الثلاثاء، 7 مارس 2017
Could You Make Money Baking and Decorating Cakes? This Mom Does
Preparing cakes for special occasions is one of my favorite moneymaking hobbies.
I love baking and decorating cakes. I love being able to make money from home with minimal capital using skills I picked up for free. I love that word-of-mouth keeps me in as much business as I want.
And I definitely love eating the cake trimmings.
I’ve been selling decorated cakes on and off for 15 years, since I was 14.
I both decorate and bake cakes, partly because I prefer not to ice cakes other people have baked, and partly because nearly all my clients want me to do both for simplicity’s sake.
How Much Do I Make With a Cake Business?
It’s a very irregular income.
People seem to get married in batches, so I might do five wedding cakes one year and then none the next. I once created two wedding cakes in a month and made about $400.
Last year, I was in the middle of a horrible pregnancy, so I only did a few cakes and made about $500. I could have done several more and maybe made $1,200… if I hadn’t been fainting all over the place.
I’ve never made a killing from cakes — I have too little time because of other side gigs and too many children to take on as much work as I’m offered.
But my kitchen table currently boasts a simple one-tier fruitcake — a 100th birthday cake for a friend’s father’s coworker’s mother — which is about to net me a profit of $120. Not too shabby.
How to Start a Cake Business and Earn Extra Cash
When it comes to baking and decorating cakes, here are the rules I live by.
1. Charge a Decent Price
Do you have any idea how much a professional wedding cake costs?
Phone a few of your local bakers for quotes. The average wedding cake cost $582 in 2016 — not exactly cheap.
So, I undercut the competition. But I don’t go too crazy, because wedding cakes aren’t cheap to make.
A three-tier cake might use eight recipes’ worth of ingredients — which could easily be, say, 16 blocks of butter — plus eight bricks of almond paste and fondant, three cake boards, three cake tins you’ll probably have to rent, wooden dowelling and a significant amount of electricity.
Add on gum (or sugar) paste, edible glitter, ribbon, gel colorings and so forth. Plus, “tool fund” money for buying handy things like cake levelers and tilting turntables. Then, factor in labor, which will be significant.
My rule of thumb is to charge 250% of the ingredient costs, including nonreusable supplies like cake boards. I may charge more for a time-consuming cake, such as one covered with gum paste roses.
I generally net a profit of about $150-$200 per wedding cake — and I’m still cheaper than the professionals.
2. Choose a Great Recipe
I’m frequently amused by the people who are surprised my cakes taste good.
I’ve had brides choose a traditional fruitcake for the top tier purely to appease grandma — who invariably believes a chocolate mud wedding cake renders a wedding invalid — only to say to me later, “Wow, I thought I didn’t like fruitcake, but yours was really nice!”
My other standby recipes – chocolate mud, banana and carrot – get similar enthusiasm.
The fact is, a lot of commercial cakes are geared toward looks, not taste.
I choose great recipes geared toward moistness and sturdiness and use real ingredients. As a baker, you’re even more appreciated if you have a few gluten-free, dairy-free or vegan recipes available.
3. Decorate Your Own Cakes
I once had a bride ask me to decorate a cake her mother made. It was a hard, dry, overbaked fruitcake that had been spread unevenly in the tin, so one corner was lower than the other.
I had two options: even it out by trimming off half the cake, resulting in a very flat cake, or pack the low corner with great wedges of fondant, meaning several guests would get slices that were more frosting than cake. It wasn’t exactly an appealing choice.
Since then, I’ve only decorated my own cakes. Even a good home baker won’t necessarily bake the tiers to the right heights or know how to avoid burned edges and a raw middle in a 12-inch cake.
4. Figure Out Transportation
My favorite rule of cake decorating? The client picks up the cake.
I loathe transporting wedding cakes, and I always breathe a sigh of relief when the cake goes out the door and becomes someone else’s responsibility.
Most of the time, firmly gluing a cake to its cake board with frosting is enough. The client can line a well-fitting cardboard box with a towel, then place it flat in the trunk, and that should get the cake safely to its destination. (Yelling at the driver periodically is optional, but soothing.)
A tiered cake may need to be assembled on-site, partly so it won’t tip over in the car, and partly because a fully assembled wedding cake can be unbelievably heavy. My own three-tier wedding cake, which I made, couldn’t be lifted by a strong man once it was assembled!
Assembling on-site means packing each tier into a separate cardboard box for transportation. You’ll want to negotiate with the couple about who puts the cake together — and you may need to travel to the venue to assemble the cake yourself, well-equipped with extra frosting and fix-it tools just in case.
5. Keep It Low-Key
This is a personal choice, of course. If you want to go whole hog and start up an official cake decorating business, great!
But depending on the cottage food laws in your state — and they vary even between counties — you might reach a similar decision to mine.
If you start a home business, you may need to bake the cakes in a registered kitchen, register for a number of food handling and business permits, undergo inspections of your home kitchen and similar hassles.
Personally, I prefer to operate on a favor-to-a-friend basis. My friends know I’m not a “real” cake decorator; I don’t advertise, and 100% of my orders come through word-of-mouth. I do pay taxes, but I don’t own a “real” business — which is just how I like it.
As for the future, I plan on continuing this side gig. I’m snacking on fruitcake leftovers at this very moment, and it’s great.
Your Turn: Would you like to make money baking and decorating cakes?
Sarah Tennant lives in New Zealand with her husband, three children and an irritatingly tiny kitchen. She has been selling decorated cakes to friends and family for 15 years. Sarah’s other money-making hobbies include freelance writing, mystery shopping, exam supervision and living-room neurosurgery.
The post Could You Make Money Baking and Decorating Cakes? This Mom Does appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2n3443a
This is Not a Scam: This Site Pays Up to $30 — Just for Taking a Survey
I have to say, few better feelings exist than seeing some extra money trickle into your bank account — especially if it’s easy money.
We found an opportunity that pays you to take part in online studies and surveys.
Marketing research firm 20|20 Research has been around since 1986, and has offices in Nashville, Tennessee; Charlotte, North Carolina, and Miami, Florida.
If you live in those cities, great — you can get paid to participate in in-person studies.
But even if you don’t, you can still get in on these paid opportunities, as long as you’re at least 18 years old and live in the U.S. or Canada.
Keep reading to learn what this is all about.
What Types of Paid Studies and Surveys are Available?
Research opportunities vary from focus group discussions to one-on-one interviews. The subject matter, however, depends on the client — and those vary.
“Anything and everything you can imagine, from HIV to organic yogurt to ATV Vehicles,” panel manager Amanda Brown told me.
She offers some recent, more specific examples of recent studies:
- A major cabinet company needs a panel of 180-200 homeowners who live in the Ann Arbor, Michigan, area.
