Master Your Money Bootcamp: Calculate how much you need to save to achieve your goals

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Welcome to the fourth week of the Master Your Money Bootcamp on deciding what you want. This week, we’re crunching the numbers!

Exercise 4: Figure out your price tag and your timeline

Saving money for a big purchase or event can seem overwhelming if you start with nothing or very little in the bank.

By breaking down the big goal into a series of smaller ones – such as per paycheck or per month – you can illuminate a path that feels far more achievable.

The goal for this week: Calculate how much you need to save on a regular basis to achieve your goals when you want.

1. Pull out your list of goals from the exercise in week two. These should be prioritized and each should have a target date for when you would like to have the money.

2. Decide on a target number for each savings goal. For example, if your goal is to buy a new car in two years, how much do you want to spend?

3. Plug the numbers into the following formula and repeat for each savings goal:

Target account balance ÷ the number of years until the event or purchase ÷ number of paychecks in a year = how much to save every time you get paid

Here’s an example for buying a new car:

$20,000 ÷ 2 years ÷ 24 paychecks in a year = save $416.67 per paycheck

If your income isn’t regular, use this formula:

Target account balance ÷ the number of years until the event or purchase ÷ 12 months = how much to save every month

For debt payoff, you need to know your minimum payment amount and annual percentage rate (APR). The easiest way to figure out how much you will owe each month is to plug those numbers into an online debt payoff calculator.

For retirement, you need to think about how much money you will need to live on each year – most experts recommend at least 70% to 80% of your pre-retirement salary. Then divide that number by 4% (the standard investment withdrawal rate) to get the target balance needed to retire. Then use an online calculator, which will take into account investment returns, to calculate how much you should save each month. (For a more accurate projection for retirement savings, visit with a financial planner).

4. Once you have the monthly or per-paycheck savings amount for each financial goal, go back to your budget and see where you can free up cash to save. It’s likely that you will need to go back and adjust the target balance or target deadline for some of your goals.

When you work backward – first identifying your goals and then returning to look at your financial situation – you can allocate your cash and figure out what else it might take to hit those future milestones, whether that’s increasing your income or cutting back spending.

Having clear goals in mind and seeing what it takes to achieve them can make some of today’s sacrifices more palatable.

As a reminder, here’s what you’ll accomplish in this month’s Bootcamp (we’ll link to each exercise as it goes live):

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

Master Your Money Bootcamp: Identify what’s standing in the way of your financial goals

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Welcome to the third week of the Master Your Money Bootcamp on deciding what you want. This week, we’re problem solving.

Exercise 3: Identify what’s standing in your way

You have your financial goals listed and prioritized, so now it’s time to figure out what’s holding you back from achieving them tomorrow, next year, or in 20 years.

When things are going badly, financially or otherwise, we often point the blame at outside factors. To some degree, that’s fair. Layoffs, health crises, recessions, and systemic issues like the racial wealth gap and gender pay gap are beyond our control. But there are several things within our control that we tend to overlook when evaluating our ability to afford something.

Paying off high-interest debt, reconfiguring your budget, improving bad credit, or increasing your income is totally up to you, and it can lay the groundwork for achieving your biggest dreams.

The goal for this week: To identify the financial barriers within your control and evaluate the options for overcoming them.

1. You need to save or invest money to achieve most financial goals. What do you think is holding you back right now?

Here are some common examples:

  • I want to save for a vacation, but I have too much debt
  • I want to save for retirement, but I don’t earn enough
  • I want to save for an emergency fund, but my expenses are too high

2. Next, consider your options. What specifically could reduce or eliminate each of your obstacles?

Here’s what that looks like for each obstacle:

3. Pick a solution, or multiple, and get going.

The initial work that goes into creating this plan is important, but your priorities may shift and other obstacles will likely arise. Don’t beat yourself up if circumstances changes. This framework for identifying which challenges are within your control and evaluating the options you have at your disposal is one you can apply repeatedly.

As a reminder, here’s what you’ll accomplish in this month’s Bootcamp (we’ll link to each exercise as it goes live):

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

3 steps to start tackling huge student loans before you make a single payment

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Panelists for Master Your Money’s virtual event include, from left to right, Personal Finance Executive Editor Libby Kane, personal finance coach and author Tarra Jackson, and Vice President of Young Investors for Personal Investing, a unit of Fidelity Investments, Kelly Lannan.

  • Personal finance professionals Tarra Jackson and Kelly Lannan joined Insider’s Master your Money Virtual Event.
  • They broke down the best ways to tackle debt repayment, including huge student loans.
  • Before you try to pay them off, make sure you have savings, know what you owe, and contact your lender to get your options.
  • This article is part of a series focused on millennial financial empowerment called Master your Money.

