Tag: Planning

How to Create Your Own Retirement Plan

by Phillip Warren

One of the good things of working for a company is that they create a retirement plan for you. As an employee, you don’t have to do anything else but to participate in the plan. However, when you’re self-employed or a small business owner, you’re responsible of setting up your own retirement plan.

When it comes to operating your own business, time is of the essence. However, even if you’re crazy busy, saving for retirement should be a priority. Indeed, a retirement account allows you to contribute pre-tax money, which lowers your taxable income.

Luckily, a financial advisor can help you save time and help you choose the right plan that is best for you. Below are four retirement saving options you can create as a self-employer individual.

1. Solo 401k

A solo 401k is for small businesses or sole proprietors who don’t have any employees other than a spouse working for the business. The solo 401k mirrors a typical 401k plan that most companies offer. The main difference is that you can contribute as an employee and employer.

In other words, because you’re both the boss and the worker, you get to contribute in each capacity. That in turn allows you to contribute a higher amount each year. However, your total yearly contributions cannot exceed $58,000 or $64,000 for individuals age 50 or older as of 2021. To set up a solo 401k, you have to get in touch with a financial institution.

2. SEP IRA

If you’re an independent contractor, self-employed, or has a small business with 25 employees or less you can set up a SEP (Simplified Employee Pension). It’s very easy to establish and don’t even require you to incorporate your business to qualify.

In a SEP IRA, the employer alone contributes to the fund, not the employees. You can contribute up to 25% of your annual salary or $58,000 in 2021, whichever is less.

3. Keogh Plan

Keogh plans are available to self-employed people, including sole proprietors who file Schedule C or a partnership whose members file Schedule E. This type of plan is preferable among those who have a high and stable income.

But the main advantage the Keogh has is the high maximum contribution you can make. In 2021, you can contribute up to $58,000. To set up, you will need to work with a financial institution such as Charles Schwab. 

4. Simple IRA

The Simple IRA was created by the Small Business Protection Act to help those who work at small companies to save for retirement. The small business can offer the plan if it has 100 or fewer employees.

Both the employer and the employee can contribute up to $13,000 in 2021, plus an additional catch-up amount of $3,000 if you’re 50 or older. If a company offers a Simple IRA, it must match an employee’s contribution dollar for dollar, up to 3% of each participant’s annual salary or make a nonelective 2% contribution to all employees.

Where to Invest Your Keogh, SEP IRA, Solo 401k, Simple IRA

As a small business owner, there is always an investment program that suits your needs for your IRA, SEP, Keogh and solo 401k. Places such as banks, brokerage firms and mutual funds institutions such as Vanguard, Fidelity, Charles Schwab are great options. But before opening account, make sure you consider how much money you have, your appetite for risks, the annual fee, etc.

The Bottom Line

If you’re a small business owner or self employed, you should take advantage of the tax benefits offered by these plans mentioned above. Creating a retirement plan is important, because not only will you be able to grow your retirement savings faster but also no one is going to do it for you. 

Related:

  • 4 Simple Ways to Accelerate Your Retirement Savings
  • How to Retire at 50:10 Easy Steps to Consider

Tips on Retirement Planning

Retirement planning can be a major challenge, but you don’t have to go in it alone. Speak with a financial advisor who can help you come up with a unique plan based on your circumstances and situations. Use SmartAsset advisor matching tool to get matched with fiduciary financial advisors in just 5 minutes.

 

The post How to Create Your Own Retirement Plan appeared first on GrowthRapidly.


Source: growthrapidly.com

Can I Inherit Debt?

by Phillip Warren

Man trying to role a huge boulder labeled "DEBT" up a steep hillWhen someone passes away leaving debts behind, you might be wondering if you have any personal liability to pay them. If you have aging parents, for instance, you may be worried about having to assume responsibility for their mortgage payments, credit cards or other debts. If you’ve asked yourself, “Can I inherit debt?” the answer is typically no, even though those debts don’t automatically disappear. But there are situations in which you may have to deal with a loved one’s creditors after they’re gone.

How Debts Are Handled When Someone Passes Away

Debts, just like assets, are considered part of a person’s estate. When that person passes away, their estate is responsible for paying any and all remaining debts. The money to pay those debts comes from the asset side of the estate.

In terms of who is responsible for making sure the estate’s debts are paid, this is typically done by an executor. An executor performs a number of duties to wrap up a person’s estate after death, including:

  • Getting a copy of the deceased person’s will if they had one and filing it with the probate court
  • Notifying creditors and other entities of the person’s death (for example, the Social Security Administration would need to be notified so any Social Security benefits could be stopped)
  • Completing an inventory of the deceased person’s assets and their value
  • Liquidating those assets as needed to pay off any debts owed by the estate
  • Distributing the remaining assets to the people or organizations named in the deceased person’s will if they had one or according to inheritance laws if they did not

In terms of debt repayment, executors are required to give notice to creditors who may have a claim against the estate. Creditors are then giving a certain window of time, according to state laws, in which to make a financial claim against the estate’s assets for repayment of debts.

If a creditor doesn’t follow state guidelines for making a claim, then those debts won’t be paid from the estate’s assets. But if creditors are less than reputable, they may try to come after the deceased person’s spouse, children or other family members to collect what’s owed.

Not all assets in an estate may be used to repay debts owed by a deceased person. Any assets that already have a named beneficiary, such as a life insurance policy, a 401(k), individual retirement account, payable on death accounts or annuity, would be transferred to that beneficiary automatically.

Can I Inherit Debt From My Parents?

Pencil erasing the word "DEBT"

This is an important question to ask if your parents are carrying high amounts of debt and you’re worried about having to pay those bills when they pass away. Again, the short answer is usually no. You generally don’t inherit debts belonging to someone else the way you might inherit property or other assets from them. So even if a debt collector attempts to request payment from you, there’d be no legal obligation to pay.

The catch is that any debts left outstanding would be deducted from the estate’s assets. If your parents were substantially in debt when they passed away, repaying them from the estate may leave little or no assets for you to inherit.

But you should know that you can inherit debt that you were already legally responsible for while your parents were alive. For instance, if you cosigned a loan with them or opened a joint credit card account or line of credit, those debts are legally yours just as much as they are your parents. So, once they pass away, you’d be solely responsible for repaying them.

And it’s also important to understand what responsibility you may have for covering long-term care costs incurred by your parents while they were alive. Many states have filial responsibility laws that require children to cover nursing home bills, though they aren’t always enforced. Talking to your parents about long-term care planning can help you avoid situations where you may end up with an unexpected debt to pay.

