Plan Well, Retire Well Saving and investing your money Sun, 15 May 2005 13:02:08 -0500 https://web.extension.illinois.edu/cfiv/eb141/rss.xml How Do You Save Money During the Summer? https://web.extension.illinois.edu/cfiv/eb141/entry_13446/ Thu, 21 Jun 2018 10:54:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13446/ Happy first day of summer!

For those of us in the colder regions of the U.S., the warmer months present us with options we longed for during the winter, but how do we take advantage of the warm weather? What are some ways we can save over the summer?

Check out local opportunities: If you are like me, you may miss some of the great events or opportunities that are available in your community. I started paying closer attention to the information available through my local parks and recreations office and I talk to friends and colleagues about things they do with their families. My family and I love attending local fairs and festivals and visiting local museums, splash parks, and beaches. Other low-cost opportunities may be available through community centers and community-based non-profit agencies.

Plant a vegetable garden: If you are looking for fresh and healthy food options over the summer, consider planting a garden (if that is a possibility for you). One of my colleagues just wrote a great article on gardening, which highlights some of the tremendous benefits of planting your own vegetables or other small crops. For instance, being outside helps stimulate thought and provide sanctuary in our busy lives. If possible, get the whole family involved. Younger children or grandchildren can help with watering the plants and checking in to see how they are growing.

Bike to work or around town: Depending on your capabilities, biking is a good way to save on gas. This type of activity also has great health benefits. The World Health Organization (WHO) stated that physical activities like biking help prevent diseases such as stroke and diabetes and help improve physical and mental health outcomes. If you decide to bike, please remember to pay attention to heat advisories and travel with water.

Plan day trips or short road trips: Summertime is a prime time for travel for many families. Pay close attention to the high and low seasons for travel. During high season or months, it may cost you more because of demand. Day trips can help you save on hotel and other accommodations. If you are looking for more ways to make the best of your summer and do more with your family or friends, you also could think about camping. If you already have camping gears, maybe plan a short camping trip instead of a road trip.

Pack lunches, snacks, and reusable water bottles: This is a great practice throughout the year. As a basic need, food often ends up being a major expense. There are many ways to save on food. Packing lunches for work or other outings help you make healthier food choices and may reduce food spending and waste. Researchers and nutrition experts estimate that billions of pounds of food are wasted each year in the United States. I know it is hard to pack a lunch every day. However, you can include lunch items in your grocery shopping, use leftovers, and prepare over the weekend or overnight. In addition to packing lunches during the summer, when the weather is high, make sure to invest in reusable water bottles, which helps save on buying bottled water.

Air-dry clothes instead of using the dryer: This depends on where you live, but if you have the option to air-dry your clothes on a line in your yard/on your property, you could save on energy cost during the summer months.

Use community resources: What programs are available during the summer through your local libraries and parks and recreation centers? This ties the earlier point about paying attention to local opportunities or events. One example, there are some low-cost youth and adults swim programs for community members. There also are summer food and reading programs that offer low-cost or free activities for individuals and families.

What are some other ways you or family save during the summer? Tweet at me: @SaveFearlessly - This is how I save money during the summer.

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Is Gardening Garbage or Great? https://web.extension.illinois.edu/cfiv/eb141/entry_13426/ Thu, 14 Jun 2018 11:48:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13426/ For the last two summers, my family and I have had a garden in the backyard. We take the time to till the soil, plant the vegetables and herbs, then wait. This summer I want to track my spending and see if my time and money it's really worth having a garden.

This year we planted:

  • 7 tomato plants (roma, heirloom and cherry)
  • 4 bell pepper plants
  • 1 jalapeno plant
  • 1 broccoli plant
  • 1 brussel sprout plant
  • 2 basil herbs
  • 1 rosemary herb
  • 1 head of lettuce
  • Plus some seeds for zucchini and squash
  • All for a total of around $110

Why Garden?