- Another client needs participants who are 45 to 46 years old, have been diagnosed with chronic constipation and use one of two different types of medications.
- This example is super specific: A client wants married women between the ages of 25 and 50 who have kids in the household. In addition, these married women must have a high school diploma, make $55,000 or more a year, shop at a major wholesale grocery store and have never bought a Whirlpool appliance — or any appliance in the past year for that matter.
For transparency’s sake, Brown says it can be difficult to get into some of the studies.
“Because many of our clients are looking for the 10% of the 10% of the populations at times … you may take several pre-qualifying surveys before making it as a participant,” she says. “But, once you do, you are compensated very well.”
How Much You Can Get Paid Per Opportunity
There are two types of paid opportunities: surveys and studies.
The surveys are for points; 100 points is equal to $1. Brown says it pays about $6 to $10 an hour for those surveys. She suspects a survey doesn’t take more than about 15 minutes to complete.
On the study side, there are live chats (so you don’t have to leave the couch!), which last about 30 minutes to an hour and can pay $15 to $30 an hour.
There are also extended online studies. Brown says three-day studies are very common. This means a participant would need to log in once a day for about 45 minutes to an hour to answer questions. She says panelists would be paid at least $20 to $30 an hour — perhaps even more.
“As an advocate for the panelists, my job is to ensure our panelists’ time is valued,” Brown told me. “Therefore, if a survey is longer, we make sure we increase the pay to reflect the time invested.”
How to Sign Up with 20|20 Research
If you’re still feeling skeptical, check out 20|20 Research’s Facebook page. (It even hosts contests with prizes!)
You’ll find more than 170 reviews for the company with an overall 4.4-star rating. The most common complaint is people don’t get selected to participate, but like Brown said, there are no guarantees.
Here’s a recent review from Carol Jackson: “I have enjoyed doing the surveys and the 20|20 employees are the best! Always a smile and very helpful. I have told friends and family about it. My son and husband have done a couple surveys, too. What’s a hour of your time?”
OK, so here’s how to sign up: Visit learn.2020panel.com, or hop over to the community page at join.2020panel.com.
You’ll start by filling out a 15-minute consumer profile survey. (I can vouch for it. I signed up, and it was super painless.) This helps you get matched to surveys and studies.
Upon completion, you’ll get an email. Be sure to confirm your registration within eight hours.
If you have any questions, you’re encouraged to shoot an email to joinus@2020panel.com.
Keep an eye on this page, too. If I qualify for a study or survey, I’ll be sure to let you know about my experience.
Your Turn: Have you participated in panel studies/surveys? Tell us about your experiences!
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder.
The post This is Not a Scam: This Site Pays Up to $30 — Just for Taking a Survey appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2lUfKDS
Don’t Pay to Pay Your Taxes: Use One of These 8 Free Filing Sites Instead
April 18 looms on my calendar. No matter how organized I am or how early I prepare, tax day always gets my stomach’s butterflies fluttering.
But the days of sitting in an uncomfortable, overheated office to wait for a pro to pluck away at your tax return are over.
Thanks to the power of technology, electronic tax return filing is as routine as checking your sports scores or your bank account online. With a few clicks, you can get the agony of filing your annual tax return over and done with — and get on with life.
Wondering where to start? Overwhelmed by promises shouted on TV commercials?
Don’t dive in — or pay up — until you read these options for filing your taxes for free.
If you live in a state that collects income tax, you may have to pay a nominal fee to file through the services below. If you don’t have to file a state tax return, chances are good you can spend precisely zero dollars to e-file.
Take a look below to see which free (or nearly free) filing option is best for you.
1. The IRS
The IRS offers two versions of its FreeFile program.
If you made less than $64,000 in 2016, you can file your federal return for free through online software.
The IRS doesn’t directly provide this service, but it partners with 13 tax preparation companies — like H&R Block and Jackson Hewitt — to facilitate your process.
Some state returns are available for free through these companies, so check for your state before choosing one to use to file your federal return.
If you made more than $64,000, you can e-file your taxes for free directly through the IRS. While the tool provides basic calculations, it doesn’t hold your hand through the process like the IRS’s partnerships at the lower income level.
Also, state tax prep isn’t available at this level.
2. United Way MyFreeTaxes
If you made less than $64,000 per year, take advantage of the United Way’s MyFreeTaxes program to file state and federal taxes online for free.
The site notes that 70% of Americans qualify for this free filing service, powered by H&R Block.
3. TurboTax Federal Free Edition
If your tax return is simple — maybe just one or two W-2s — filing with TurboTax online could be your best option.
In previous years, I’ve filed my federal taxes through TurboTax for free, then ponied up $30 or so to prepare my state returns. This year, federal and state tax preparation is free via TurboTax’s 1040EZ/A Absolute Zero guarantee.
If you make less than $100,000, don’t own a home or business and didn’t deal with investments or major medical expenses, this is a great option for you.
But watch out — you won’t be able to prepare and file for free if you need to report any 1099 earnings.
4. H&R Block Free Edition
H&R Block offers a free option for those filing simple returns.
Its online Free Edition allows you to e-file federal returns for free, and a state return option is now included with the package.
If you’re expecting a hefty refund, you can get an additional bonus from H&R Block.
When you e-file, choose to receive $100 increments of your refund in gift cards from your favorite retailers (think Amazon, Target and Nordstrom). H&R Block will kick in an extra 5% toward the gift card amount.
5. TaxSlayer
If a 1040EZ is all you need to file, TaxSlayer will help you do it online for free.
The Free Basic Edition offers a deduction finder, and you can add your state return at no charge.
Active-duty military members save 50% on any preparation and filing package through TaxSlayer offers, including state returns.
6. TaxAct
If you simply need to file a 1040EZ/A, federal and state returns are free with TaxAct.
If you get a refund, you can choose to receive it on American Express Serve — a prepaid debit card that doesn’t require a credit check or minimum balance.
7. Liberty Tax Service
Wondering if Liberty Tax Service offers a free filing option? It does, but you wouldn’t guess it looking at DIYTax — no Statue of Liberty logos here.
DIYTax promises free, easy e-filing for 1040EZ/A and state returns.
Here’s another offering backed by Liberty Tax: ESmart Tax offers free e-filing of 1040EZ and state forms.
8. EFile
EFile.com offers free basic federal filing and advises this option if you’re single with no children and no mortgage.
If you need to file a state return and expect a refund, choose to have the fee for your state filing deducted from your refund. You can get 50% off if you file with your state when you enter the promo code e50State.
If things get complicated, EFile promises to charge for only the least expensive service you need. There’s no pressure to get a deluxe package if you won’t use all the perks.
Bonus: Volunteer Income Tax Assistance Program (VITA)
Want to talk it out? Sit down with an IRS volunteer.
If you make $54,000 or less, have a disability, are elderly or speak limited English, it’s free to use the Volunteer Income Tax Assistance Program.