Can I Inherit Debt From My Children?

The same rules that apply to inheriting debt from parents typically apply to inheriting debts from children. Any debts remaining would be paid using assets from their state.

Otherwise, unless you cosigned for the debt, then you wouldn’t be obligated to pay. On the other hand, if you cosigned private student loans, a car loan or a mortgage for your adult child who then passed away, as cosigner you’d technically have a legal responsibility to pay them. Federal student loans are an exception.

If your parents took out a PLUS loan to pay for your higher education costs and something happens to you, the Department of Education can discharge that debt due to death. And vice versa, if your parents pass away then any PLUS loans they took out on your behalf could also be discharged.

Can I Inherit Debts From My Spouse?

When marriage and money mix, the lines on inherited debt can get a little blurred. The same basic rule that applies to other situations applies here: if you cosigned or took out a joint loan or line of credit together, then you’re both equally responsible for the debt. If one of you passes away, the surviving spouse would still have to pay.

But what about debts that are in one spouse’s name only? That’s where it’s important to understand how living in a community property state can affect your liability for marital debts. If you live in a community property state, debts incurred after the marriage by one spouse can be treated as a shared financial obligation. So if your spouse opened up a credit card or took out a business loan, then passed away you could still be responsible for paying it. On the other hand, debts incurred by either party before the marriage wouldn’t be considered community debt.

Consider Getting Help If You Need It

If a parent, spouse, sibling or other family member passes away, it can be helpful to talk to an attorney if you’re being pressured by debt collectors to pay. An attorney who understands debt collection laws and estate planning can help you determine what your responsibilities are for repaying debts and how to handle creditors.

The Bottom Line

Son talks with his mother about her debtWhether or not you’ll inherit debt from your parents, child, spouse or anyone else largely hinges on whether you cosigned for that debt or live in a community property state in the case of married couples. If you’re concerned about inheriting debts, consider talking to your parents, children or spouse about how those financial obligations would be handled if they were to pass away. Likewise, you can also discuss what financial safety nets you have in place to clear any debts you may leave behind, such as life insurance.

Tips for Estate Planning
  • Consider talking to a financial advisor about how to manage and pay off debts you owe or any debts you might inherit from someone else. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool can help you connect with an advisor in your local area. It takes just a few minutes to get your personalized advisor recommendations online. If you’re ready, get started now.
  • The Fair Debt Collection Practices Act caps the statute of limitations for unpaid debt collections at a maximum of six years, although most states specify a much shorter time frame. However, some debt collectors buy so-called zombie debts for pennies on the dollar and then – unscrupulously – try to collect on them. Here’s how to deal with such operators.

Photo credit: ©iStock.com/NiseriN, ©iStock.com/AndreyPopov, ©iStock.com/FatCamera

The post Can I Inherit Debt? appeared first on SmartAsset Blog.


Source: smartasset.com

Best credit cards for Airbnb

by Phillip Warren

Many of us are avoiding travel during the pandemic.

But if you have to shelter in place under quarantine once you get to your destination, wouldn’t you rather do it in an environment that at least seems more within your control?

If the choice is between a hotel where you must trust your experience to a faceless corporation or a local host you can talk to through homestay sites like Airbnb and Vrbo, the latter may be the better option for these times (provided you don’t violate their party guidelines).

Whatever option you choose, credit card issuers now reward homestays with points and cash back in the same way they’ve long doled out rewards for hotels and other travel expenses.

These are the best cards on the market for homestays like Airbnb.

See related: Strategies for planning 2021 travel

Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option
  • Chase Sapphire Reserve: Best introductory bonus
  • Bank of America® Premium Rewards® credit card: Best for bonus rewards
  • Capital One Venture Rewards Credit Card: Best flat-rate miles card
  • Amazon Prime Rewards Visa Signature card: Best for online shopping
  • Discover it® Miles: Best no-fee option
  • Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option

    The Wells Fargo Propel American Express card includes arguably one of the highest rates of return on points for some of the most popular redemption categories out there, including homestays like Airbnb and Vrbo.

    The greatest advantages of this card – besides earning 3 points per dollar spent on some popular spending categories – are that there’s no point limit or expiration, no annual fee and no rotating categories that you constantly have to remind yourself to activate. You get three times the points in the relevant categories all the time without restriction, with travel – including all homestays – and transit being one of those prominent categories.

    The card also charges no foreign currency conversion fee, so buying things abroad is less expensive. If that weren’t enough, here’s what you also get:

    • 3 points per dollar spent on travel and transit purchases
    • 3 points per dollar spent on eating out and ordering in
    • 3 points per dollar spent on gas and rideshares
    • 3 points per dollar spent on select streaming services such as Hulu, Netflix, Sirius XM and Spotify Premium
    • 1 point per dollar spent everywhere else
    • No annual fee
    • No points limit or expiration
    • Premium access to presale tickets, offers and protections from American Express
    • 20,000 points when you spend $1,000 in the first three months
    ProudMoney.

    Chase Sapphire Reserve: Best introductory bonus

    Before the Wells Fargo Propel card debuted, Chase Sapphire Reserve was the go-to credit card option for Airbnb fans. It offers a 50,000-point introductory bonus when you spend $4,000 in your first three months of membership. Those points are worth up to $750 when you book travel through Chase Ultimate Rewards.

    Though equipped with fewer spending categories offering 3X points and carrying a large annual fee of $550, the benefits of the Chase Sapphire Reserve card are more specifically geared toward frequent travelers.

    At the same time, that large annual fee is offset by a $300 annual credit that will reimburse any travel expense – including Airbnb. And from June 1, 2020, to June 30, 2021, gas station and grocery store purchases count toward the travel credit.

    Add to that a $100 credit covering the application to Global Entry/TSA Precheck every four years and the annual fee is almost completely offset in the first year.

    Meanwhile, there are even more travel benefits:

    • 50,000 bonus points after you spend $4,000 in the first three months (worth up to $750 in travel)
    • 3 points per dollar spent on travel (excluding purchases covered by the $300 travel credit)
    • 3 points per dollar spent on dining (including delivery and takeout) and travel; $1,000 in grocery purchases, including eligible pick-up and delivery services, from Nov. 1, 2020 to April 30, 2021
    • Complimentary airport lounge access through Priority Pass Select Membership
    • Trip cancellation/interruption insurance
    • Primary car rental insurance
    • Lost luggage reimbursement

    Bank of America® Premium Rewards® credit card: Best for bonus rewards

    While the points per dollar offered by Bank of America Premium Rewards credit card on travel and Airbnb are fewer than the credit cards above, the sign-up bonus and up to $200 in annual statement credits make it a decent option, even with less flexibility on what qualifies as a credit than the credit cards above.

