Money-saving tips that will stop you from overspending



You just withdrew money at an ATM, went for a walk around the neighbourhood and, by the time you got home, your wallet’s cleaned out. Then your phone pings with a message from the bank reminding you of another totally unplanned, random purchase. And before you’ve reached the end of your pay cycle, you’re broke and wondering how you got there. Sound familiar? Well, then it’s time for a reality check. Start with accepting that most things you buy are completely unnecessary. Open any closet in your home, and staring at you is most likely a whole mess of things you haven’t used, looked at or even thought about in months. Once you recognize there’s a problem, you can get down to fixing it.

Spell it out

“Women tend to be impulsive buyers. So what you should do is note down your expenditure. Before buying anything, ask yourself if you really need it and whether you have space to keep it,” says Shikha Bhatnagar, executive vice-president, Bajaj Capital. With debit and credit cards and e-wallets, it has now become easier to spend. A study conducted by Dun & Bradstreet, a business services company, found that people spend 12-18 per cent more when they use plastic money instead of cash. Chartered accountant Dhananjay Paranjpe agrees. “Credit cards create liabilities. They commit your future income for what you buy today. Always ask yourself whether what you’re buying will be an asset or just an expense.” What you also need to do is identify areas you are splurging on—whether it’s dining, shopping, or even cabs.

Manage your mood

Psychotherapist Dr. Radhika Bapat believes splurging is a coping mechanism. “The occasional impulse buy is normal by itself. But chronic overspending might be an emotional tool. People come to depend on shopping to be happy, to fill those empty spaces, and to run away from themselves.” According to Dr. Lorrin Koran, professor at Stanford University School of Medicine, “People who overspend may also be suffering from other psychological issues. These include mood swings, anxiety and other impulse control problems or addictions.” Dr. Sonal Sheth, psychotherapist and counsellor at Bhatia Hospital, Mumbai, explains how this manifests. “Moods and money habits are related. When people are depressed, they spend money in order to feel in control. It reduces their sense of gloom,” she says. Shopping is also popular among those with low self-esteem. “Objects give people a sense of security,” says Dr. Vasant Mundra, consultant psychiatrist at Mumbai’s Hinduja Hospital. “From childhood, it has been ingrained in us that rewards are a token of love, so we identify objects with emotions. Rewarding oneself is a way of handling insecurity,” she adds. If you are a compulsive spender and think you might be depressed, make an appointment to see a mental health therapist. Find ways to get that ‘high’ that doesn’t involve spending money. You could call friends over for dinner or spend time with family. On your list of priorities, upgrade experiences and people and downgrade material possessions.

Think

Long-term “Plan in such a way that the moment your salary is credited, a part of it goes into your savings. Only when you instill savings discipline can you cut down on unnecessary spending,” says Surya Bhatia of Asset Managers. He, however, warns that the belt shouldn’t be tightened overnight. “Target 30 per cent savings initially. This can go up to 40 per cent depending on your expenses,” he says. Once you get into the habit, cutting down on spending will be as easy as shopping once was.

tag : Devin Consultants Financial Management in Singapore and Tokyo

9 Tax Tips to Start Your Year off Right and Save Money



You can save hundreds -- or even thousands -- of dollars by employing some of these tips. In the process you may end up better prepared for retirement, too.

A major tax bill has been passed, and in the years ahead many Americans will be paying more than before, while many others will pay less. Folks in both camps will still want to minimize any sums they pay Uncle Sam, so here are some tax tips to help many taxpayers shrink their bills.

Note that many of these actions can be taken throughout the year, not just at the end of the year or come April. For best tax-minimizing results, think about and tend to your taxes all year long.

Tip No. 1: Learn about changes to the tax laws

Few people are eager to read up on taxes, but the new legislation ushers in so many changes that it's worth becoming familiar with many of them, in order to best plan. For example, many tax deductions are ending in 2018. These include:

Personal exemptions. These allowed many taxpayers to shrink their taxable income by a hefty $4,050 per person in 2017. This is gone for the 2018 tax year, though an increase in the standard deduction will partially offset it.

Moving expenses. Some job-related expenses (such as license and regulatory fees and unreimbursed continuing education).

