from a domestic partner.

Could this salary be considered good? Consider the following:

• As an individual, you may find that $40,000 is a good entry-level salary.

• Couples living the DINK lifestyle (which stands for dual income, no kids) and who each make $40,000 would be well above the median household income. Plus, they would have the additional costs of raising children as part of their budget.

$40,000 Salary Breakdown

It can be helpful to know what a $40,000 salary translates to as a monthly budget, weekly paycheck, or even hourly rate. This may help you compare career options and budget wisely, not to mention answer that question, “Is $40K a good salary?”

Here’s how it breaks down:

• Monthly income: $3,333.33

• Biweekly paycheck: $1,538.46

• Weekly income: $769.23

• Daily income: $153.85^*

• Hourly income: $19.23^**

^*Based on 260 working days a year
^**Based on 2,080 working hours a year

And remember: That’s before taxes. If you are single and make $40,000 a year, your federal tax bracket is at 12%, but you may also owe state, city, and even school district taxes as well. It’s important to keep that in mind as you plan and assess how to pay bills and save with this salary.

Recommended: What to Do When You Get a Pay Raise: 12 Tips

Can You Live Individually on a $40,000 Income?

It is possible to live individually on a $40,000 income. In fact, you may be able to afford the average monthly expenses for a single person and work on your saving and investing goals.

Your location will have the largest impact on how far your dollars will stretch. Areas with a lower cost of living will likely be easier to afford for an individual on a $40,000 income.

As an individual, you can help your salary go further by looking for ways to save money, like:

• Having a roommate or renting out a room in your house if you own one

• Cooking at home instead of eating out

• Buying a used car or, depending on where you live, relying on public transportation

• Finding a higher-yield savings account, ideally over 1.00% APY

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

Best Places to Live on a $40,000 Salary

If you can afford moving expenses and aren’t tied to a specific location for work, you can make your dollars go further more easily in certain locations in the United States. These are places with a lower cost of living. Here are the five cheapest cities to live in the U.S. this year, according to U.S. News:

• Hickory, North Carolina

• Green Bay, Wisconsin

• Huntsville, Alabama

• Quad Cities (Davenport-Bettendorf, Iowa and Moline-Rock Island, Illinois)

• Fort Wayne, Indiana

However, there’s more to moving than just the expenses and the job. Before packing up a rental truck, consider whether you are comfortable leaving behind friends, family, and familiar places.

Recommended: Financial Moves to Make During a Job Transition

Worst Places to Live on a $40,000 Salary

A $40,000 salary might not go far enough in a city with a high cost of living. U.S. News research indicates these are the most expensive cities to live in:

• Los Angeles, California

• Miami, Florida

• San Diego, California

• Salinas, California

• Santa Barbara, California

And if you were expecting to see New York City on this list, don’t worry: It’s not far behind, at number nine.

Tips for Living on a $40,000 Budget

So how can you (and possibly your family) live on a $40,000 budget? It’s important to cut costs, look for deals, pay down your debt, and build up savings for an emergency.

But living on a small salary doesn’t mean you have to completely give up entertainment. Remember that it’s OK to treat yourself to the nice things in life from time to time, as long as they are within reason. Everyone needs some fun in their life.

Here are some important tips for living on a $40,000 budget:

Carefully Tracking Your Expenses

First things first, get an understanding of your current spending habits. Your bank may offer tools that make this easy to analyze or you can download apps or check websites that make this easier.

Consider what bills you have every month, whether they are on auto pay, and, if so, when do they process? (This will help you schedule your bills and avoid getting hit with late fees.) Make a list of all your recurring expenses (mortgage or rent, student loans, car payment, phone, insurance, and utilities), and then analyze how much on average you’re spending on more variable expenses like groceries, gas, clothing, and entertainment.

What can you cut? What bills can you negotiate down? Where can you reallocate money toward savings?

Recommended: 20 Commonly Forgotten Monthly Expenses

Getting on a Budget

Now that you have an idea of what you’re currently spending, it’s time to design a budget around what you should be spending.

Start by plugging in necessary monthly expenses; these are things you must pay for each month, like your home, insurance, and food. Only once you can see that these basic needs are met should you begin to budget for things like dining out or new clothes, also known as wants vs. needs.

Not sure where to start? Do some online research on how to make a budget. There are different techniques including a line item budget and the 50/30/20 budget rule.

Getting Out of Debt

As you consider how to manage daily life on a $40,000 salary, it’s wise to pay attention to the role that debt plays in your personal finances. Mortgage and student loan debt are structured to be paid off over decades, and can be considered by some to be good debt, as the interest rates are often relatively low and timely payments build your credit history. The rates on credit card debt, however, can be high (currently over 20% on new offers and 16% on existing accounts) and therefore more detrimental to your finances (and mental health). If you have serious credit card debt, it is wise to cut back expenses as much as you can so you can focus on paying off your debt.

You can tackle your debt using the snowball method or the avalanche method. You may also consider a balance-transfer credit card or a debt consolidation program, depending on your situation. A debt counselor who works for a nonprofit, like the National Foundation for Credit Counseling (NFCC ), can be helpful as well.

Saving Your Money

If you are debt-free (house, car, and student loan payments aside) and still have wiggle room in your budget after accounting for necessary expenses and a little bit of fun money, you can allocate some of your $40,000 salary toward your saving goals. These might include vacations, a house down payment, renovations, or a wedding. An emergency savings fund is often a good place to start.

Recommended: How to Save Money from Your Salary

Investing Your Money

After you have gotten a handle on your expenses, designed a budget, and opened a savings account, you might consider if there is enough leftover from your $40,000 salary for investing. This may not be possible if you live in a city or state with a high cost of living.

How can you start investing? If your employer offers a 401(k) match, consider taking advantage of that. It’s basically free money, so contribute enough to snag it.

You can also look for automated investing opportunities so you don’t have to worry about building a portfolio from scratch.

Managing Finances With SoFi

If your $40,000 salary is paid via direct deposit, think about opening a high interest online savings account. With direct deposit, you can get an array of perks from our SoFi Checking and Savings account. You’ll spend and save in one convenient place, plus you’ll earn a competitive APY and pay no fees, which can help your money grow faster. What’s more, qualifying accounts can get paycheck access up to two days early.

Make the most of your money with SoFi.

FAQ

Can you live comfortably on $40,000 a year?

Individuals can often live comfortably on $40,000 a year. Families, however, may struggle with this salary, especially in areas with a higher cost of living.

What can I afford making $40K a year?

If you are an individual living on $40,000 a year in an area with a low to moderate cost of living, you can afford typical monthly expenses like food, housing, and utilities and still have enough for some fun expenditures, like entertainment. If you are frugal and build a budget, you may also be able to pay down debt, build your savings, and even invest a little.

Is $40,000 a year considered middle class?

According to Pew Research, a middle-class family of three makes between $56,000 and $156,000. Families of that size who bring in $40,000 a year would not be considered middle class. However, an individual making $40,000 a year would likely qualify as middle class.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

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Source: sofi.com

Apache is functioning normally

February 27, 2024 by Brett Tams

Mortgage originators who seek success in 2024 need to move with confidence and adaptability. To reach strategic goals for the year ahead — and avoid being left behind — here are four strategies for originators to consider.

1. Identify potential market impact

The mortgage market is feast or famine, with origination volumes varying between high and low extremes. Mortgage originators chasing ambitious goals for the year must be vigilant in monitoring the factors that impact markets.

Originators learned this harsh lesson when the COVID-19 era brought historically low interest rates and record-high loan volumes, quickly followed by almost two years of spiking interest rates as inflation rose and volumes rapidly declined. Given the cyclical nature of the mortgage market, the industry seems to be moving beyond these challenges with a more normalized market in 2024.

If the Federal Reserve lowers interest rates as expected, the industry anticipates an uptick in transactions as buyers and sellers become more active. By incorporating this outlook into their strategic planning, mortgage originators may better anticipate changes, adapt their client service, and meet their goals.

2. Refuse to play the waiting game

Some originators chose the path of inaction in 2023, waiting for mortgage rates to drop, while others found success by adapting and exploring opportunities to take in new or different clients.

Regardless of the market’s unpredictable nature and the direction of mortgage rates in 2024, taking a passive approach will result in significant setbacks in origination volume. The upcoming year promises great potential for lower rates, whether through enhancing marketing strategies or offering differentiated product solutions and remaining on the sidelines is not a productive option.

3. Evolve offerings with market demand

Innovation in the mortgage market still exists. Many originators hope to take advantage of a potential refinancing wave that may come with rate cuts. But they can also open new channels for success by looking outside of traditional products. This year, originators should take a look at the needs of today’s prospective homebuyers and what’s trending in the market. Analyzing the details of market demand will help originators identify how they can better serve clients with unique financial backgrounds through niche products like non-QM loans.

4. Work with a trusted partner

A trusted partner can be an asset for mortgage originators navigating markets’ volatility. Deep-seated experience and robust industry relationships are often critical when business is tight, and getting something wrong could risk losing not just a client but a future referral. The right partner can strategically guide originators, whether through offering diversified loan opportunities or engaging in nuanced conversations with real estate agents and potential clients.

In pursuing their goals for 2024, mortgage originators must not be complacent. Only by analyzing and adapting to the changing mortgage landscape, and by proactively seeking partnerships and solutions, can originators successfully grow their business.

Tom Hutchens is the executive vice president of production for Angel Oak Mortgage Solutions.

Source: housingwire.com

Apache is functioning normally

February 27, 2024 by Brett Tams

I have partnered with WizeFi on this WizeFi Review. All opinions are 100% my own. I am excited to tell you about a new money tool that I recently started using. Are you looking for a money management tool that will help you budget, save hundreds of dollars each month, and accelerate your path to…

I have partnered with WizeFi on this WizeFi Review. All opinions are 100% my own.

I am excited to tell you about a new money tool that I recently started using.

Are you looking for a money management tool that will help you budget, save hundreds of dollars each month, and accelerate your path to financial independence?