    This card should absolutely move to the top of your list if you are already a Bank of America Preferred Rewards client. That designation automatically increases your return even higher than what the other credit cards above offer on travel and dining – you can get a rewards bonus of up to 75%.

    Combine that with a generous sign-up bonus and the Bank of America Premium Rewards is one of the most potent rewards cards for Preferred Rewards clients.

    The card includes:

    • Introductory bonus: 50,000 points when you spend $3,000 in the first 90 days (worth up to $500 in free travel)
    • 2 points per dollar spent on dining and travel purchases, including Airbnb and Vrbo
    • 1.5 points per dollar spent on everything else
    • Get up to $200 in travel statement credit rewards, including $100 for incidental spending per year and $100 toward a TSA Precheck/Global Entry application every four years
    • No foreign transaction fees
    • Bank of America Preferred Rewards clients earn up to 3.5 points per dollar on travel and dining purchases and up to 2.62 points per dollar on all other purchases
    • $95 annual fee
    Travel loyalty programs offer extended perks in pandemic

    Capital One Venture Rewards Credit Card: Best flat-rate miles option

    The Capital One Venture Rewards Credit Card is remarkably similar to Bank of America’s Premium Rewards card, right down to the $95 annual fee, but without the additional benefits afforded to Bank of America Preferred Rewards clients.

    However, Capital One Venture Rewards offers 2 points per dollar spent on every purchase, not just travel and dining.

    • Earn 60,000 travel miles after you spend $3,000 in purchases in the first three months – equaling $600 in travel credit
    • Earn 2 miles per dollar spent on every purchase, every day
    • Points can be redeemed for statement credit on travel purchases, including Airbnb
    • $95 annual fee
    • No foreign transaction fees

    Amazon Prime Rewards Visa Signature card: Best for online shopping

    You may be wondering why the Amazon Prime Rewards Visa Signature card is on a list highlighting the best credit cards for AirBnb, Vrbo and other homestays.

    Shouldn’t this card be limited to the “best credit cards for online shopping” list? Not when Amazon offers Airbnb gift cards and the Amazon Prime Rewards card gives you 5% cash back on Amazon.com purchases as long as you have a Prime membership, which essentially acts as the annual fee ($119).

    Just purchase an AirBnb gift card from Amazon with the card, and it’s as if you are getting 5% cash back for your AirBnb stay when you apply the gift card towards it. It’s the highest rate on this list, Amazon or not.

    You’ll receive the following additional benefits:

    • 5% cash back on Whole Foods and Amazon purchases (with Prime membership)
    • 2% cash back on purchases at drugstores, gas stations and restaurants
    • 1% cash back on all other purchases
    • A $100 Amazon gift card upon credit card application approval
    • No foreign transaction fees
    • $500,000 travel accident insurance
    • $3,000 per passenger lost luggage reimbursement
    • Baggage delay insurance of up to $100 a day for three days
    • Extended warranty coverage for an additional year

    See related: How to pay off Amazon purchases over time

    Discover it® Miles: Best no-fee option

    Though the points per dollar on this card are lower than any other credit card on the list, Discover it Miles gives you much more freedom in how you can manage your points and account.

    You can redeem miles in any amount, your miles don’t expire even if you close your account and 1% of your miles can be converted directly into cash for your bank account.

    Discover it Miles offers:

    • 1.5 miles for every dollar spent on every purchase (matched at the end of the first year)
    • Points can be redeemed for statement credit on travel expenses, including Airbnb, gas stations and restaurants.
    • Miles can be converted into cash at rate of 1 cent per mile and transferred directly into your bank account
    • Redeem miles in any amount
    • Miles never expire and you don’t lose them even when you close your account
    • No late payment fee or penalty APR on your first late payment, up to $40 thereafter
    • No foreign transaction fees
    • No annual fee
    • 0% APR on purchases for 14 months (11.99% to 22.99% variable APR after that)
    creditcards.com

    Activate Chase Freedom cash back categories for Q1 2021 now

    by Phillip Warren

    Chase has announced the 5% cash back categories on the Chase Freedom Flex℠ and the retired Freedom card for the first quarter of 2021.

    From Jan. 1 through March. 31, 2021, Freedom and Freedom Flex cardholders can earn 5% cash back on select streaming services, internet, cable and phone services and wholesale club purchases (up to $1,500 in combined purchases) after activation.

    Besides that, the new Flex card offers 5% cash back on travel booked through the Chase Ultimate Rewards portal, 3% on dining and drugstore purchases and 1% on everything else. All other purchases earn 1% cash back.

    See related: Chase to launch new Freedom Flex card, add new categories to Freedom Unlimited

    Activation for first-quarter categories on both the Freedom and Freedom Flex launched on Dec. 15, 2020, and will be open until March 14, 2021.

    Here’s what you need to know at a glance:

    • Activation of first-quarter bonus categories begins on Dec. 15 for both the Chase Freedom and Chase Freedom Flex.
    • Cardholders must activate by March 14 to earn the bonus rate.
    • From Jan. 1 to March 31, Freedom and Freedom Flex cardholders can earn 5% cash back on eligible streaming services, internet, cable and phone services and wholesale club purchases.
    • The 5% cash back bonus is capped at $1,500 in combined purchases per quarter.
    • As of Jan. 12, 2020, Chase Freedom cardholders earn 5% cash back on Lyft rides through March 2022.

    Chase 5% cash back calendar 2021

    Winter Spring Summer Holiday
    January – March

    (Activation closes on March 14)

    April – June

    (Activation closed)

    July – September

    (Activation closed)

    October – December

    (Activation closed)

    • Select streaming services
    • Phone, cable and internet services
    • Wholesale clubs

    TBA

    TBA

    TBA

    Chase only releases its quarterly bonus categories one quarter at a time, so we can’t yet predict what will be offered in the rest of the quarters in 2021. Here’s a quick look at some of the categories Chase has offered in the last year.

    Chase 5% cash back calendar 2020

    Winter Spring Summer Holiday
    January – March April – June July – September October – December
    • Select streaming services
    • Gas stations
    • Phone, cable and internet services
    • Gym memberships
    • Fitness clubs
    • Grocery stores
    • Select streaming services
    • Amazon
    • Whole Foods Market
    • Walmart
    • PayPal

    What is included and excluded in the ‘Select streaming services’ category?

    In this category, you can earn 5% cash back on select streaming services, including music and video streaming.  The eligible services include Disney+, Hulu, ESPN+, Netflix, Sling, Vudu, Fubo TV, Apple Music, SiriusXM, Pandora, Spotify and YouTube TV.