According to the University of Illinois Extension, Urban Gardening Educator, Ron Wolford – Gardening can:

  • Make you healthier and happier
  • Is a peaceful and stimulating environment
  • It's a tool to help people cope with issues such as anxiety, depression and conditions affecting physical health
  • Stimulated thoughts
  • Exercises the body, fresh air, and vitamin D
  • Encourages awareness of the external environment
  • Renew desire to live
  • Increases flexibility, hand strength, and hand-eye coordination
  • Provide sanctuary in our busy lives

Learning from mistakes

I will say in years past, I have made a few mistakes that may have made the gardening experience not valuable to be financially -- including not fencing off my garden, planting too many of one kind of plant as well as not watering it enough. One mistake I learned was growing too many cucumbers. I've found that they go in abundance and we don't consumer them before they go bad!

TIP: If you're thinking about planting a garden, plant vegetables, fruit, herbs that you like! This will motivate you to tend to your garden.

Time vs Cost

One of the main concerns about having a garden that I hear, "is it worth having a garden?" There are many benefits of having a garden, enjoying the produce, getting to be outside in the sunshine, and being proud of the accomplishment. To me, having my garden fresh tomatoes made into a pasta sauce that I can enjoy later is not only something I value but I also enjoy.

When gardening there are other factors to consider including:

  • Your time – how many hours are you spending per week on your garden?
  • Water costs – how much more will your water bill be?
  • Opportunity cost – time in my garden verses buying the produce in a grocery store

Let's Learn Together

I want to challenge our readers to follow along with me in my garden budget to see if having a garden is more of a time suck or time worthy! Plus it'll be a learning experience for all of us as well see what produce is harvested and how it all plays out financially.

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Let's Shop for Mortgage Loans https://web.extension.illinois.edu/cfiv/eb141/entry_13415/ Fri, 08 Jun 2018 13:58:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13415/ Are you shopping for a new home to purchase? If so, are you spending enough time shopping for your mortgage loan too?

Shop around to find the best interest rate you can on loans. According to research from the Consumer Federal Protection Bureau (CFPB), many people think the rates at different financial institution are the same – but that's not necessarily true! Additionally, research indicates that failing to comparison shop for a mortgage costs the average homebuyer approximately $300 per year and many thousands of dollars over the life of the loan.

Even given the same loan amount, credit score, and other basic information, financial institutions often offer different loan interest rates. For example, today the Explore Interest Rate tool on the CFPB website shows that for someone with a credit score of 690, most lenders in Illinois are offering rates at or below 5.0% for a 30 year, fixed rate, $135,000 loan. However, if someone didn't shop around and just went to one lender to apply for a loan, they could be offered interest rates as low as 4.625% or as high as 5.875%!

Does a difference of 1.25% really matter? Yes! Even small variations in a 30-year interest rate can add up over time to big dollars. In the first 5 years, the higher rate would cost someone $8,402 more than the lower rate. Over 30 years, it would cost them more than $37,600. Shopping around can save you money.

I've heard people say they don't want to shop for a loan because they worry that it will hurt their credit score. We do need to keep our credit scores in mind when applying for loans. However, according to the CFPB, if you submit multiple mortgage applications within 1 - 45 days of each other, it will NOT affect your credit score.

What are good mortgage shopping strategies?

First, check your three main credit reports to make sure there aren't any errors and to see what steps you can take to raise your credit scores. You can receive each of your three reports free at www.annualcreditreport.com. If you'd like a paper form to submit, rather than collecting the reports online, you can download it or call your local Extension office.

Your reports at the different credit bureaus may be different, and any of the credit reports could have errors. Check your reports a few months before you plan to purchase a home so that you'll have time to make any necessary corrections.

Next talk to multiple lenders -- at least three is recommended. Make sure to compare the overall terms and fees for each loan to understand the true cost of each loan you're considering.

Ask each lender about other loan products they sell that might be right for you. You may qualify for several different loans, and the rates and fees on each product are likely to vary.

When you're ready to move forward with a home purchase, ask lenders to complete a Loan Estimate form so that you can make the best decision for you.