Parking and transit reimbursement. Companies have been allowed to subsidize worker transportation costs up to $255 per month per worker, with the sum deductible by the employer and not counted as income to the worker. With this deduction gone, the job benefit may disappear, too.

The tax brackets themselves have changed, for 2018, with new tax rates and new income levels qualifying for them.

Tip No. 2: Contribute to retirement accounts

One tax benefit that hasn't changed, fortunately, is our ability to use tax-advantaged accounts such as IRAs and 401(k) s to save for retirement. There are two main kinds of IRA -- the Roth IRA and the traditional IRA, with the latter shrinking your current taxable income and giving you an upfront tax break, and the former offering tax-free withdrawals in retirement. For 2017 and 2018 alike, the contribution limit for both kinds of IRAs is $5,500 for most people and $6,500 for those 50 and older. Meanwhile, a 401(k) (which also exists in traditional and Roth forms) has much more generous contribution limits -- for 2017 its $18,000 for most people and $24,000 for those 50 or older, and for 2018 it rises to $18,500 for most people, while the $6,000 catch-up limit is unchanged.

Those allowable investments are quite powerful if your money can grow for many years. The table below shows what you might accumulate over various periods if your investments average 8% average annual growth:



Tip No. 3: Consider your holding periods

Don't sell any stocks without giving some thought to how long you've held them. Don't base your decision solely on taxes, but know that as of now, most of us face long-term capital gains tax rates (for qualifying assets that were held at least a year and a day) of 15%. Short-term capital gains face your ordinary income tax rate, which could be close to twice as high. So if you've held a stock you want to sell for 11 months, consider hanging on for another month and a day.

Tip No. 4: Use your losses to offset gains

You can make lemonade from lemons when you have an investment loss: If you know you'll be facing taxes on capital gains you realized throughout the year, such as via stocks sold at a profit, you may be able to reduce or wipe out the taxes owed on that by offsetting the gains with losses. For example, if you have $8,000 in gains and you sell enough holdings to generate a loss of $6,000, you can pay taxes on only $2,000 in gains.

If you have way more losses than gains, you can wipe out your gains entirely, then shrink your taxable income with up to $3,000 of your losses, and then carry over any leftover losses into the next year. (If you plan to buy back any of the losers you sold, be sure to wait at least 31 days, lest you end up with a "wash sale" that doesn't count.) Keep this strategy in mind throughout the year, as there may be particularly good times to sell various holdings for a gain or loss.

Tip No. 5: Open a Health Savings Account (HSA)

If you have a qualifying high-deductible health insurance plan, you may be able to take advantage of an HSA. You fund an HSA with pre-tax money, lowering your tax bill just as you would with a contribution to a traditional IRA or 401(k). That money can be used tax-free for qualifying healthcare expenses. The money in the account can accumulate over years, too, invested and growing. Once you turn 65, you can withdraw money from an HSA for any purpose, paying ordinary income tax rates on withdrawals. Thus, an HSA is actually a bit of a healthcare expense/retirement hybrid.

Tip No. 6: Use a Flexible Spending Account (FSA)

This is another account that accepts pre-tax dollars and lets you spend them tax-free on healthcare expenses. It's not quite as wonderful as an HSA, though, as you need to use most of your contribution each year, or you lose it. Still, if you plan well, this can save you a lot in taxes. For 2018, the FSA contribution limit is $2,650. If you're in the 24% tax bracket and sock away that much, spending it on eligible expenses, you can avoid paying $636 in taxes.

Tip No. 7: Take your Required Minimum Distribution (RMD)

Fail to start taking your RMDs once you hit age 70 1/2 can be costly, resulting in penalties. Some retirement accounts such as traditional IRAs and 401(k)s require them, expecting you to withdraw certain amounts each year. The deadline to take your distribution each year is Dec. 30, except for the year in which you turn 70 1/2. For that year, you have until April 1 of the following year to take your RMD. (It can be better to take it before the end of December regardless, though, lest you end up taxed on two distributions in one year.) See if your account can be set up so that your RMD is sent it to you automatically each year.

