This Is How You Get Paid to Travel - Frugl

This Is How You Get Paid to Travel

Traveling the world is a dream for many of us. The problem is that it’s so expensive, it seems out of reach. But what if you could get paid to travel? Instead of spending thousands of dollars on an international vacation, you can find ways for companies and brands to pay you to travel the world. Doesn’t that sound fantastic?

It sounds like a dream, but there are actually quite a few ways to make money traveling. Some of these methods require a lot of up-front work, while others require commitment and personal sacrifice.

You can get paid to travel by choosing a certain career or pursuing side hustles to help pay for your travel.  Here are all the options to earn money traveling.

How Do I Get Paid to Travel?

There are a few career fields that will pay you to travel. The travel costs will all be on the company’s dime, so it’s free to you. However, remember that if you choose a job that pays you to travel, your main priority will be work, not exploring exotic locales.

Many folks choose a career that pays for travel only to learn that the only foreign lands they’ve experienced are airports and hotel rooms. Some of these jobs aren’t as glamorous as they seem, but if you are brave and adventurous, you can make it work.

The other option for getting paid to travel is starting a side hustle. A professional travel blogger can make a lot of money, but there are many different ways to make your travel dream come true with side hustles.

And of course, if you’re not getting paid to travel, then your only other option is to make sure that you’re doing what you can to save for a vacation, a family trip, or whatever is next to come. Ultimately, the latter comes down to discipline and good money habits.

Careers that Pay you to Travel

Military

Many people will balk at joining the military, especially as a means to travel. However, it’s one of the best career fields for getting paid to travel.

Not only are there training opportunities all over the United States, but there are also trainings abroad as well. Many Soldiers, Sailors, Airmen, and Marines get stationed overseas in Europe and Asia, so it’s like you are getting paid to live in a foreign country.

The great thing about the military is that you get to travel almost as soon as you sign up. There are Army bases that conduct basic training in most parts of the country. Still, if you join the Navy, you will most likely get sent to Great Lakes Naval Station and explore Chicago, or you will go to the Naval Station in San Diego and have the opportunity to explore California on the weekends.

Clearly, there are downsides. The United States has been at war for over twenty years, and you may end up traveling to war-torn countries. However, if you are adventurous and feel a calling to serve your county, this might be one of the only ways to see ancient sites in Mesopotamia, like the Ziggurat at Ur.

Remember, though, that with the military, there are no guarantees about where you will go. You go where you get sent. Sometimes it’s an epic experience, and sometimes it’s horrendous. You have to take the good with the bad if you go this route.

Diplomat

Another government career that pays you to live in foreign lands is with the State Department. As a diplomat, you will be stationed at a US embassy somewhere abroad. Newer diplomats tend to get less desirable locations, so if you’ve always wanted to live in underdeveloped countries, this might be a great fit for you. As you work your way up, you can get assignments in developed countries.

It’s not easy to become a diplomat. A rigorous selection process includes a written essay, a role-playing exam, and a written test. However, there are also support positions available in IT, medicine, and general administration. The selection process for these positions is rigorous, but it’s not quite as difficult as that for the actual diplomat.

Although it’s hard to get into it, it’s a great career choice if you want to serve your country without joining the military and see interesting parts of the world.

Flight Attendant or Pilot

If you want to literally get paid to travel, consider getting involved in the aviation industry. Pilots and flight attendants get paid to be in the air, ensuring that everything on a flight runs smoothly.

However, these jobs aren’t as glamorous as they seem. Pilots are highly respected, but it takes years of training to get behind the wheel of an airplane. You need a minimum of 1500 hours of flight experience to earn an airline transport pilot certificate, the minimum requirement for becoming a commercial pilot. Gaining this experience is not cheap. It can cost upwards of a hundred thousand dollars.

Becoming a flight attendant is much easier (and cheaper), but these workers are often underpaid. Some are only paid for the actual flight time, not any prep work, which is ridiculous!

Both of these careers often have quick turnaround times, so it’s unlikely that you will be able to see much of whichever city you landed in before you have to fly back. However, if you plan your work hours with your vacation days and off days correctly, you should be able to find time to explore!

Ship Crew Member

Another way to literally get paid to travel is to work on a cruise ship. The cruise industry always needs workers to help clean rooms, run the many restaurants and stores on board, and assist guests. The downside of working a cruise ship is that you will most likely be working when a ship is docked in cool places.

Another option is to become a deckhand on a cargo ship. It’s a bit harder to find work in this industry, especially since most ships don’t hire US workers, but it’s still possible. Many different jobs are available on cargo ships, from cooks and janitors to engineers to ship officers. Many crew members can take shore leave when the ship is docked in various locales.

Being a crew member on a ship is not easy. It’s dangerous work, and the majority of the world that you will see is covered in the ocean. However, for someone who loves the idea of being on the water and traveling by sea, this is a great option.

Journalism

Journalists can be sent on assignment all over the world. One of the best things about this field is that it covers a variety of niches. Fashion journalists can be sent to Paris to cover Fashion Week. Food journalists can be sent to cover the scoop on new restaurants or emerging food trends.

Writers can be sent to uncover stories of people living in desperation, the environmental impacts of developing new technologies, and political disruptions in war-ravaged countries. The work runs the gambit from fun entertainment pieces to dangerous journeys to uncover the truth.

Some journalists venture deep into rain forests to learn about the people or animals who call it home, while others stay safe in Hollywood interviewing up and coming stars. This industry is filled with people in thousands of different niches, all reporting on the things that they truly care about.

If you truly have a passion for traveling, you can become a travel writer. This niche of journalism is highly competitive, but those who make it can travel to exotic locations and write about their experiences.  Travel magazines such as Conde Nast often publish epic tales of amazing adventures. Unfortunately, it is harder to get a full-time job at these publications. Many of their content is written by freelancers, but becoming a regular contributor might be enough to make a living.

Teaching Abroad

A final way to get paid to travel is to get a job teaching English overseas. Native English speakers are in high demand in many different countries. You need a bachelor’s degree in any subject and a TEFL (Teaching English as a Foreign Language) certificate to teach English abroad. You can obtain a TEFL certification at a variety of online schools, generally for about $500.

Many people use teaching English to backpack through Europe or Asia while having a home base at the teaching location.  There are opportunities available all over the world. However, it will probably be difficult to find assignments in Western Europe or developed Asian countries as a newer teacher. If you dream of living in Europe, try an Eastern city like Prague or Budapest. If you are in love with Asia, look into teaching in Cambodia or Thailand. The competition isn’t as fierce in these countries, and there might be more opportunities available.

Find Companies that Pay You to Travel

Although the jobs listed above are the ones that traditionally have travel opportunities, they aren’t the only ones. With globalism, more and more companies are becoming multi-national. You may find work at a software company in Seattle that sends you to conferences in Germany or at a supply chain company in California that sends you to China to meet your shipping counterparts. You may be an engineer sent to South America to quality control the production of a certain product.

There are too many possibilities to list. If you want to find a career traveling the world, find skills that are in demand globally. Use job search boards like Indeed to determine which career fields require employees to travel and become essential in one of those fields.

Side Hustles that Pay You to Travel

Not everyone wants a career that forces them to travel. Sometimes, we want to get paid to travel on our own! It’s much better to work for yourself and choose your own assignments than to be tied to what a company wants you to do.

Here are a few side hustles you can start that might lead to paid travel opportunities. Remember that you need to put a lot of work in upfront to score these epic opportunities with side hustles.

Start a Travel Blog

Travel blogging is the first thing that pops into most people’s minds when they want to get paid to travel on their own terms. Those with successful travel blogs often get sponsored trips to interesting places, which they then review and write about for their audience.

