Financial freedom is something that most people want, but only a few learn how to master.  While it does take some up-front planning, in the end the payoff is substantial.  Here are five things that can be done to ensure more financial freedom.

1. MAKE SURE THERE IS MORE MONEY COMING IN THAN GOING OUT. It is amazing how many Americans are still struggling with this basic concept.  Yes, that does mean being more conscientious about assigning every dollar, and dealing with needs first and wants later…but it works!  It is a proven concept that if you ignore, you will never have money to save, which leads to financial bondage rather than financial freedom.

2. DISTINGUISH BETWEEN WANTS AND NEEDS. How much of your daily and weekly expenditures are purposeful, planned expenses for the basic needs of life?  It is not hard to find plenty of things to spend money on, but do you NEED it?  If you try to rationalize these expenditures (WANTS) as a need, your financial freedom will be a very long way away.

3. BE PATIENT, FLEXIBLE AND PREPARED FOR EMERGENCIES. If you and your partner are both working, can you try to live on just one income?  The extra money can then be put away for a rainy day.  This cushion will give you flexibility and financial freedom that so many others cannot enjoy when the unexpected happens.  In fact, the best motto to follow here is, “Expect the unexpected.”  Big ticket emergencies hit all of us at one time or another.

4. EDUCATE YOURSELF ON FINANCIAL MATTERS. The sooner you master the game of money management, the sooner you will enjoy more financial freedom.  Find good, sound sources of financial information.  Read books on financial matters…there are plenty in our local libraries.  Take a class or two – many are offered in the community and often from your local Extension office.

5. KEEP TIME ON YOUR SIDE. Use both your time and your money wisely over time.  A little bit of money and a little interest in your favor, and a lot of time, can provide you with rich rewards.  A 6 percent interest rate, with $25/month, from age 18 to 65 can mean just over $78,000!  Your contribution?  $14,000.  As difficult as it may seem right now to part with $25/month, the time and consistency do pay off.

This article was written by Teresa Hunsaker, USU Extension family and consumer sciences educator, Weber County

As you prepare to send your kids back to school, consider these two options for saving for their future education. 

Does having children worry you about their financial future? You’re not alone. A recent survey by Citi of 1,500 parents found that 56 percent of parents surveyed “are not confident that life for their children’s generation will necessarily be better than it has been for their generation.”

Are you wondering what you can do to help your children now? We’ve put together two Popular Options for Saving for Your Child’s Education.

The first thing families should do is decide where educational savings fits into their overall financial goals. Buying a home, preparing for retirement and providing an education for the children tend to be the three most costly family objectives. Few families have the means to tackle all three at the same time. It’s been said that you can’t get a scholarship for retirement. There are more options to cover the costs of higher education (scholarships among them) beyond having the savings entirely on hand. Given that, I suggest a retirement strategy be in place before establishing a means for college savings.

Here are two currently popular options: a 529 plan and the use of a Roth IRA.

529 Plans

A 529 plan is named after section 529 of the Internal Revenue Code, the provisions of which allowed for their creation in 1996, and each state has at least one. In our state, it is the Utah Educational Savings Plan (UESP) and it is consistently rated among the very best in the nation.

• A 529 savings account is initially set up for a named beneficiary, however, the recipient can be changed to another family member, with a wide range of people who can be named, including a first cousin. The donor to the account is in full control of the assets.
• Beneficiaries can attend qualified schools throughout the nation, not just in the state where the plan is held. This includes most community colleges, universities and even some vocational schools.
• The fees and other maintenance costs associated with 529 plans are generally lower than with other investments. This is especially true for direct purchase plans like UESP. These are self-directed plans.

• Among the UESP options are an FDIC insured account and a range of investment accounts that adjust with the beneficiary’s age. They automatically shift from aggressive investments to more conservative choices as the child draws nearer to college age.
• Contributions to a UESP plan (and other state 529 plans) are not tax deductible, but all earnings from investments in the plan are free from federal taxes. The USEP plan is also free from state taxes. This means that when distributions are made to pay for qualified expenses, there are no taxes due. Current Utah law also allows state residents to claim a tax credit based upon USEP donations.
• If distributions are not used for educational expenses, the earnings on your contributions are taxable and are also subject to a 10 percent penalty.