If so, then I recommend checking out WizeFi. This money management software can be used from your phone or computer, and will give you all the tools that you need to take control of your finances.

Understanding money can be tricky, especially when you’re working towards long-term financial freedom. WizeFi helps you optimize your money to reduce waste and put your money where it’s most effective at accelerating financial freedom. It’s made for people who are serious about financial freedom.

Please click here to try out WizeFi for free for 30 days.

WizeFi right now is hosting a free 30-Day Financial Independence Challenge so that you can have a clear plan for reaching financial independence and retirement. You can sign up for WizeFi and the free 30-Day FI Challenge by clicking here.

WizeFi Review

Below is my WizeFi review. I will be talking about why it was started, the different ways this tool can help you, the cost, and answer some common questions.

Some of the reports you’ll see when you log into WizeFi (screenshot from WizeFi)

What is WizeFi?

WizeFi is a helpful money tool for your computer or phone that helps you reach financial freedom. It’s like having your own money coach, helping you to make better decisions with your finances.

Here’s what WizeFi does:

WizeFi helps you manage and eliminate debt, quickly! WizeFi will sort your debt in an efficient pay-off order to save you money and pay off your debt quickly. Plus, the 30-day challenge will give you tips to accelerate your debt freedom journey.
WizeFi tells you your financial independence date. Learn where you’re headed now if you change nothing with your finances, and then learn what you can do to reach retirement sooner.
WizeFi finds hidden spending habits that might be getting in the way of your financial goals. For example, it will help you find out about everyday habits that you didn’t know could postpone your retirement by 5 years.
WizeFi makes plans just for you, not using generic templates that fit everyone.
WizeFi helps you make smart choices by providing the ability to create “what if” scenarios, which it calls “drafts” to test financial choices before you actually make them. This can help avoid costly mistakes like major purchases that could delay your financial freedom date by years. Or, discover opportunities for applying bonus money (like tax returns) where they can have the biggest impact on your financial goals.
WizeFi keeps an eye on your progress and motivates you by showing visible results. For example, understanding how little changes can change your future net worth.
WizeFi makes money less confusing and boosts confidence, reducing the stress about finances.
WizeFi helps you learn money skills, making you less reliant on others and more confident in managing your own finances.

As soon as you start using WizeFi, you’ll notice it’s not just about tracking expenses. The software is built around the concept of empowering you to develop money habits that could potentially halve the time it takes to reach your financial goals, such as early retirement or financial independence.

I’ve signed up for WizeFi, and I really like how easy the platform is to use. There are no ads and they aren’t trying to sell anything else that is extra, so you don’t have anything else cluttering this tool when you are trying to use it. It is straight to the point.

Why WizeFi was started

WizeFi was started in 2017 by Sean Allen, a financial expert and 30-year veteran of the financial industry. He was noticing that clients were failing with their finances, even though they were making enough money for early retirement.

He learned that there were two main causes of this:

A lack of money skills and
Not understanding the future impact of current choices (such as spending).

He then realized that there was a need for a change in the way that people approach money management so that they can pay off their debt and reach financial independence.

To find a solution to these challenges, he created WizeFi, starting as a program and later becoming an app. It focuses on making the most of every dollar you earn. WizeFi is all about helping you manage and eliminate debts and expenses that don’t benefit you financially.

The app aims to reach millions with its easy (yet effective) approach, speeding up the path to financial independence and giving people the ability to create a lasting system for building wealth.

How WizeFi Is Helpful

If you’re finding it hard to figure out why your money goals feel distant, WizeFi is the tool that can show you the patterns and choices that might be causing the challenge. Instead of being confused by a bunch of numbers, you’ll be able to see exactly where your money goes each month.

WizeFi helps you create a budget that fits your personal financial situation, and your financial plan is customized to you, making it more likely that you’ll stick to it and see real results.

Here are some ways that WizeFi can help you:

Discover your financial independence date. Learn where you’re headed now if you change nothing with your finances, and then learn what you can do to accelerate your FI date.
Find leaks in your spending habits: WizeFi will show you your spending all month long and compare it to your planned spending. This can be very eye-opening and help you discover spending habits you can change
Develop wealth-building habits: Speaking of habits, WizeFi is all about helping you develop money skills that lead to healthy financial habits. For example, when you subscribe, WizeFi starts you off with a 30-day challenge that can help replace bad habits with good habits. Try it for yourself.

WizeFi helps with three main money skills: Money Organizing, Money Planning, and Money Monitoring.

Money Organizing

WizeFi will sync with your financial accounts and organize your money into categories, and then it will provide a guideline spending amount for each category. See how your spending compares to the guideline.

Screenshots from WizeFi

Money Planning

WizeFi goes beyond just organizing your money; it also gives you a guideline so that you can know how to best use your money. It makes a personalized plan that matches your specific goals and financial situation, encouraging a proactive approach to your financial future.

WizeFi includes a process where you can go through each area of your finances and you can see how cutting back on certain expenses can increase money to be used towards accelerating your financial independence.

So, I could see how cutting back on dining out would give me more “financial independence dollars (FID) which WizeFi will then show me the best place to put those dollars in the 4-step plan. I can use WizeFi to plan the perfect budget that frees up FI-dollars.

Then, I can use WizeFi to determine the best use of those dollars—pay off debt, add to 401(k), or pay off a mortgage early – no more guessing. WizeFi will reveal which choices accelerate financial freedom and which delay it.

Screenshots from WizeFi

Money Monitoring

WizeFi allows you to monitor your money, such as your budget, spending, income, debt payoff progress, and net worth. Knowing these numbers and being able to monitor them can help motivate you to make changes for the better.

Money monitoring is known to help people think differently about their money. It keeps people constantly aware of where their money is going compared to where it should be going.

WizeFi provides monthly reporting to monitor your financial trends like is your net worth growing and your debt shrinking, and is your budget balanced like you want it to be.

WizeFi also provides real-time monitoring with progress meters so you can watch your money every day to make sure you stay on track. Both of these are key to empowering you to be a great manager of your money without having to become a financial analyst. WizeFI keeps it simple.

How To Get Started With WizeFi

WizeFi allows you to better manage your finances from both a computer/laptop and from your phone. They also have a 30-day email challenge that teaches you how to save money, make money, and develop money skills.

As you check out what WizeFi can do, you’ll see it provides various tools to improve how you handle money. With easy-to-use features and a clear plan, WizeFi is designed to guide you toward financial freedom in a better and more effective way.

Here’s how you can get started:

Sign up for the 30-day free trial of WizeFi and get enrolled in the 30-day challenge
Enter your goals, such as your emergency fund target, general savings target, and your desired monthly income at retirement.
Enter your salary (net monthly income after taxes), any side hustle income, investing income, and more.
Enter and connect your financial accounts, such as bank, car loan, mortgage, retirement accounts, and more.
After you enter the information above, you will see your financial freedom projections. This will show you the exact date that WizeFi thinks you will be able to retire if you continue the way that you are with your financial situation. You will also see WizeFi’s built-in wealth potential guideline and the exact date you will be debt-free.

WizeFi 30-Day Financial Independence Challenge

As you noticed above, I think the best way to get started with WizeFi is to sign up and take their 30-Day Financial Independence Challenge.

WizeFi just launched this challenge and it’s a free, daily guide filled with steps to help you grow your money smarts and sprint toward financial independence faster than you might think possible. You’ll receive an email every day with new actions to take that can refine your spending and saving habits.

Here are a few highlights of the challenge:

Reduce expenses – You’ll see how small changes in daily spending can create big savings over time. You’ll actually learn 200 different strategies to stop wasting money!
Debt mastery – Get tips on handling debts that stand in your way.
Build wealth – Learn about strategies that can increase your income.

On Day 1, you start crafting your very own FI plan. This sets the foundation. By Day 2, you’re diving into ways to spend less on food, and by Day 3, it’s all about saving on transportation. Throughout the challenge, you’ll learn to cut costs across many different spending categories without sacrificing the fun in your life.

Day 9 shows you powerful wealth-building strategies. As you approach Day 17, you’ll see the five stages of financial independence.

Jumping into Day 20, get creative with 50 side hustle ideas to boost your income. Later on, Day 26 focuses on investing tactics designed to speed you along to FI.

This is a free challenge that is sent straight to your email. I am signed up for this challenge and it is full of actionable tips that are actually helpful (and not just fluff or generic tips).

You can sign up for the free 30-Day FI Challenge by clicking here.

WizeFi Cost

So, after reading all of the above, you’re probably wondering “How much does WizeFi cost?”

Free trial

You get to use WizeFi risk-free for the first 30 days. During this period, you have complete access to all features, and you can cancel anytime if you decide it’s not for you.

Monthly cost

The service is available for $8.99 per month. This subscription is designed to pay off by helping you potentially grow your net worth by tens of thousands (or even hundreds of thousands of dollars) and put you on a faster track to financial independence.

Why isn’t there a free plan?

WizeFi is dedicated to providing a complete set of money tools and tailored advice for your financial growth. Unlike some free tools that might restrict your potential, your paid subscription makes sure that the services are high-quality.

Plus, WizeFi stays focused on your financial well-being, avoiding promotions of external products that might conflict with your financial goals. This is something that I really like about WizeFi – they aren’t trying to sell you anything else – you are getting a helpful money tool without any ads.

WizeFi Security – Is WizeFi Safe?

When thinking about using WizeFi for managing your finances, security is important.

WizeFi makes sure that your information is safe with protective measures similar to those used by banks.

In a digital world where safety is important, you can relax knowing that WizeFi doesn’t keep your account numbers or personal details within their app. What you see are the important elements—your budget and balances. It’s like having a clear view of your financial landscape without any doors open to the private account information you don’t want to share, like account numbers or other personal information, making the platform safer for you.

Think of WizeFi as a one-way mirror. You have the full picture of your finances at a glance, yet there’s no path for anyone to reach in and move things around.