Travel bloggers earn money by writing about their adventures. This side hustle is always at the top of any list on traveling the world and making money, and for a good reason. It works. It’s the dream.

But what many writers forget to mention is that it also takes a lot of time and effort. Making a travel blog is hard work, and it will take time to get established enough to earn those sponsored trips. It usually takes at least a year or two for bloggers to see any return on their investments. However, those who stick with it through the hard first few years will be able to monetize with ads and affiliates, and as they grow their blogs, they will start earning sponsorship deals and get paid to travel.

Be an Influencer

If you don’t want to go through the hassle of creating a blog, you can try becoming a social media influencer or content creator to get paid to travel.

Influencers are the new rockstars, and becoming one is not as easy as it seems. It takes a lot of content creation, curation, and understanding of the variety of social media platforms available to make it big on any of them.

However, if you are successful at it, you can earn a living by posting to social media. Companies will start paying you to post if you build a following on your travel Instagram of over 100K. You can get sponsorship deals with tour companies, hotels, and more. In addition, you could become a brand ambassador and get paid to promote a certain brand’s products. Some influencers work with travel gear companies, getting paid to show off the latest trends in luggage or travel jackets. There are plenty of ways that influencers can make money and get paid to travel.

Become a Photographer

Being a photographer ranks up there with journalism as a great way to get paid to travel, but with the advent of smartphones and easy access to editing tools, anyone can become a great photographer.

The difficult part is selling your photos and making a living off of your photography. There are a few ways you could go about this. You could become a freelance photographer for a travel magazine and get paid to take great shots for them. You could set up your own photography website and sell prints of your epic travel photos, and you can even post your photos to apps like Instagram and try to become an influencer.

Another way to make money with photography is by selling stock photos. Amazing photos of interesting places are in demand. Upload your best shots to sites like Shutterstock and make money whenever someone uses your photo. A final option is to upload your photos to a print-on-demand website, so people can use them to create t-shirts, mugs, or wall prints. ArtPal is designed specifically for printing works of art, but you may be able to sell your photos on sites like Tee Public as well.

House Sitting

House-sitting can be a great way to cut your travel costs, if not get paid fully for your trip. Rather than paying for lodging on your next trip, use an app like Home Exchange or Love Home Swap to find opportunities for house sitting and house swapping. You can also exchange services, such as pet sitting, for free lodging on apps like Trusted House Sitter. This app matches house sitters who love pets with people who need trusted pet sitters while they are away. They get the pet sitter while you get free lodging.

Many of these apps do have service fees or membership fees, but if you use them often, the cost will be much lower than the cost of lodging. That’s like getting free money to travel!

Become a Digital Nomad

Getting paid to travel is the dream, but they don’t always have to go hand in hand. Instead of getting paid to travel literally, you could find remote work. By working remotely, you can travel wherever you want and get paid for your normal work while doing it.

There are tons of ways to be a digital nomad. You could become a freelancer and write articles for a variety of outlets. You could land a few virtual assistant jobs and help others manage their social media accounts or blog schedules. These digital positions would allow you to work on your own schedule and travel whenever you want. You could also create your own businesses, like a blog or a YouTube channel. The difference between being a digital nomad blogger and a travel blogger is only in the niche. You can write about whatever you want while traveling.

Other digital nomads prefer to work full-time with a normal company, but their jobs are completely remote. Sit in on Zoom meetings from a beach in Belize. Finish that JavaScript program from a bar in Berlin. Work wherever you want, whenever you want with remote work opportunities. It’s not exactly getting paid to travel, but it’s pretty close.

Volunteer Work that Pays for Your Travel

Volunteer work is traditionally unpaid, of course. Still, many volunteer organizations will pay for your airfare, and some even provide a stipend while you are in a foreign country working for them. However, don’t expect to go to fancy cities like Paris and Rome if you go this route.

If you are doing volunteer work, you will likely be heading to countries that need the help. Expect harsh weather conditions and poverty conditions. Volunteer with organizations like the Peace Corps or Volunteer Service Overseas to do good in the world and get your travel paid for.

Getting Paid to Travel

Getting paid to travel is the ultimate dream. Start with the ideas on this list to turn that dream into a reality! This post originally appeared on Savoteur.

Residual Income - Frugl

What Is Residual Income? 10 Residual Income Ideas to Build Your Wealth

Most people believe that money is created through active income. They rarely think about passive income or even residual income as a source to generate wealth or financial freedom.

Wealth is thought of as being reserved for those that have the means to create and make money. These may be the rich and famous or even those that have inherited money. Why can’t we be part of those people that are wealthy? What rules restrict us from being able to make this wealth for ourselves and our families?

When exploring the means of creating wealth without using active income, we come across two types. There is passive income, and there is residual income. They both act very similarly, but as we talk about finance, it is better to think of the residual income.

What is Residual Income?

Residual income is an income that can be passive. The calculation determines how much profit or excess income is available after all expenses are paid off.

It is the leftover money we have after we have paid off any personal or business debt.

Most people trade time for money, but we create income streams without trading in more time with the residual income. These income streams are passive and allow us to keep our time without spending it to make more money.

Residual Income vs. Passive Income

Residual income and passive income seem to be used interchangeably within the internet world. You go to google to search, and some posts and articles come up with passive income ideas.

Let’s get these two things straight. The money that comes from all that work is passive income. Passive income comes from doing work like building a blog, writing posts, and using it to sell affiliates and ads if I were to buy rental properties that create massive amounts of cash flow, once all the work is done and the money comes in passively. You have now done all the work, and the income comes afterward.

We often think about active income. Work is done, and therefore, we get paid for the work. The work is done with the passive income, but the money keeps coming in. If you write one blog post and keep making money off it years later.

Residual income is the same, but you calculate how much profit you get from the passive income. With the blog you are writing, there are costs such as hosting, plugins, a theme, and even a mastermind group.

The rental property would have been bought with money and would have expenses like management fees, taxes, rehabbing the property, and maintenance.

In the end, you take the revenue you have created and subtract it from the involved costs. That is your residual income.

Different Types of Residual Income:

When talking about residual income, we come across two different types. There are personal and corporate.

Personal Residual Income:

In personal finance, residual income is the disposable income. You can calculate your residual income every month by taking what is left over after paying all debts. This debt-to-income ratio is critical when looking to get loans from banks and lending services.

Banks and lenders want to see how much you keep to see if it is worth loaning you money. The debt to income ratio is significant to these lenders.

Lenders generally do not want to see a debt to income ratio over 43%. It is not good for business. So the lower the ratio, the more likely a bank is willing to lend money to an individual.

Corporate Residual Income:

Corporate residual income is a bit different from personal. Corporations use residual income to assess their performance. That is the profit after paying all costs they have incurred to generate revenues. That is the net operating income.

They use residual income to evaluate the effectiveness of their investments, their teams, and their departments. It is a good measurement to see the health of a company.

10 Ways to Create Residual Income

Now we know residual income. It is time to make some. Here are 10 ways you can create residual income for yourself.

1. Invest in Real Estate

Owning real estate can be a great way to generate monthly income. You can purchase a single-family home, duplex, or even apartment building. The great thing about owning real estate is that there will be a good cash flow coming in every month.

There will be additional expenses, but the work is relatively minimal. The rental payments can help pay off the mortgage, taxes, and repairs while you save the rest.

You can manage the property yourself or even hire a property manager to help you with the property. With a property manager, you can put some of your time into other valuable items, but you can manage the property yourself to obtain more income.

2. Vacation Rentals or Short-term rentals

Airbnb has become huge over the last many years. If you have a free room in your house, you can rent that out. It is an excellent opportunity to make extra money without having much work to put in it.