    What is included and excluded in the ‘Phone, cable and internet services’ category?

    You can earn cash back on your monthly bills, such as your cable, internet and phone services. To earn 5% cash back in the category, make sure to pay these bills with your Freedom or Freedom Flex card.

    Equipment purchases don’t qualify in this category. You may also not receive the bonus cash back if you pay for your phone, cable or internet service at a merchant’s store that’s not classified in the applicable services category.

    What is included and excluded in the ‘Wholesale clubs’ category?

    In this category, you can get 5% back when you’re shopping at wholesale clubs, including Sam’s and BJ’s. You can also use your Chase Freedom (no longer available for new applications) to earn bonus cash back at Costco. Since Costco only accepts Visa cards, the new Freedom Flex, which is a Mastercard, won’t be accepted. Mastercards are, however, accepted on Costco.com.

    See related: Best credit cards for Costco purchases

    earn 5% cash back on up to $1,500 in combined spending in rotating categories each quarter, upon enrollment, then 1%.

    Chase vs. Discover cash back categories 2021

    Chase Freedom Flex℠

    Discover it® Cash Back

    January – March Select streaming services, phone, cable and internet services, wholesale clubs Grocery stores, Walgreens and CVS
    April – June TBA Gas stations, Uber, Lyft and wholesale clubs
    July – September TBA Restaurants and PayPal
    October – December TBA Amazon.com, Target.com and Walmart.com

    Which card offers the best deal?

    The best card for you depends on where you plan to spend your money in the first quarter of 2021.

    Discover it® Cash Back offers bonus cash back at grocery stores at the beginning of the year. Since groceries are regular expenses that can get rather high, especially if you’re grocery shopping for a family, this category can be pretty lucrative.

    At the same time, if you have a wholesale club membership, it can be very easy for you to meet the spending cap in this category with your Chase card. This can make up for the other two underwhelming categories.

    For the rest of 2021, we can’t predict which card will be best for you, as while Discover has announced its categories for the next year, Chase only releases bonus categories one quarter at a time.


    Source: creditcards.com

    Taking the Leap: How to Make a Career Change and Land on Your Feet

    by Phillip Warren

    Imagine this: You’ve gone to college—even grad school—to pursue a career path you always thought you wanted. But after a few years and many tuition dollars spent, it suddenly hits you: If you have to write one more press release, it might push you over the edge. If this is the case, it’s time to prepare for a career change.

    Transitioning careers is not unusual. In fact, according to a survey conducted by the American Staffing Association, 38 percent of working adults say they are likely to change careers within the next year. The only problem is, if you are unsure of how to make a career change and whether it will be financially sound, you might be hesitant to make the leap.

    “No one wants to change careers without knowing the chances of success,” says Mark Anthony Dyson, host of The Voice of Job Seekers podcast, a show designed to help those in career transition. “Adequate preparation can make all the difference.”

    “Preparation in every form—from updating job skills to financial planning and really taking time to think about what you desire in a fulfilling career—will be a huge factor in your career-change success.”

    – Mark Anthony Dyson, The Voice of Job Seekers

    “How do I make a big career change with this adequate preparation,” you ask?

    Learning how to prepare for a career change financially and finding out which skills you’ll need in your new career are great places to start. Take these steps to understand your career intentions, then determine the best financial strategies for achieving them:

    Figure out if a career change is right for you

    Before preparing for a career change, start by doing an honest self-assessment on whether or not a switch is right for you. This is important, says Dyson, because you’ll want to weigh the advantages and disadvantages of changing careers versus exploring a job transition within your current field. Doing the latter might make more sense for you if you aren’t quite ready to go through a full-blown career transition. Either way, taking the time for self-reflection will help you get to your desired career path sooner.

    It’s important to complete a self-assessment in order to prepare for a career change.

    When you are thinking about how to make a career change and if it’s the right time for you, Dyson suggests asking yourself these questions:

    • What are the professional and financial impacts if I stay on my current career path? A quick list of pros and cons might help your analysis.
    • Are there other opportunities in my current field that I haven’t yet considered? Talk to a human resources professional or research online to understand the qualifications, salaries and opportunities for advancement within your area of expertise.
    • What does my ideal career look like?
    • Do I currently have the skills and experience that can transfer to a new career?
    • What are the possible financial and professional outcomes if my new career doesn’t work out?

    Kelan Kline, a jail deputy turned personal finance blogger for The Savvy Couple, felt stifled by his previous job and the limitations it imposed on his time. He believed that in order to achieve career growth and increase his money-making potential, he would have to change careers. “I knew I was done working for others altogether,” Kline adds.

    If you're wondering how to make a career change, consider the skills you already have in your current position and how they could apply to a new one.

    You may not think you have the skills and experience necessary to transition into a new career, but a tip to prepare for a career change is to consider the skills that have led to your career success thus far. That’s what 10-year human resources veteran Lisa Cassella did when she decided a new career direction was in order and wanted to follow her passion for real estate.

    “As hiring and program manager for a senior living facility, I met face-to-face with with people everyday,” says Cassella, now a licensed real estate salesperson for the brokerage firm Compass. “Sometimes you have to have some difficult conversations,” she continues. “It’s the same in real estate. But for the most part, you are helping people—which is what I enjoy and a strong connection between both careers.”

    Sasha Korobov, a career and success strategist, agrees that a tip for preparing for a career change is to use your current skills as a foundation for a new career. Having undergone a career change herself, she advises people to “really think about what you want to do next, and see if you can start getting those skills and experience in the job you’re already in.”

    Once you understand your motives and capabilities, you’ll have the groundwork for what needs to come next: smart ways to financially support yourself through the transition.

    Prepare yourself financially for making the switch

    One of the best things you can do when figuring out how to make a career change is to have a financial plan. Depending on how you approach your career change, the steps that you take to move to a new industry could impact your finances in various ways.

    For example, when you start out in a new industry, you might be taking a lower level position than what you had in your previous career. This may come with a dip in income, for which you will need to adjust your budget as you progress in your new career.

    If you plan to take any time off before you make the switch, you may experience a gap in income. “You have to think about how many months of income you need to save to get over that hump,” Cassella says. Cassella planned in advance so that she had at least six months of income in the bank before she made the switch to her new career.

    One of the most important tips to prepare for a career change: prepare financially before taking any action.