Tip No. 8: Keep track of your spending and receipts

Don't wait until April to start scrounging around for whatever receipts you can find. Make your life easier by having a "taxes" folder or shoebox open all year round, into which you can drop any receipts or other documents that will support your tax return. For example, you should keep receipts from your charitable giving and medical spending to support possible deductions. Track your spending, too. If you find that you're spending a lot on healthcare, which might mean you'll be able to itemize your deductions.

Tip No. 9: Get help

Finally, don't let tax matters overwhelm you. There's no shame in hiring someone to help with your tax strategizing and tax-return preparation. In fact, a good tax pro will know far more about the tax code than you do and may be able to lower your tax bill while suggesting effective strategies. Don't just hire anyone, though. Ask around for recommendations. Consider hiring an "Enrolled Agent," a tax pro licensed by the IRS who is authorized to represent you before the IRS if need be. You might find one through the National Association of Enrolled Agents website.

By employing some or all of the tips above, you can strengthen your financial condition and perhaps save hundreds or thousands of dollars. Why pay more in taxes than you have to?

tag : Devin Consultants Financial Management in Singapore and Tokyo

Millennials! Want to retire rich? Here's what you need to do



The earlier you start your retirement planning, the better. Consider starting an SIP in equity mutual funds early in your career.

Many youngsters believe retirement is a distant reality, planning for which can be pushed back some years. What this usually means is that those in their 20s often feel they are too young to plan for their retirement! However, retirement planning becomes essential once you understand that eventually you will retire one day and your monthly pay cheque will cease to come. You need to build a substantial corpus during your working life for your money needs during retirement years.

Actually, the earlier you start the better. “Start an SIP in equity mutual funds early, maybe when you are 25. The amount you invest at this stage may not be much but even Rs 1000 invested every month will grow substantially. This amount will compound for the next 35 years and beat inflation - which is the whole point of planning for retirement early on,” said ER Ashok Kumar, CEO and co-founder of Scripbox.

Here are few tips which can help you make a big corpus at the time of retirement.

Start planning from today: The first and the foremost step are to think and implement your idea for investing towards your financial goal of retirement as soon as possible.  Unless you start saving, you won’t achieve the wealth you desire to get at the time of your retirement.

Stick to the plan: The longest financial goal is the retirement goal and one needs to stick to the plan till it is achieved even if it takes 30 years to accomplish it. Do not divert your retirement savings to meet any other goal falling in between, unless it is very necessary and you do not have any other source of getting money.

Go for automated savings: The best way to achieve your long-term goal more precisely your retirement goal is to go with automated investing. Instead of investing lump-sum from time to time, SIP’s are the best way forward which can be done through Electronic Clearing Service (ECS). Choosing this option will help you deduct your amount automatically on a predetermined date every month. This process can be held for a fixed number of months or even done on a perpetual basis. Also, the process can be stopped anytime as per investor’s need.

Be debt free: “Make sure you are debt-free and own your primary residence. And keep your expenses in check -- don't spend more than 5% of your savings each year to pay for your living expenses in retirement,” says Kunal Bajaj, CEO & Founder, Clearfunds.com.

Take advice regularly: You should always take advice from a certified financial planners or adviser. They are financial doctors who will always give you a good and genuine advice. The better the advice will be, the easier would be for you to gain from your investments.

tag : Devin Consultants Financial Management in Singapore and Tokyo

4 Money-Management Tips to Help You Bootstrap Your Business

4 Money-Management Tips To Help You Bootstrap Your Business

Sometimes, people who aspire to be business owners have this idea that they’ll pitch their idea, get millions of dollars in funding and start spending money like pro athletes. But, if they’re anything like the average American, they'll have an average $1,000 in savings (if that).

They’ll also have $17,000 to $137,000 in debt. If these numbers describe you, then borrowing money, applying for a loan, relying on credit cards and finding an investor may not be your best move. Instead, you should bootstrap your business.

My co-founder Dan Foley and I bootstrapped Tailored Ink back in August 2015. We spent a combined $1,000 to get it off the ground and kept our costs low. Flash-forward to today, two years later and we’re swiftly closing in on the $1 million mark. We still haven’t maxed-out our credit cards or applied for a business loan.

Want to know how we did it? Here are some financial habits we learned on our way to becoming successful business owners.