My friends had a big house with plenty of rooms to rent out to people for weekends. It was an excellent way for them to create extra money without extra work to create active income.

You can also have a place in popular vacation spots like on the beach or the mountains to rent out short-term to use VRBO or other sites to make some good side income.

3. Invest in the Stock Market

Investing in the stock market is one of the simplest ways to create a passive income stream. Have you heard of index funds? They are one of the simplest ways to build wealth with your money in the stock market. You can continue to buy these index funds and allow compounding interest to really grow your money.

You can buy these funds with Vanguard or Fidelity. It can really make creating wealth simpler and easier for the average person.

It does take patience to allow your money to grow. If you can be patient and continue to invest, you will wake up in 10, 20, or 30 years with a massive portfolio. This is one of my favorite ways to create residual and passive income.

If investing in stocks is new territory to you, this guide about how stocks work is a great resource to get started!

4. Invest in REITs

If you want to invest in real estate without having the responsibility of being a landlord, you could invest in REITs.

REITs are real estate investment trusts. These are companies that will buy up real estate and use your money to help them do it. You will get dividends from the residual income that the company makes off of its property.

This is an easy way to create some residual income. You invest in some REITs and reap the profits at the end of each month.

5. Start a Blog

Starting a blog can be challenging work that takes time and money to make things happen. If you want to capitalize on something with a high ROI, creating a blog can be a way you can do it.

It takes little money to start. You need to have a good niche, persistence, and start to write. Once you get started, you can build a following, and soon enough, as the blog grows, your income can grow along with it.

Many people have started blogs and created great avenues of income through these blogs. It takes time and patience, but you can dominate the interweb with your content if you find a good niche.

6. Launch a Podcast

If you enjoy talking with people or sharing ideas, you can start a podcast. Many podcasts pop up all over the place, but it is a newer field compared to the blogging world and offers many opportunities.

With a niche, you can help educate the world with your skills and expertise. The great thing about running a podcast is once you record, edit, and publish, you can wait as people download the episode.

In making money with podcasts, many people will go to Patreon and set up an account. That is a way for subscribers to help sponsor their favorite content. As the content creator keeps creating, his audience will continue to grow, and other sponsors will jump on to help fund and make the podcast profitable.

7. Write a book

Writing a book is a great way to build something and allow the income to come in after all the work. It can be as easy as writing it and publishing it as an ebook through Gumroad or even using Amazon’s KDP program to create the book.

If you are knowledgeable about a particular subject, you need to put that pen on the paper and write something that will help bring value to someone’s life. Something helpful will be worth it to people that will buy it.

This book can be an asset that continues to pay you days, months, and years after you have written it. It is a perfect way to start some residual income.

8. Create a course

Creating a course is much like writing a book. There are many skills out there that people would be willing to learn if they had a good course that can teach them.

Right now, the internet is full of courses to help improve your life, create skills, and help you even manage your money. If you can teach someone, then building a course is a great way to generate some good residual income.

9. Make an App

If you have some technical skills, you can use those skills to be an app. That can be an app about anything that people will find value in. For instance, you can have a finance app, a recipe app, or even a fantastic travel app.

Once you build the app, you are ready to go to make some money. Not all of us can create apps.

You can visit sites like Upwork and hire some people to code and create an app for you. If you have an idea, you can make it work.

10. Sell Digital Products on Etsy

If you are good at creating, you can create notebooks and other digital products. You can sell these on Amazon, but you can also sell these on Etsy. Create a digital product, then add a download button, and you have it set.

You make the item once and can continue to sell many more of those specific items. That can be as easy as creating cards, wall prints, inspirational quotes, or even sell digital versions of your artwork.

Final Thoughts

Residual income is a way to create much wealth. As you can make most of this money through passive income sources, you can generate more income. This is a massive step towards achieving financial freedom. As you think about it, it is not just about making passive income but creating enough income not to need an active job.

Remember that residual income is the income and profit after all expenses are paid off. With these 10 ways, you have the tools to go out and make your residual income streams.

It’s also important to always keep in mind that you should always be practicing and building good money habits along the way to continue improving the relationship you have with your money which can afford you the many perils in life including saving up for your next vacation.

This post originally appeared on Savoteur.

Can I Work and Collect Social Security - Frugl

Can I Work and Collect Social Security in 2021

Around 64% of Americans have not saved enough for retirement, and about half of those individuals may have nothing set aside when they reach retirement age.

The pandemic worsened some grim statistics from a recent GoBankingRates survey. Many people lost their jobs and are months behind on bills.

With such a large percentage of Americans struggling to save for retirement, it’s clear that many of these individuals will need to work far past the full retirement age. And quite possibly in some capacity for the rest of their lives.

This harsh reality begs the question: Can I work and collect social security?

Like most things, the answer to that question is complex and varies depending on your situation. However, by the end of this article, you will be able to answer the question for yourself and your loved ones.

Can I work and collect social security? Let’s find out.

What is Social Security?

Signed into law in 1935 as part of the New Deal, the original purpose of Social Security was as a retirement plan for workers aged 65 or older. The program allowed individuals to have continuing income after retirement, and for many, to have a retirement.

Although Social Security started as purely a retirement plan for workers, provisions were added over the next 40 years to include survivor benefits, disability insurance, Medicare, and supplemental security income (SSI). These additions helped provide income for families of deceased workers, those with disabilities, and medical insurance for beneficiaries.

Today, roughly 63 million individuals in the United States receive Social Security benefits or approximately 1 in 5 Americans. Of those individuals, 1 in 3 are disabled, dependents, or survivors.

How Does Social Security Work?

Social Security is one of the more confusing areas of personal finance for people, and it can be challenging to determine how to handle the decision of claiming your benefits.

There are also concerns of solvency and the Social Security shortfall, or the fact that more benefits are get paid out than taxes taken in. However, we’ll save that discussion for another day.

It is essential to know is how Social Security works, which will help us answer whether you can work while collecting benefits.

At What Age Can You Take Social Security?

For most, Social Security benefits will come in the form of income for retirement. For those not on disability, you can begin drawing Social Security benefits at age 62 at the earliest (age 60 if a widow or widower). However, if you decide to start receiving benefits early, they will be reduced by a small percentage for each month before your full retirement age you take them.

Full retirement age, or the age at which you’ll receive full benefits for your situation, is age 66 and 2 months for those born in 1955, with a gradual rise to age 67 for those born in 1960 or later.

There is also an incentive for delaying your benefits until after your full retirement age. You can delay your benefits up until age 70, after which there is no further increase in benefits and thus no reason to delay receiving Social Security.

For example, those who reach full retirement age at 66 years and two months but delay until age 70 would receive 132% of what they would have received if they had begun drawing at full retirement age.

How are Benefits Calculated?

Social Security calculates benefits using two factors: 1) The amount you earned during your working career, and 2) The age you begin taking benefits.

In calculating your benefits, SSA uses the highest 35 earning years of your working career. This calculation yields your Average Indexed Monthly Earnings (AIME), which they use to calculate your benefits. However, take note that years in which you earned no income are also included in that count, which could severely impact your benefits if there were many years where you were not working.

The AIME is then divided into three “bend” points plugged into a formula that yields your monthly benefits at full retirement age or your Primary Insurance Amount (PIA).

Your PIA gets increased or decreased based on what age you start benefits.  Cost of living adjustments impact benefits as well.

Calculating your AIME and PIA is very confusing and complex, so those hoping to get an estimate of their monthly Social Security benefits can do so using online calculators offered at the Social Security Administration (SSA) website.

Can I Work and Collect Social Security?