    Another consideration when you prepare for a career change is whether there is a cost investment required in moving to the new career you have chosen. For example, you might need to spend money on additional education, training, certifications and other measures before you can move into your new role. Your financial plan will have to consider dips in income that could occur if you need to reduce your hours or quit working in order to get the training and education your new career requires, Korobov says. Cassella had to get licensed before moving into real estate sales. She quit her job and took a two-week course, then immediately took the state test.

    If your career change means starting your own business venture, you may have to prepare for all of the financial scenarios mentioned above. Your income might decrease as you establish your own business and gain traction, for instance. You might also have to pay for things that were once provided to you by an employer, such as supplies, computer equipment, software and health insurance.

    Because of these potential challenges, having a savings plan is key when considering tips to prepare for a career change.

    Fine-tune your savings to prepare for a career change

    No matter which path you choose, preparing for a career change may present you with some financial risk. Therefore, it’s beneficial to have savings set aside to manage the transition. With just a few small lifestyle changes that will save you money, you can build the financial safety cushion you need to prepare for a career change, says finance blogger Kline.

    To prepare for a career change, find ways to cut costs and build up your emergency fund.

    Here are Kline’s tips to prepare for a career change and the areas he focused on most when he prepared for his professional move:

    • Reduce unnecessary expenses. As you work on how to make a career change, consider cutting back on discretionary spending such as eating out, entertainment and vacations, and set that money aside for your career change. Don’t already have a budget to track your expenses? Now is the perfect time to start one.
    • Pick the right type of savings account. You’ll want to put the money you save from reducing your expenses into the best type of account to support your career transition. A high-yield savings account, such as the Discover Online Savings Account, will help you grow your savings. For a long-term savings strategy, a Discover Certificate of Deposit might be a great fit.

    You earned it.
    Now earn more with it.

    Online savings with no minimum balance.

    Start Saving
    Online
    Savings

    Discover Bank, Member FDIC

    • Start an emergency fund. Similar to establishing a budget and picking a savings account, if you haven’t already started an emergency fund, now is the time to create one (or add to it if you already have some momentum with your rainy day savings). An emergency fund can help you prepare for unexpected expenses and the financial risks involved in changing careers. Experts suggest that you keep at least three to six months’ worth of living expenses in your emergency fund.
    • Pay down debt. If you are able to pay down debt, such as student loan and credit card debt, it will free up cash to save toward your career transition. Pay more than the monthly minimum to reduce or eliminate the debt altogether as you prepare for a career change.

    With just a few small lifestyle changes that will save you money, you can build the financial safety cushion you need to prepare for a career change.

    – Kelan Kline, The Savvy Couple

    Approach your new career at a gradual pace

    For some, a slower transition, with moonlighting or side hustling until they are ready to go full time, has proven effective. When Jeff Neal started his online retail site selling bait and live feeders, he was still a full-time project manager in e-commerce, but not passionate about his day-to-day. He was able to use his skills from this position to build his own online ventures.

    Neal says he started his online business as a side hustle, with the intention of always having a full-time job keeping his household afloat. He has now been able to transition into being a full-time internet entrepreneur.

    Korobov, the career and success strategist, also started to prepare for her career change with a part-time entrepreneurial venture that grew out of corporate coaching. “I wanted to go into business for myself as a career strategist for women, and I knew that having corporate coaching experience would fast-track my credibility with a lot of potential clients,” she says.

    “I began offering workshops and brown-bag lunches at my office,” Korobov continues. This experience was a valuable lesson for Korobov in how to make a career change, helping her boost her confidence and allowing her to tweak her workshops as she got more experience.

    Slowly transitioning into a new job is how to make a career change without quitting your day-to-day all at once.

    One of Korobov’s biggest tips to prepare for a career change that she learned firsthand: “Your entrepreneurial ventures, even if done part-time, can make the transition into your career smoother, while giving you extra income to help with your financial preparation process.”

    Ensure your path to career-change success

    Making a career change can seem like a huge risk, since you don’t really know if it will work out in your favor. But with research and readiness, you can confidently prepare for a career change. Dyson, of The Voice of Job Seekers podcast, can’t emphasize enough that “preparation in every form—from updating job skills to financial planning and really taking time to think about what you desire in a fulfilling career—will be a huge factor in your career-change success.”

    Understanding your goals and expectations—and trusting your gut—before you begin is a big step in the right direction. Says Cassella of her move into real estate: “It just made a lot of sense for me and my family. My expectations are that once I really get going, there is no limit to what I can make.”

    The post Taking the Leap: How to Make a Career Change and Land on Your Feet appeared first on Discover Bank - Banking Topics Blog.


    Source: discover.com

    The Average Salary of an Architect

    by Phillip Warren

    The Average Salary of an Architect

    The average salary of an architect is $76,100 per year.

    Have you ever wondered how much an architect earns? Becoming an architect requires an investment of money and time, but pays off in the form of a rewarding career that comes with above-average earnings. And for those lucky few who become “starchitects,” it’s a path to fame. Let’s take a closer look at the average salary of an architect. 

    The Average Salary of an Architect: The Basics

    The Bureau of Labor Statistics (BLS) finds that the average salary of an architect was $76,100 per year, $36.59 per hour in 2015. There is wide range of architect salaries, however. The top 10% of architects earn an average salary of $125,520 per year, $60.34 per hour. The bottom 10% of architects earn an average salary of $46,080 per year, $22.15 per hour.

    Architects’ salaries are fairly high, but what do the future job prospects look like for architects? The BLS releases a “job outlook” for the fields it studies. The job outlook predicts the percent by which the number of people in a given job will grow between 2014 and 2024. For architects, the BLS job outlook is 7%, which is around the average for all the jobs the BLS studies. The field isn’t shrinking, but it’s not growing at faster-than-average rates either.

    Related Article: The Average Salary of a Doctor 

    Where Architects Make the Most

    The Average Salary of an Architect

    The BLS examines state- and metro-level data on earnings, too. Where does it pay the most to be an architect? According to BLS data, the top-paying state for architects is California, where the annual mean wage for architects is $97,880. Other high-paying states for architects are Georgia ($93,940), Massachusetts ($90,430), New Jersey ($89,130) and Minnesota ($88,680).

    What about metro areas? The top-paying metro area for architects is West Palm Beach-Boca Raton-Delray Beach, FL, where the mean annual wage for architects is $117,870. Other high-paying metro areas for architects are Santa Maria-Santa Barbara, CA; Oxnard-Thousand Oaks-Ventura, CA; Syracuse, NY and Oakland-Hayward-Berkeley, CA.

