patterns
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Chapter 1: What Is a Budget & How to Create One
Creating a budget can offer you peace of mind and give you more confidence in managing your finances. A budget can help make you more aware of how you spend your money, and the places where you may be spending…
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What Type of Houseplant Should You Get? [Quiz]
Find your perfect plant match!
The post What Type of Houseplant Should You Get? [Quiz] appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
Which of the 3 Financial Phases Are You In?
Every year we see the same months, holidays and seasons â itâs all pretty predictable. While you may not know when a winter storm will hit, you can usually count on chillier weather come winter. The same can be said for financial phases. While not always easy to predict, you can find patterns if you look for them.
But how does knowing a financial phase pattern help? When it comes to financial planning, the answer is a lot.
What are financial phases?
There is a natural ebb and flow to money habits throughout the year. For example, most of us tend to spend more around the holidays because of gifts and parties. When January hits, people take a look at their budget, set goals for the year and attempt a financial diet. The same can happen in the summer as people splash out on vacations or enjoy a plethora of activities with their families.
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Patterns can also occur throughout, showing up in spending and savings habits. Recent college grads probably live on a tight budget with less savings, whereas an established professional might be more focused on long-term goals, such as buying a home or saving for retirement.
Is it the same for everyone?
While the year can offer similar periods of spending and saving, each individual has their own plans, priorities and habits that make them unique. If you enjoy saving, maybe you take vacations during shoulder seasons to take advantage of lower hotel and airfare prices or you sign up for a credit card (of course, paying it off every month) that supports your travel habit â think free rooms, reduced flights, etc. Or if you always go big on your birthday each year, you create a plan to automatically save money every month into a âbirthday fundâ so when the time comes each year youâre ready.
The same is true when looking at life patterns or saving and investing. If you land a well-paid job out of college, perhaps you spend more lavishly than the average early 20-something would. Or someone who joined the FIRE movement would contribute to their retirement and save differently since they have a different goal. Itâs important to understand that each person has their own goals and priorities, and sometimes life gets in the way with unexpected obstacles.
How does knowing this help?
Knowing the patterns can help you plan for the future. If flying home for the holidays with a Santa sack of gifts is your pride and joy, you can plan ahead by only eating in or cutting back on entertainment a few months in advance. When you know something happens annually that you want to enjoy to the fullest and not worry about your cash flow, you can budget it in fun ways beforehand.
For example, if you love having happy hour with friends every week, maybe offer to host it at your house for one month. Rotate who brings the drinks and apps each week, and what you spend in one month can easily be equal to what you spend in one week out on the town.
Taking the time to write down important things to you, both annually and in the bigger picture, is a great starting point. If some of these items have regularly occurring dates, like holidays or birthdays, you can build specific timelines around when you need to focus on saving.
Sometimes there are unplanned events, like weddings or concerts, but you can find ways to save all year round so you have a sturdy fun fund waiting for you when you need it. (Of course, you should only build a fun fund after you have a solid emergency savings fund.)
What phase am I in?
The economic life phase youâre in isnât necessarily tied to your age, as many people assume. Weâve uncovered that the phases actually better reflect where you are in your life, which is split into three different phases: (1) build and grow, (2) transition (3) and finally, distribute and deploy. For example, a 35-year-old in the FIRE movement and a 68-year-old late saver for retirement can both be focused on their transition into retirement.
Assessing your stage and adjusting your plan should be an ongoing process, but you can only know the phase you are in after you articulate your goals.
Financial phase No. 1: Build and grow
During this phase, decide on your long-term goals and plan for them. Is saving for retirement a top priority? Work toward maximizing your contributions to your 401(k) plan. (A tip I learned early on: When you receive raises, save more and live off of the amount you were already comfortable with.) Or, is buying a home a priority? Then figure out a savings plan for a deposit, mortgage and other expenses that is realistic and build on it.
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The build and grow phase is also about protecting your future earnings. This is a good time to look at life insurance and create an estate plan for you and your family. Iâm currently in this phase and wanted to ensure that (as scary as it is to think about!) my husband and boys would be OK if something were to happen to me. We bought term life insurance for each of us and created an estate plan to dictate what would happen if something were to happen to me or my husband. This gave us both peace of mind.
Financial phase No. 2: Transition
During this phase, itâs important to understand what youâve built during your years of saving. Itâs also the time to figure out how you want to live once you decide to leave full-time employment. Working with a financial adviser to do a financial goal assessment is important to project how well youâve saved.
If you havenât done a budget yet, itâs critical to understand your spending so you know what you will need to live off of.
During this phase, itâs important to factor in possible moves â do you want to stay in your home, downsize or even upgrade? Are there any plans to buy a second home to travel to since youâll have more time? These are factors to take into account.Â
Itâs also critical to assess how much risk youâre taking in your portfolio â this is the time to really have a good plan for protecting your assets. If something big happens in the market, it would be terrible to lose a large amount of money and delay your plans to make this transition.Â
Financial phase No. 3: Distribute and deploy
In this phase, understanding where and how you are going to pull from your assets is crucial. There are important strategies to think about and tax consequences to consider.Â
If you are well-funded and have excess assets, thinking about how you are going to leave your legacy is also important. There are many ways to give, including charities, foundations and personal gifts, and these can be structured to be given while you are alive or after you pass. The beauty of it is, itâs all your choice as long as you have a good plan.