Frequently Asked Questions

When thinking about using a financial planning tool like WizeFi, you probably have questions about what it offers and whether it’s the right fit for you. Here are some of the common questions answered to help you decide.

Can I try out WizeFi for free?

Yes, you can start with WizeFi for free. They have a 30-day trial period for you to explore the full range of features before you commit to a subscription.

Please click here to try out WizeFi for free for 30 days.

How can WizeFi help me reach early retirement sooner?

WizeFi is designed to guide you in creating a personalized financial plan. By helping you customize the right budget plan, and track your spending against that plan, you’ll easily identify unnecessary expenses you can cut, which can help you better manage debt and increase your savings rate, which can help you reach your financial goals faster.

Is WizeFi worth using?

Yes, WizeFi is worth it if you’re serious about taking control of your finances and reaching financial independence or early retirement.

Does WizeFi have an affiliate program?

Yes, WizeFi has an affiliate program where you can earn 20% of the monthly subscription (so 20% of $8.99). Their hope is that people will use WizeFi for a month and dial in their own personal finances (craft a new plan that makes them feel empowered to manage their money for financial freedom). Then, they’ll share what they’ve learned with their audience.

WizeFi Review – Summary

I hope you enjoyed my WizeFi review.

If you are committed to improving your personal finances and want to reach early retirement or financial independence, I think that WizeFi is great to sign up for.

WizeFi stands out from other money tools because they focus on developing money skills, and not just giving you information, because the WizeFi team knows that money skills can make a difference for a lifetime. Plus, there are no ads and they don’t sell your information.

Their goal is to empower a person to master their money, speed up financial independence, and live their best, most meaningful life.

If that is you, then this is the money tool that I recommend checking out.

Please click here to try out WizeFi for free for 30 days.

What other questions do you have about WizeFi?

Source: makingsenseofcents.com

Apache is functioning normally

February 27, 2024 by Brett Tams

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how to utilize a tax advantaged 529 plan to help your or a friend’s children save for future education expenses.

This Week in Your Money: What are the risks of purchasing a home without an inspection? How can you plan for major expenses when healthcare providers can’t tell you how much their services will cost? Hosts Sean Pyles and Sara Rathner share their hot takes on unexpected financial challenges, with tips and tricks on handling surprise expenses, understanding the importance of home inspections, and dealing with healthcare industry inefficiencies.

Today’s Money Question: What are the benefits of a 529 college savings plan? Can you contribute to a friend’s 529 plan to support their child’s future? NerdWallet writer Elizabeth Ayoola joins Sean and Sara to discuss the essentials of 529 college savings plans. They discuss the types of educational expenses covered, the tax benefits associated with 529 plans, and the flexibility of choosing different state plans. They also answer a listener’s question about how to approach the sensitive topic of financial gifts for education with parents, sharing methods for contributing to a loved one’s 529 plan without overstepping boundaries. Then, they discuss the implications of the Secure Act 2.0 on 529 plans, methods for estimating necessary savings for a child’s education, and tactful ways to discuss educational contributions with parents.

Check out this episode on your favorite podcast platform, including:

NerdWallet stories related to this episode:

Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sara Rathner:

Hey Sean, has money ever made you mad?

Sean Pyles:

Yeah, it has, especially when I get a bill that I don’t expect to pay but have to anyway. So yeah, why?

Sara Rathner:

Yeah. Yeah, those surprise major expenses are a huge pain. I just had to replace my washing machine because the fun never stops in my house.

In this episode, we are going to let off a little steam about what makes us mad in the world of money.

Sean Pyles:

Welcome to NerdWallet’s Smart Money Podcast. Our job today is to help you be smarter with your money, one money question at a time. I’m Sean Pyles.

Sara Rathner:

And I’m Sara Rathner.

So listener, this show is all about you and your money questions. So, whatever financial decision you’re pondering, whatever’s making you mad about your money, let us know.

Sean Pyles:

Leave a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or you can email your questions to podcast@nerdwallet com.

Sara Rathner:

In this episode, Sean and I answer a listener’s question about contributing to 529 accounts for your loved ones. But first, we’re going to yell into the void in our semi-regular Money Hot Takes segment.

Sean Pyles:

So here’s how this works. Sara and I just rail against whatever we feel like in the world of money. And let’s put, say, 100 seconds on the clock. That’s what? A second for every penny in a dollar. I don’t know, it’s just an arbitrary number really.

Sara Rathner:

That works for me. It’s a nice round number.

Sean Pyles:

All right, Sara, are you ready?

Sara Rathner:

Sean Pyles:

I’m starting my timer. Go.

Sara Rathner:

All right. I hate the trend where home buyers feel pressure to completely waive getting a home inspection before buying a property. That’s different from the type of waiver where you’ll still do the inspection, but then you’re assuming the cost of anything you find. It’s when you just do without the inspection entirely.

I live in a block of houses that are like 107 years old, and two houses on my block sold with waived inspections where the buyers had to put tens of thousands of dollars unexpectedly into problems in their house that they didn’t know about. I just had a neighbor text me asking for a roofer because the first time it rained since she moved in her house, it started raining on the inside of her house, which means that the seller just lived with that for however long before selling the house and passing the problem onto somebody else.

So especially if you’re a first-time home buyer, if you are going to drain your savings to buy your house, and then you’re not going to have much money left for repairs, be really careful about this. And as a society, can we just make inspections mandatory? That’s more consumer-friendly, honestly. People need to know what they’re getting into, and frankly, people should feel pressure to keep their houses well maintained before sale. There I said it.

Sean Pyles:

You’ve got 40 more seconds if you want to keep on railing.

Sara Rathner:

Oh man, I do? Well, if you haven’t bought a home yet, what’s nice about getting an inspector involved is they’ll look at all the major systems of the house, the appliances, the roof, all sorts of stuff, the electrical, the plumbing, and they will tell you the lifespan of some of those major things like a furnace or a boiler, your roof, your HVAC system. And even if something is going to go in the next year or two, at least you have this laundry list of things and when they’ll probably need to be replaced, and you can begin to budget for those replacements.

Sean Pyles:

Okay, that’s 100 seconds.

Sara Rathner:

Boom. All right, Sean, you got any reaction?

Sean Pyles:

Well, I totally feel that, because buying a house without knowing what’s wrong with it is very risky financially. Buying a house can be financially risky in and of itself, depending on how expensive the home is. But imagine getting into the house, it’s your first day, you’re super happy to be a homeowner, and then you realize, oh, it’s raining inside the house, or the crawl space is infested with termites. You don’t know what you’re getting into if you don’t have an inspection. And even if it may make you a more competitive buyer, it isn’t worth it, in my opinion, to get yourself into something like that because you just don’t understand the risks you could be taking on. And I’m all about mitigating risks as much as possible.

Sara Rathner:

All right, Sean, I have had my turn, and now it is your turn. I have set my timer for 100 seconds. And go.

Sean Pyles:

Okay. Today I am mad about industries that are designed to extract money from us while making our lives miserable or at least really frustrating. And I have one, maybe two, examples depending on how far 100 seconds takes me.

First step is healthcare. Americans spend far more on healthcare than other wealthy nations. Nearly 18% of our GDP in 2021 went to healthcare. And what are we getting for it? An incompetent extractive industry that exploits nearly everyone that engages with it. Among wealthy nations, the US has the highest rates of infant and maternal mortality and excess deaths, not to mention the daily indignities that come with trying to access healthcare.

I have a recent example that is a microcosm of these larger issues. I recently got a bill in the mail for some regular lab work, and the thing is, I have these labs done every few months, and they’re always covered by my insurance. But this time I got a surprise bill for nearly $200, and I’d already had an expensive month with some car repairs, and I was not excited about the prospect of an additional $200 to cover. So I called my doctor, and they said, “Oh yeah, the company that does the lab work just messed up. Oops, just disregard the bill.”

So if I hadn’t called my doctor, I would have been on the hook for this bill. This was a relatively small bill as far as medical bills go, and it was fairly easy for me to clear up. I’m obviously very fortunate in this case, but for so many people, especially those with chronic illnesses or complex medical conditions, the onslaught of navigating insurance, verifying that you’re being billed correctly and then somehow coming up with the money to cover bill after bill is just totally exhausting and can make achieving financial goals nearly impossible.

So why am I going on and on about things that we already know too much about?

Sara Rathner:

Just so you know, you’re over time.

Sean Pyles:

Oh, God. I’m going to keep going. I’m almost done.

Sara Rathner:

Keep going, Sean. Let’s do this.

Sean Pyles:

All right. I am going on and on about this because I think it’s important to remind people that it does not have to be this way. We are in an election year, people, so I don’t know, let’s try to do something about it.

Okay, Sara, how many seconds was that?

Sara Rathner:

Oh, well I stopped timing it the second it hit the clock, so that might’ve been just an extra 10 seconds, honestly.

Sean Pyles:

Okay. It’s hard to fit so much into such a small amount of time.

Sara Rathner:

You know what? Your rage is such that it cannot be fit into a tiny container and that is valid. It’s okay to let the rage out and give it some more space.

I agree with you. What’s annoying is, for example, this past year I had a baby, and that is expensive to the tune for me of $7,000 out of pocket after insurance. Hi. $7,000 is a lot of money, people.

And what was annoying about that, and this is something for anybody who maybe is facing a planned medical procedure like a surgery or childbirth or anything like that, or who takes medication for chronic illnesses, I tried to call the billing department at the hospital to talk to my insurance company to say, “Can you at least give me an idea of how much money I will be out?” I knew going into it that I would be having a C-section. So I could say, “I’m having a C-section, that means I have to work with an anesthesiologist, which is an extra expense. Can you tell me ballpark, even if you’re off by a grand, how much should I budget for this?” And everyone’s like, “We don’t know.” Shrug emoji.

Then the bills just fly in for months and you think you’re done. So you’re like, “Okay, we’re done paying for the hospital bill. Now we can put our money into other stuff.” And then you get another bill for like, $1,100.