Roth IRA

A Roth IRA is another savings option that many families are considering for college expense planning. A Roth IRA was developed as a retirement savings program. Contributions to a Roth are not deductible, but earnings grow tax free.

• While contributions to a Roth IRA can be withdrawn anytime, withdrawals of earnings prior to age 59 1⁄2 are subject to taxes and penalties. That is, unless the funds are used for higher education purposes. This provision means that it is possible for families to use a Roth IRA for both retirement and college preparation.
• There are two other benefits of a Roth IRA. First, lower income tax filers may get a federal tax credit for contributions to a Roth IRA. Second, unlike an education savings account, retirement accounts like a Roth IRA are generally not considered when applying for financial aid. On the other hand, there are limits to annual Roth IRA contributions. If you use half of your retirement savings to send your kids to school, you may need to bank on them getting a good enough education and career to support you during retirement.

In summary, here are some issues families should consider:

• Tax considerations are an important aspect, but not the only factor to consider.
• Risk levels, potential rates of return and the range of investment opportunities will be part of any strategy.
• The investor must determine how much or how little professional help they desire.
• Family income levels and the number of children involved are critical components. Well-to-do grandparents with lots of descendants have different challenges and opportunities than newlyweds expecting their first child.

Which will it be? A Roth IRA, a 529 savings plan or some other option? Think about it now because the toddler munching Cheerios on your kitchen floor today will be off to college before you know it.

This article was written by Amanda Christensen, Extension Assistant Professor for Utah State University. Follow her on Twitter: @FamFinPro, Facebook: Fam Fin Pro, Instagram: @FamFinPro.

Republished from 2014.

Have you ever been caught in the trap of wasting money? Find out how you can escape!

A Penny Saved is a Penny Earned

In a recent article, financial guru Dave Ramsey identified the Top 10 things Americans wasted money on in 2015. His list includes: student loans, Ziosk tablets at restaurants, gym memberships, daily coffee trips, car payments, car leasing, car wash upgrades, name-brand household paper products, timeshares and shipping charges.

While this is his personal perspective, assessing our own personal money wasters over the year is a worthwhile activity. Here’s how to do it.

*Get out receipts or go online to your bank account (or bank statements if you have them) and start adding up expenses in specific categories such as clothing, food, entertainment, gas, etc.

*Total each category for the entire year. This will take some time if you have not been tracking through the year, but it is critical if you want to change the way you handle money.

*This last part is the most useful, and that is to ask yourself some key questions to identify money wasters:

1) Did we need to spend this much?

2) What traps did we fall into?

3) Did we get into loans that, with some planning, we could have saved for to avoid the interest costs? Could we have put more money down or found a better interest rate? (Or avoided a loan altogether?)

4) Did we enter into contracts for products or services that we didn’t realistically think through? (The long-term implications can get us in trouble.)

5) Do we currently have little habits that add up to a considerable dollar amount when multiplied by the frequency?

6) Are we guilty of the “I earned it, I deserve it” mentality?

7) Is the price of convenience being forgotten in our budget and dollar equations?

It can be helpful to assess where we are financially, based on current habits we may have gotten into, then determine if there are better ways our resources could be spent in the coming year. Ramsey’s list provides us some great things to consider for our own budget as well as a path to step down some of our own expenses.

This article was written by Teresa Hunsaker, Utah State University Extension educator, teresa.hunsaker@usu.edu, 801-399-8200

It’s that time of year again. Many people will be getting tax returns (or already have) and are looking for the best ways to use that money as well as other “extra” money they have received.

Many of us hope for a windfall or a large gift or bonus. However,  more than likely, most of us will be hoping for a tax refund this time of year.  Here are five ways to consider using your tax refund (or gift or bonus).