Electronic filing also is available in some locations.
Search the IRS database of VITA centers — a lot of them are at local libraries — to see if you need an appointment.
The IRS also offers Tax Counseling for the Elderly (TCE) at some locations. It’s free if you’re over 60, and volunteers are well versed in financial concerns for retired individuals.
All volunteers are certified by the IRS, and many have professional backgrounds in accounting and finances.
Your Turn: What’s your favorite way to file your annual income tax returns for free?
Lisa Rowan is a writer and producer at The Penny Hoarder. She stocks up on antacids during tax season.
The post Don’t Pay to Pay Your Taxes: Use One of These 8 Free Filing Sites Instead appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2my60mK
Learning How to Adult? 10 Nifty Life Skills You Can Learn for Free Online
Home economics and auto shop classes are so 1950s.
But the skills you learn there are still valuable today.
Years ago, learning to cook, balance a checking account and change a flat tire were things people learned in school or from their parents.
Those kinds of classes aren’t offered as frequently as part of the school curriculum, and parents today are often too busy holding down second or third jobs just to keep food on the table.
For many families, there’s simply no time to teach kids how to shop for ripe vegetables or file taxes.
How Adulting Classes Can Help
We aren’t born knowing how to shop for deals or manage our money any more than we’re born knowing how to tie our shoes or use a fork.
Yet, these are all really important life skills to have.
So it should come as no surprise that “adulting classes” are popping up all over country. They’re designed to fill in knowledge gaps and give grown-ups the mastery to tackle the basics of taking care of themselves.
“You know, when you see 10 people feeling like they’re the only one, and they’re all struggling with the same thing, you think, let’s get these people together so they can learn this stuff and not feel so isolated and ashamed,” Rachel Weinstein, co-founder of Adulting School in Maine, told NPR.
Tuition at Weinstein’s school starts at $19.99 for a monthly subscription and access to several topics.
One-time workshops around the country range anywhere from $35 to free.
DIY Your Own Adulting School
If adulting classes aren’t in your budget or offered in your area, why not cobble together some DIY courses that teach you what you need to know?
Here are 10 life skills you can learn on your own, thanks to the wonders of the internet.
1. How to Dig a Hole
Learning this practical skill can also change the way you interact with people.
2. How to Change a Tire
Practice this one a couple of times before you need it.
3. How to Defend Yourself
Online courses give you an overview of what you need to know for self-defense, but check with your local police department for information about in-person classes where you can practice your skills in a real-life setting.
4. How to Cook
If you’re just learning to cook, you don’t need to worry about posh ingredients and fancy sauteeing techniques. Just focus on the basics like how to make rice, roast a chicken or chop vegetables without losing a thumb.
5. How to Make Your Bed
A crisply-made bed ties a bedroom together and makes it look tidy even if there are dust bunnies secretly hiding under it. A well-made bed is also proven to aid in getting a better night’s sleep.
6. How to Ace a Job Interview
It’s okay to be nervous; just make sure you’re prepared for your interview. Oh, and don’t pull any of these dumb moves.
7. How to Recognize When You Need a Doctor
There’s no reason to shell out big bucks on an expensive co-pay for every little sniffle or sneeze. But sometimes you really do need to see a doctor.
8. How to Do Laundry
You don’t need expensive clothes to look and feel your best. Taking care of your clothes is key, but there’s more to doing laundry than tossing everything in the washer and turning it on.
9. How to Organize Important Paperwork
As we march toward a paperless world, eventually almost all our important paperwork will be digital. Until then, it’s vital to create a system that stores things like medical records, tax paperwork and personal documents safely so they’re available when you need them.
10. How to Create a Budget
This is perhaps one of the most important life skills you need to learn. No matter how much (or how little) money you earn, learning how to manage it well sets the stage for you to reach other goals in your life. So don’t put it off.
Your turn: What’s the most helpful life skill you’ve learned?
Lisa McGreevy is a staff writer at The Penny Hoarder. Her life skill super power is laundry. She folds fitted sheets like a boss.
The post Learning How to Adult? 10 Nifty Life Skills You Can Learn for Free Online appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2mC0zU6
Amazon Flex is Hiring Drivers in These 19 U.S. Cities — Make Up to $25/Hr
Are you all about that flex life?
Don’t worry; you don’t have to hit the gym. (Dad joke…)
Amazon Flex is actively seeking delivery drivers in 19 U.S. areas.
This isn’t your average delivery service, either. You can make up to $25 an hour — and set your own schedule.
As a Flex delivery driver, you’re picking up packages from your local Amazon facility and delivering them to locals who use the Prime one-hour delivery option. It’s like a pizza delivery job — but you never know what people are going order from Amazon.
And there’s no pizza stinking up your car.
Amazon Flex Needs You — If You Live in These Areas
Flex is currently available in more than 30 U.S. areas, according to Amazon. But for now, it’s only recruiting folks in 19 of those, including:
- Arlington, Virginia
- Austin, Texas
- Boston, Massachusetts
- Chesapeake, Virginia
- Chicago, Illinois
- Dallas, Texas
- Denver, Colorado
- Indianapolis, Indiana
- The greater Los Angeles area, California
- Manhattan, New York
- New Jersey
- Orlando, Florida
- Philadelphia, Pennsylvania
- Portland, Oregon
- San Antonio, Texas
- San Diego, California
- The greater San Francisco area, California
- Seattle, Washington
- Virginia
Amazon has plans to expand the program, so if your area isn’t on this list, you can opt to join a waitlist. That way you’ll be notified if an opportunity pops up.
Here’s How You Can Start Flexin’ With Amazon
You can sign up online or through the Flex app.
Note: You must be at least 21 years old and have a valid U.S. driver’s license.
Once you confirm this, you’ll be asked: “Do you have a mid-sized sedan, such as a 4-door Honda Civic, or a larger vehicle?” You’ll need to answer “yes” to qualify.
It also notes that if you have a truck, it’ll need an enclosed bed to avoid soggy deliveries.
In some areas, bikes are an acceptable mode of transportation — as long as you have a helmet, basket and meet safety standards.
Then you’ll be asked if you have an iPhone, Android or “other”? You can operate from an iPhone or Android, but just be sure you meet the specific minimum requirements, as outlined on the FAQ page.
If you meet all the qualifications, Amazon Flex will get in touch with you with more details.
Eventually, you’ll need to do a background check, which takes about two to four days to complete.
Do You Qualify? Here are More Details on Working for Amazon Flex
You can set up your work schedule through the Amazon Flex app.
There are two ways to do this:
1. You can set your availability for the upcoming week. So if you’re working a 9-to-5 job already, you can set your delivery times around those priorities. This way, you’ll be confirmed for a delivery ahead of time. Just be sure to update your schedule before noon on Fridays.