Sean Pyles:

And you have to question, was this billed correctly? Was it coded correctly? You don’t know. And it just flies in the face of all the things that we try to talk about in the personal finance space, which is around anticipating big expenses, budgeting for it, saving up for it if you can. It’s impossible when you don’t know what you’re going to be paying.

Sara Rathner:

Right, and if you’re facing surgery, what, are you just going to not have anesthesia to save money? Do not recommend.

Sean Pyles:

That is not a money-saving tip that we would recommend. No.

Sara Rathner:

No, that’s a place where you should spend good money, get good and numb.

But really it is an extra expense. And that’s so, so frustrating because you are not only out a lot of money, but you’re feeling kind of vulnerable because you’ve just gone through some medical stuff, even if it’s just blood work or something, and you want to take good care of your health, and it’s sometimes financially impossible to do that.

Sean Pyles:

Yeah. Not to mention completely demoralizing.

Sara Rathner:

Yeah, and some people just don’t go to the doctor because of the cost, or the dentist. And then years later, they’re faced with really serious health issues because they’ve been neglecting their health because of the cost.

Sean Pyles:

Yeah. I don’t know, it’s really tough in this space to talk about medical expenses because at NerdWallet and in the personal finance realm, we try to give actionable advice, and a lot of the time the advice is reactive. If you get a medical bill, you do have to ensure that it’s coded correctly. Maybe try to work out a payment plan with your medical office if you can’t cover the bill in one go. But it’s so hard to be proactive like you were just describing and understand what you’re going to have to pay if you want a routine procedure like blood work or something more significant like having a baby, makes me want to yell into the void all day every day.

Sara Rathner:

Yeah. Well, we took more than 100 seconds about this. If you have a body, then this is something that affects you, and it is really hard to deal with those extra unexpected costs.

Sean Pyles:

All right, so that is what we are mad about this week, listener. I know there’s a lot to be mad about in the world of money, so do not keep it in. Let us hear what you’re mad about, and we might just share it on a future episode.

You can text your Money Hot Take to us or leave a voicemail on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or you can email it to podcast@nerdwallet com.

Sara Rathner:

All right, I don’t know about you, but my heart rate is starting to come down from all of that. Ooh, deep breaths, everyone. This episode’s money question is up next. So calm down too and stay with us.

Sean Pyles:

This episode’s money question comes from Lauren, who wrote us an email. Here it is.

“Hi nerdy Nerds. I’m not a parent. I’m never going to be a parent. Because of that, I have made it part of my financial plan to contribute to the 529 plans of kids around me. Because I don’t have nieces and nephews, I’m contributing toward the savings of my friend’s three-year-old. How much needs to go into a 529 starting at age two or three to cover a four-year private college?”

“I got the details on this kid’s 529 plan from his dad and started contributing about $100 a month. We didn’t talk about it. I intend to keep chipping in until the kid is done getting formal education 20 to 25 years from now. How do I talk to the parents? I want to understand if I’m helping enough without becoming privy to their private financial details. I also don’t want to make it seem like I have any vote whatsoever in how the kid charts an educational path. How do I broach this with the parents?”

Sara Rathner:

To help us answer this listener’s question, on this episode of the podcast, we are joined by NerdWallet writer Elizabeth Ayoola. Welcome.

Elizabeth Ayoola:

Hello, and hi.

Sean Pyles:

Elizabeth, so good to have you on.

So let’s start by setting some groundwork. Can you please describe what a 529 college savings plan is, how they work, and why they’re such a big deal?

Elizabeth Ayoola:

A 529 plan is a huge deal indeed to me anyway. I wish I had one when I went to college because I was left with a huge bill. But anyways.

529s are tax advantaged college savings plans, and they allow people to save and invest money for education expenses. So, with that said, the money gets to grow, and it gets to compound, which can mean beneficiaries have a nice education pot to pull from when they need the money. And for those who don’t know what compounding is, it’s essentially when your interest earns interest.

Sara Rathner:

It’s the eighth wonder of the world.

Elizabeth Ayoola:

Sara Rathner:

So you mentioned education expenses and that’s what the purpose of this account is, but what kinds of education expenses can you use a 529 to fund?

Elizabeth Ayoola:

Funds in a 529 account can be used to cover a vast range of qualified expenses, and that can range from tuition to computers and education related equipment. The expenses can also be used to pay for education needs of your beneficiaries. And the good thing that I like is that the beneficiaries can be in anywhere from kindergarten through grade 12. So that said, it’s not only for college students.

Sean Pyles:

Right, that is a really good point because people hear about 529 accounts, and they think they may be specifically for people going through a traditional four-year education, but people can also use the funds in the 529 college savings plan to cover things like trade schools too. So it really isn’t only for that traditional four-year higher education route.

Sara Rathner:

So earlier you mentioned that 529s are tax advantaged accounts. Can you talk a little bit about the tax treatment of them, and what should people know when they’re considering opening a 529?

Elizabeth Ayoola:

Well, one thing that I personally like about these accounts that some people don’t know also is that some states offer a tax deduction if you contribute to their plan. And when I say their plan, I mean the state that you live in. But there is no federal tax deduction for a 529 contribution. So it’s only at a state level. The tax deduction is usually capped. So no, you can’t just deduct your entire contribution. The deduction amount varies from state to state. So it’s best that you check in your state what the amount may be, if they offer it.

And a little bit off-topic, but I also like that the IRS doesn’t set a cap on your contributions to a 529 account, although some states do set a limit.

Sean Pyles:

And I’ll call out two other tax benefits of 529 college savings plans. The first is that investment growth in this account is tax-free, and second, distribution for qualified expenses like tuition or books are also tax-free.

Elizabeth, another important thing to know about 529 college savings plans is that each state has their own, and you don’t have to choose the 529 plan from the state that you live in. And this can all get a little bit confusing because there are so many states to choose from. So, at a high level, can you outline the main differences between a 529 from one state to the next, and how would someone go about choosing which state’s 529 plan to use?

Elizabeth Ayoola:

One of the major differences that people should know and a reason that people may cheat on their state’s 529 plan is lower fees. I personally have a 529 from a different state than my current home state for that very reason. So people should consider shopping around and comparing fees before opening an account. Ultimately, the goal should be to do some math and see whether the deductions and the credits that you’re going to get in the state that you live in are worth more than the lower fees that you could get in another state in the long term.

Also, note that you can open multiple 529 accounts. I have multiple 529 accounts. I recently opened a second one in my home state, Florida, because my son was awarded a grant and it could be transferred to a 529 account, but the catch was it had to be a Florida 529 plan.

Sara Rathner:

So 529s have some flexibility, which we talked about before, not just for four-year educations, but also for trade schools and for K to 12 expenses as well. And interestingly enough, 529s were just made even more flexible. Can you talk about recent changes around the ability to roll 529 funds into a Roth IRA, and what that means for folks who maybe aren’t considering going to college?

Elizabeth Ayoola:

The Secure Act 2.0 was recently passed, and if I can be honest, that’s what motivated me to open up my first 529 account, and I just opened it last year. I was always on the fence and only saved money in a brokerage account because I was afraid of what would happen if my son decided not to go to college in 15 years. He’s six, by the way.

I decided to get off the fence when the Secure Act 2.0 made it possible for people to roll at least a portion of the unused funds into a Roth account. However, you do have to wait until 15 years after you’ve opened the 529 account before you can roll those funds over. And you can also only roll up to a certain limit starting in 2024. It may be ideal to read the IRS’s rules, they have a lot of fine print around the conversion or speak to a finance professional about it.

I think Roths are also awesome because they aren’t subject to required minimum distributions and withdrawals. They’re also tax-free when you meet certain requirements like waiting until 59-1/2, amongst other rules.

Sara Rathner:

All right, well thank you for that great summary of the tax rules surrounding this new change. We just want to let you all know that we are not investing or tax professionals, and if you have any specific questions to your own situation, definitely consult a professional who can give you guidance.

Now let’s turn to the fun stuff. The math, Sean. I know that you are in the midst of your certified financial planner coursework. I have slogged through that myself. It is a lot. It is a lot of math.

Sean Pyles:

Sara Rathner:

And now that you know how to do it, I’m sure you’re eager to show off your chops. So are there any insights you can share that will help our listener figure out how much they need to save every month or every year to help their friends reach their savings goals?

Sean Pyles:

As a matter of fact, yes. And you’re right, I have been waiting for an opportunity to show off what I’ve been learning about because often I’m just doing calculations in silence and this is a time for me to be loud and proud about hitting buttons on a calculator. So let’s do it.

I’ll spare you and our listeners the specifics of the calculation, but I plugged the listener’s situation into a time value of money calculation and got a rough estimate for how much they will need to save.

Sara Rathner:

All right, drum roll. What’s the number?

Sean Pyles:

For our listener to meet the savings goal that they outlined in their question, remember, they want to save for four years of education at a private college starting now-ish and saving until the kid finishes school. They would need to save around $8,000 per year. Obviously, that’s a lot of money to contribute to a 529 account, no less for a kid who isn’t your own. And this is why 529s are often just part of the picture when it comes to paying for college, which usually includes some combination of scholarships, grants and loans and generous gifts from family friends.

Sara Rathner:

That is definitely more than a hundy a month.

Sean Pyles:

Yeah, that’s for sure.

All right, so all of that math out of the way, I want to talk about the other part of our listener’s question. They seem to be concerned about how much they should contribute and also how to talk about this with their friends. I am not a parent, so I would love to hear from both of you who are parents, how you would approach the situation if you had such a generous friend. Would you welcome the money, or say get out of my business? Or if you are going to accept this money, if you want to have this conversation with your friend, how would you want them to communicate that with you?

Elizabeth Ayoola:

Honestly, I would welcome the money, especially because I’m a single mama. So as a matter of fact, my friends always contribute to my son’s savings account in London for his birthdays or holidays and I really, really appreciate it. It can be a better gift to me than toys that stab me in the foot within a few days.

Sean Pyles:

Elizabeth Ayoola:

I would also appreciate a friend asking me what my savings goals are, so they know how to support that goal. However, I do think, for the sake of boundaries, I would like my friend to ask me my comfort level with the topic before they dive in and start trying to give advice.