1. Add it to your Savings.  Whether you are saving for a particular item or event such as a vacation, new baby or retirement, your savings account is a great place for any extra money you receive.  Powerpay.org can help you set savings goals, help you with steps to reach them and also find resources to help you with overall  financial goals.
2. Reduce Debt.  If you have any debt, this is also an important category to pay attention to.  Powerpay.org can be an especially useful tool to help you power your way out of debt.  There is also an iOS app for PowerPay.  These tools will help you determine which debts should be paid first and outcomes if you pay different amounts on each debt.
3. Contribute to your Posterity’s Future.  Set up or contribute to a college fund, wedding plans or other event for your children or grandchildren. The Utah Educational Savings Plan can be a tool for college savings.  Be sure you understand the details before participating.
4. Charitable Giving.  If you decide to contribute to a charity, be sure to check a website such as Charity Navigator or Charity Watch before donating.
5. Create or Add to an Emergency Fund.  If you don’t have one, do what you can to get one started. This can be a useful tool to help keep you out of debt.  Any amount can be helpful to start with and add to.  A minimum to aim for should be $1,000, and recommended is three to six months of your income.

Have peace of mind while shopping online!

Check Before You Spend

As tax return season is fast approaching, you may have money coming your way. If you choose to spend it online, consider these tips to keep your personal information safe.

Choose online businesses wisely. If you’re not sure a company looks legitimate or that it is a safe online retailer, check it out on the Better Business Bureau’s website at www.bbb.org. Here you can find information about a company, both good and bad, that can help you make an informed decision.

Use a safe payment method. Do not shop online with a debit card. Credit cards are a safer choice since they have added security measures, and credit card companies hold you liable for much less in the event that someone gets ahold of your card information online.

Go directly to the source to make a purchase. Don’t click through an email or an ad on social media to get to the website. Going directly to the source ensures that you’re at the actual website instead of a phony site that’s been created to steal your personal information via phishing or other online scams.

Look for the “s” in the address bar of the browser. Before you ever enter your credit card information for an online payment, make sure you see “https” in the address bar of the browser.

The “s” helps you know the site is secure with measures in place to safely collect your personal information. The “s” isn’t always there in the address bar of the browser, but it should appear when you enter your payment information.

For more financial tips, follow @FamFinPro on Twitter or Facebook.

These 5 tips will help you manage money as a team!

The Cost That Money Can Have

Successful couples have learned to blend their money styles by being in harmony with the way they build a budget and spend money. So how do they do it?

Everyone has a money style. Many people love to save, others enjoy spending and unfortunately some just don’t want to be bothered with thinking about money, and they are the avoiders.

Often spouses are opposite in their habits, which can work well; but unless they can discuss it and make a successful plan, it can lead to arguments and dissatisfaction in the relationship.

It may have been learned from parents or developed later in life, but everyone values money differently and has a preferred style for handling it. No style is right or wrong, but how it is handled is critically important.

Some regard money as a security and have a desire to save and protect it. Some enjoy spending money because it makes them feel good, and still some don’t want to even open an envelope that might have a bill inside.

Unless you understand how your partner values money, it can cause frustration in a relationship.

When a couple fails to communicate about how each person values money and there is not a financial plan, arguments often arise. Many unhappy marriages and divorces are a direct result of financial issues.

A strong relationship will put the value of money into what makes family members happy and content. Money will be used for meeting goals and planning ahead for the future. When you can build a financial plan, you will have the freedom to work on areas of need for your family.

Consider these tips for building a financial plan:

1. Discuss how you value money and what is important (saving, spending or not discussing it). Visit Olivia Mellan’s website if unfamiliar with money styles. Take the quiz at https://www.moneyharmony.com/moneyharmony-quiz.

2. Discuss your family goals for this year, the next five years and then for future needs and retirement.

3. Make a financial plan (a budget) where you can set aside money to save and money for charity. If things are tight, start where you can. Most financial planners will encourage you to set aside 10 percent for each of these; however, you can begin with less. Even a little can make a difference because it sets a precedence.