    Related Article: The Cost of Living in California

    The Cost of Becoming an Architect

    The first step to becoming an architect is to earn a bachelor’s or master’s degree in architecture. A poll by the American Institute of Architecture Students (AIAS) found that poll respondents (all architecture school graduates) had an average post-graduation student debt of $40,000. The students also reported spending thousands on extra costs such as modeling materials, textbooks and more.

    After obtaining a degree (often a five-year degree), budding architects do an average of three years at an architecture internship. Finally, they must take the Architect Registration Exam (ARE). That means that even the fastest path to becoming an architect in the U.S. takes eight years, but most people take around 11 years. In the meantime, most of these aspiring architects are paying back student loans. The ARE also comes with stiff fees. Depending on which version of the exam you take, the exam fee itself is either $1,470 or $1,260. If you have to cancel your exam, the fees you pay are non-refundable.

    Bottom Line

    The Average Salary of an Architect

    The job of an architect comes with glamour and prestige, as well as a high salary and a solid job outlook. However, the path to becoming an architect is a long and expensive one and not everyone who wants to become an architect makes it through the multi-year process. Still, if you have the discipline, talent and funds architecture is a financially rewarding career path.

    Update: Have financial questions beyond an architect’s average salary? SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

    Photo credit: Â©iStock.com/Geber86, Â©iStock.com/vgajic, Â©iStock.com/monkeybusinessimages

    The post The Average Salary of an Architect appeared first on SmartAsset Blog.


    Source: smartasset.com

    Four Things to Consider When Choosing Your Next Community

    by Phillip Warren

    Deciding to move is a major decision and location is one of the most important aspects you should consider when planning a move. Whether it's a new neighborhood, a new city, or a new state--once you get there, you want to make sure your new community truly makes you feel welcome.

    The post Four Things to Consider When Choosing Your Next Community appeared first on Homes.com.


    Source: homes.com

    What is Panic Selling & How Does it Work?

    by Phillip Warren
    woman covering eyes

    Panic selling is when enough investors want to sell their holdings at the same time that it creates a profound drop in prices. That drop scares other investors into selling, which causes prices to fall still further, which frightens more investors, and so on.

    The resulting panic can erase vast amounts of wealth. It can take weeks or even years for the markets to recover from a serious panic.

    markets can crash.

    Throughout the history of every kind of market, panic occasionally sets in. Sometimes it’s a major global event that sets it off, like what happened with the stock markets in March of 2020 as the global COVID-19 pandemic picked up speed and countries entered lockdown.

    Other times, it’s simply a matter of a given asset—like housing in 2008—being bid up to unrealistic levels, followed by the mass consensus of what it’s worth changing seemingly overnight.

    What Causes Panic Selling?

    While panic is a very human response to the prospect of major financial loss, there are also other factors that can trigger investors to start panic-selling stocks.

    Panic Selling and Margin Calls

    In the Great Crash of 1929, there were many investors who had borrowed heavily to invest in the stock market. When the markets dropped, they received something called a margin call, requiring that they pay back the loans they took out to invest. Those margin calls required that they sell potentially even more stock to pay back the loans, which caused the markets to fall even further.

    Panic Selling and Stop-loss Orders

    Similarly, there are trading programs that can throw fuel on the fire of a bout of panic selling. These can be as simple as a stop-loss order, a standing order to buy or sell a particular security if it ever reaches a predetermined price, which investors commonly use in their brokerage accounts.

    A stop-loss order can be a way to take advantage of price dips to buy a stock at a discount. But during a sudden drop in the markets, stop-loss orders often lead to automatic sales of stocks, as investors try to lock in their gains.
    These automatic sales—in large enough numbers, can accelerate the decline in a market, and contribute to the panic.

    Panic Selling and Algorithms

    There are algorithms employed by major financial institutions and professional investors that will automatically sell if the price of a given stock falls to a certain level. The crash of 1987 was caused in part by some of the first computerized trading programs. And in 2010, one trader who lost control of his highly sophisticated trading software was responsible for the “flash crash,” which caused roughly a trillion dollars of market capitalization to disappear in under an hour.

    The system-wide risk presented by these tools is one reason that most major stock exchanges have installed a series trading curbs and “circuit breakers” in place to slow down panic selling and give the traders who use these programs to recalibrate them before a full-fledged selling spree can run out of control.

    The Risks of Panic Selling

    When markets drop suddenly, it can be scary for investors. And one of the biggest risks may be to give into that fear, and join in the selling.

    But one thing to remember is that markets go up and down, but an investor only loses money when they sell their holdings. By pulling their money out of the stock market, an investor not only accepts a lower price, but also removes the chance of participating in any rebound.

    Loss is a big risk of panic selling. People who invest for goals that are years or decades away can likely weather a panic. But if a person is investing for retirement, a sudden panic just before they retire can create a major problem, especially if they were planning to live off those investments.

    The danger of sudden, panic-driven drops in the market is one reason it makes sense for investors to review their holdings on a regular basis, and adjust their holdings away from riskier assets like stocks, toward steadier assets like bonds, as they get nearer to retirement.

    That risk is also why most professionals recommend people keep 6-12 months of expenses in cash, in case of an emergency. That way, even if a financial crisis causes a person to lose their job, they can stay in the market. It’s a way to protect their long-term plans from being jeopardized by everyday expenses.

    Finding Opportunities in Panic Selling

    During a panic, there are typically enough scared people making irrational decisions to create valuable buying opportunities. The stock-market crashes in 1987 and in 2008, for instance, were each followed by a decade in which the S&P 500 rewarded investors with double-digit annual returns. (As always, however, past performance is no guarantee of future success.)

    The problem is that there’s no way to know when a panic has reached its end, and when the market has fallen to its bottom. Professional traders with complex mathematical models have had mixed results figuring out when a market will rebound. But for most investors—even savvy ones—it’s a guessing game at best.

    There are two ways an investor can try to take advantage of a bout of panic selling:

    1. The first is not to panic.
    2. The other is to keep investing when the market is down, while stocks are selling for much lower prices.

    Dollar Cost Averaging

    One way to take advantage of panic selling is with dollar cost averaging. With this long-term plan, an investor buys a fixed dollar amount of an investment on a regular basis—say, every month. It allows an investor to take advantage of lower purchase prices and limits the amount they invest at when valuations are higher. As such, it’s a strategy for all seasons—not just during a panic. Most investors already employ some form of dollar cost averaging in their 401(k) plan.

    The Takeaway

    SoFi Invest® offers an active investing solution that allows members to choose their own stocks, or take advantage of an automated investing solution that invests their money based on personal goals and risk tolerance.

    Find out how you can get started investing today with SoFi.