I think it’s also important to note that not everyone is comfortable discussing money or financial goals. But with that said, here’s an example of maybe how somebody could say it. So you may say, “Hey, I want to help you reach John’s college savings goal. Are you comfortable discussing that target number you have in mind, and can you tell me how I can support that?” Or another option could be you saying, “Hey, would you like to do the math yourself and then let me know how I can support that goal?” So those are just a couple of options.

Sara Rathner:

Yeah, I mean, I’m not going to look a gift horse in the mouth. College is expensive now, and it’s only going to become even more expensive in the future. Even in-state tuition, where I live in Virginia, is often over $20,000 a year. That used to be the economical way to get a four-year degree, and now it’s also very, very expensive. So what’s it going to be like by the time my kid’s in college? I don’t know. A lot.

Sean Pyles:

I think we can confidently say more money.

Sara Rathner:

Confidently, we can say a whole lot more money.

I would want my friends to decide for themselves what they feel comfortable giving, because I don’t feel comfortable telling another person how they should allot their money because they have other competing financial goals and obligations. And I never want to tell another person what they can do with their money unless they specifically ask me to tell them what to do with their money, which nobody ever asks me.

Sean Pyles:

And you also don’t want to give the impression that your friends can’t look after their own family’s finances, right? That’s a bit of the awkwardness underlying the question, is you want to help someone that you care about and this child that you’re seeing grow up in the world, but you don’t want to impose your will upon them. It seems like our listener is being very thoughtful about that. And you don’t want to make it seem like you think they aren’t doing enough.

Sara Rathner:

Right, or you think their kids should go to a four-year private university because that’s what you value, but maybe the parents have other values that they want to impart upon their child as the kid grows up, and then the kid will go off and do their own thing as a young adult.

In my case, we have a 529 for our son. We have family members who’ve contributed money. They’ve just written checks to us, and then we deposit it into our account that is tied to our 529 and then deposit the money into the 529.

Ultimately, when you contribute, you do go through the account owners, and that’s oftentimes parent or guardians. You are going to have to communicate with them because they’re ultimately the gatekeeper of that account. They are the owners, and then the child is the beneficiary.

Sean Pyles:

That actually brings up something that I wanted to talk about, which is who would own this account? The listener could in theory open up a 529 account on their own for this kid. But long-term, it’s probably going to be easier if the parents are the owners of the account, because that way when the kid is eventually ready to go to college or trade school or what have you, the parent can be the one managing those distributions.

Personally, I know as a friend, as much as I love my friends and my friends’ kids, I don’t want to have to manage that down the road. So that’s something else that they should think about when they’re talking about this with their friends.

Sara Rathner:

I definitely agree with talking to the parents and ultimately contributing to an account that the parents or guardians are in charge of.

Sean Pyles:

Well, Elizabeth, do you have any final thoughts around 529s and helping your friend’s kids afford college?

Elizabeth Ayoola:

I think we have given some very juicy tips here and only two more things come to mind, which is one, while it’s noble to contribute to your friend’s kids or loved one’s kids’ 529 account, please take advantage of any state income tax deductions that you might be eligible for. The rules around this can be muddy. And I know the original listener who asked this question lives in a different state than where he’s contributing, but sometimes you’re able to get a deduction depending on the state that you live in. So if you can get money back, I mean, why not?

My second thing that I’ll say is that if your loved one doesn’t have a number in mind, guide them to a college savings calculator or run the numbers together over coffee if they’re open to doing that.

Sean Pyles:

Great. Well, thank you so much for coming on and talking with us.

Elizabeth Ayoola:

I loved it. Thank you for having me.

Sean Pyles:

And that is all we have for this episode. If you have a money question of your own, turn to the Nerds and call or text us your question at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected].

Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate, and review us wherever you’re getting this podcast.

Sara Rathner:

This episode was produced by Sean Pyles and myself. Kevin Berry and Tess Vigeland helped with editing. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all of their help.

And here’s our brief disclaimer:

We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Sean Pyles:

And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

February 27, 2024 by Brett Tams

Are you all about saving, spending, or do you hide your head in the sand when it comes to personal finance matters? This money personality quiz helps you uncover your money style. That, in turn, can be a way to learn about your strengths and weaknesses and manage your cash that much better.

Each person handles their money in a unique way. Some people are laser-focused on saving and building their nest egg. Others believe that money is there to be spent on fun and satisfying purchases and experiences. And still others would prefer to look the other way when talk turns to 401(k)s and IRAs.

By knowing your money M.O., you can take steps to enhance your financial status. Ready? Read on for the details.

What’s Your Money Personality?

Steady Saver

Did the money personality quiz say you’re a steady saver? That likely means that you are well aware of your monthly budget and how much cash is coming in and going out. In addition, you are probably following the standard financial advice to save at least 10% or 20% of your take-home pay.

You may well be investing that in a 401(k) and getting a company match and putting funds into an IRA, too.

You are the kind who may have multiple bank accounts, with savings for various short- and long-term goals, such as the down payment on a home and your toddler’s future educational needs. Heck, you might even brag a little to friends and family about how much you have socked away.

Overall, you have some very impressive financial habits down pat. Keep up the good work. However, are you missing out on living your best life? There is the possibility that you may be overdoing it and being perhaps a tad too rigid. Does saving for Junior’s college fund mean the family can’t take a vacation for the next 17 years? Check in with yourself, and make sure you aren’t overly focused on your future goals.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.60% APY, with no minimum balance required.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

Super Spender

To cut to the chase, you love the things that money can buy. Nothing wrong with that! Omakase dinners at that new Japanese restaurant, the perfect new dining table, the latest mobile device, and baby’s first Disney vacay: There are plenty of things that your income can buy that make daily life delightful and memorable.

But when you see money as simply a conduit for experiencing the best here and now, you are likely risking a couple of very important things:

• You may be incurring debt.

• You may not be planning for your future.

• You may be succumbing to lifestyle creep vs. building wealth.

So here are some steps to take:

• Consider whether you are saving towards the important milestone goals that many people aspire to, such as the down payment on a home, a college fund for your kids, and a healthy retirement account.

Meeting with a financial advisor may be a wise move to get you on track for saving for these aspirations and perhaps learning more about the fine points of investing.

• Take a look at your budget, or make one if you don’t yet have one. Among the various budgeting methods is the popular 50/30/20 rule, which says to put 50% of your take-home towards needs, 30% to wants, and 20% towards savings and additional debt payments.

• Check in with your credit card debt. You don’t want your balances and credit utilization ratio to get too high. If you find you are facing challenges, consider a snagging balance transfer credit card offer, using a lower-interest personal loan to pay off credit card debt, or working with a nonprofit credit counseling agency to reduce your load.

The Money Shunner

If the money personality quiz indicates that you’re a money shunner, it may mean you are not comfortable with financial matters so you choose to look the other way. Many people feel stressed when thinking about money, whether because they don’t think they are good with numbers or they don’t have a solid base in personal finances (after all, you probably didn’t sit through a budgeting basics class in high school).

But if you tend to avoid money matters, you could be missing opportunities to reach your personal goals and gain a sense of security.

To gain financial literacy, you can dip into self-education. Your bank may have a library of content, or you can try well-respected books, magazines, newsletters, and podcasts. You might also take a class, whether in person or online.

In addition, meeting with a financial advisor could be helpful.

You may also want to pay more attention to your budget and understand your income and how much you’re spending and saving. These steps can help you make friends with your money and get it to work harder for you.

Recommended: Getting Back on Track After Going Over Budget

The Takeaway

A money personality quiz can reveal what your relationship with your finances is like. It can help identify whether you tend to be focused on saving (perhaps too much so), spend a bit too freely, or don’t pay enough attention to your cash. By tweaking your approach, you could build your financial literacy and wealth. Making sure you have the right advisors and banking partner are other important facets of this.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with up to 4.60% APY on SoFi Checking and Savings.

FAQ

What are some common money personality types?

There are different ways to categorize money personalities. You may see ones that use the terms spender, saver, and avoider, among others.

How do I know if my money style is too much about spending?

Typical signs that your money style involves too much spending can be having a large amount of credit card debt, living paycheck to paycheck, and not saving enough (or at all).

If my money style is a saver, isn’t that good?

Saver can be an excellent habit and can help you reach your financial goals and be prepared for whatever comes your way. However, you likely don’t want to go overboard and should enjoy your earnings as well.

Photo credit: iStock/stockfour

SOBK1023050

Source: sofi.com

Apache is functioning normally

February 26, 2024 by Brett Tams

Looking for the best business ideas for kids? Finding business ideas for kids is a great way for them to learn about starting their own business, being responsible, and understanding money from a young age. They get to understand how to set goals, handle money, and feel the joy of earning their own extra income….

Looking for the best business ideas for kids?

Finding business ideas for kids is a great way for them to learn about starting their own business, being responsible, and understanding money from a young age. They get to understand how to set goals, handle money, and feel the joy of earning their own extra income.

Whether it’s in the summer, after school, or on weekends, having a small business can be a fun and educational thing to start.

I did many different things as a kid to make extra money, and they all taught me so much. There are many different ways for kids to make money, as you will learn below.

Best Small Business Ideas for Kids

Here are the best business ideas for kids to start.

1. Sell arts and crafts

If your kid enjoys being creative and making things with their hands, selling arts and crafts can be a great business idea for them. It’s not only fun but can also help them earn some money.

Here are some crafts kids can make and sell:

Bead jewelry – They can make necklaces and bracelets with colorful beads.
Homemade candles – Candles are simple to make and can be sold to people who like to add a cozy feel to their homes.
Paintings – If they like to paint or draw, they can create artwork to sell.
Slime – Slime is really popular and fun to play with. Kids can make and sell their own slime in different colors and maybe even add things like glitter to make it unique.
Pet toys – If they love animals, they could make toys for pets. Choose materials that are safe for animals and design toys that pets would enjoy.
Soap – Homemade soap is always nice to have, and people love to buy it. This can be a fun item to make on their own.
Stickers – Everyone loves stickers and this can be a fun way to make extra money on Etsy or in person.