Now that you know when you can begin taking Social Security, how your benefits get calculated, and possibly an estimate of how much you can expect to receive, we can start diving into the question posed at the beginning of this article.

Can I work and collect Social Security?

The simple answer is yes, but the complex answer is yes with a caveat. While it is possible to work and collect Social Security, the amount you can earn and the impact on your benefits depends on several factors.

How Much Can You Earn and Still Receive Benefits?

The moment you begin receiving Social Security retirement benefits, the Social Security Administration considers you retired. Whether or not earnings impact your Social Security benefits depends on your age.

If you have reached your full retirement age (between 66 + 2 months and 67 depending on the year you were born), then whatever you earn by working will not reduce your benefits. In other words, once you’ve reached full retirement age, you can work as much as you want without those earnings impacting your Social Security.

However, if you are under full retirement age, there is a cap on your earnings without facing a reduction in benefits. For 2021, the annual limit for those receiving Social Security retirement benefits is $18,960.

Thus, if you are under full retirement age and receiving Social Security, you can work and make up to $18,960 annually in addition to your benefits without losing any of those benefits.

However, for every $2 you earn above the annual limit, $1 will be deducted from your benefit payments.

For example, say you earned $19,960 this year, $1,000 above the annual limit. In this case, you would lose $500 in Social Security benefits for the year due to the additional earned income. Of course, you are gaining $500 in income in this scenario, but you’d have to decide for yourself if working to make that money is worth the loss of benefits.

To complicate things even more, there are special rules for those who choose to work while receiving benefits in the year they will reach full retirement. For those individuals, the earnings limit for 2021 is $50,520, with $1 in benefits being deducted for every $3 earned over this limit.

In addition, in the above scenario, the SSA only counts your earnings up to the month before you reach your full retirement age instead of your earnings for the entire year.

What Counts as Earned Income?

As you can see, the annual limit for the amount you can earn while still receiving full Social Security benefits is relatively low, and thus you may be wondering what the SSA counts as earned income.

Of course, income from working a job counts, along with bonuses, vacation pay, and commissions. However, if you are self-employed, the SSA only counts your net profit as earned income.

On the other hand, the SSA does not count pensions, investment income, interest, veterans or government retirements benefits, or annuities as earned income.

As you can see, the SSA only counts income earned from working a job or from self-employment when determining whether your benefits get reduced.

Can I work and collect Social Security? Yes, but be careful not to exceed the annual limit that applies to your situation, or you will lose out on some of your benefits.

Should You Work and Collect Social Security?

Now that you know that you can work and still collect Social Security, the question becomes, should you?

As with most things, it depends.

Remember that the annual earned income limits only affect your Social Security benefits under full retirement age. If you are over the full retirement age, you may work as much as you please without that income affecting your benefits.

If you are under full retirement age and receiving Social Security retirement benefits, consider the annual income limits and whether or not you anticipate making more than the limit.

If you are slightly over the limit, the impact on your benefits will be minimal. Still, if you are significantly over the limit, the extra income you’ll bring in likely won’t outweigh the reduction in benefits.

Suppose you want to keep working and earn significantly more than the annual earnings limits listed above. In that case, you should consider delaying taking your retirement benefits until you’ve reached full retirement age and the point where your earnings won’t impact your benefits.

You may still be unsure whether it makes sense for you to work and collect Social Security. If so, consider hiring a retirement advisor, a financial advisor specializing in helping people nearing retirement. You’ll find many retirement advisors have earned the Retirement Income Certified Professional designation, so they can help you determine the best time to claim Social Security based on your circumstances.

You can also visit the Social Security Administration site for a list of Social Security resources and help decide what is best for your situation.

Final Thoughts

Social Security is a complex but critical component of the long-term financial plan of every American.

While not meant as a complete retirement plan, Social Security remains a key piece of retirement and an earned benefit for those who have worked throughout their life. Social Security becomes even more critical for those with little retirement savings but may still not be enough to get by without additional earned income comfortably.

Luckily, you can work while collecting Social Security benefits up to a specific annual limit, after which SSA reduces your benefits based on how far over the cap you go. So if you’ve reached full retirement age, there is no impact to Social Security from additional earned income.

Can I work and collect Social Security?

Yes, you can, but only you can decide if you should.

This post originally appeared you Your Money Geek.

13 Easy Effective Money Habits

13 Easy, No-Effort, Effective Money Habits

Old habits die hard, and that should especially be the case for bad money habits. If you’re finding yourself with little-to-no savings and spending more money than you earn, then it’s time to ditch your bad money habits and work on building new money habits.

By building good money habits, you’ll be well on your way to gaining (or re-gaining) confidence in your everyday financial life. Good money habits help you budget, save money and pad your sinking funds, and work towards your most important financial goals, whether that’s your next hot and sunny destination or working towards early retirement. 

Sure, Rome wasn’t built in a day, and building good money habits (while dropping the bad ones) and improving your financial fitness isn’t something that usually happens overnight. But that doesn’t mean you can’t get started right away. Below are 13 easy, no-effort, and effective money habits that you can get started with right away.

Money habit #1: Automate your savings

Automating your weekly, bi-weekly, or even monthly savings contributions is what’s known as “paying yourself first” and is one of the best ways to make sure that you are consistently contributing towards your short-term savings, investments, and retirement funds. without having to worry about making manual contributions yourself.

By doing this, you’re eliminating both the time and the work that is involved, while making sure that you are always working towards your financial goals. 

P.S. Saving for a family trip, vacation with friends, home repairs, or birthday celebrations? Frugl makes it easy to automate saving for what’s important to you.

Money habit #2: Automate your bills 

Automating what’s coming out of your accounts is equally as important. By automating your regularly occurring bills such as rent, utilities, and cell phone payments, you’re making sure that your bills are being paid on time, which means you don’t have to worry about missed payments, late payment fees, or interest.

The other benefit is this; paying your bills on time is a sure way to build your credit score. 

Money habit #3: Set a phone reminder to check your bank account once a week

Regularly checking your bank accounts is a small but mighty habit that can give you a clear view of what’s taking place in your accounts; the good, the bad, and the ugly… well, hopefully just the good! 

By quickly checking in once a week, you’ll be making sure everything adds up and that you’re not being charged for payments you actually didn’t make! It’s also a good way to know exactly when money is coming in and when payments are going out. 

Money habit #4: Create a separate savings account for an upcoming big purchase, like a vacation!

Opening separate savings accounts are more than just a good idea; it’s a game-changer. When you create separate savings accounts for each of the different savings goals you have, you’ll reap many benefits including easier automation per account; easier goal tracking; increased motivation; and reducing your chances of easily misspending any money that’s pooled together. 

With Frugl, you can create separate, individual savings accounts for your goals in less than two minutes! Give it a try today 😉  

Money habit #5: Treat that ‘extra’ money with extra respect 

The next time you get a raise, have a great month with your side hustles or net that bonus you’ve been waiting for, do yourself a huge favor, and don’t go spending it all at once. Instead, take most or all of that ‘extra money’ and put it toward your savings goals.

We’re not saying it’s going to be easy, but it’s absolutely going to be worth it in the long run. Remember, a dollar saved is a dollar earned.

Money habit #6: Chat openly about your money 

Open and honest money conversations with friends and family is a great way to learn new money management approaches and money tips to improve your literacy. 

It’s also one of the best ways to get over any of your money fears and to help you take those next steps to start working on your financial goals.

Money habit #7: Use the Honey Chrome extension when shopping online

What if we told you there was an app, or rather a Chrome extension, that automatically looks for discount and coupon codes for you when you’re window shopping online? Well, there is and it’s called Honey

Getting started with Honey couldn’t be easier; Add the chrome extension and as you browse websites like you normally would window shopping online, Honey will automatically find working discount codes for you and apply the one with the biggest savings to your cart. 