4. Set up a plan for your family needs and wants and review it monthly.

5. Be sure to set aside weekly activity nights for the two of you. Spending quality time together can help you discuss your financial plans in a more direct and positive way.

Couples with strong relationships have developed money management skills that work for them. For example, they set aside time each month to go over finances, talk about how they value money and set goals.

Generally one of the individuals will be the money manager; however, both should discuss and look at the plans each month. Both partners must be happy with the spending arrangement.

Understanding the value each person places on money helps build respect in a relationship. Both partners should have input about where the money goes.

Relationships are fragile, and money is a major issue. It doesn’t matter how much or how little you have, but how you work as a team to plan and be content with your financial decisions.

This article was written by Carolyn Washburn, Utah State University Extension family and consumer sciences professor

Follow this advice to avoid being hornswoggled!

Mess-Free Investments

Research statistics on the Financial Industry Regulatory Authority’s (FINRA) website show that eight in 10 individuals have been solicited about potentially fraudulent investment offers.

Con artists are successful because they eliminate rational behavior and prey on your emotion.

Financial fraud flourishes in Utah because of the strong entrepreneurial spirit and residents’ tendency to trust others. In order to avoid falling victim to a con artist, it is important to recognize common tactics and know where to go for help. (FINRA Foundation, 2016)

Common tactics of con artists include:

Reciprocity:Free lunch or dinner seminars, books or gifts are often used to guilt investors into giving an investment adviser money. A free lunch is not really free if you give away your life’s savings.

Affinity fraud: Con artists typically take advantage of commonalities they share with unsuspecting investors. They may claim to be part of your religious group, professional organization, an alumnus of your university or have children in the same school. Be cautious when someone tries to convince you that an investment decision should be based on a similarity.

Source credibility: Does the investment professional drive a very expensive car? Is he/she wearing very nice clothing or trying to impress you with credentials? Many times con artists will use their surroundings to lead an investor into believing they are credible.

Scarcity: Limited time offers on land, gold, securities and commodities are designed to pressure you into making a quick decision. Be cautious of secret deals or when they tell you not to share details of the opportunity with anyone.

Phantom riches: Some professionals will promise you extremely high rates of return to support a lifestyle that you dream of attaining. The average rate of return in the stock market is 10 percent; any promised return above and beyond the market average should be a red flag.

When in doubt, check it out. Before you invest:

Check out the person: FINRA keeps a detailed database of an investment professional’s history, credentials and licensure suspensions. To investigate a prospective investment professional, go to
BrokerCheck by FINRA.

Research the professional designations: Investment professionals can receive a number of licenses and designations. To understand licensure acronyms at the end of an investment professional’s name, go to: Investors Professional Designations.

Investigate the product: Transparency is critical. Company filings and event reports should be available if the investment has been registered with the Securities and Exchange Commission. Search the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database at the SEC for information on 20 million investments.

Investment fraud is very common and costs consumers $50 billion a year. If you have been a victim of fraud, contact FINRA, the SEC or the Utah Division of Securities for help. Your experience could protect and save future investors from falling prey to fraudsters. For more information, call the Utah Division of Securities at 801-530-6600.

Christmas is just around the corner, but there is still time to plan for gift exchanges that won’t cause credit card debt to skyrocket. Consider implementing one, two or several of the following tips.

* Reduce the number of purchased gifts. This is especially effective for children. Rather than buying gifts for family and friends, help children create service gift cards good for babysitting, watching a pet for a weekend, 1 dozen homemade cookies, etc.

* Pick up odd jobs for a few weeks. Find people who will pay to have their leaves raked, garden tilled or rain gutters cleaned. If you are handy with tools, there may be other jobs that can be done like chopping wood, building a shed, etc.

* Beware of shopping the TV networks. Professionals on commercials are trained to entice buyers. They are interested in getting you to buy; they aren’t interested in whether or not you need their product.

* Shop local. Perhaps some items on your Christmas list could be purchased for less in a larger city. However, watching sales close to home can save time and fuel costs. Consider that many who shop out of town will also spend money to eat out and are tempted to buy more when there is a larger selection available.