    SoFi Invest®
    The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
    1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
    2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
    3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
    For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

    Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
    SOIN20283

    The post What is Panic Selling & How Does it Work? appeared first on SoFi.


    Source: sofi.com

    How to Include Some Guilt-Free Spending in Your Budget

    by Phillip Warren

    With so many of us dealing with the coronavirus pandemic (plus the financial fallout from it) and spending more time at home this year, there’s a very good chance your family budget looks different. Our own budget had some big adjustments (transportation costs went down to basically nothing) along with some minor changes (buying supplies and items around the house for projects).

    Our money dates have had us reevaluate some things and redirect money to other expenses and savings. Besides making sure that you’re taking care of essential expenses and building up your financial cushion, you want to want to make sure you include another key area in your budget – some guilt-free spending in there as well.

    Why Budgets Need to Include Some Guilt-Free Spending

    First off what exactly is guilt-free spending? And why should families include it when planning out their budget. Basically, it covers the expenses that you enjoy. Every family has different ways they use that money. It could be travel, eating out together, adding another pair of shoes to your collection, or gadgets. With families having to deal with so many decisions and challenges, there has been an increasing awareness of having proper self-care as part of the routine. Families are now including that in their budgets.

    The key part of keeping these expenses guilt-free is that they bring you joy without breaking the bank. These aren’t frivolous spending sprees. They can be meaningful purchases such as supplies for a hobby like painting that enriches your life. Second, these expenses are planned ahead of time and baked into your budget so you’re not taking on debt or upsetting your family’s cash flow.

    Why Budgets Typically Fail

    One of the reasons why I think having some fun money in your budget is a wise move is because it’ll help make your budget more sustainable. How? If I asked you what the point of a budget is, what would you say? Most tell me it’s to keep their spending in check.

    It makes sense to believe that because for most families that’s what it’s about – restrictions. However, the best budgets I’ve seen are geared towards the direction of the money. I’ve interviewed families who have retired early or have knocked out a ton of debt and something they had in common was that their budgets reflected their priorities and circumstances.

    Before they put pen to paper (or tap the app), they sat down and defined what goals they wanted to achieve. If you had to break down a budget the three key areas are basically:

    1. Paying your essential bills.
    2. Building long term financial stability.
    3. Have the money you can use now to enjoy.

    Many times, the disagreements, arguments, and sometimes sabotage with budgets come from friction on finding a balance between spending money with long term stability and enjoying now. If you skew too much to saving up for the future, one or more of you in the family could start getting resentful. Financial infidelity or set back with keeping the budget can occur for many reasons, but some spouses say one reason is there’s absolutely no wiggle room in the budget for fun. If you’re only focused on the now when something comes up – hello 2020! – you’re left without a safety net.

    For families with kids, that’s an additional source of stress they don’t need. I noticed that the families who hit their goals had found a way to balance things. They save towards their long term goals as well as set aside money to enjoy now. How? By redoing how they approached their budgets.

    Easy Budget Framework to Use

    Let’s go back to those three key goals of any budget – taking care of essentials, saving for the future, and spending on the present. Families looking to include all of these goals need a budget that can weave them together. If you’re just starting out with a budget and are still trying to figure out a framework, an easy foundational budget is the 50/20/30 budget. It divides up your money into those three key goals, with 50% going to necessary expenses, 20% towards financial stability and wealth, and 30% towards discretionary or fun money.

    Feel free to adjust the percentages based on your circumstances, but for many families that three-bucket approach is easy enough to set up and it gives them enough wiggle room where there can enjoy some of their money now. Once you’ve created that budget, you can then take the next step – automating your money. We’ve done this for over a decade and it has been incredibly helpful. We have our bills automated every paycheck plus our savings and investments are scheduled monthly. With those necessary things taken care of first, we know whatever spending we do won’t harm our expenses.

    Staying on Top of Your and Budget – The Easy Way

    Now that you have a budget and you’re including some guilt-free spending, how do you make sure you’re staying on track? There are some wonderful options out there including money apps like Mint. You can stay on top of your money without losing your mind because the apps can pull that data from your accounts and give you an easy and clear way to see where your money is going. You can also use Mint to track your goals like paying down debt or saving up for a house. With that information in front of you can quickly and easily see how you’re doing anytime.

    Another handy tool with Mint is how simple it is to set up alerts on certain spending. So if you have set aside $200 for your ‘fun’ account, Mint can notify you when your spending is getting close to your limit. It’s a more proactive and real-time way to manage your money without having to worry about every single penny.

    Your Take on Budgets

    As you can see, with a little planning you can be financially savvy and enjoy some fun now. I’d love to get your thoughts – how do you approach your budget? What are some must-have expenses in yours?

    The post How to Include Some Guilt-Free Spending in Your Budget appeared first on MintLife Blog.


    Source: mint.intuit.com

    Fido-Proofing Your Budget: Managing the High Cost of Owning a Dog

    by Phillip Warren

    When Craig Hynd and his fiancée brought home their new Lhasa Apso puppy Chewie, they knew the addition to their family would be worth it—but they didn’t quite understand the true cost of owning a dog. As new homeowners, “we didn’t have a lot of money to spare on a month-to-month basis,” Hynd says, “but we also love dogs and felt that we could afford to bring one into our home.”

    To make sure they were financially on the mark, Hynd, a marketing executive for HR software company Youmanage, decided to do some research on how to afford a dog on a budget, shortly after Chewie settled in. He was glad he did: He found that the costs of dog ownership added up to much more than he originally anticipated. Fortunately, there was still time for him to adjust.

    Many people underestimate the cost of owning a dog, which can leave them short on funds for vaccinations, vet visits or dog food.

    But Hynd’s foresight is not always top of mind for new dog owners. Getting a dog can be an emotional, knee-jerk decision, and you may not think about the expenses that go along with it or how to budget for a dog. The cost of owning a dog over the average lifespan of 12 years ranges from $5,000 to $20,000. The majority of dog owners underestimate this figure.1 That’s the kind of misunderstanding that can leave you short on funds for things such as vaccinations and preventative care—even food and toys.

    So when asking yourself the question, “How much money should I budget for a dog?” you’ll be glad to know that a little financial preparation can go a long way toward making sure you’re ready for the responsibilities that come with pet ownership. The information that follows can help you and your new pooch share a happy, healthy friendship for years to come.

    Welcome home: First-year costs for your pup

    “Before getting my dog, I made sure to save as much money as possible,” says Danielle Mühlenberg, a professional dog trainer and blogger at PawLeaks, a site that focuses on dog training and dog behavior. Mühlenberg paid $1,300 for her 115-pound rottweiler Amalia. A safe approach when thinking about how to budget for a dog is to “always put away more money than you’ve calculated in your budget, so you won’t be overwhelmed by any surprise costs,” she adds.