2. You can pick up deliveries based on demand as customer orders trickle in. You’ll select the “Ready to Deliver Today” option for this.
You’ll be notified at least one hour before the delivery must occur. If you can’t make it, forfeit it at least 45 minutes before the delivery clock begins ticking down.
If you have an exceptionally hectic week, don’t worry — you don’t need to meet any sort of minimum requirements.
Amazon does emphasize that this gig should not be treated as full-time income; it’s just a great way to earn some extra money in your free time.
Check Out How Much Money You Can Make Working for Amazon Flex
You can earn $18 to $25 an hour delivering packages, according to the Flex site.
You’ll get paid on Tuesdays and Fridays through an automatic direct deposit to your bank account. You’ll see the payment in your account the next day.
Not a bad side gig, right? And you don’t even have to deal with people — just the workers over at the Amazon delivery station.
Any other questions? You can contact Amazon Flex, but chances are its FAQ page will have you covered.
A hearty shoutout goes out to Hip2Save. Thanks for reminding us about this awesome opportunity!
Your Turn: Do you work for Amazon Flex? We’d love to hear about your experience!
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder.
The post Amazon Flex is Hiring Drivers in These 19 U.S. Cities — Make Up to $25/Hr appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2n2qNwu
How Peeing in the Shower Could Help You Save Money
Peeing in the shower.
First of all, no, I don’t do it.
But I am a Penny Hoarder, and this recent hubbub might convince me to change my ways.
In the name of environmental conservation, IFLScience suggests we should pee in the shower. It could mean saving 579 gallons of water per person, per year.
The calculations are flying around the internet about how many people pee in the shower. Judging by a Buzzfeed reader survey in which more than 80% of respondents admitted to peeing in the shower, I’m guessing some folks are all too happy to share science that supports their controversial hygiene choices.
But conservation often means saving money, so I wanted to learn more.
How to Save Money by Peeing in the Shower
The logic goes: If you pee in the shower, you can avoid flushing the toilet. The water you’re already running in the shower will wash away your urine.
If you shower once per day, that’s one less flush, which saves between 1.3 and 3.5 gallons of water per person per day.
A family of four would save more than 5,000 gallons of water each year — and up to 42 cents per day or $153.30 each year.
That’s nothing to sneeze at. (We’ll have to discuss your sneezing hygiene in a later post :mask face emoji:.)
And you can save money on toilet paper, too. A few twists and bends of the torso, and your shower becomes a fancy do-it-yourself bidet — no assembly required.
If you’re already peeing in the shower, do these savings justify your behavior? And if you don’t, would you update your daily routine to save money on your water bill and toilet paper costs?
Let’s address the concerns.
Is It Dirty? Sort Of
In 2014, research from the University of Chicago debunked the myth that urine is sterile.
“Urine is not sterile, even before it comes out of you and gets contaminated by your skin. Bacteria are present at low levels in the urine of healthy people, Evann Hilt of Loyola University of Chicago reported,” according to Science News.
However, the research also suggests this bacteria probably won’t make you (or your family or roommates) sick. Just don’t let it run across any wounds.
What About the Pipes?
Toilets drain “black water,” which contains waste from feces, urine, toilet paper and other things you’re allowed to flush.
Showers, bathtubs, sinks and your washing machine, on the other hand, drain “grey water,” which contains far less waste.
Can you damage your plumbing by yellowing up your shower’s grey water?
“Aside from it being not the most sanitary thing to do, [peeing in the shower] is not going to generally clog your shower drain,” said Sarah Green of Advanced Plumbing Commercial & Residential in St. Petersburg, Florida.
Green explained shower water drains down the same line as the toilet. As long as it drains properly, you shouldn’t have an issue.
But, “you don’t want that sitting in your tub,” she warns, because it could cause a stink.
As for saving money, Green says the effect would be minimal. She says those who follow the “if it’s yellow, let it mellow” rule are probably saving a lot more.
I’ll add they also don’t ever have to worry about standing in their — or anyone’s — urine.
What Else Can You Do?
If neither option floats your boat, here are more ways to save money with your toilet this year.
And here’s how you can save up to $250 a year on your water bill throughout the house.
For the 41% of you who pee in the pool, there is still no excuse for your behavior.
Your Turn: Would you pee in the shower to save money?
Dana Sitar (@danasitar) is a senior writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).
The post How Peeing in the Shower Could Help You Save Money appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2n22HSf
Best and worst Isa funds since 1999
With less than a month ago until the end of 'Isa season' it is the time of year when investors are searching for last minute ideas and inspiration.
A useful starting point, according FundExpert, is to look at funds that have earned their stripes since Isas were introduced on 6 April, 1999, replacing personal equity plans (Peps).
Source Moneywise http://ift.tt/2mSZkQT
February's 10 most-bought trusts
Financial markets are enjoying a fine run of form, with both the FTSE 100 and S&P 500 hitting new all-time highs last week, but retail investors are not getting carried away.
Source Moneywise http://ift.tt/2meLsx8
Finding and Handling Your Money Boundaries
Everyone has boundaries. If you find yourself doing something that makes you bitter, it is time to reconsider. – Peter Singer, The Most Good You Can Do, p. 29
It’s going to happen at some point in your financial journey.
At some point, you’re going to try a frugal tactic or even read an article about a frugal tactic that just doesn’t sit well with you. The practice of doing it – or even the thought of doing it – feels very wrong, as though you’re abandoning a value that you hold dear or giving up some element of your life that’s very important to you.
This is a money boundary. A money boundary is simply a point where a financial tactic comes into contact with something connected to another strongly held value and the other value is simply more important to you.
Some people press through this anyway. They force themselves to take on this change that they’ve been told is very important and do everything they can to make it work for them. This strategy is akin to a cork in a champagne bottle – it’ll either hold things in place under pressure or it’ll erupt suddenly and violently.
Other people simply balk at this point. They start rejecting not only this individual tactic, but wide groups of tactics. They’ll read one tactic that they disagree with in an article or a book and decide that the whole article or book is inherently flawed and often spread that to everything the writer has ever done (believe me, I’ve received plenty of emails like this). They’ll try one frugality tactic that doesn’t really click with them and they’ll just abandon the wide array of tactics that are working well and rebound back to the way they used to do things.
I don’t think that either tactic is smart and that both will lead to outcomes you don’t want in your financial and personal life.
Instead, here’s my strategy for discovering and properly handling your financial boundaries so that you continue down the road to success even in the face of such boundaries.
Strategy #1 – Recognize a financial boundary when you see it
At the very start of this article, I offered up a quote from Peter Singer which I think fits very well here. “Everyone has boundaries. If you find yourself doing something that makes you bitter, it is time to reconsider.”