Recommended reading: 16 Best Things To Sell On Etsy To Make Money

2. Tutoring

If your child is really good at a subject like math or science, they can start a tutoring business. They can help other kids who might find those subjects tough.

Tutoring is something they can do after school when they’re finished with their own homework. It’s a great way to use what they know to help others and even make some money.

Learn more at The Best Online Tutoring Jobs.

3. Babysitter

If your child loves being around kids, babysitting can be a great way to start their journey into the world of small businesses for kids. It’s not just about watching kids; it’s about creating a fun and safe environment while parents are away.

Your child’s reputation is important, and they can start with their neighbors or family friends who already know and trust them.

To decide what they should charge, you can look at what other babysitters charge in your area, but consider how much experience your kid has.

I recommend having your child learn about basic first aid and child care, and you can find classes through community centers or the Red Cross.

Babysitting is what I did the most of as a kid. It was my first full-time job, actually. Starting at the age of 14, I was working around 40 hours per week in the summer taking care of a baby in my neighborhood (I found the babysitting ad on a local bulletin board!). I earned $10 per hour. The mother was a nurse, so I was working about 13 hours per day for a few days each week.

4. Pet sitting and dog walking

If your kid loves animals, starting a pet care service or dog walking business could be perfect for them. It’s more than just a job; it’s a way to care for pets when their owners can’t.

In this job, you might look after pets either at your own home (called pet boarding) or take care of them at their home.

Depending on their age, your child may walk the dog for 15 to 30 minutes a day, or more.

I was recently looking at a local bulletin board, and a parent put up an ad for their 10-year-old to walk dogs. The parent would be there as well (to ensure the safety of both the child and pet, of course), but it was a small business idea that the kid wanted to start. If your child is a little older, they may be able to do this on their own as well.

5. Lemonade stand

Starting a lemonade stand is more than just a fun activity; it can be their first step for starting a business as a kid!

Your child will probably want to start with a simple recipe, as lemonade does not have to be hard. They can try different flavors, like strawberry, to make your stand unique.

They will need pitchers, cups, ice, and a table.

Work out how much each glass of lemonade costs to make, and then decide on a price that makes a little profit but is still affordable for customers.

6. Mow lawns

Mowing lawns is a great way to start a small business as a kid. It’s simple to get going, and kids can make money during spring and summer.

They’ll need a lawn mower, fuel, and basic gardening tools.

Next, it’s time to set rates. Figure out how much to charge for each yard. A good plan is to look at what others charge and then set a competitive price.

Your kid can talk to neighbors, family, and friends to find new lawn mowing jobs.

I know many, many families who have kids who mow lawns to make money. I also know several people who have older kids who have turned this into a full-time business that has grown with them as an adult.

7. Rake leaves

Raking leaves is a great business idea, especially during the fall. Trees drop their leaves and many homeowners need help gathering and disposing of them.

To get started, your kid will need to have a sturdy rake, bags for leaf collection, and a pair of gloves to keep their hands clean and protect them from blisters.

8. Shovel snow

If you live in a place where snow falls, a kid can make money by shoveling snow. This job is great if they enjoy being outdoors and don’t mind the cold. Start by asking family and neighbors if they need help clearing their driveways and walkways.

They will need a few things to start:

A shovel: This is the main tool, of course!
Warm clothes and gloves: Stay warm while they work.

Your kid can hand out flyers or tell friends to spread the word. Social media can be a big help too. A simple post can let everyone in your neighborhood know that your kid is ready to help clear the snow.

9. Birthday party assistant

If your kid likes being around kids and celebrations, becoming a birthday party assistant could be a fun way for them to earn money.

They will help set up decorations (balloons, banners, and table settings), organize games (such as being ready to lead a game of musical chairs or a treasure hunt), and make sure the party runs smoothly (they might help serve cake and snacks to the little guests.).

10. Start a YouTube channel

Starting a YouTube channel can be exciting. If your child is under 13, remember, they can’t have their own account. But with a parent’s help, they can still share videos.

Your child can pick something they love, whether it’s science experiments, video game walkthroughs, or crafting tutorials.

They will want to post videos regularly – maybe post once a week to start.

Remember, it’s all about doing something fun and sharing what they love. Starting a YouTube channel takes work, but if they stick with it, they could make something really cool.

11. Lifeguard

If your child is looking for a responsible way to earn some extra cash, becoming a lifeguard could be a way to make money.

Not only does this gig teach important life-saving skills but it also teaches them responsibility and discipline. Many local pools or community centers offer lifeguard certification courses, giving them an excellent opportunity for young entrepreneurs to get valuable training.

Running a small lifeguard business can be a win-win situation for kids and the community. They can sell their services to local events, pool parties, or even provide private swimming lessons.

Note: In most states, you need to be at least 15-years-old to become a lifeguard.

12. Start a greeting cards business

Starting a greeting card business is something your kid can have fun with and get their creative juices flowing! They can make cards for birthdays, holidays, thank you, congratulations, or just to say hello.

They will need:

Art supplies, like colored pencils and markers
Cardstock or heavy paper
A printer (if they’re printing designs)
Digital design software like Canva (this is optional)

They could start by selling to family and friends or at school events. As they grow, they could try selling them at local markets or even online.

13. Neighborhood helper

As a neighborhood helper, they can sell their services to people around your community. This is a great way to help others and earn some money.

Your child can sell services such as:

Car washing: Wash cars for people in the neighborhood for a shiny finish.
Grocery running: Offer to pick up groceries for those who can’t go themselves.
Gardening: Help maintain gardens by planting flowers or weeding.
Lawn care: Keep neighbors’ lawns neat by mowing them regularly.
Pet walking: Walk neighbors’ dogs when they’re busy or away.

To get started, your kid should make a list of what they’re good at and what they might enjoy doing. Then, let neighbors know about their services with flyers or tell them directly.

If you have many kids, they could even involve multiple family members so that each kid has their own specialty or niche as a neighborhood helper.

14. Reseller

Starting a small business as a reseller means buying products at a lower price and selling them for a profit. They don’t need to make their own things; instead, they can find good deals on items, then sell them to others for more than they paid.

They can get items from yard sales, thrift stores, or their own home.

They can sell online on places like Etsy or eBay, or at school events and local fairs.

Recommended reading: 16 Best Selling Apps For Selling Stuff Online And Locally

15. Voice artist

Becoming a voice artist can be an exciting way for kids to explore and share their talent. If they enjoy speaking and have a unique voice, this could be a fun business idea for them.

They can sell services for character voices for cartoons and animations, narration for audiobooks or educational videos, commercial voice-overs for ads and marketing materials, and more.

They will need to start with a good microphone and recording software on a computer. They can practice by reading out loud and recording their voice.

To find work, they can join online platforms like Fiverr, where people look for young voice talent.

Recommended reading: How To Become A Voice Over Actor

16. Actor

If your child is interested in acting, the first step is to take acting classes, which can help them learn the skills they need to act in plays, movies, or TV. These can be found online or at a business near you.

Once they have some skills, they can try out for local theater productions and school plays, and join their school’s drama club. Being part of a production gives them practical experience and shows them what it’s like to work with a director and other actors.

17. Sell candy

Starting a candy business can be both fun and rewarding. With a love for sweets and a little creativity, your child can turn their passion into profit.

Candy is something that I see children selling all the time, and it completely makes sense – everyone loves candy! So, it is an easy item to sell.

They can sell homemade treats like chocolate-covered pretzels or gummy bears. Or, if you prefer, you can buy popular brands in bulk and sell them individually.

Next, consider where they will sell the candy. They may be able to sell at school, neighborhood, or local community events, and you should always ask for permission when selling in public areas or on someone else’s property.

Pricing the candy is important. You’ll want to make sure your kid covers the cost of what was spent and adds a little extra for their profit. Selling candy for $2 or $3 can make it easy for customers to buy without thinking twice.

18. Start a blog

If your kid is interested in working online, then they may want to try starting a blog. It doesn’t take a lot of money to get started, and it can teach a kid a lot about how to run a website.

I have met many teens over the years who have started a blog, and I think it’s a great small business idea!

Whether they want to share their hobbies, interests, or personal experiences, a blog gives them a platform to be creative and communicate.

Other business ideas for kids related to this include starting accounts on social media platforms like Instagram and Twitter, and starting a podcast.

Recommended reading: How To Start A Blog Free Course

19. Deliver newspapers

Newspaper delivery is a classic way for children to earn some money. It’s a job that can fit well into their schedule before or after school. Plus, they can get good exercise at the same time!

It’s usually pretty simple: they take newspapers and deliver them to people’s homes.

When I was younger, I had a friend who had a delivery route. Once, I went along with her and helped her deliver some newspapers. It was hard work but she ran it smoothly!

If your kid is interested in this job, start by checking with local newspapers. Call them and ask if they’re looking for delivery helpers. Some things they might need:

A bicycle or a reliable way to get around the delivery area quickly
A bag or basket to hold the newspapers as they deliver them
An early morning start if the paper is a morning edition
To dress for the weather, since they will be outside

They will learn responsibility by making sure the newspapers are delivered on time.

Sometimes there may be age limits, so if your child is younger, they might need to get a work permit. But often, kids as young as 11 or 12 can start with a bit of paperwork.

20. Sell used toys

Recently, I was on Facebook, and a parent was helping their child host a garage sale. They were letting their child take control of most of the sale, but the parent was posting about it in the group to get more traffic to their yard sale.

They were selling the kid’s used toys to help them declutter and make some extra money. I thought this was a great idea!

Kids can learn the basics of entrepreneurship by organizing and pricing their toys for sale. This activity not only teaches them about value assessment but also introduces the concept of supply and demand as they observe which toys are more popular among buyers.

People pay good money for used toys all the time, so this can be a great side hustle to get into.