Before you start tackling an enormous debt like a student loan, experts have some advice.

Kelly Lannan, Vice President of Young Investors for Personal Investing at Fidelity, and Tarra Jackson, author of “4 Financial Languages” and “Financial Fornication,” explained during Insider’s virtual event, “How to control your debt, build your credit, and set yourself up to build wealth,” that there are a few steps to take before you start writing checks.

1. Figure out exactly what you owe and can afford to pay

Before you pay off your debt, you need to know exactly what debts you have, Lannan said. For a lot of people, this is easier said than done.

“Sometimes if you’re scared of the numbers and what they’re going to show you, it’s like inertia sets in and you don’t check them,” Lannan said. “But if you have no idea what you even have to begin with, how can you ever take action on it?”

Lannan recommended using apps to get an overview of your finances, but you can also start a basic spreadsheet or even a written list of your debt amounts, interest rates, and lenders to keep everything in one place.

Knowing what you owe and to whom is one side of the coin; knowing how much you can afford to pay is the other.

Jackson explained that before you consider refinancing or consolidating your loans, make sure you have a holistic picture of your spending and you know how much you can afford to pay your lenders each month. If you need to pay more than you can afford, she continued, use this as an opportunity to take a closer look at your spending habits and see where you might want to make a change to free up some cash.

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2. Get all your options from your lender

Jackson, who held the role of interim president and CEO of a credit union, suggested that borrowers struggling under large debts get in touch with their lenders to figure out all of their options for repayment. The lending institution might offer a deferment program, suggest refinancing, allow borrowers to split up the payment or extend the term of the loan to lower payments, or have other options for situations of financial hardship. As Jackson put it, “You can’t give what you don’t have.”

In her role at the head of a credit union, Jackson remembers struggling borrowers offering to give up their home or car in lieu of payments. But the union doesn’t want the collateral, she explained. “Most financial institutions, all they really want is the money,” she said, and they’re willing to work with you to get it.

3. Make sure your emergency fund is on track

One of the first steps in paying off a large debt balance seems counterintuitive: Start saving.

Before you worry about paying off your debt, make sure you’re saving an emergency fund. Lannan said, “The most important thing is that you make sure you have money set aside in case the unexpected happens.” An emergency fund is generally defined as about six months’ worth of living expenses saved somewhere easily accessible, like a savings account. That money is earmarked for an emergency like a job loss or medical emergency – something that might otherwise cause you to take on debt.

“What we don’t want to have happen is people are not prepared for the unexpected, and then they go further into debt, because they either can’t pay off the debt that already existed, or they have to take on more loans to do so,” Lannan said.

It’s important to save this fund somewhere separate from your checking account, to reduce the ease (and temptation) of tapping it when you need a little more cash in checking, added Jackson. She recommends automating your contributions, and then leaving that money entirely alone – no debit card, no regular access to the account. “That’s the best way to build your savings,” she said. “Set it and forget it.”

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Master Your Money Bootcamp: Dream about what you want to accomplish

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Welcome to the first week of the Master Your Money Bootcamp on deciding what you want. This week we’re dreaming up goals!

Exercise 1: Dream big

Money is a ticket to freedom. When used strategically, it can help you build a fulfilling life. But you have to start somewhere.

It can be hard to see the path from Point A to Point B, especially if you want to go from $0 to an early retirement, homeownership, or taking a once-in-a-lifetime vacation. Making a plan can reduce a lot of that mystery.

So, grab a glass of wine, cup of tea, or soothing beverage of your choice (not mandatory, but it doesn’t hurt), and let’s get to it.

The goal for this week: Pinpoint the goals that require capital to achieve.

1. Step back and consider: What exactly do you want in the future that you don’t have now?

Write down everything, whether it obviously requires money (“throw the wedding of my dreams”) or not (“marry the person of my dreams”).

Here are some examples to kickstart your brainstorm:

  • Pay off my student-loan balance
  • Own a home
  • Stay out of credit-card debt
  • Rent an apartment in an expensive city
  • Save up a one-year emergency fund I can dip into when family members need help
  • Run a business that generates X dollars a year
  • Work from anywhere
  • Spend half the year traveling
  • Have enough savings to pay college tuition in full
  • Retire at 60 and …

Dream big!

2. Isolate the dreams that require money to achieve – star them, highlight them, or write them on a separate piece of paper. Sit with them for a while. Next week, we’ll prioritize.