If you find yourself being unhappy or bitter about some change you’ve made in your life, then you’ve probably touched upon some kind of a boundary between different values that you hold dear, even if you don’t completely see that boundary yet. Your gut is a very strong guide for personal change, as it will tell you loud and clear when you’ve changed something that you probably shouldn’t be changing. Often, it’s that subconscious discomfort that’s a sign that you’re stepping over the edges of some kind of life boundary and trampling over some value that’s more important to you, even if you’re not really seeing it yet.
In general, a life change that’s worth making should make you, on the whole, happier with your life. That does not mean that all areas of your life become universally more joyful; most changes are a tradeoff where you sacrifice a little bit in one category to gain a lot in another category. A sense of bitterness and negativity comes in when some part of you begins to sense that the tradeoff isn’t actually that good, that you might actually be sacrificing more than you think or getting less than what you think in return for that change.
I’ll give you a concrete example from my own life. For several months, I was an extremely avid coupon clipper. I would go find old copies of the Sunday Des Moines Register (usually early in the morning on Monday) and harvest copies of the coupon flyers, then take them home and cut out tons and tons of coupons. I’d find more of them online, print them out, and clip them, too. I maintained a coupon binder, which was a repurposed photo album, and I kept all of those coupons carefully organized.
While I did enjoy those times when I could go to the grocery store and pay for $50 or $75 of my purchases with clipped coupons, I often had this sense in the back of my head that this wasn’t the best use of my time, a sense that grew and grew and grew over time. What I was hitting on was the fact that the time I was investing in couponing was taking away from other things that were more important to me, even figuring in the money I was saving with the effort.
I was easily spending several hours a week cutting out coupons, organizing them, and finding more coupons online, which was time that I wasn’t spending taking my son to the park or making meals or building up a side gig. All of those things were more important to me, but it wasn’t obvious for a while what was making me feel negative about the couponing, especially since it was saving me money.
It took a while for me to figure out that couponing – at least the way I was practicing it – was hitting upon a boundary in my life. I wasn’t using my time most effectively in terms of my values. Saving money was – and still is – quite important to me, as I view it as a path to personal security and personal freedom, but it’s not worth losing out on the freedom today to take my kids to the park or to have at least some time for hobbies and personal interests or even for things like building up successful side businesses. Those things are things that I value more than saving a relatively small amount of money every week or two on a grocery trip; the savings from couponing were not making up for what I was losing due to the invested time.
Strategy #2 – Don’t overreact; throwing the good strategies out with the bad is a poor solution
Whenever you recognize that you’ve hit a boundary, it can be very tempting to rebound strongly from it. Some people might do this by simply giving up on their progress, tossing out most of the good strategies they’ve been using that are actually effective on their own, and reverting to their old methods. Others might take a long list of strategies they’ve learned from one source and reject all of them because one of the strategies is something that they disagree with.
Both of those reactions are a big mistake. They can cause you to overlook and eliminate a lot of good strategies that actually fit your life while trying to undo a single bad strategy that doesn’t fit. That usually ends up causing more problems than you’re fixing.
Whenever you hear about a strategy that doesn’t seem to click for you, don’t throw out all of the strategies around it. Instead, isolate that one strategy and discard it. If you’re still in doubt, try to think about why that one strategy bothers you so much. What value is it conflicting against?
I’ll again look at that couponing strategy I mentioned above. My initial gut reaction was that couponing in itself was a giant waste of time, so I basically tossed out the whole concept. I stopped even looking at coupons and stopped clipping them at all. Instead, I moved to a much less time intensive strategy of buying store brands for most items, which was, on the whole, a strategy that saved almost as much money as couponing.
The problem was that, in doing so, I missed out on some very, very easy ways to save money. If I was somewhere reading the Sunday paper and they had a coupon section, I wouldn’t even bother to look at it. If a friend offered up a link for a $3 off coupon on something I normally bought, I wouldn’t even click on it.
I had adopted a new rule that all coupons were a waste of time and money, and that rule was nearly as flawed as the couponing strategy I once used.
The truth is that I overreacted in my cutbacks on coupons. The truth is that if worthwhile coupons find their way to me with minimal effort and time invested, I should clip and use sensible ones because they basically amount to cash.
Today, we have a coupon envelope on our fridge that we check whenever we’re assembling a meal plan or a grocery list from a store flyer. If we happen to need anything that matches a coupon, especially when it also matches the flyer, I put it in my wallet next to the card I usually use to pay for groceries. I toss out any coupons that I notice being expired. If an easy source of decent coupons falls on my lap, then I’ll add them to the envelope; otherwise, I won’t.
Why did I reach this “middle of the road” technique? The next strategy explains why.
Strategy #3 – Figure out what exactly the boundary is and what value it represents
So, you’ve identified a specific strategy that’s bothering you. Why is it bothering you? What exactly is causing you to discard that strategy (or, at least, why are you not happy with that strategy)?
There are a few reasons why this is really useful and important. First, it helps you figure out what in your life you view as more important than the strategy you’re discarding, which is really worthwhile in filtering other strategies that might cross the same line. Second, it might help you to quickly see that there are alternatives to your strategy that will fit the bill quite well and have much less of a drawback for you.
Let’s go back to my couponing strategy. As I mentioned, we now have a “coupon envelope” on our fridge that we toss in easily-acquired coupons, and we use them when we’re making a shopping list or a meal plan.
I arrived at this solution by asking myself why couponing bothered me so much. What I quickly realized is that it wasn’t the coupons themselves, but the time I was investing in couponing that really bothered me. I didn’t have any objections to taking a coupon into a store and using it to make my bill a little smaller; my problem came from the fact that in order to save a notable amount, I was investing a lot of time into it.
This meant, of course, that I had zero objection to easy-to-acquire coupons; it was the hard-to-acquire ones that were causing the problems. If I happened to find a coupon flyer and could leaf through it during complete spare time, or if a friend gave me a coupon, or if someone shared a great one on Facebook that I could print in about five seconds, I actually was glad to have that coupon. Mobile apps that just hand me coupons when I’m in the store are great, too, especially when they line up with what’s already in the cart.
My objection to couponing wasn’t couponing itself, but to time spent couponing. When that time was minimal, even if that meant the savings went down drastically, I didn’t mind it at all. In fact, I kind of liked taking a few coupons to the checkout and then finding that my bill dropped by $5 or $10.
This actually revealed something of a bigger truth for me: I don’t like frugal tactics that require a constant infusion of time to make them really work. I am strongly predisposed toward strategies that either require only one burst of time up front to cause regular savings (like installing a bunch of LED light bulbs in our house or installing weatherstripping) or else manage to also save time (or at least break even in terms of time) in the process (like making meals in bulk or using smarter driving practices on the road).