Throughout the home buying process, take the time to visit the Consumer Federal Protection Bureau's Owning a Home website for excellent resources such as a Roadmap to Help You Plan and the Loan Estimate Explainer.

I really like their interactive Explore Interest Rates tool, at, that allows you to input your state, loan amount, credit score and other variables to see what interest rate you're likely to pay and how that affects your monthly payments. The data on this page is updated twice a week. Even if you're not buying a home, it's very interesting to see how changing one variable affects monthly payments.

Buying a home is an exciting but challenging event! Take the time to do your research and shop around for the home AND the mortgage to keep your costs lower.

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Summer Employment: Saving with Your Youth https://web.extension.illinois.edu/cfiv/eb141/entry_13390/ Thu, 24 May 2018 11:22:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13390/ What summer jobs have you done? Why did you choose those jobs? I have worked many summer jobs over the years to save and pay off debt. This type of seasonal work is important to our economy, and it has important personal financial effects on youth and their families.

July is the summertime peak for youth employment and these opportunities help them to gain experience, build confidence, and earn money. These types of rewards have long-term effects on their overall financial well-being. So, how do you (e.g. parents, caregivers, or grandparents) help youth who are earning their own money develop healthy financial behaviors?

  • It is important to start by exploring who you are with money and examine the best approaches you have taken to manage your income and expenses. Even though you may have had challenges in our pasts and current blind spots with money management, working with your youth to help them organize their finances (no matter how small) is important. For example, creating a list of needs vs. wants is an important step in that direction.
  • If you struggle with saving and overall financial management, you also can start by making changes together. For instance, if you have direct deposit set up for your personal accounts, but you do not arrange automatic savings; those are two things to start the conversation with your teens. Depending on developmental age, talk with them about some of the barriers you have experienced and the multiple benefits of saving (e.g. unexpected expenses and fulfilling goals).
  • Think about more strategies that you can use to teach them about money and effective ways to save. Help them establish regular savings accounts and learn about the interest rates associated with this type of account.
Developing and maintaining healthy saving and money behaviors is an ongoing process. Parents and caregivers play a significant role in helping working youth effectively manage their money. Here are a couple more supporting examples from America Saves:
  • When youth have a plan, they are more likely to move toward their saving goal.
  • When youth set up direct deposit (if available through an employer) and save automatically to an account, they are developing positive savings behaviors.

Summer employment has a number of benefits for youth. It also provides opportunities for families to reestablish saving goals and to help build lifelong positive money behavior in youth.

 

Follow us on Facebook at Plan Well Retire and Twitter @SaveFearlessly


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The Easy Way to Set Up a Spending Plan. https://web.extension.illinois.edu/cfiv/eb141/entry_13344/ Mon, 30 Apr 2018 16:49:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13344/ Have you ever thought about setting up a spending plan (aka budget) but it seemed like too much work? Here's an idea that can help jumpstart that process.

Usually financial experts suggest that you track your expenses for a month first, to see where your money is actually going. Then you create your budget based on that information. That's a useful process. But I have a different approach that will let you establish a pretty realistic budget today or maybe tomorrow, instead of next month.

Start by doing a quick-and-dirty estimate of your monthly expenses by looking backward at the past month. For most people today, the vast majority of our expenses leave a paper (or electronic) trail.

  1. Choose categories that reflect your expenses (housing, food, entertainment, healthcare, transportation, etc.). Make columns for each of these, using a spreadsheet or just a sheet of paper with columns drawn in.
  2. Look at your checking account, your credit card statements, your monthly bills, etc. to find records of your expenses.
  3. List each expense under one of your categories, and then total your expenses by category.
  4. The only thing you'll be missing is cash expenses. Can you guestimate those by looking to see how much cash you withdrew from your checking account last month?

This might take you just one hour, maybe two if you're a perfectionist. And you're ready to create your spending plan!