It might be worth mentioning that we ONLY recommend using this when you’re already committed to making a purchase. 

Money habit #8: Skip eating out once a week

Guilty of eating out and splurging on lunches or dinners throughout the week? You could easily be wasting thousands of dollars each year. Even those small $5 to $10 food splurges here and there can add up and impact your ability to save for what’s important to you. 

Would you rather Mexican takeout on a Tuesday or actually eating authentic Mexican cuisine while in Mexico? I’ll go with the latter, thanks. 

Money habit #9: Don’t settle on the first quote you get

Taking the time to do your “research” and shop around for just about anything from everyday household items to financial products and services like auto insurance can pay dividends in the long run.

The best part is that by spending anywhere from thirty minutes to a few hours, you’ll easily save yourself well over a few hundred dollars, as well as have more confidence in your purchase. 

Don’t settle on the first quote or price you see. There’s almost always a better price that exists. 

Money habit #10: Use Value-Based Spending to guide your spending habits

Instead of spending with emotion or on impulse, use what’s known as value-based spending to help guide your spending habits. The premise is simple, only spend on items and expenses that bring value to you and that reinforce your financial goals. Anything else, it probably isn’t worth it. 

Value-Based Spending means that every dollar you spend should add significant value to your life and go towards helping you reach your financial goals.

Money habit #11: Remove yourself from email lists 

Out of sight, out of mind. Removing yourself from email lists is all about getting rid of the daily spending temptations that take over your inbox and do nothing but encourage you to spend your hard-earned money. 

Money habit #12: Create 3 SMART financial goals

Without setting financial goals, it’s almost next to impossible to track progress and celebrate milestones. When you’re considering your goals, it’s important to create everyone’s favorite acronym, S.M.A.R.T goals, which stands for Specific, Measurable, Achievable, Relevant (or Realistic), and Timely. 

Make sure to set both short-term and long-term goals to keep you motivated while focused on working towards your financial future.

Money habit #13: Sign up for mobile alerts from your bank

Long gone are the days of having to wait for bank statements or account updates to know what’s going on inside your bank account. With bank alerts, you can get real-time updates about various types of account activity and use these alerts to better manage your finances.

While the types of alerts available vary from bank to bank, they’re usually free, and you can choose to receive them by email or text.

Out with the old, in with the new

Say goodbye to your bad money habits and hello to these 13 new easy, no-effort, and effective money habits that will help you save more money, reach your goals, and feel better about your relationship with money. Which one will you be taking up first? 

Best ways to invest in 2021

Best Ways to Invest Money in 2021

Don’t fall into the trap of thinking that investing is reserved for the already rich.

Although having more money to play with makes investment simpler and less risky, anyone with a healthy savings account and enough income to set aside a few dollars each month can afford to invest. So don’t ask yourself whether you should get involved — try to figure out the best ways to use your money.

Unfortunately, there’s not a simple answer to that question. We all have drastically different financial goals and mindsets; one person’s foolproof plan is someone else’s recipe for disaster. In the advice that follows, I’ll outline the main factors to consider when starting on your investment journey, along with the best approaches for different situations.

What to Consider First

Most people want to jump straight into figuring out the hottest new investment opportunity, thinking that if they select the latest up-and-coming cryptocurrency or stock that they’ll be guaranteed tidy profits.

But this is the wrong approach — before you even think about what you want to invest in, you should turn your mind toward how you want to invest.

Lost? I’ll break things down into five questions you should be asking yourself:

  1. What are your financial goals?
  2. What’s your investment timeframe?
  3. How much risk are you prepared to take on?
  4. Do you want to select your investments yourself?
  5. What type of account is right for you?

Let’s look at each one in turn.

Financial Goals

We’d all like to have more money. But what exactly do you want it for, and how much are you going to need? Knowing the answers to these two questions is the foundation for building a solid financial strategy.

While investing your savings instead of leaving them sitting in a checking account will (almost) never be a bad idea, this method will be less effective if you don’t have a clear picture of what you’re heading toward.

Common financial goals include:

  • College tuition (or the college tuition of your children)
  • Retirement
  • Paying off a mortgage
  • Making a downpayment on a property

As you might have noticed, all the objectives above are longer-term goals that involve some serious saving over multiple years (if not multiple decades).

Although some people save for shorter-term milestones, like a wedding or vacation, investing is generally only recommended if you’re prepared to lock away your money for five years or more. I’ll be assuming most people reading this are in that category.

Next, you’ll need to figure out exactly how much you need to meet your goal(s).

For example, if you’re saving for retirement, start by working out how much annual income you’d need to live off. Many people in the financial independence movement recommend following the 4% rule (multiplying your annual income by 25).

Like mortgages and college tuition, other goals are easier to associate with a number for — but don’t forget to account for inflation. If college tuition costs $20,000 a year now, expect it to be a little more expensive in ten years.

Timeframe

Once you know your financial goals, it should be pretty straightforward to figure out the kind of timeframe you need to be investing over.

If you’re saving for your kids to go to college and the eldest is currently four years old, you’re looking at a time frame of 14 years. Or, if you’re 30 years old and saving for retirement, expect a horizon of roughly 35 years (assuming you want to retire at the “normal” age).

You get the gist.

Risk

The timeframe you decide on is one of the greatest determinants of how much risk you should take. For example, investing $100 in Bitcoin or Tesla shares is pretty risky if you know you’ll need to use that money in two weeks — maybe the market will just so happen to be experiencing a dip at that point, meaning you’ll lose money.

Take a look at the price chart of any stock, crypto, or currency pair, and you’ll know how volatile prices can be in the short term.

But if you know that you’re in it for the long haul and won’t need the money for a few decades, you can be reasonably confident that your investments rise in value by the time you withdraw them.

Naturally, there’s always a chance that a company could go under or lose value — that’s where diversification, research, and some thought about your risk tolerance come in.

If you invest all your money in a single company or asset, there’s far more risk involved than if you spread it across multiple companies or assets.

Then there are the investments that are inherently riskier than others. For example, pouring your money into a brand-new company or a new asset class like cryptocurrencies involves far more risk involved than putting your trust in a “safe pair of hands,” such as the Googles and Amazons of the world.

Anything with inherent value, like real estate in a desirable area, is also a decent option.

Still, risky investments aren’t necessarily a no-go — you need to make sure you’re going into them knowing and accepting their riskiness.

Investment Selection

You might be thinking, haven’t I already covered investment selection in the paragraph above? Not quite — investment selection here is all about deciding whether you want to handpick your investments or pass that responsibility onto someone else.

If you’re new to investing, you might find the idea of enlisting a professional to help you select your investments more appealing than having to do everything yourself. However, while this can be a good option, it comes with a fee — portfolio managers charge a management fee, which eats into your returns, especially if you’re only investing a modest amount.

But if you’ve never invested before, you probably don’t even know what you don’t know — how can you hope to pick the right platform, never mind the right assets and products?

Fortunately, there’s a third option: using a robo-advisor. Many platforms and apps have launched special software and applications that guide investors through selecting and managing their portfolios. The sophisticated algorithms bring suggestions that rival actual asset managers.

Some will take users through a quiz with questions about their risk tolerance, financial goals, and similar; others provide tools for automatic investing and rounding up spare change to make investing effortless.

Account type

Figuring out what you want to invest in is just the first step — you also need to know exactly how you’re going to do it. Or, in other words, which account type you’ll open and on which platform.