For some people, the time issue may be less important than it is for me. My parents, for example, have a lot of free time and they clip coupons far more than I do. They also do things like washing out freezer Ziploc bags, something that also falls into the “too much time for too little reward” trap for me.
It’s about what you value in your life and what the constraints are in your life, and everyone’s lives are different.
What do you do if you’re not sure about a strategy? Do you just skip it and go for only the obvious wins?
Strategy #4 – Use trial runs to figure out if your first impressions are wrong or not
Unless I am absolutely sure a strategy won’t work for me, I’m almost always willing to give that strategy a trial run of some kind. I usually find that the practice of trying a frugal strategy – or another life improvement strategy – usually reveals some kind of method for making my life better, even if it’s not the exact strategy that I started out trying.
Another advantage of committing to a thirty day challenge with a tactic you’re unsure about is that it gives you time to really refine it. Almost always, the first time you try doing something new, you flail and stumble around and just don’t do it all that well. I still remember the first time I chopped a green pepper on my own and almost cut off the tip of my thumb – I still have a little scar there. If you keep trying something, you will get better at it, and you’ll find that after a trial run you can really assess how useful a strategy is when you’re used to it, rather than judging it by your initial flailings.
I usually do this with a “thirty day challenge,” in which I commit to doing something a certain way for a month. I usually do two or three of these each month in various aspects of my life, and then at the end of the month, I spend a bit of time reflecting on that challenge to see if it added anything of value. For example, right now I’m in the midst of three different 30 day challenges, one centered around food intake, another centered around exercise, and a third centered around work and building income.
Let’s jump back to the couponing example we’ve been talking about throughout this post. When I realized that I had overreacted by rejecting all couponing, I decided to try a “thirty day challenge” where I tried out something pretty similar to our envelope strategy. My challenge was simple: keep a coupon envelope in which I save any coupons that I come into with no extra effort, then use that envelope whenever I write up a meal plan or a grocery list.
This thirty day challenge worked really well and I basically kept doing it. It takes almost no time and saves about $10 or so on a typical grocery store visit. I find coupons in old copies of newspapers lying around or when someone shares one on Facebook or when my parents give me any extras that they find, and I also use in-store apps like Cartwheel to find coupons that match up with my grocery list. Going through that challenge helped me to refine some very low-effort ways to get coupons – for example, I’ve found that if you see a Sunday newspaper that someone has abandoned on a table, there’s usually a coupon flyer in it and it takes about five seconds to grab that flyer. I’ll look through it for coupons when I happen to have a minute or two of downtime, like when I’m waiting for a microwave meal to finish or I’m watching a live television program with commercial breaks.
Strategy #5 – Focus on positives, not on negatives
In the end, money boundary issues always come down to comparisons. You’re comparing the merits of doing things one way versus the merits of doing things another way.
Usually, such comparisons wind up with a pros-and-cons list, where you list all of the pros of doing things a particular way versus all of the cons of doing things that way.
I’ve found that, when you’re comparing two or three ways of doing things, a much better approach is to simply list all of the “pros” of each option and see which one adds up to the best result. If one of them has an obvious negative, then that’s actually a “pro” for the other options.
I usually don’t strictly write down these lists of “pros” – though I do it sometimes for big decisions – but instead I do this as a mental exercise. It’s something to think about while driving somewhere or when you’re waiting at the dentist.
For example, with couponing, I simply compare the “pros” of three options: my old full couponing strategy, my much quicker envelope strategy, and just not bothering with coupons. Clearly, the “not bothering” has the best time advantage, but the quicker strategy shares most of it. The full couponing strategy saves the most money, but the quicker strategy shares some of it. The no-couponing strategy takes up the least space, but the quick coupon strategy only requires an envelope that’s attached to the fridge with a magnet. Basically, I quickly realized that the “quick” strategy had a pile of “pros” that wasn’t matched fully by the other strategies, so I stuck with it.
Strategy #6 – Give yourself time to reflect
Ideally, you want to reach a point where you can make these kinds of good choices very quickly, and that requires a very deep and strong understanding of what you value. That type of deep understanding itself takes time and reflection, so give yourself time to reflect.
I’ve found that, when I give myself time each and every day to reflect on my life and on any challenging choices I had to make that day and what my values actually are, my snap decisions in life become better and better and better. That reflection time is basically time spent sharpening an axe, to borrow from Abraham Lincoln’s famous quote.
Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” That’s exactly what time spent reflecting on your life is – it’s time spent sharpening the axe that is your decision-making process in life. That decision instinct is a tool that you use constantly every single day, so making that tool as sharp and accurate as you can possibly make it is bound to improve your life. Reflection is how you sharpen it.
Take some time each day to really think about the rough edges of your life. Think about the choices you made that are troubling you and ask yourself why you made them, and why you came up with that answer, and whether there was a better way to handle it. Think about situations that are coming up in your life and what the best way to handle those decisions are.
That type of thinking will sharpen your thinking, and sharp thinking will result in better decisions throughout each and every day, and better decisions throughout each and every day results in a better life.
Final Thoughts
Knowing your money boundaries – and the boundaries of other values in your life – makes it much easier to quickly figure out which money strategies will work best for you in your life. Not everyone has the same money boundaries, because not everyone has the same values and the same lifestyle restrictions. Strategies and tips that work well for some people might not work at all for others.
The best thing you can do is have a sharp understanding of what works and doesn’t work for you so that you can quickly take a list of tips and cut it down to the ones that are very likely to produce positive results in your life. That requires knowing your money boundaries quite well.
Good luck.
Related Articles:
- Finding the Line Between Frugality and Deprivation
- Five Things I Was Willing to Give Up to Save Money
- Depriving Yourself Doesn’t Work
The post Finding and Handling Your Money Boundaries appeared first on The Simple Dollar.
Source The Simple Dollar http://ift.tt/2mSgDSa
Moneywise users want savings incentives to be announced in the Budget
Incentives for savers is what the majority (28%) of Moneywise.co.uk users want to see announced by Chancellor Philip Hammond in tomorrow’s Budget, according to our latest poll results.
Source Moneywise http://ift.tt/2lYhWe1
15 Creative Ways to Avoid Debt While Still Getting a College Education
If you’re thinking about going to college, you have to think about how to pay for it.
Rising college costs are impossible to avoid. Everywhere you turn, there’s another horror story about how much debt ordinary people got into just trying to get college degrees.
The average borrower ends up with $27,000 to pay back after graduation. And unless you’re planning your education so you inevitably land in a high-paying industry, you’re likely to have student loan debt hanging over your head for way too long.
Don’t want to take any chances? If you want to avoid student loans at all costs, there are ways to pay for college without taking out loans.
You just need to know how to do it.
We’ve collected 15 ways to pay for college that you can think about — first when you’re narrowing down your college path and again once you’re settled into your campus routine.