21. Face painting

Face painting can be a fun and profitable small business venture for kids who love art and painting. They can start by setting up a face painting booth at local events or birthday parties.

Running a face painting business encourages kids to develop their entrepreneurial skills, from marketing their services to managing customer interactions.

22. Recycling collector

Kids who care about the environment can turn it into a business by collecting recyclables. With a passion for keeping things green, they can offer to gather recyclables from neighbors, schools, or local businesses.

This not only helps the environment but also teaches kids about reducing waste and recycling.

23. Vending machines

I have been seeing more and more parents starting vending machine businesses for their children.

Getting kids into the entrepreneurial world by running vending machines can be an interesting and educational small business idea. Whether they decide to place machines in school common areas or local community spaces, managing a vending business can help teach children valuable lessons in supply and demand, handling inventory, and understanding customer preferences.

Running vending machines also gives kids a chance to learn about financial responsibility as they handle income, expenses, and profit calculations.

Recommended reading: How To Start A Vending Machine Business

Frequently Asked Questions

In this section, you’ll find answers to common questions about starting a business as a kid.

What is a good business to start as a kid?

Starting a business that fits into their hobbies and interests makes a good choice. For instance, if they like technology, they might try starting a blog or YouTube channel. If they love the outdoors, then a lawn mowing or gardening business might be a better fit.

How can a kid make $100 dollars fast?

A kid can make $100 fast by selling their old toys or clothing items that they already have. You, the parent, can help them organize a yard sale or gather their items to sell in a Facebook buy/sell group.

What can kids sell to make money?

Kids can sell a lot of different things to make money, such as jewelry, paintings, greeting cards, homemade cookies, lemonade, used toys, and more.

What kind of businesses can young students start at school?

They can start businesses at school like a pencil and eraser store, a book swap service, or a snack bar (if the school allows it). Just remember to check in with the school’s rules to make sure their business idea is allowed on the school campus.

What steps can a child take to start their own business?

Here are steps a child can take to start their own small business:

Identify interests and skills – This will help them find a business idea that they actually like.
Research business ideas – Research different small business ideas suitable for kids and think about factors like their age, skills, and the resources available.
Create a business plan – Develop a simple business plan outlining the business idea, target audience, products or services offered, and basic strategies for marketing and sales.
Learn basic business – Introduce the child to basic business concepts such as budgeting, pricing, and customer service, and this can be done through discussions, educational resources, and more.
Decide on pricing – Teach your child about pricing by thinking about the cost of materials, time, and possibly profit. This helps them understand the value of their products or services.
Market the business – Your child could create posters, use social media with parental supervision, or spread the word within the local community such as by placing an ad on a local bulletin board.
Provide good customer service – I highly recommend making sure that you teach your child the importance of treating customers with respect and giving great service as this can lead to repeat business and word-of-mouth referrals.
Track finances – Teach the child basic financial management, including tracking income and expenses.
Celebrate achievements – Celebrate small victories and milestones to keep the child motivated and proud of their entrepreneurial journey.

Throughout this process, parental involvement is so important. Parents can guide, supervise, and provide a supportive environment for the child’s business, making sure it is a positive and educational experience (and safe!).

Can a 9 year old make a small business?

At around 9 years old, they can start businesses that use creativity and simple skills. For example, making greeting cards or friendship bracelets.

What business can a 10 year old make?

There are many things that a 10-year-old can do to make extra money. A 10-year-old can start a lemonade stand, sell crafts, do yard work, and more.

How can an 11 year old make cash?

There are many things that an 11-year-old can do to make extra money. An 11-year-old can rake leaves, walk dogs, sell baked goods like cupcakes, and more.

What are some simple business ideas for children under 12?

Younger kids can think about businesses like lemonade stands, which are simple to set up and manage. They also might create and sell craft items or start a pet sitting service for neighbors if they enjoy spending time with animals.

How can a teenager make money online?

A teen can make money online by blogging, offering online tutoring services, selling printables on Etsy, reselling items online, and more. I recommend reading 17 Online Jobs For Teens To Make Money to learn more.

How can children stay safe when starting a business?

When starting a small business as a kid, it’s important to think about safety and the rules they need to follow. For safety, always make sure they have an adult they trust to help watch over their business. If they’re selling something like food or crafts, make sure everything they use is safe and won’t hurt anyone.

For legal aspects, different places have different rules for businesses. They might need to ask for permission from someone (like you, the parent) or maybe need a permit.

They also need to make sure they have supervision, which means having an adult around to help them out and make sure everything’s going right. Monitoring what they are doing online, if they are dealing with customers, can be very smart because you never know who they are selling to or talking with.

Small Business Ideas for Kids – Summary

I hope you enjoyed this blog post about small business ideas for kids.

From traditional ways to make extra money like running a lemonade stand or mowing lawns to more modern business ideas like making and selling crafts or starting a YouTube channel, the possibilities for kid-run businesses are plentiful.

Starting a business as a kid can teach children valuable problem-solving and life skills. With the proper guidance and help, there are many different good business ideas that a kid can start.

I have been earning my own money from a young age, and it has taught me so much. I highly recommend helping your kids do the same!

What are your favorite kid business ideas?

Source: makingsenseofcents.com

Apache is functioning normally

February 25, 2024 by Brett Tams

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Mortgage interest rates for today February 22, 2024: Rates inch higher on many loan terms

While mortgage rates are relatively steady from yesterday’s numbers, overall averages are higher than they were last week. 30-year-fixed mortgages are 7.28%, which is one basis point lower than yesterday, but overall higher than it has been since early December 2023. 15-year fixed loan terms also increased, landing at 6.70%, while 30-year fixed refinance rates dropped slightly, hitting 7.28%. Predictions of a bumpy road for potential homebuyers seem to be a reality now, as rates are not falling as quickly as hoped. An overall downward trend is expected, but as of today, Wednesday, February 22, 2024, here’s where the numbers stand.

30-year fixed rates are 7.28%
15-year fixed rates are 6.70%
5/1 adjustable rate mortgages are 6.16%
30-year fixed refinance rates are 7.27%

The unchanged interest rates by the Federal Reserve have mostly positively impacted mortgage rates. Inflation has slowed in recent months, and market conditions are favorable with more student loan forgiveness announced today. Fed governor Christopher Waller believes the 2% inflation target rate is on the horizon. While the Fed rate does not determine mortgage rates, it sets benchmarks and impacts other rates, like mortgages.

Current Mortgage Rates for February 22, 2024

The National Association of Realtors does expect mortgage rates to steady in the 6% range by year’s end, but it will take a lot of ups and downs to arrive there ultimately. The Fed has a firm 2% inflation rate goal and with favorable economic reports on the job market, it’s unlikely they will cut rates until that goal becomes more of a reality. The latest announcement from the Fed kept rates steady again, signaling things are on the right track and hopeful homebuyers may have a more favorable market in 2024.

Daily Mortgage Rate Frequently Asked Questions

What is a mortgage rate? The rate of interest paid by the borrower to a lender for the length of a loan term. There are two types of rates: fixed and variable. Fixed remains the same and variable rates will fluctuate based on market conditions after a certain amount of time.
What are mortgage lenders? They are financial institutions that loan money to homebuyers. They are different from a loan servicer, which typically handles the operational tasks of your loan, like processing payments, conversing directly with borrowers and sending monthly statements.
What does it mean to refinance a mortgage? This is essentially trading in your current mortgage to another lender for more favorable rates and/or terms for your current loan. The new lender pays off your old mortgage and you then owe the new lender a monthly payment.
What factors influence mortgage rates? Mortgage rates are impacted by many factors, including inflation rates, economic conditions, housing-market trends, and the Federal Reserve’s policies. Lenders will also consider your credit score, down payment amount and other terms of the loan you’re requesting, like 30-year or 15-year offers.
How do I get the best mortgage rate? The best way to secure a good mortgage rate is to maintain a good credit score, have a stable income, shop around and research lenders, as well as understand and consider different types of loan options that are most suitable for your life and income. In some cases, increasing the down payment amount can result in better rates, too.
What is the difference between a fixed or adjustable-rate mortgage (ARM)? Fixed-rate mortgages offer a consistent interest rate throughout the period of the loan, whereas ARMs will typically start with a lower fixed rate for an agreed-upon time frame (e.g., 5-year ARM would have a fixed rate for the first 5 years) but will adjust to a variable interest rate based on market conditions for the remainder of the loan term. So, you could wind up paying more or less than your initial rate. Choosing between them depends on individual financial goals and risk tolerance.
When is the best time to lock in a mortgage rate? Mortgage rates can fluctuate daily, so it’s best to lock in a rate when you’re comfortable with the offered rate and conditions of the loan. Market conditions will impact the rates offered, so it’s important to pay attention to the changes.
How does the Federal Reserve impact mortgage rates? The Federal Reserve’s changes to rates for federal funds can influence short-term and long-term interest rates, which indirectly impacts mortgage rates, but it is an important distinction to know that mortgage rates are not directly determined by the Fed.
Can I negotiate my mortgage rate? Lenders set their rates using many factors so there may not be room to negotiate. You can, however, discuss options for reducing costs in other ways with your potential vendors.
What is the average mortgage rate in the US? Mortgage rates fluctuate and can vary based on loan terms, economic conditions, and individual qualifications. Checking current rates from different lenders will give you the best sense of rates each day.
What are the current mortgage rate loan types?
- 30-Year Fixed Rate
- 20-Year Fixed Rate
- 15-Year Fixed Rate
- 10-Year Fixed Rate
- 7-Year ARM
- 5-Year ARM
- 3-Year ARM

Current refinance mortgage rates for February 2024

Sources:

Source: aol.com

Apache is functioning normally

February 25, 2024 by Brett Tams

Earning returns can be exhilarating. But it’s important to remember that they don’t necessarily represent the money that goes in the bank. Commissions, taxes, and other fees impact the returns any investor makes on their investment.