In the US, common investment accounts include:

  • 401(k): A tax-efficient retirement plan allowing employees to save part of their paycheck, often involving matched contributions from employers.
  • Traditional IRA: An account that lets you contribute after-tax money and withdraw it tax-free (along with the extra earnings) at retirement age.
  • Roth IRA: An account lets you contribute pre-tax money and pay tax when you withdraw it at retirement age.

Tax-effective investment accounts and pension plans exist in many other countries, but they’re likely to have different names and involve slightly different rules. For instance, the UK offers individual savings accounts (ISAs), which allow individuals to save up to a set threshold each year and later withdraw the funds they’ve accumulated tax-free.

You might also want to consider accounts for specific savings goals, such as an account for saving for college (known as a 529 account in the US) — these can offer special perks.

Best investments in 2021

Now you’ve given plenty of thought to the questions outlined above. It’s time to get on to the juicy part of the article — selecting suitable investments.

There’s not a single correct answer here since the right investments for you will depend on your answers to the questions outlined above — that’s why I’ve highlighted who each of the investment types below is most suitable for. Let’s go!

Stocks

Best for: Longer timeframes and higher risks for higher returns.

When you buy a stock, you essentially become a shareholder (or owner) of that business — so whenever the company increases in value, your investment will also rise in price.

You only have to look at how much some of the most successful stocks have grown over the last few decades to see how profitable this can be. For instance, if you’d invested in a Google stock back in July 2016, its value would have jumped from $719.85 to $2585.72 — an increase of around 259.2%.

That’s a whole lot better than stowing it away in your savings account and even better than investing in the S&P 500 (which achieved a return of around 100% over the same period).

Source: https://finance.yahoo.com/quote/GOOG/

Yet, although stocks can be a path to mouthwatering returns, they can also end in tears. If you purchase shares in a company that happens to go under, you’ll lose your entire investment. And even if a firm doesn’t go out of business entirely, it could lose a lot of its value, even over the long term — industry trends, technology, and customer opinion can suddenly render a profitable business less than desirable.

This isn’t likely with a business as dominant as Google, but there’s no way of knowing for sure what’s going to happen tomorrow.

Luckily, there’s a solution.

Mutual Funds

Best for: Longer timeframes and lower risk.

If you like the sound of the returns and liquidity that stocks can bring but not the high risk and the need to handpick your investments, I’ve got great news: you can opt for a fund instead. Funds let you invest in a mix of different company stocks, therefore offering increased diversification.

They don’t tend to achieve the same level of returns as the highest-performing stocks — but they’re far less risky.

While it’s reasonably likely that a single company could face tough times, it’s far less likely that thousands of companies will experience these same difficulties (other than during recessions, but these are a natural part of the economic cycle and nothing to be scared of).

There will be some high-performers and some low-performers (or non-performers) in any fund, but on average, you’ll still get good investment returns. As long as you’re willing to invest for long enough, that is.

The main types of funds available to investors are:

  • Mutual funds: Contain a selection of bonds, stocks, and other assets (e.g., real estate or commodities) picked by asset managers and pooled together with other investors’ money. Traded at the end of the day.
  • Index funds: Contain an index, like the S&P 500 or the FTSE 100, and are traded throughout the day (just like stocks).
  • ETFs: Contain an index but are traded at the end of the day, just like mutual funds.

The differences between these are subtle but worth noting.

Bonds

Best for: Shorter timeframes and lower risk.

Although I said I’ll focus on investment strategies for longer timeframes and goals, an article about the best investments wouldn’t be complete without giving an honorable mention to a top short-term investment option: bonds.

Bonds are essentially loans, with the borrowers usually being the government or large companies. Because of who you’re lending to, the risk associated with bonds is low, yet this also means that the returns are lower than other types of assets.

The exact returns you can expect depend on the type of bonds you opt for and who the borrowers are — some bonds are unable even to beat inflation, while others can earn up to 5%.

Bonds are often used in funds to hedge against risk since they’re less affected by the stock market swings.

However, if you want to invest over a larger time period, it’s generally agreed that the benefits of investing in bonds are minimal. If you know you’re not going to access your funds within the next few years, the cons of low returns will outweigh the benefits of increased security.

Real estate

Best for: Portfolio diversification and stable returns.

I want to address something right away. Although I just said that real estate offers stable returns, this isn’t true all of the time. Properties have inherent value — people will always need somewhere to live — so their prices will generally increase over time.

But real estate doesn’t always match the returns seen in assets like stocks, and if you choose the wrong property location, you could fail to achieve much of a return at all. However, as a big advocate myself, I wanted to explain why it can be such a great option.

For one, the gains can beat the stock market if you choose the right area. Just look at how much property prices in London have increased over the last few decades!

Source: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/january2021

If you purchase a property and then rent it out to others, it can also be a great way to generate income and make your money work for you — you can use your investment to finance even more investments by using rent payments toward the future down payment.

Still, money invested in real estate is less liquid than anything in the stock market. It carries some serious risk — you might have issues with tenants or face expensive maintenance operations, for instance.

Cryptocurrencies

Best for: High risk and high returns.

Last but least, we have cryptocurrencies. This certainly isn’t an option for the faint-hearted — it’s no secret that the crypto market is somewhat wild, and you need a clear strategy for the price swings. Just look at how much the value of Bitcoin has fluctuated in the last year alone.

Source: https://finance.yahoo.com/quote/BTC-USD/chart/

But if you’re prepared to take on some risk to earn higher returns — often even higher than anything you could achieve from investing in stocks — then the world of crypto is the way to go. For example, if you’d bought into Bitcoin five years ago, you’d have achieved a return of 5144.33% by now — and the coin is currently way below its all-time high.

Just be prepared to do some serious research before you start investing in this one. Following the crowd could lead you to buy into a bubble at the wrong time, whereas buying niche coins at random could involve you in a scam (the crypto world is unregulated for the most part).

Beware!

It’s Decision Time

As you should realize by now, choosing the best investment vehicle(s) for you is a personal decision. For example, some people are happy to accept significant risk by investing in specific stocks or cryptocurrencies. In contrast, others would prefer to sleep at night knowing their money is (relatively) safely locked away in index funds or property.

I’d recommend doing a mixture of all the above. It’s good personal finance practice to have a good amount of liquid cash at hand, and it’s safest to invest the rest of your funds across a range of assets or investment types. Why not invest the bulk of it in something safer like an index fund but allocate a smaller percentage to something riskier with higher potential returns, like crypto or individual stocks?

Whether that idea fills you with boredom, fear, or excitement will say a lot about your risk preferences and what your next step should be.

This post originally appeared on Your Money Geek.

The Psychology Benefits of Saving Money

The Psychological Benefits of Saving and Practicing #FinancialSelfCare

We explore the relationship between your finances and mental wellbeing, the benefits of getting your financial plan in motion, setting up your goals and practicing regular financial self-care (and what that means).

After the year we’ve had (good riddance, 2020), there’s no doubt that personal finances and mental health are linked.

Thankfully, as a society, we’ve become more comfortable talking about mental health, which was once a taboo topic. But what about financial health? What about the day-to-day stresses of managing debt, of saving for the future, of living the life you want within your means?

While the impacts of anxiety and depression are coming to the forefront, money still remains largely a hush-hush topic for North Americans.

So, let’s talk about it.

The Link Between Mental Health and Financial Wellbeing

In a recent survey for an FP Canada report, 38 per cent of Canadians said that money is the leading cause of stress in their lives, beating personal health (25%), work (21%) and relationships (16%).

One-third of Canadians say that the stress related to money management has increased since the pandemic hit according to a national survey by CPA Canada. On top of that, 23 percent of Canadians reported that the COVID-related financial impact was the biggest contributor to their mental health — more than getting sick (16%), loneliness (6%) and even losing a loved one (20%) — according to a study for Morneau Shepell.