Looking at last month's expenses, estimate how much you'll spend in each category this month. Also think through the year and make note of non-monthly expenses you need to include in your budget, such as car registration, family vacation, holiday celebrations, memberships, etc. Also make an estimate of how much you'll spend on unexpected expenses such as emergency car repairs, doctor visits, and veterinarian services.

You can find forms for spending plans lots of places. There's one created by us – University of Illinois Extension – at http://bit.ly/U_I_SpendPlan. The Department of Labor has a great one in their Savings Fitness book (download PDF), and there's even an interactive (fillable) version of it at http://bit.ly/Savings_Fitness_Worksheets. Click on #5. Register if you'd like the site to save your work.

Once you've created your spending plan, track your expenses for the coming month so that you can compare your actual expenses with your plan. Total your expenses by category every week or at the end of the month. Weekly can make the task more manageable if you're manually adding up the numbers. Plus, you can catch problems sooner, such as a category where you're spending much more than expected.

Don't expect your expenses to match your plan perfectly. In my mind, that's not even the goal. The goal is to have a plan that will guide your spending decisions during the month and help you stay on track overall.

Here's a story that will show you what I mean.

Years ago, I was teaching a class about budgeting where we met two times, one week apart. At the first class, I asked the participants to identify three kinds of expenses that they spent cash for. (Nowadays, I would probably ask about expenses they pay with a debit card, since many of us use so little cash.) We were learning envelope budgeting, where you have an envelope for each spending category. In each envelope, you put the amount of money you expect to spend in that category. One of the women -let's call her Maria – chose lunch at work, groceries, and I've forgotten what the third category was.

The next week, I asked the participants how it went. Maria said, "It didn't work." I was a little surprised, so I asked her to tell me what happened.

Maria explained, saying, "I usually go out to lunch once a week, on Friday. So I put $15 in my 'lunch at work' envelope. On Friday, I went out to lunch and spent almost exactly $15. But then on Monday, someone in the office decides that we have to take Matt out to lunch because it's his birthday. Now I've got to buy lunch for myself, plus chip in for his. It was $25!"

"What did you?" I asked her.

"I was planning to go to the grocery store after work, so I had my grocery envelope with me. I took the money out of that."

I asked, "And what happened when you went to the grocery store?"

"Well, now I only had $100 in that envelope instead of $125. So I had to buy different things – cheaper things – than I had planned, and I put off a few things."

At that point I asked, "What would you have done at the grocery store if you hadn't divided your money up into envelopes, if you just had all your cash in your wallet?"

Maria answered, "Oh, I would have spend the whole $125 like I usually do!"

I told the group that, to me, the plan had worked. Because she knew she had spent more on lunch that she had planned, she knew she had to make up the difference somewhere else. And she did it! Overall, her spending plan stayed on track.

By having a plan, she was able to make better decisions when unexpected circumstances arose and therefore she had a better chance of staying within her overall budget. That's what I call success!

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Money Smart Week: A Chance to Keep Up with Changing Realities https://web.extension.illinois.edu/cfiv/eb141/entry_13305/ Wed, 11 Apr 2018 14:58:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13305/ After over 20 years of teaching personal financial management, I am still looking for more ways to empower people to use money to reach their goals and dreams. As our economy, societal practices, and laws change, our approaches to financial management education need to change too.

In the past few weeks, our Extension office presented "Welcome to the Real World," a financial career simulation, to over 225 students from six different schools, with the help of over 35 volunteers. (Thank you volunteers!) This program has been around awhile and it continues to evolve with the times. Students still write a few checks for their purchases but we also teach about using debit cards and automatic withdrawals. I can imagine a day where we won't be teaching check writing anymore.

Our Money Mentor's Book Club is currently reading The Financial Diaries: How American Families Cope in a World of Uncertainty, by Jonathan Morduch and Rachel Schneider. Financial Diaries describes a research study, which collected detailed financial data from 235 low- and moderate-income households over the course of a year. The book focuses on the volatility of people's incomes and the variability in monthly expenses. For example, for more than five months a year, the average family's income was 25% above or below their median income. Wow! This has significant implications for how I teach money management skills related to budgeting and saving.