1. Spend within your means.

When I was making $40,000 a year, back in 2012, I was eating frozen TV dinners every single night. Aside from my desktop computer, which cost only $300, there was no furniture in my apartment to speak of. I even slept in a $25 inflatable bed.

Most of my friends and colleagues who had tons of college debt and were making about the same as me were literally pissing money. When they ran out of cash, they would max-out their credit cards.

Despite everything you may have seen on TV, this is not how to behave if you want to become successful. You’ll never accumulate wealth if you spend it as soon as you get it. Debt and loans do not equal wealth.

How do you keep yourself disciplined and spend less money in a credit-dependent and debt-ridden culture? By practicing delayed gratification. It’s the key to financial success. You need to believe that your short-term sacrifices will result in long-term gain. And they will.

2. Save way more than you spend.

With that in mind, you should aim to save as much as possible. Some people will tell you the exact opposite, as in, “Don’t worry about saving until you’re 30.” These are the same people who'll work until they’re 65 and wonder why their savings accounts are so small.

There are plenty of secrets to growing money, but there’s no secret at all to saving it. You just need to tuck in your belt and control your spending. Many financial advisors recommend saving at least 10 percent of income per year, but that’s not enough if you want to be rich one day.

Saving as a business owner is even trickier because you'll have other people to think about. Let’s say you make $10,000 a month at your new business. That sounds pretty great -- but after you pay 20 to 40 percent of that revenue for tax, 25 percent for business expenses and 25 percent for living expenses. .  .  There won't be a whole lot left.

If you’re running a B2B business, you'll also have accounts receivable to think about. Not all of your clients will pay you on time, if at all.

Dan and I save way more than we spend and put most of what we make back into the business. That way, we can afford to pay all our vendors before we pay ourselves. We keep a two-month runway in our business bank account at all times.

3. Always pay off your debts (or don’t borrow at all).

America has a serious credit problem. We’re brainwashed into believing that borrowing huge sums of money on a regular basis is smart. That’s why we do just that for college, cars, houses and even businesses. It’s why Americans had nearly $1 trillion in credit card debt back in 2015.

If you really stop and think about it, though, this is insane.

Warren Buffett has some pretty strong opinions about debt and loans. “You don’t really need leverage in this world much," he said. "If you’re smart, you’re going to make a lot of money without borrowing.” Buffett indicated that he was especially leery of credit cards. “Interest rates are very high on credit cards," he said. "If I borrowed money at 18 percent or 20 percent, I’d be broke.”

So, just as an example, let’s say you charged $5,000 to your credit card with an APR of 15 percent, and you paid the minimum 2 percent each month. After 14.3 years, you’d have paid out an additional $5,614.44 -- more than you borrowed.

4. Don’t just leave your money in the bank.

Speaking of savings accounts, they’re pretty much worthless. The interest rates at nearly all banks are so low that they’re insulting. Yet most people continue to think that leaving money in the bank is the safest thing they can do.

But you have other, better options. Nearly all banks and brokerages give you similar insurance -- just through different providers. Banks give you insurance for up to $250,000 in cash from the FDIC, while brokerages have the same coverage through SIPC.

In other words, as long as you have less than $250,000, your savings are just as safe in a brokerage as they are in a bank. You can trade stocks, bonds and funds without worrying that someone will steal your money. And if you follow Warren Buffett’s low-risk advice to invest in different index funds, you can earn upwards of 5 percent to 10 percent per year. The S&P 500 Index, for example, returned an average of 11.69 percent per year in the year’s from1973 to 2016. Compare that to 1 percent, which is the highest interest rate generous banks offer.

What’s in your wallet?

Bootstrapping a business isn’t that hard. You just need a basic understanding of how wealth accumulation works, and accept that your money-spending habits may not currently be aligned with success. That’s the hard part.

But if you dream of owning your own successful business one day or becoming a millionaire before you retire, you’re going to have done some soul searching. Are you willing to delay your gratification and make some sacrifices in the near future so you can reap the rewards down the road? Will that sacrifice be worth it to you?

tag : Devin Consultants Financial Management in Singapore and Tokyo

6 Mistakes to Avoid When Planning Your Retirement



When we're young, we tend to think about retirement as though it's just a really long, really great vacation.

