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Category: Financial Planning

  • Fast Track Your Emergency Savings in Just 100 Days

    Fast Track Your Emergency Savings in Just 100 Days

    An emergency fund is a safety net for your financial life. It keeps you from sliding into debt when an expected event happens. But saving up a few thousand dollars can be overwhelming, especially if you’re starting from zero. Fortunately, you can build an emergency fund in just 100 days with the right plan and a little consistency. Here are some tips to help you make this happen:

    Know Your Target

    Decide how much you need before you start saving. A common goal is $1,000 to $2,000 to cover small emergencies. It is good to aim higher, but it is best to start with a doable goal for this 100-day plan.

    You should break your target into daily or weekly goals. Thinking in small amounts makes it easier to stay on track and stay motivated.

    Set Up a Separate Account

    Open a savings account just for your emergency fund. This keeps the money out of sight and less tempting to spend. Look for a high-yield savings account if possible. This allows you to earn a little interest while your fund grows. 

    Also, automate transfers from your checking account to this new savings account. You are less likely to skip a deposit  if the money moves automatically, 

    Cut One Expense Each Week

    You do not have to overhaul your lifestyle overnight. Just choose one thing to cut each week for the next 14 weeks. This could be skipping a coffee run and brewing at home, cooking dinner instead of ordering takeout, or canceling a streaming subscription for a few months. Small cuts add up fast.

    Emergency Savings

    Pick Up Extra Cash When You Can

    Look for small ways to bring in extra money if cutting expenses does not get you there. You only need something that works with your schedule. Consider selling things you no longer use or offering services such as babysitting, dog walking, or tutoring. Also, taking on a few freelance gigs or surveys online or doing a weekend delivery shift can help.

    Use Cash Windfalls Wisely

    Any unexpected money such as a tax refund, rebate, birthday gift, or work bonus, can speed things up. You might want to spend a few hundred dollars that you were not counting on immediately. Instead, drop it into your emergency fund. One surprise deposit could take care of a whole week or even a month of savings.

    Track Your Progress Visually

    Seeing your savings grow keeps you motivated. Create a tracker on paper or use a free savings application that shows how close you are to your goal. Update it every time you make a deposit. It’s more fun than just checking your bank balance and gives you a sense of momentum.

    You can even break your goal into mini-milestones. Consider treating yourself to a free reward every time you hit $100. These mini-wins help keep the energy up, especially in the middle of the 100 days.

    Stay Flexible Without Falling Off Track

    You might miss a deposit or have to dip into your fund early. You should keep going despite the circumstances. Make up for the right week the next. Do not let one off week turn into giving up completely.

  • Smart Retirement Planning for Self-Employed Professionals

    Smart Retirement Planning for Self-Employed Professionals

    Being your own boss comes with a lot of freedom, but it also means taking full responsibility for your financial future, including retirement. But you might put off retirement planning without an employer-sponsored 401(k) or a human resources department reminding you to contribute. Thankfully, self-employed professionals have more control and flexibility when it comes to building a retirement plan that fits their lifestyle and goals. Here are tips you can consider when planning retirement:

    Set a Clear Goal

    Retirement looks different for everyone. You might want to travel, downsize, or keep working part-time on your terms. Determine what you want your retirement to look like and estimate how much money you will need to support that vision.

    Work backward once you have a general idea. Break it down into how much you will need to save each year or month to stay on track. This number may change over time, but starting with a target makes everything else easier to plan.

    Know Your Retirement Account Options

    Self-employed individuals have several excellent retirement savings options. You can mix and match options depending on your income and needs. Below are your options:

    • Solo 401(k). This is ideal for people with no employees. You can contribute both as an employee and employer, which allows for high contribution limits up to $69,000 in 2024 if you are over 50.
    • SEP IRA. This is easy to set up and perfect for freelancers or sole proprietors. Contributions are made by the business and are tax-deductible, but you cannot contribute as an employee. It’s especially useful for those with high but variable incomes.
    • SIMPLE IRA: This is Ideal for small business owners with a few employees. It’s not as flexible as a Solo 401(k), but it’s straightforward and low-maintenance.
    • Traditional and Roth IRAs: These personal retirement accounts can supplement your main plan. A Roth IRA offers tax-free growth and withdrawals, while a traditional IRA gives you a tax break now.

    Make Saving Automatic

    It is tempting to skip saving during slower periods when your income changes from month to month. But you can stay consistent by setting up automatic transfers from your business or personal account into your retirement plan. Making contributions regularly helps build the habit regardless of the amount. Make larger contributions to catch up when income is high,

    Retirement Planning

    Think About Taxes

    Self-employed retirement plans allow you to take advantage of tax savings. Contributions to most retirement accounts are tax-deductible, which can reduce your taxable income and lower your annual tax bill.

    You won’t get a deduction if you are contributing to a Roth account. However, your money grows tax-free. Also, you won’t owe taxes when you withdraw it later. This can be a good decision if you expect to be in a higher tax bracket in retirement. Also, make sure you work with a tax professional who understands self-employment and can help you maximize deductions. Also, this professional should help plan quarterly payments and stay on top of IRS rules.

    Build an Emergency Fund First

    Make sure you have an emergency fund in place before you go all-in on retirement savings. Save at least three to six months of expenses in a separate, easy-to-access account. Having this cushion can prevent you from dipping into your retirement savings if business slows down or an unexpected expense pops up.

    Invest for Growth

    Saving is just part of the equation. You also need your money to grow. This means putting it into investments that have the potential for higher returns over time.

    Most retirement accounts let you choose from a variety of investment options. Consider a target-date fund that automatically adjusts your investments as you get closer to retirement if you are not sure where to start. You can also talk to a financial advisor who can help you build a portfolio that matches your risk tolerance and timeline.