That’s a big deal.

More than ever tending to your financial wellbeing is crucial. And an imbalance in its maintenance can cause debilitating stress, loss of sleep, motivation and can put great tension on your relationships.

But how do you get to financial wellness? Saijal Patel, founder and CEO of Saij Elle, a financial consultancy and education platform, breaks it down. She defines financial wellness as a combination of financial literacy, level of confidence and sticking to your responsibilities and goals.

“’Financial wellness’ is achieved when people can apply financial knowledge confidently to manage their economic lives effectively,” writes Patel. “That includes making good financial decisions, spending within one’s means, planning adequately for emergencies and preparing for the future.”

“If any one of the pieces — knowledge, confidence or implementation are missing – financial wellness is at risk. And with that comes emotional stress, loss of sleep, a decrease in productivity and relationship tension.”

The Importance of Financial Self Awareness and Well Being

It’s one thing to understand basic economic principles (thanks, macroeconomics class) and to know the difference between an RRSP and TFSA, or a Roth IRA vs a 401K. It’s another to understand your own spending habits and know exactly where you stand on the personal liabilities versus assets scale.

Financial self-awareness (FSA) is how well you understand your own financial situation.

In a 2019 study by Rice University’s Jesse H. Jones Graduate School of Business, they measured individual’s score FSA score based on a 19-point questionnaire covering everything from total net worth to the details of their life insurance policy.  

They found that a high FSA with associated with high self-efficacy. And trust us, you want high self-efficacy: heightened interest in activities, faster recovery after setbacks and better commitment to your life goals (which, at FRUGL, we are all about).

Those with high FSA scores were also better at committing to a repayment plan and tackle debt more efficiently, and they were more cautious in their spending habits and investments.

How to Practice Financial Wellness (#Financial Self Care)

The secret is to build habits that keep you astutely in the loop when it comes to your finances.

Work in healthy routines the same way you would a skincare routine or yoga practice. Maybe you set aside a half hour per week, or ten minutes every other day. All that matters is that you set aside the time regularly to review your own financial situation.

Regularly check your bank accounts to track your spending and monitor for any suspicious activity. Review your bills and other payments (and make sure you automate as many of your bills as possible and set up alerts for any non-recurring payments.)

Review your financial goals and their progress each week. At least every month, review your budget.

Stacy Yanchuk Olesky, director of education and community awareness at the Credit Counselling Society, breaks down how to stay on top of your financial situation.

First, know where your money is going: a $5 a day coffee habit can add up quickly.

Second, Olesky recommends having several savings accounts. An account for unexpected expenses, a rainy-day fund, and accounts for different savings goals (think vacation or a new car).

And finally, live within your means. Know when and where you can afford to splurge – that is, once you’ve accounted for all the necessities.

The Benefits of Financial Wellbeing

Financial wellness is different for many people — you may want to feel secure in your retirement savings plan, or living comfortably within your means, or living debt-free.

First and foremost, you’ll feel a sense of control and shed those day-to-day anxieties (yes please!).

You can dare to dream big. Once you feel settled, as if you’ve gained control of your finances, you can start planning for some things that are more exciting than your RRSP and tackling debt. Start planning a dream vacation or a major splurge – heck, maybe a boat.

You can afford to take chances, you’re not as tied to a job you hate, for example. You’re also better set up to tackle life’s unexpected setbacks.

Finally, you’ll feel a difference in your self-esteem. Being financially comfortable and confident means that you’ll feel accomplished.

Ride that sense of pride that comes with feeling good about your finances.

(Psst: Check out our 21 ways to make 2021 your best financial year yet.)

SOURCES

  1. https://www.cpacanada.ca/en/the-cpa-profession/about-cpa-canada/media-centre/2020/october/one-in-three-canadians-concerned-about-covid-19-personal-finances
  2. https://www.cpacanada.ca/en/news/canada/2019-10-25-debt-health-impact
  3. https://www.psychologytoday.com/us/blog/the-science-behind-behavior/201910/four-powerful-benefits-financial-self-awareness
  4. https://www.thebalance.com/a-thirty-minute-weekly-financial-self-care-routine-5070195
  5. https://www.hermoney.com/connect/confessionals/5-psychological-benefits-of-financial-freedom/
  6. https://www.theglobeandmail.com/investing/globe-advisor/advisor-news/article-why-its-time-to-get-serious-about-financial-wellness/
Happy New year 2021

How to Make 2021 Your Best Financial Year (Yes, Really)

So, yes, 2020 was a dud on many levels: socially, mentally, financially. Here’s how to get back on your feet and feel good about your finances again.

We’ve scoured the internet so you don’t have to, from money magazines to personal finance blogs. Here are 21 ways to start the year off on the right foot and keep the momentum going all year.

1. Assess your situation (and be honest): create a balance sheet to assess your net worth 

Okay, so this is the scary but absolutely necessary part. Sit down and create a balance sheet so you can get a snapshot of where you stand financially. (You should do this every year). List all your assets — cash, investments, property, valuables, etc. — and liabilities: credit card balances, student debt, mortgage, car payments, etc.

Check with your bank — they likely have templates available online, or you can opt for a simple Excel doc.

2. Review your credit report and credit score

You’re allowed one free credit report a year from each of the three Canadian credit bureaus (check out annualcreditreport.com). Definitely take advantage.

It’s important to understand where your credit stands and what lenders may see. It’s also the first step to identifying any changes you may need to make to boost your score. Finally, read your payment history carefully to make sure it’s correct and report any activity you don’t recognize.

3. Tackle your “bad debt” as quickly as possible

Every financial expert will tell you to pay off your debt as quickly as possible. However, there is a difference between bad debt (credit cards and other consumer debt, usually with high interest rates and little pay off) and good debt (a mortgage or business loan, for example, which help build wealth or income over time). Prioritize paying off bad debt with the highest interest rates.

4. Create a budget and track your expenses

Yes, we know, another super exciting task. Essential, though. Here is where you take account of all your recurring bills, your expenses by category (entertainment and recreation), your weekly grocery list — everything that is coming in and out of your account. 

Use whatever tool makes you the most comfortable but will also make you feel accountable. Your bank likely has a template for you (TD, for example) or you may opt for a budgeting app such as Mint that will track and report your spending habits.

5. Reduce bills and subscriptions as much as possible

Once you’ve had a good look at your recurring bills, remove any redundancies and scrutinize where you may be paying more than you have to. Maybe you and your partner both have your own Spotify account and can split a duo account instead. You may pay for Amazon Prime every month but hardly actually use it. You may be dishing out for an internet package that far exceeds what you actually need.

Skim out any extra costs, even if the savings seem minimal — they add up.

6. Get creative with cutting down spending

Take a good, hard look at where your money is going. Ask yourself if you really need to be spending that much. Instead of ordering books from Amazon, opt for a library card. Alleviate your uber habit with public transport. Make more meals at home and take out less. Opt for free YouTube yoga classes instead of paying for that studio you hardly go to anyway.

7. Take advantage of cash back and coupon apps for everyday purchases

There seems to be more cash-back apps, savings apps and reward programs then a person count. Do a bit of research to find a couple that suit your lifestyle and spending habits. Maybe start here.   

8. Review and adjust your insurance coverage every single year

Your needs change every year so make a habit to review all your coverages across the board. You may be paying for coverage that you actually don’t need (or not getting the coverage that you thought you were).

9. Build an emergency reserve (ahem, covid)

There was likely no better wake-up call around the necessity for an emergency fund than when so many of us were facing layoffs and sweeping uncertainty. If you don’t have one already, make this year the year you start saving toward an emergency reserve.