Just how big a bite these investment expenses take out of an investor’s assets isn’t always instantly clear. But by understanding the fees they pay, and the taxes they’re likely to owe, investors can better plan for the money they’ll actually receive from their investments. And they can also take concrete steps to minimize the effects of fees and taxes.

Investment Expenses 101

There are a few different types of investment expenses an investor may come across as they buy and sell assets. Here are the most common ones.

Fund Fees

Mutual funds are a very popular way for investors to get into the market. They’re the vehicles that most 401(k), 403(b), and IRAs offer investors to save for retirement. But these funds charge fees, starting with a management fee, which pays the fund’s staff to buy and trade investments.

Investors pay this fee as a portion of their assets, whether the investments go up or down. (With employer-sponsored retirement accounts, the employer may cover the fees as long as the account holder is employed by the company.) Management fees vary widely, with some index funds charging as little as .10% of an investor’s assets. But other mutual funds may charge more than 2%.

In addition to the management fee, the fund may also charge for advertising and promotion expenses, known as the 12b-1 fee. Plus, mutual fund investors may have to pay sales charges, especially if they buy funds through a financial planner, or an investment advisor. While the maximum legal sales charge for a mutual fund is 8.5%, the common range is between 3% and 6%.

One way to understand how much of a bite these mutual fund fees take out of an investment on an annual basis is to look at the expense ratio.
💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

Advisor Fees

Investors may also face fees when they hire a professional to help manage their money. Some advisors charge a percentage of invested assets per year. More recently, some advisors have simplified the cost by simply charging an hourly fee.

Broker Fees and Commissions

Even investors who want to manage their own portfolios typically pay a broker for their services in the form of fees and commissions. These fees and commissions may be based on a percentage of the transaction’s value, or they may be rolled into a flat fee. Another factor that may influence the fee: whether an investor uses a full-service broker or a discount broker.

How to Minimize the Cost of Investing

No matter how an investor approaches the market, they can expect to pay some fees. It’s up to each individual to decide whether or not those fees are worth it. For some, paying a professional for hands-on advice is worth the extra annual 1% fee (or more) of their invested assets. For others, minimizing costs may be a priority. Among many options, there are a few investing opportunities that stand out as relatively low-cost.

Index Funds

When investing in mutual funds, one type of fund has established itself as the least expensive in terms of fees: Index funds. That’s because these funds track an index instead of paying analysts and managers to research and trade securities. When it comes to index funds vs. managed funds, proponents typically cite the lower fees.

Automated Investing Platforms

People seeking investing advice or guidance who don’t want to pay typical fees might want to explore automated investing platforms, also known as “robo-advisors.” Some of these platforms charge annual advisory fees as low as .25%. That said, these platforms often use mutual funds, which charge their own fees on top of the platform fees.

Discount Brokerage

Investors who manage their own portfolio may opt for a discount or online brokerage. These brokers tend to charge flat fees per trade as low as $5, with account maintenance fees also often as low as $0 to $50 per account.

How Taxes Eat into Investing Profits

There are typically two kinds of taxes that investors have to worry about. The first is income tax, and the second is capital gains tax. In general, income taxes apply to investment earnings in the form of interest payments, dividends, or bond yields. Capital gains, on the other hand, apply to the returns an investor realizes when they sell a stock, bond, or other investment. (The exception: The IRS taxes short-term investments, which an investor has held for less than a year, at that investor’s marginal income tax rate.)

By and large, capital gains tax rates are lower than income tax rates. Income tax rates for high-earners can be as high as 37%, plus a 3.8% net investment income tax (NIIT). That means the taxes on those quick gains can be as high as 40.8%—and that’s not including any state or local taxes.

The taxes on long-term capital gains are lower across the board. For tax year 2023, for investors who are married filing jointly and earning less than $89,250, the capital gains tax rate is 0%. It goes up depending on income, with couples making between $89,250 and $553,850 paying 15%, and those with income above that level paying 20%.

For tax year 2024, those who are married and filing jointly with taxable income up to $94,050 have a capital gains tax rate of 0%. Couples making between $94,050 and $583,750 have a rate of 15%, and those with income above that have a tax rate of 20%.
💡 Quick Tip: Automated investing can be a smart choice for those who want to invest but may not have the knowledge or time to do so. An automated investing platform can offer portfolio options that may suit your risk tolerance and goals (but investors have little or no say over the individual securities in the portfolio).

Strategies to Minimize Taxes

There are a few ways an investor can minimize the impact of taxes on their investments. One popular way to take advantage of the tax code is by investing through a retirement plan, such as a 401(k), 403(b), or IRA. All of these plans encourage people to save for retirement by offering attractive tax breaks.

For tax-deferred accounts like a 401(k) or traditional IRA, the tax break comes on the front end. Retirees will have to pay income taxes on their withdrawals in retirement. On the other hand, retirement accounts like a Roth 401(k) or Roth IRA are funded with after-tax dollars, and money is not taxed upon withdrawal in retirement.

Another approach some investors may want to consider is tax-loss harvesting. This strategy allows investors to take advantage of investments that lost money by selling them and taking a capital loss (as opposed to a capital gain). That capital loss can help investors reduce their annual tax bill. It may be used to offset as much as $3,000 in non-investment income.

The Takeaway

Fees and taxes typically do have an impact on an investor’s returns on investments. How much they eat into profit varies, and is largely dependent on what the investments are, how they are being managed, and how long an investor has had them. Other factors include the investor’s income level, and whether they’ve also lost money on other investments.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing.

Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.

SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

SOIN0224024

Source: sofi.com

Apache is functioning normally

February 24, 2024 by Brett Tams

Knowing your risk tolerance is an important factor in investing. Some investors are willing to take big risks with the potential for big rewards. Others prefer to minimize their losses, even if it means smaller returns.

Determining what type of risk taker you are by taking our risk tolerance quiz can help you decide how best to invest your money. The stock market can be volatile, and the assets and allocations you choose should be those that make you feel comfortable personally and financially — especially for the inevitable dips in the market.

What Investment Risk Tolerance Is

When it comes to investing, understanding risk tolerance involves the following three factors:

• Your risk capacity: This is your ability to handle risk financially — the amount of money you can afford to lose without impacting your financial security. How close you are to retirement and the financial obligations you have will affect your risk capacity.

• Your needs and wants: These are your goals for your finances and your lifestyle. For instance, maybe you want to retire soon or save up for a down payment on a new house.

• Your emotional risk IQ: This is about your personality and how you see risk. You might be a thrillseeker who likes to live on the edge. Or perhaps you prefer a sure and steady approach.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Risk Tolerance Quiz

Take the risk tolerance quiz below to find out, then read on to learn about the best investment strategies for your investing style.

What Your Risk Tolerance Means

Now that you know whether your investment style is conservative, moderate, or aggressive, you can dig a little deeper to understand what’s driving your specific risk tolerance.

First, of course, there are the goals you’re saving and investing for. Is it retirement? A down payment on a new house? Sending your kids to college? Where your money is going will make you more or less willing to take risks for the potential of higher returns.

Your time-frame is another major factor. If you plan to retire in a few years, you have less time to recover from possible losses, so you’ll likely take a conservative approach to investing. You need your money to be there so you’ll have income to live on in your golden years.

But if you’re a newbie investor in your 20s, you have decades ahead of you with plenty of time to recoup any losses. In that case, you may be more aggressive with your investments to try to maximize your returns. And if you fall someplace in the middle of these two groups, time-wise, you might favor a more moderate investing strategy that balances risk and reward.

Your income is also very important. If you expect your income to grow, you may feel freer to take risks. But if your income is uncertain — maybe you’re a freelancer, for instance — or you don’t anticipate your salary to grow, you might be much more cautious with your money.

Finally, there’s your temperament. If you invest in stocks, for example, are you going to be filled with anxiety every time the market dips? Or are you more or less unflustered by swings in the market?

Thinking about these different factors can give you some insights into your feelings about money.

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*Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

Finding Investments That Match Your Risk Tolerance

With this new knowledge in hand, you can invest your money in a way that makes sense for you and the amount of risk you feel comfortable with. These are some scenarios you might want to think about, depending on your investment style.

• Conservative: A conservative investor may opt for a portfolio that mainly consists of funds that tend to be stable and lower risk, such as money market funds and government bonds.

• Moderate: An investor who takes moderate risks might choose to balance their portfolio between riskier assets like stocks and more stable investments like money market funds and bonds.

• Aggressive: This type of investor will likely gravitate to assets with a high potential for return, but also a higher potential for volatility and loss, such as growth stocks and options trading.

Whatever your risk tolerance is, it’s wise to diversify your portfolio across different asset classes including stocks, bonds, and commodities.

The Takeaway

Each investor has a risk tolerance level depending on their individual circumstances. A risk tolerance quiz can help you evaluate how much risk you should take.

That said, it’s vital to know that all investments come with some degree of risk. A conservative investor will likely feel better with lower risk investments, while an aggressive investor will typically look for assets with high growth potential, despite the higher risk they pose.

Once you have investments that suit your style and temperament, the better you may feel about your investment strategy. Just be sure to check your investments regularly to make sure they’re on target to get you where you need to be to meet your financial goals.

Invest with as little as $5 with a SoFi Active Investing account.

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Source: sofi.com

401(k) Plans

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Vesting in a 401(k) Retirement Plan

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Vesting in a 457 Retirement Plan

457 vs 401(k): Comparing the Pros

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457 vs 401(k): The Differences

457 vs 401(k): The Similarities

457 vs 401(k): Which Is Better?

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Is $40,000 a year considered middle class?

1. Identify potential market impact

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4. Work with a trusted partner

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Episode transcript

What’s Your Money Personality?

Steady Saver

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

Super Spender

The Money Shunner

The Takeaway

FAQ

What are some common money personality types?

How do I know if my money style is too much about spending?

If my money style is a saver, isn’t that good?

Best Small Business Ideas for Kids

1. Sell arts and crafts

2. Tutoring

3. Babysitter

4. Pet sitting and dog walking

5. Lemonade stand

6. Mow lawns