One of my favorite financial management strategies that I share with people is the usefulness of tracking their monthly expenses in order to see where there money is really going. Also, this strategy allows people to see if their spending aligns with what's important to them. I've been working under the assumption that most of the time their expenses are relatively consistent month to month; now I need to rethink that. Tracking expenses is still a good strategy; however, people may need to track expense for longer to understand their expenses.

While reading this book, I realized that I don't emphasize tracking income month to month. I am changing my teaching strategy on this now. Clearly, we need to have good data about our income flow as well as our expenses to develop a working spending plan.

What has changed in your money management practices that reflect our changes in our world? What do you need to learn about that's new in personal finance?

Money Smart Week is a great opportunity to learn new financial strategies. Money Smart Week is celebrated nationwide and likely in a community near you. Sponsored by the Federal Reserve Bank of Chicago, it is organized by local libraries, credit unions, banks, social service agencies and educational groups. Mark your calendars for April 21 – 28, 2018. All events are free and sales pitches aren't allowed. Check the online Money Smart Week calendar to find nearby events.

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Mind Your Money https://web.extension.illinois.edu/cfiv/eb141/entry_13272/ Thu, 29 Mar 2018 09:27:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13272/ Greetings!

I am so thrilled to contribute to the Plan Well Retire Well blog. My name is Camaya Wallace Bechard and I am the new Consumer Economics Educator for Livingston, McLean, and Woodford counties. I love learning about new research and approaches to improve and maintain our well-being.

Recently, I read an article about using mindfulness techniques when managing your finances. I first learned about to this concept five years ago. A very simple way to describe mindfulness is that it focuses on breathing techniques, which over time allows you to become more aware of your thoughts and emotions. This increases calmness, reflectiveness, and thoughtfulness. It develops self-awareness and self-observation that helps us to make effective and planned decisions. I did not get far with these techniques five years ago. Being a little older and wiser, I decided to pay closer attention and embody some of these principles in my financial decision-making.

My family's food budget includes bulk household shopping once per month and weekly purchases for fresh fruits and vegetables. A few weeks ago, I decided to get all the groceries I needed over the weekend and that way I didn't need to run to the grocery store during the week for lettuce if I needed to make a sandwich. When I go during the week, I noticed that I would pick up more than I intended to on those grocery trips. Therefore, to stick to my budget, I decided to change things up and get everything I needed by Sunday night. I have a more focused weekend shopping, so it does not take too much time away from doing things with the people in my life.

This switch made my week feel very boring because I liked running to the store during the week! However, that behavior was causing me to overspend. After reading this article, I started with one technique that has helped me:

Pause and Plan: Have you ever bought an item and by the time you got home, you started feeling a sense of regret?

  • This approach allows you to carefully think about what you buy and how you spend
  • You plan each shopping trip
  • It reduces impulsive financial behaviors
  • It works for small, medium, and large purchases
  • It is deliberate!

Mindful financial techniques also incorporate "readiness to change", which influences our money decisions. I wasn't ready to give up my grocery trips during the week, but by doing so, I was home an hour earlier. I also remembered to bring my shopping bags and some grocery stores reward you for using reusable bags. Best of all I did not overspend!

It takes time, it is a gradual process, but it is achievable! You can start by thinking about some of the taken-for-granted money behavior that you do daily or weekly. For example, your daily coffee purchases, buying soda at the gas station or eating out two or more times weekly. You do not have to be an expert in mindfulness to start following simple strategies:

  • Adopt new attitudes that support positive and purposeful financial management
  • Believing in your capability to make thoughtful and responsible financial decisions is an important step toward your financial well-being
  • Do not let past failures with budgeting or other financial planning prevent you from explore and learning new ways to be a good manager of your money!

As you make plans for Easter or upcoming activities, think about this approach and how it can help you in your decision-making.

 

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