An emergency fund can also be used for any unexpected medical expenses or emergency repairs to your vehicle or house. Traditionally, experts suggest saving three to six months of fixed expenses, though the amount of debt should be factored in.

Money Sense does a good job of breaking it all down.

10.  Put away as much savings as you can.

Save, save, save. If your employer offers a pension plan with a matching policy to boot, use it. If you can commit a monthly amount into a tax-free savings account, do it. Anywhere that you can automate savings, go for it.

11.  Set clear goals for yourself this year and beyond.  

Want to take an epic trip to make up for the lack of travel in 2020? Finally want to make this year the year you are debt free? Want to put that money away for a down payment?

Take the time to sit down and make concrete, clear goals for yourself.

12.  Make saving fun by working in strategies that suit your lifestyle

Setting your goals is the easy part. Planning how to actually meet those goals is where it gets tricky. Obviously, making a commitment to save does mean cutting back but you don’t have to make major compromises. Choose saving strategies that fit with your lifestyle. (Psst: this is FRUGL’s philosophy. Learn more about saving strategies here.)

13.  Look into low-fee, high-interest accounts offered by online banks.

There’s no sense in letting your money sit there without earning interest. While you’re putting away as much money as possible this year, make sure you’re also earning as much as possible — look into online accounts that offer competitive interest rates.

14.  Stop the guessing game – set very clear amounts and timelines to reach your goals

One of the biggest mistakes you can make when it comes to achieving your financial goals is to underestimate how much you need to put away and for exactly how long. Carefully calculating the timeline and any factors involved (your income, total cost of the goal, any interest rates, etc.) will make you feel confident and increase your chances of meeting your goal.

15.  Contribute to your RRSP

Yes, RRSP contributions fall into the savings category, but the closer you can get to your maximum contribution, the more money you may get back come tax season. (And the more money you can put toward your saving goals!)

16.  Maximize your investments

Once you’ve made a commitment to contribute regularly to your RRSPs and have taken advantage of any employer matching program you may have access to, take a look at your total investment commitment. Are you investing at least 15% of your income? Is your investment mix still standing up to your long-term goals? You should reassess every year.

17.  Automate everything.

Your bills, investments, savings — take advantage of everything that you can set up to be transferred and paid automatically. Not only will this make your life easier and pay your bills on time, but it will keep you committed to your savings goals.

18.  Set yourself up for an easy breezy tax season

Think back on the year you’ve had. Any major life moments that will impact your amount owing? A new house, for example, or CERB collection? Make sure you understand how much you may have to owe come the deadline and start preparing (as in, saving).

And, going into the new year, even when the deadline feels ages away, make sure you’re always staying organized. Track all invoices proactively, organize deductible expense receipts in a folder, etc.

19.  Invest in your career

Make this year the year you take that class, learn that new skill, earn that certificate. With online learning more accessible than ever, now is the time to invest in yourself (and set yourself up to earn more in the future).

20.  Find a way to earn extra income.

Easier said than done, we know. But if you can, pick up a side gig. Work hard toward that raise. Sell some clutter on Kijiji. Anything extra that you can earn is money you can put toward this year’s goals.

21.  Make a resolution to practice regular financial self-care.

Undoubtedly, money can be a huge source of stress. Commit to including your finances in your self-care routine by regularly monitoring your spending and your goal progress. The more on top of your finances you are, the more confident you will be. And the more you’ll be able to concentrate on the things that are the most important to you.

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How to avoid awkward money situations this holiday season

How to avoid awkward money situations this holiday season

There are so many wonderful things about the holiday season: the music, the cookies and cocoa, the lights, and of course, all of that time with your loved ones. But, the holidays also bring some pretty awkward situations, especially when it comes to money.

Let’s take a look at a few awkward holiday encounters that you should aim to avoid this holiday season.

You waited until the last minute

It’s no secret that 2020 has done a number on Canadians’ savings accounts and budgets. According to new statistics, 45 percent of Canadians surveyed said they plan to spend less on holiday shopping this year than in past years. So, family gift-giving may be particularly awkward this year if you have little room in your budget for extra spending.

One way to avoid the awkward situation altogether is to put aside a special savings account early for holiday gifts. You can decide how much money to set aside out of every paycheck, depending on your family’s size and how many gifts you will need to buy. Come the holidays; you can dip into your holiday account without worrying about going into debt or not being able to get Cousin Johnny that new Playstation game that he wants so badly.

Another tip to avoid an awkward morning under the tree is to set a family gift budget every year. Gifts are a huge part of the holidays, especially for the kids. But as our families grow, unfortunately, our budgets don’t grow with them, nor does every family member have the same budget. A family budget will ensure that you don’t gift cousin Drew a $10 gift card while he gets you a $300 pair of earrings. This allows an even playing field for all family members. If you have a large family and you can’t afford to buy gifts for 15 cousins and 20 nieces and nephews, consider a family Secret Santa gift exchange. You can set a dollar amount and stick within your budget by only worrying about getting a gift for one extended family member.

The bottom line is, setting a budget well in advance and putting money aside throughout the year will make your holiday spending a lot less stressful and a lot merrier. If you’re not sure how much you’ll need, there are online budgeting tools you can use. Then, you will be able to actually have fun with your holiday spending, knowing that you already have the money set aside and without worrying about going into holiday debt. Nothing ruins the Christmas spirit faster than a huge credit card bill that you can’t pay.

You keep getting pressured to donate to a charity 

With approximately 86,000 registered charities across Canada, and with so many ways to give, there’s no shortage of options for Canadians for charitable endeavours. Around the holidays, there is tremendous pressure to donate to charities.

Whether you can’t afford it, you’ve already donated to several holiday charities, you don’t believe in the charity’s mission, or you simply don’t want to, saying no can be awkward and leave you feeling like the Grinch. A survey by CouponCabin.com found that 34 percent of respondents said that being pressured to donate to a charity by a co-worker, family member, or friend is the most awkward situation.

Just like we recommend setting aside a special savings account for holiday gifts, you can avoid having to turn down your co-worker’s son’s charity donation request again by saving up throughout the year. Create a savings account, especially for charitable donations. You don’t have to add to this account as regularly as a typical savings account or your holiday gift account. But even throwing $20 in there every few months will ensure that you at least have something to give when the charities come calling this holiday season.

Then, if you go over your charity budget, you have a legitimate reason why you can’t donate.  

Someone asks to borrow money from you

The budget gets tighter than Santa’s pants for most of us around the holidays. But, it may be even tighter for your cousin Joey who lost his job this year. So, he asks you to borrow some cash. Awkward.  

Experts agree that you should never give money you can’t afford to lose. But if you can afford to help a family member and you are basking in the holiday spirit and want to do so, give them money as a gift, not a loan. The holidays are a great time to ensure that you are clear about the fact that it is a gift, and you expect and will not accept repayment.

Once again, if you are using a holiday savings account, you can take money from there to give to cousin Joey instead of scrambling to come up with the cash or having to say no. Another area where a savings account benefits in this situation is, if someone asks to borrow $1,000 from you, but you only have $500 in your holiday budget, you can tell them straight up that’s all you have in the budget without having to come up with excuses or seem heartless and deny their plea for help.

The bottom line to avoid awkward holiday money encounters is to be prepared ahead of time. That will ensure you always have at least something when holiday spending needs pop up, whether it’s gifts or charities. 

At Frugl, we’re committed to helping Canadians reach their full potential by providing a tool that makes saving money effortless and effective. Our mission is simple: to give Canadians confidence in their financial future. Learn more today.