Before Freshman Year
Starting to plan your college experience? Make sure you take some of these steps:
1. Fill out the FAFSA
I’ve heard all the excuses for why you don’t want to apply for financial aid. You think your parents make too much money. You want to go to an expensive school, so the Federal Application for Federal Student Aid won’t help. You’re afraid of what the FAFSA will say you should pay for college.
Stop with those excuses. You need to fill out the FAFSA.
The application is easier than ever (promise!), and most schools require it to consider you for financial aid of any kind — whether it’s need based, a merit scholarship or work-study.
The FAFSA also determines your eligibility for Pell Grants, which unlike loans, you don’t have to pay back. If you don’t apply, you miss your chance to essentially get free money for college!
The estimated family contribution (EFC) amount the FAFSA spits out after you apply can be scary, but remember, it’s just an algorithm. You’ll get a financial aid package from the school you choose that spells out your financial aid options and what awards are available to you.
2. Learn About Application Fee Waivers
Low-income students may be eligible to apply to college without paying application fees. Work with your high school guidance counseling office to submit your fee-waiver application to the schools that interest you.
Some colleges also offer application fee waivers if you take a campus tour.
3. Use Campus Tours Wisely
If you’re traveling to visit colleges, don’t waste your time by wandering around in the back of the tour group. Ask smart questions. Tour guides and campus ambassadors will be ready to tell you how they found a job, scholarships or internship opportunities.
And if you simply ask, “How are you paying for college? Do you have any advice for me?”, the odds are good they’ll spill the beans.
4. Ask for Contributions
If you’re a high school student, the idea of saving money versus spending it with your friends on the weekends probably sounds like a total bummer. You can still ask for cash for your birthday or the holidays, but consider asking for those contributions to go to a 529 college savings account in your name.
Withdrawals from this account are tax-free as long as you use the money toward real college expenses like tuition, room and board, or equipment, although restrictions vary by state.
5. Consider Community College
Community colleges have long held the stigma of being for students who couldn’t get into a four-year college. But they’re a great place for working adults, nontraditional students, college students with undeclared majors and people who just don’t want to spending a ton on a solid education.
The average annual tuition for a full-time community college student is just $3,430. The average yearly tuition at a state school? $9,400. Doesn’t community college sound like a good investment for those prerequisite courses everyone has to take in their first two years?
When it’s time to work on your bachelor’s degree, many schools offer transfer scholarships — and some even cover full tuition for a few students each year.
6. Go to a State School (In Your Own State)
In-state discounts may not be as dramatic as they used to be, but going to a public school in your home state can shave thousands off your tuition bill over four years.
If your home state doesn’t offer your chosen field of study — or you’re just desperate to get outta Dodge — check for reciprocity agreements between your state and others in your region. These agreements can help you get in-state or otherwise reduced tuition even if you’re not at “home.”
7. Consider Getting a Job That Offers Tuition Assistance
Some companies offer tuition assistance; the really awesome ones even offer it for part-timers. Starbucks reimburses employees who take courses through Arizona State University online — regardless of field of study — while UPS part-timers can receive $5,250 per year in education assistance.
Juggling work and school can be hard, but it’s a little easier to roll out of bed for an early shift when you know you’re earning extra toward your education!
8. Apply for School Scholarships
A bit of sleuthing can turn up big rewards. Once you know where you’ll attend, check with your major’s department, the career center and the financial aid office to find scholarship and grant opportunities.
Some campuses offer scholarships or grants for new and returning students based on highly specific criteria, so they don’t get advertised as much as major awards with wide eligibility.
See an interesting scholarship you might be eligible for in the future? Mark a date on your calendar to check back in!
9. Apply for Outside Scholarships
Various organizations provide scholarships to students, and these awards can make a big dent in your tuition bill. The application process may be tedious — sharpen your essay writing skills! — but for every application that requires two essays, transcripts and a recommendation, there’s another that requires a tweet-length personal statement.
Don’t forget that scholarships aren’t just available for rising freshmen. Many are also available for upperclassmen, and some scholarships offer renewals if you keep your grades up.
On Campus
Once you set your semester schedule and sharpen your pencils (do college students even use pencils anymore?), keep an eye out for these ways to keep your college bill low.
10. Be Smart at the Bookstore
You can often use financial aid, whether in the form of grants, scholarships or loans, for supplies. You should never pay full price for new books anyway, so dig around to see how you can save on books – or get them paid for entirely.
11. Visit the Financial Aid Office
The best thing you can do in the first few weeks of freshman year? Set up a meeting with your financial aid office. Get to know the people who work there, and show up on a regular basis — once or twice a year, maybe — to check in. It can be as simple as setting up a regular appointment to review your file and make sure you’re not missing out on any opportunities for aid or awards.
Bonus: Knowing your financial aid counselors can come in handy if you ever have an issue and need a question answered quickly.
12. Consider Alternative Housing Arrangements
Living in the dorms is fun, but the bill can add up fast. Consider alternative housing arrangements, whether you choose to live at home, commute to campus from a group house or maybe even apply for nontraditional campus housing.
13. Find Out If Your School Has a Tuition-Reimbursement Program
Did you know some colleges will pay you to graduate on time? We’re not saying to rush through your coursework to get out the door in exactly four years. But if you’re already on track to graduate “on time,” you might be able to get a few grand back to put toward any remaining college expenses.
14. Check Your Eligibility for Federal Work-Study jobs
Work-study jobs aren’t always glamorous. Most of them don’t pay much, and you can only work a certain number of hours per week. So why does anyone tick the box on their FAFSA to be considered for federal work-study jobs?
Because it’s money! Income of even a few hundred dollars each month can prevent you from charging everyday needs or using your emergency fund for presentation supplies.
Work-study jobs are often filled quickly, so stay on top of your school’s career center or work-study website for details.
15. Get a Remote Side Hustle
A bad commute to a so-so job can really put a damper on your hustle. If you’d rather work from the comfort of your own dorm, consider a part-time remote position. Self-starters — especially those skilled in writing, design or customer service — are a particularly good fit for remote positions.
Your Turn: What interesting ways have you discovered to help you pay for college?
Lisa Rowan is a writer and producer at The Penny Hoarder.
The post 15 Creative Ways to Avoid Debt While Still Getting a College Education appeared first on The Penny Hoarder.
source The Penny Hoarder http://ift.tt/2naf2TL
E.on to up energy prices by 9%
Millions of households whose energy is supplied by E.on will see price rises from 26 April, it’s been announced today.
Average dual fuel users will see prices rise by 8.8%. Electricity prices will increase by an average of 13.8% while gas prices will rise by an average of 3.8%.
Source Moneywise http://ift.tt/2nabdOo
Budget 2017: is another Isa on the cards?
On Wednesday (8 March) chancellor Philip Hammond is going to deliver the Spring Budget and as ever various experts have been making their predictions ahead of the event.