    When considering how to budget for a dog, look at animal shelters where adoption fees are more affordable.

    Mühlenberg outlines the first-year expenses new dog owners should expect as they resolve how to afford a dog on a budget and some suggestions on managing costs:

    Purchase/adoption fees and dog license

    The purchase of a purebred puppy from a breeder can cost anywhere from $800 to $1,500 or more—which makes a pure-blooded hound the most expensive type of dog to own. At the other end of the spectrum are the many shelter or rescue dogs in need of a home; they can generally be adopted for as little as a few hundred dollars. You will also need a dog license to bring home your pup, which runs from $10 to $20 on average (and needs to be renewed annually).

    • Pro Tip: Once you bring your tail-wagger home from the shelter or breeder, research local vets. Offices in one neighborhood or town can be much pricier than what you’d find if you’re open to a commute.

    Upfront medical costs

    It can cost between $200 and $800 to spay or neuter a dog at a veterinary clinic. You can typically pay less at a shelter or humane society, where such procedures are often subsidized by donations. In other costs, puppies need an initial exam and special vaccinations that typically run between $75 and $100 (rabies is the only shot required by law, however). Microchipping, while not mandatory, is recommended to help identify your pet if it’s lost or stolen. This procedure costs around $40.

    • Pro Tip: Plan to have your dog spayed or neutered. Otherwise, you may pay higher boarding fees and license fees, as well as release fees if your pup is taken in by animal control.

    Comfort, training and grooming supplies

    Expect to spend another few hundred dollars for a collar and leash ($6 to $50), food bowls ($10 to $50), waste bags ($6 to $20), a crate and bed ($25 to $250), doggie shampoo and brushes ($5 to $10), training pads ($16 to $35), toys ($10 to $200) and the first month’s supply of food ($40 to $60).

    • Pro Tip: Supplies like a dog crate or bowl can be found secondhand for a lower cost, sometimes for free. Check online listings for yard sales and giveaway events, where used or unwanted items are given away instead of being sold or thrown away.

    Lost time at work

    A new puppy needs a lot of attention, which can add to the cost of owning a dog. One in five dog owners took time off from work to care for a new puppy.2 Some puppies have a harder time on their own and can chew up your home and belongings, so it’s worth knowing this upfront in case your pup needs a sitter.

    • Pro Tip: Prepare for “puppydom” ahead of time by banking extra personal days or asking about short-term, work-from-home opportunities.

    Ongoing expenses for your furry companion

    Annual, ongoing costs of owning a dog can vary widely depending on your situation. Why the disparity? It’s due mainly to dog size. For instance, larger dogs eat more food, and if you’re the type of owner that chooses premium kibble over a lower-cost option, that can really add up. Groomers also charge more for larger dogs because of the extra time and care needed to handle them.

    Mühlenberg spends about $1,200 per year on her Rottweiler’s high-end food and another $600 annually for twice-weekly social training sessions. A pricey diet and puppy play camp may fall in the “nice to have” category of dog ownership for some. Dog owners worried about how to afford a dog on a budget can minimize these costs by choosing less expensive canned food and kibble or by making their own dog food. To save on other expenses, Müehlenberg grooms her dog at home, makes her own toys and treats and buys pet supplies in bulk.

    To get a handle on how to budget for a dog, here are some of the biggest costs annually that dog owners need to plan for:

    When considering how to afford a dog on a budget, remember that annual costs can add up to over $2,000.

    When considering how to afford a dog on a budget, remember that annual costs can add up to over $2,000.

    To help relieve the financial burden of how to afford a dog on a budget, you may want to open a savings account for emergencies. Mühlenberg puts a few hundred dollars aside each month, which can be tapped for unplanned household repairs due to any damage the dog may cause, dog sitting for unexpected travel or illness or other pup-related surprises. The Discover Online Savings Account is one place to hold cash for a dog-only emergency fund and grow your savings.

    You earned it.
    Now earn more with it.

    Online savings with no minimum balance.

    Start Saving
    Online
    Savings

    Discover Bank, Member FDIC

    Invest in keeping your pooch healthy

    As you can see, there are a lot of annual costs to consider when determining how to afford a dog on a budget—and they can really add up, particularly when a pooch gets sick or is involved in an accident. Preventative care such as flea, tick and heartworm medication, which can cost a total of $64 to $320 monthly, and regular vet visits can decrease the risk of an expensive health condition.3

    For larger or recurring costs, consider pet insurance (an annual policy costs about $360 to $600).2 Some unexpected expenses can be offset by a pet insurance policy, which “is kind of like a forced savings account,” says Sara Ochoa, DVM, veterinary consultant for product review site DogLab. “You pay the insurance company, and they will pay for most of your pet’s medical bills.” This might go a long way in resolving how to budget for a dog.

    For example, a typical pet insurance policy may cover accidents, illness and conditions that are genetic, congenital and chronic, as long as these conditions were not present at the time the policy was purchased.5

    “Always put away more money than you’ve calculated in your budget, so you won’t be overwhelmed by any surprise costs.”

    – Danielle Mühlenberg, professional dog trainer

    Ochoa is often able to witness the financial benefits of pet insurance firsthand. She cites one example of a client whose dog had emergency surgery and spent a few nights in the hospital. According to Ochoa, the bill would have cost the owner around $7,000. With their pet insurance, they paid somewhere around $1,000.

    Create a happy home for your four-legged friend

    In the end, how to budget for a dog just takes some advance planning and preparation, which can help manage the upfront costs and monthly cash cushion required to ensure a happy and healthy dog. By understanding the cost of owning a dog as much as possible, you’ll have less financial stress and more time to focus on play time with your pup.

    “Even with the associated costs,” Hynd says, “I don’t for one moment regret our decision [to bring Chewie home].” Mühlenberg agrees: “Bringing a dog into my life has always been a goal and dream of mine. The love and affection you receive back from a dog are priceless.”

    Sources:

    1“The True Cost of Owning a Dog or Cat,” Credit.com
    2“The True Cost of Getting a Puppy in 2019,” Rover.com
    3“The True Cost of Getting a Dog,” Rover.com
    4“5 Reasons to Get Your Dog Licensed,” Cesar’s Way
    5“Pet Insurance Coverage: What You Need to Know,” ConsumersAdvocate.org

    The post Fido-Proofing Your Budget: Managing the High Cost of Owning a Dog appeared first on Discover Bank - Banking Topics Blog.


    Source: discover.com