From the American Family Insurance website, this article focuses on the importance of sharing budgeting and financial responsibilities with your spouse. In many relationships, it seems one party usually takes over much of the financial decision making– knowing important contacts, where money is kept and how it is spent etc. This article stresses the importance of making sure BOTH parties are on the same page with the family finances and, just as importantly, the family’s financial goals.
AmFam provides a few important steps to accomplishing this, beginning with talking to each other about things like saving, bills, retirement planning and debts.
Setting short- and long- term financial goals TOGETHER, knowing where to find your safe deposit box and combinations to the home safe, and finally making sure your loved ones know how to contact important financial contacts are the final steps to being on the same page as your spouse.
The article also discusses the importance of protecting your important papers by using preventative measures such as a safe deposit box, a fire-resistant home safe, a home filing system, and your attorney’s office to keep all your various documents safe.
Overspending is a common problem for many people; it creates debt, anxiety and relationship problems, even among high income earners. All too often, people’s spending habits seem to rise to meet – and exceed – their incomes.
So why does this happen? What compels people to overspend when they already have the items they truly need? The answer lies deep within each person’s spending personality. Recently, I read Dr. April Benson’s book I Shop Therefore I Am, and was fascinated by what the contributing authors uncover about the emotional and psychological factors influencing our buying habits.
I thought it would interesting, and beneficial, to touch on the six key spending personalities they explore: image spenders, bargain hunters, collectors, compulsive shoppers, co-dependent spenders (a.k.a. gift-givers) and bulimic spenders. Continue Reading…
Based on a survey released this year by the TransAmerica Center for Retirement Studies, it appears that the majority of Millennials and Gen Xers believe Social Security will no longer exist by the time they are ready to retire. It’s time to set the record straight about what Americans can realistically expect from Social Security in the coming decades and what they can do to secure their own financial future.
The Truth about Social Security
The truth is Social Security is in need of a fix. Social Security trustees believe the program will still be financially solvent through to 2019. However, if no changes are introduced by 2033, the trust fund will be exhausted. Based on the latest Social Security Trustees’ report, money generated from current payroll taxes at that point are estimated to be enough to support only 77% of promised benefits until the year 2088.
Changes to the Social Security program are required at a congressional level and with the current stalemate in Congress over other political agendas, Social Security has apparently taken a backseat. Congress hasn’t passed any significant ratification to the program since the last reform of 1983.
A public opinion poll sponsored by Voice of the People in February 2014 suggests Americans are willing to make some tough concessions. A representative majority of the public supports measures such as raising the payroll tax rate and the annual cap on income, reducing benefits for top income earners and increasing the full retirement age to 68 or more.
Count Social Security as a Bonus
It’s important to note Social Security was never intended to serve as a full pension but rather as a supplemental retirement and disability insurance program. The reality is that many Americans rely solely on Social Security payments during the course of their retirement years. Suffice it to say, extreme financial hardships along with poor financial planning are often cited as reasons why some retirees end up with little to no personal savings and investments.
Even though many Americans overwhelmingly disapprove of any potential cuts to Social Security, according to recent Gallop polls, over 69% of those surveyed don’t expect to rely heavily or at all on Social Security payments. These findings mirror my own view in that my plans and calculations for achieving financial independence do not consider Social Security payouts as part of the equation.
As taxpayers, Americans have the right to expect their fair share from Social Security during their golden years but considering that the average Social Security monthly payment is $1,192.21, this amount is likely far from being enough for the vast majority.
Achieve Financial Independence without Social Security
Whether the intent is to leave the workforce earlier than 55 or continue to work well into your golden years for the sheer joy of it, focusing on achieving financial independence is truly a wise option. By saving and investing as much as possible, ideally well above the suggested rate of 10% to 15% of earned income, keeping consumer debt out of the picture while paying off any mortgage debt, spending consciously and living frugally, financial independence is well within reach.
In striving for financial freedom, your future and financial security will never be limited by how much Social Security can afford to pay you. In the event Social Security reforms are enacted and in place by the time you’re eligible to file, you could easily decide to defer filing your claim until 70 years of age, in order to reap even higher benefits.
As the saying goes “Never keep all your [financial] eggs in one basket.”
Kassandra Dasent is a freelance writer, business consultant, wife and step-mom. She is the founder of More Than Just Money, where she discusses a variety of topics and personal experiences that intersect with money. Her articles have been featured on several sites, including US News & World Report, The Globe & Mail and Brighter Life.
Is the little birdie kicked out of the nest truly “Findependent?”
My latest MoneySense blog posted today carries the curious headline that most Millennials expect to achieve “financial independence” by age 27. I put “air quotes” around the phrase financial independence because of course it’s nonsense that merely leaving the nest and putting fewer demands on the Bank of Mum and Dad constitutes true financial independence.
Keep in mind that the research firm cited in the piece seems to use quite a different definition of Financial Independence than the one used at this site or as formally defined at Wikipedia. For research firm yconic, it seems financial independence means merely leaving the nest and landing a job that pays at least the monthly rent: they are merely “financially independent” of mum and dad.
Even with that loose definition, only 56% of older millennials (aged 30 to 33) say they have “achieved financial independence.”
With these savings rates, true Findependence for many millennials is a pipe dream
It’s just as well they’re using such a loose definition because the way the younger generation spends, it’s going to be a long long time before they achieve the kind of financial independence this blog describes.
To sum up the difference, I’d say “our kind” of Financial Independence is being able to stay afloat financially without the traditional source of single income known as “a job” or full-time employment. It’s quite a leap to go from moving out of the parental nest to being able to survive with neither parents nor an employer to keep those regular financial injections flowing into your bank account.
Far from being findependent, almost half the millennials surveyed (46%) admitted “saving money is a struggle” even if they are able to afford to pay the bills. A third say they are living paycheque to paycheque and are barely making ends meet. Fully 43% still rely on their parents for financial assistance, including 37% who look for help paying their student loans off. Does that sound like “our” kind of financial independence?
Non-saving millennials should find a Government job with a DB pension and stay there
I hate to break it to the non-savers but if they don’t start saving soon, they’ll never be able to achieve true financial independence. They had better be prepared to work until age 67 and be able to live on Social Security (in the US) or on the Canada Pension Plan, Old Age Security and possibly the Guaranteed Income Supplement (GIS), or find a good Defined Benefit pension plan somewhere and hang on to the job for three or four decades. (may as well try the Government first: their DB plans are most likely indexed to inflation and ultimately backstopped by taxpayers).
If there’s hope for them, it’s in the finding that most millennials hope to buy a home at some point. I like that because I always say the foundation of financial independence (our kind, that is) is a paid-for home. But even among those who already own a home, 32% got parental help rustling up the down payment. Among those who don’t, a quarter of them (24%) expect their parents to help them with the down payment.
Parents who have yet to kick the little birdies out of the nest might consider giving them a hint about what true Financial Independence entails by investing US$2.99 or C$3.37 in either of these e-books featured elsewhere on this site. Might make a great stocking stuffer! (Just gift the e-book via Amazon and maybe insert in the stocking a card telling them to check their Kindle).
MoneySense.ca today is running my column on Extreme Early Retirement from the November issue. It looks at the phenomenon championed by super-frugal savers like Mr. Money Moustache and Jacob Lund Fisker of so-called Extreme Early Retirement.
The idea is to be self-sufficient, do without, live in a small home, eliminate frivolous purchases like cars or furniture and save like crazy for five or ten years: and we’re not talking the typical savings rates of 10 or 15% of a paycheque: more like 50% or more.
Posted By 
Hub Staff