The Budget will be the last one to be announced at this time of year, with future statements being moved to the autumn.
Source Moneywise http://ift.tt/2meh9qu
Savings update: higher deals hard to find as tax year end approaches
Only a handful of banks and building societies have launched new Isa accounts to encourage savers to use their cash Isa allowance of up to £15,240 before the end of this tax year on 6 April.
Source Moneywise http://ift.tt/2mApqHN
An Advanced Degree Can Help You Earn More Money – and Spend It All, If You’re Not Careful
For many college graduates, an advanced degree is a one-way ticket to earning more. By working beyond a bachelor’s degree, new graduates can climb the corporate ladder, move into middle or upper management, and perhaps score a higher-ranking position at a new firm.
While not all jobs that require advanced degrees pay enough to justify the cost, the difference between median earnings by educational attainment is truly staggering. As the U.S. Bureau of Labor Statistics (BLS) notes, median weekly earnings for professionals with a bachelor’s degree worked out to $1,137, and that number increases when you add more letters after your name: Individuals with master’s degrees earned a median of $1,341 a week, those with a doctoral degree earned $1,623, and those with a professional degree (such as a medicine or law) earned a median of $1,730 a week.
While a higher income is almost always a good thing, earning more doesn’t necessarily mean you’ll do better financially. And in the words of Notorious B.I.G., mo’ money sometimes means mo’ problems – whether in the form of student loans, overspending, or unnecessary debt.
A recent study from LendEdu illustrates the fact that individuals with advanced degrees tend to spend more on big-ticket items and rack up more credit card debt along the way.
For example: Those with a Master of Business (MBA), Doctor of Philosophy (Ph.D.), Juris Doctor (JD), or master’s degree had the most credit card debt among college degree-holders in 2016. Here’s how those numbers played out, according to LendEdu:
Individuals with advanced degrees also took out the biggest car loans in 2016 as well, with Doctor of Pharmacy degree-holders leading the way and Ph.D. graduates right behind. Amazingly, individuals with a Doctor of Pharmacy degree or Ph.D. borrowed nearly twice as much for a car as those with bachelor’s degrees.
Lastly, those with advanced degrees took out much larger mortgages than their less educated peers last year – and it’s not even close.
Even though individuals with a master’s degree earned only slightly higher median wages than graduates with a bachelor’s degree in 2015 ($1,341 vs. $1,137 weekly, respectively), MBA graduates borrowed more than twice as much for housing last year. Perhaps they’re simply more likely to live in expensive cities where Fortune 500 companies are headquartered – but there could be more to it.
- Related: How Much House Can I Afford?
Five Ways Advanced Degrees Can Lead to More Spending
An advanced degree might lead to a higher income, but that alone doesn’t mean you’ll get rich. Since a high income, steady job, and good credit score gives you more access to cheap credit, earning more can easily lead to a lifestyle that requires more debt and spending than most people can handle.
At the end of the day, there are myriad reasons high earners and those with advanced degrees justify spending more and taking on more debt. Here are a few of them.
You want to ‘look the part.’
When you worked hard in school to become successful, it’s only natural to feel the need to prove you’ve “made it” once you’re able to. This is especially true for advanced degree-holders who work among other high-earning peers. Landing a prestigious job working alongside other overachievers makes it far too easy to think you need the big house and the expensive car right away.
Some careers may even require you to look successful. If you’re a lawyer who deals with high income clients, for example, it’s only natural to want to upgrade from your college-grade Toyota hatchback so you can look the part. If you’re a financial advisor, on the other hand, you might feel like you need to have a nice suit, big house, and fancy car just to show you’re living the dream you sell.
- Related: Status Symbols and Spending Less
Earning more makes debt less scary.
A higher salary has a way of obscuring the constant strain debt places on our lives. The more you earn, the easier it is to accept that you can’t quite cover that $4,000 credit card bill yet – or that your new car payment is well over $600 a month. You’re good for it, right?
Earning more makes it seem perfectly reasonably to borrow four to five times your salary for a home, and to spread your mortgage out over 30 years or more. With a high income, you’re confident you’ll be able to pay it off eventually. So, why worry?
You feel more secure in your job.
One huge benefit of earning an advanced degree is that you’re less likely to be unemployed. When you’re fairly certain you’ll never be without a job for long, it’s much easier to spend without fear – and without limits.
In 2015, the unemployment rate among adults with a doctorate was just 1.7%, according to the BLS, compared to 8% for those without a high school diploma. Professional degree holders were even less likely to be jobless, at 1.5%, and more education generally correlated with lower rates of unemployment at every level.
Unemployment Rate by Education Level (2015):
- Professional degree: 1.5%
- Doctorate (Ph.D.): 1.7%
- Master’s degree: 2.4%
- Bachelor’s degree: 2.8%
- Associate’s degree: 3.8%
- Some college: 5.0%
- High school diploma: 5.4%
- No high school diploma: 8.0%
You want to enjoy the rewards that come with hard work.
Earning an advanced degree can take a decade or longer, so it’s no wonder many new graduates count down the days until they can enjoy the spoils of their hard work. Maybe they’ve watched their friends build huge homes, book luxury trips to Bora Bora, and buy designer furniture for years. With their brand new and upgraded incomes, they believe it’s finally their turn to splurge.
An advanced degree doesn’t necessarily mean you’re savvy with money.
The final reason many people with advanced degrees overspend might be the most important: The fact that you earned an MBA or a Ph.D. doesn’t mean you’re good with money.
There’s a reason neighborhoods with expensive luxury homes still have their share of foreclosures, and even those who earn six figures or more still file for bankruptcy. Earning a big income doesn’t mean you have the first clue about how to save money, budget your income, or invest for the future. And in many ways, a high income can exacerbate any financial problems you do have.
Final Thoughts
If you have an advanced degree and a high income, you’re probably aware of the challenges you face when it comes to growing wealth. On the flip side, earning an average or lower income might make it feel like you’ll never get ahead.
Fortunately, the basic financial principles that help people build wealth are the same for everyone. To create a prosperous future, you should spend a lot less than you earn, pay yourself first, and try to avoid debt when you can.
No matter what your paycheck looks like, these basic financial principles will help you grow wealthier over time. But with a high income and an advanced degree, you have the potential to reach your goals even faster – as long as you don’t blow all the extra money on stuff you can’t afford.
Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.
Related Articles:
- Financial Independence on a Smaller Income
- Choosing a Budgeting System that’s Right for You
- Living Paycheck to Paycheck with a High Income?
Do you think more money leads to more problems? How do you overcome lifestyle inflation as your income grows?
The post An Advanced Degree Can Help You Earn More Money – and Spend It All, If You’re Not Careful appeared first on The Simple Dollar.
Source The Simple Dollar http://ift.tt/2mehut9