We picture a house near the beach or a golf course. We can get out of bed when we please, stay up all night if we want, and never worry about another missed deadline. A frosty beverage is always at hand, and there's a hammock waiting in the shade.

But as we grow older and retirement gets closer, that enthusiasm often turns to angst. We have to figure out how the heck we're going to pay for the lifestyle we want when the paychecks stop -- and that can be a challenge, even for the savviest of savers.
Here are six mistakes to avoid when planning your dream retirement:

1. You do not have a plan.

Your No. 1 goal in retirement should be to know how much you will have coming in each month from all of your income streams -- and how you'll make that money last. Most prospective clients I meet with have a broker who helps them choose and purchase investments, but they don't have a holistic, written retirement plan that covers five key areas:

• Income (how you will pay yourself)
• Investments (how you will keep growing your money while also keeping it safe)
• Taxes (how you will hold onto more of the money you worked so hard to save)
• Health care (how you will deal with the short- and long-term care expenses that could significantly reduce your nest egg as you grow older)
• Estate (how your spouse, children and favorite charities will be taken care of when you die)

Your plan is your guide to and through a successful retirement.

2. You have never had your portfolio stress-tested.

One of the first questions I ask clients is how much money they're willing to lose if there's a market downturn. They always say zero. Of course, that isn't an option in investing; to earn a return, you must take on some risk. But we usually can land on an amount they can handle, both financially and psychologically. Software (such as the Riskalyze program we use) can help determine your risk tolerance -- and whether that's what your current portfolio is built for. Most people are surprised to see how aggressive their investments are compared with their comfort level. This can be fixed -- but first, you have to know where you stand.

3. You do not have a tax plan.

Investors often underestimate how much they will pay in income taxes after they retire. Some aren't aware that up to 85% of their Social Security benefits can be taxed. Others forget that Uncle Sam owns a portion of their 401(k) or IRA if they aren't in a Roth account, and when they take out their money, they'll have to pay him his share. Many are under the (usually mistaken) impression that they'll be able to live on far less income during retirement. I recommend working with a CPA who understands retirement income tax planning. And it's always a plus if your financial adviser and tax professional are working as a team to maximize tax efficiency.

4. You have an unrealistic income plan.

Many of the income plans my prospective clients come in with use a high rate of return that, at best, is a reach; they use minimum inflation protection rates and low tax rates; and there are no assets set aside for health care costs. A plan like that could leave you in a vulnerable situation. I prefer to build a more conservative plan, and if it turns out you have more money to work with than you thought, its gravy.

5. You do not understand investment fees.

Most investors don't know how much they pay in fees, which can be layered and complicated. When we run software to identify those fees, we find some people are paying as much as 3%. That may not seem like a lot, but if you look at a $1 million portfolio with an 8% rate of return over a 30-year period:

• A portfolio with 3% in annual fees will have $4.0 million.
• A portfolio with 2% in annual fees will have $5.5 million.
• A portfolio with 1% in annual fees will have $7.4 million.

The power of compounding interest is a beautiful thing -- and you want to make the most of every penny you put away. Pay attention to your prospectus, and don't be afraid to ask about fees. Your vigilance could save you thousands or even millions of dollars over the course of your retirement.

6. You do not have an estate plan, or you don't update it regularly.

If you don't have an estate plan, the state in which you live has one for you -- and it likely won't be anything close to what you wanted for your loved ones. Again, it's best if your adviser is working with a CPA and an estate-planning attorney. Most people need a will, a living will and a power of attorney, which should cost around $400 to $600, depending on the attorney. You also may need or desire to draw up a trust. If your legacy is an important part of your retirement dream, your wishes should be included in your comprehensive plan.

If you're closing in on retirement -- or if you're already there -- putting together your written plan should be a priority. And if you've been fretting, knowing that you have a guide to go by can make your retirement dreams feel a little more doable.

Just make sure your adviser includes a way to pay for the occasional umbrella drink and at least one big comfy hammock.

tag : Devin Consultants Financial Management in Singapore and Tokyo

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Pearlene L. Carey

Author:Pearlene L. Carey
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