No matter what financial phase you are in, planning and preparing for the next step will always yield positive results. The better you articulate your goals, for both the short and long term, the more likely it becomes you can achieve them.
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32 Inexpensive Ways to Refresh Your Home Room by Room
Spring is here, and for many people, that means seasonal cleaning and a home refresh. If youâre looking for some budget-friendly changes that will bring new life to your rooms, we have those for you. Before you start, itâs a good idea to clear any clutter you may have. If you tend to hoard, you […]
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Copy Trading Defined – Can You Make Money Mirroring a Professional?
Stock Market Today: Stocks Scratch Out Meager Gains
Wall Street seemed to be en route to another day of losses, but a strong jobless-claims report helped stocks gain some momentum ahead of the week’s final session.Â
The Labor Department on Thursday said that for the week ended April 2, just 166,000 Americans filed for unemployment benefits â the lowest number since November 1968 (though also what they were for the week ended March 19). It also easily flew in lower than the 200,000 claims expected.
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“Initial jobless claims looked too good to be true,” says Edward Moya, senior market strategist at currency data provider OANDA. “Today’s impressive claims data reminds Wall Street that the labor market is ‘firing on all cylinders’, which should allow the Fed to continue to solely focus on inflation.”
However, while the markets did manage to turn higher, it was primarily led by defensive names. Pfizer (PFE, +4.3%) and Thermo Fisher Scientific (TMO, +4.2%) were among the best performers in the healthcare sector (+1.9%), while Costco (COST, +4.0%) and Target (TGT, +5.7%) helped lift consumer staples stocks (+1.2%).
The end result was modest gains among the major indexes. The Dow Jones Industrial Average closed up 0.3% to 34,583, the S&P 500 improved 0.4% to 4,500 and the Nasdaq Composite eked out a marginally higher finish at 13,897.
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“We continue to see defensive trading patterns in the options market, especially at the onset of earnings season, and remain surprised that the Cboe Volatility Index, or VIX, remains relatively subdued,” says Steven Sears, president and chief operating officer of asset-management firm Options Solutions. “If earnings reports are as stressed as many investors believe they could be amidst these extraordinary economic and risk conditions, we could see a sharp investor re-rating of risk assets.”
YCharts
Other news in the stock market today:
- The small-cap Russell 2000 fell 0.4% to 2,009.
- U.S. crude futures slipped 0.2% to $96.03 per barrel, marking their third straight loss.
- Gold futures gained 0.8% to settle at $1,937.80 an ounce.
- Bitcoin retreated 0.8% to $43,414.98. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Deutsche Bank analyst George Hill downgraded Rite Aid (RAD, -17.2%) to Sell from Hold and slashed his price target on the pharmacy chain to a mere dollar per share from $16. The bruising analyst note comes ahead of RAD’s fourth-quarter earnings report â due out after the April 14 close â in which Hill will closely be watching the company’s guidance for its next fiscal year. Why? “Because RAD needs to generate $190 million to $200 million in cash annually to cover its debt service costs, plus another $200 to $250 million to cover its store maintenance capital expenditure requirement, meaning RAD needs to generate ~$400 to $450 million in annual adjusted EBITDA [earnings before interest, taxes, depreciation and amortization ] to continue as an operating company,” Hill writes in a note. Anything below that $400 million mark and “the equity arguably has no value as the company is not in a position to generate real returns to shareholders,” he adds.
- Ford Motor (F) skidded to a 2.9% loss after Barclays analyst Brian Johnson cut his rating on the automaker to Equalweight from Overweight (the equivalents of Hold and Buy, respectively). The analyst said Ford remains “vulnerable” to an ongoing global semiconductor shortage, while additional macro headwinds like commodities inflation could pressure margins. “Despite the selloff, we believe investors are still underestimating risks to the sector â and in particular to suppliers – from inflation and production pressures â as well as the impact of interest rate hikes on portfolio allocations,” the analyst says.
Buffett Makes Another Big Buy
One of the day’s most noteworthy gainers was printer leader HP (HPQ, +14.8%), but it had nothing to do with any economic indicators. No, HP’s good fortune was a vote of confidence from none other than the Oracle of Omaha.
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Last night, Warren Buffett’s Berkshire Hathaway disclosed a huge 11.4% stake in HPQ stock, immediately making it a dominant shareholder in the PC-and-printers name. Berkshire bought up 121 million shares worth $4.2 million, surpassing asset manager Vanguard as the top holder of HPQ.
Much of the Berkshire Hathaway portfolio represents bets by one of the greatest investors of all time, so as most of our readers know, we regularly keep tabs on what Buffett is buying and selling. But he has been busier than usual of late, also taking a massive stake in oil play Occidental Petroleum (OXY) and outright buying insurer Allegheny (Y) in the past month or so alone.
Berkshire’s most recent splash might leave some investors scratching their heads. But we explain why and how the HPQ stake move looks like a classic Buffett bet.Â
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How the Fed Interest Rate Increase Will Affect You
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