* Set a spending limit and stick to it. Traditions of buying expensive clothes, large tools, appliances, etc., can quickly run up the credit card tab. Also, do kids (and adults) really need the very latest tech gadget or toy?

* Spend on a gift that is an investment in your future. As a couple, consider giving each other the gift of an extra payment on your home mortgage. This could jump-start the desire to pay off your home sooner. Those who budget even $50 more each month to pay down the principal on their mortgage can take two or more years off the total due by decreasing the interest.

* Put on a “practical” hat when making your Christmas list. Socks, gloves, kitchen shears, towels, a welcome mat or a book are examples of practical gifts. Does the family you are giving to really need one more decoration for the home? Perhaps, if it has personal sentiments attached, but be thoughtful if you choose to go this direction.

* Consider size, shape and weight if you are mailing. Costs of shipping have gone up, even since last year. If you are sending gifts, perhaps a gift card is the best choice. It’s possible that the shipping costs may be more than the value of the gift. Some companies have electronic gift cards that can be emailed directly to the recipient.

* Start setting aside cash now. How many paychecks do you have coming between now and the holidays? For some it may be only two. Others could have as many as six. Could you set aside 5 percent from each paycheck? That could give you extra money to work with.

* Black Friday and Cyber Monday – are they worth the hype? Consider that the whole purpose behind these events is to jump-start consumer spending for the holidays. There may be one or two exceptional deals, but most people will be better off to simply stick to the original shopping list.

The above ideas don’t come close to covering the slew of suggestions available to help reduce buyers’ remorse and January credit card statement shock. Hopefully, however, they will assist in getting the creative juices flowing in deciding how to spend less this Christmas. For other suggestions to slash expenses throughout the year, visithttp://extension.usu.edu and click on “Publications.” Then type “Slashing Expenses” in the search bar.

By: Kathy Riggs, Utah State University Extension professor, kathleen.riggs@usu.edu, 435-586-8132

Budgeting can be easy if you take it one step at a time!

Little by Little

Are you feeling overwhelmed by your financial situation? Well you’re definitely not alone! According to the American Psychological Association, money, work and the economy remain the most common sources of stress in Americans.

To help you get back on track and feel confident about your finances, financial expert Amanda Christensen offers three baby steps to budgeting. No matter where you are or what state you’re in, the key to budgeting is taking one step at a time.

Click here or click below to watch the clip from Studio 5!

It’s never too early to start educating your kids about money!

10 Ways to Practice Money Management Skills

If you teach them, they will learn. One of the most important things that parents can do to help their children develop positive money attitudes and behaviors is to get them involved with the real life, day-to-day financial workings of the family. Additionally, children need opportunities to earn, spend, and save money.

1. Hold regular family discussions about money with specific details about the family’s income and expenses.

2. Keep a family income and spending log/diary for 30 days (individual family members can also do this for their personal income and spending).

3. Solicit ideas (and commitments), especially from older children, on how to reduce spending – allow children to keep a % of the savings resulting from any of their cost-cutting efforts.

4. Have older children participate in monthly bill paying and grocery shopping. Teach them about sales and coupons.

5. Have an older child teach a younger child an important money concept.

6. Have family members get together and make short, medium and long term savings goals. Have each family member sign the agreement, and then post it in a prominent location of the home to remind everyone of the things they are working towards.

7. Have children develop a specific family spending goal (vacation, big screen TV, etc.). Allow them to contribute some of their allowance or earnings toward the goal.

8. Have each child set personal earning and spending goals. Regularly discuss progress and setbacks. Teach them to avoid compulsive buying.

9. Given a certain amount of money, regularly have children plan a meal, purchase the ingredients, and prepare the meal.

10. Regularly have a “no -frills” entertainment night (“old fashioned” board games, $1 video rental, talent shows, sandwiches in the park, storytelling, etc.). Fun activities don’t have to be expensive.

This article was written by Margie P. Memmott, M.S., C.F.C.S., Juab County.