As a reminder, here’s what you’ll accomplish in this month’s Bootcamp (we’ll link to each exercise as it goes live):

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

The Master Your Money Bootcamp will help you put a price tag on your dreams – and figure out how to turn them into reality

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The thing about dreams is that we often assume they’re completely out of reach. Sure, if $1 million came our way, we’d pay our student loan debt off in full. Or take a safari. Or buy a house. Or throw the wedding of our dreams. But without that windfall, who can afford it, right?

If you do the math, you might be surprised.

Over the next month, that’s what we’ll be focusing on: Putting a price tag on your dreams and creating a plan to help you afford them in the future. We’ll start with pinpointing what exactly it is you want to accomplish with your cash, identify the right first step to take, and identify any challenges standing in your way. Then, we’ll calculate exactly what this goal will cost, and lay out a timeline for how long it will take to achieve.

We’re not going into this blindly. We know that the ability to afford your dreams depends on a lot of things: your job, your living situation, your credit, and the flawed systems in the US that favor some people over others. We know that if you dream of a private island, you’ll probably need more than a month of strategizing. But if you dream of things like laying the groundwork to become debt-free, or a homeowner, or pay for your children’s college, we can get you started on that journey.

Welcome to the Master Your Money Bootcamp

Master Your Money Bootcamps are month-long challenges broken into simple one-week exercises to help you take control of your money.

Over the course of 2021, we’ll conduct four of these Bootcamps, each culminating in a free, live, virtual discussion among experts about how to make the most of the tasks you’ve already accomplished. You can take all four Bootcamps this year, or pick and choose the ones that give the guidance you need most.

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

While you’re here, feel free to visit (or revisit) our first Master Your Money Bootcamp of the year, which broke down the major task of demystifying your finances into four achievable steps.

Our first Bootcamp exercise launches Monday, May 17, 2021. You don’t have to sign up – just dive in! Here’s what you’ll accomplish in just one month (we’ll link to each exercise as it goes live):

Read the original article on Business Insider

Master Your Money Bootcamp: Make a list of all your debt balances

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Welcome to week two of the Master Your Money Bootcamp on demystifying your finances! This week we’re focused on managing debt balances.

Exercise 2: Figure out how much you owe, to whom, and at what price

Not all debt is bad, but it can be expensive and, at times, messy. Attention to detail is critical when it comes to getting organized.

Whether you’re carrying a balance on your credit card, paying off a new car, or chipping away at a student loan or mortgage, the best way to manage debt is head on. Being specific about the stakes of your debt – how much you owe and when it’s due – can feel daunting, but it’s key to getting out from under it.

Remember, you don’t need to be debt-free to be good with money, but you do need to be in control.

The goal for this week: To get a clear picture of all your financial liabilities. You need this information to make a plan for paying off your debt.

1. Open up a spreadsheet or get out a blank sheet of paper and write down all the financial categories where you hold debt, such as:

  • Credit cards
  • Home loans
  • Student loans
  • Auto loans
  • Personal loans

2. Go through each category and write down the bank, credit union, or another lender that falls under each one. For example, the US Department of Education might be listed under student loans, while Chase Bank might be listed under credit cards.

3. Under each lender, write down the following:

  • Your balance as of a specific date
  • Your interest rate or annual percentage rate (APR)
  • Your minimum payment
  • Your payment due date

As a reminder, here’s what you’ll accomplish in this month’s Bootcamp (we’ll link to each exercise as it goes live):

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Read the original article on Business Insider

The Master Your Money Bootcamp will help you take control of your finances, no matter how messy they are

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Ask just about any personal finance expert how to start taking control of your money and they’ll give you the same advice: Figure out where your money goes.

It’s a lot harder than it sounds.

Have you ever left a bill unopened, to deal with it later? Are you 100% sure which subscriptions are charging you every month? Which of your debts has the highest interest rate? Quick, off the top of your head: How much money do you have in cash savings?

Chances are, you can’t answer some of these questions without a good deal of password-finding, terms-reading, and note-taking. And that’s normal! But being aware of your money (all of it) is a crucial step on the path to building long-term wealth.

Welcome to the Master Your Money Bootcamp

Master Your Money Bootcamps are month-long challenges broken into simple one-week exercises to help you take control of your money.

Over the course of 2021, we’ll conduct four of these Bootcamps, each culminating in a free, live, virtual discussion among experts about how to make the most of the tasks you’ve already accomplished. You can take all four Bootcamps this year, or pick and choose the ones that give the guidance you need most.

For each exercise, you’ll get a detailed explanation of how to complete it and why it’s important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.

Our first Bootcamp exercise launches Monday, April 19, 2021. You don’t have to sign up – just dive in! Here’s what you’ll accomplish in just one month (we’ll link to each exercise as it goes live):

Read the original article on Business Insider