What Is A Health Savings Account?

Let’s face it, medical expenses can have a major impact on your budget, especially as you get older.

If you’ve heard about a Health Savings Account or maybe your work offers one, then it just may make sense to give it some serious consideration – and, in my opinion, it typically makes a lot of sense.

Interested in learning more?

Everything you need to know about Health Savings Accounts, and how to determine if one is right for you, is here for you.

Here’s how to navigate the information below:

1. What It Is
2. How To Open
3. HDHP’s
4. How It Works
5. Contributions
6. Expirations
7. Pros & Cons
8. Setup
9. Alternatives

What is an HSA?

A Health Savings Account, also referred to as an HSA, provides an opportunity for you to use pre-tax money from your income to pay for certain medical expenses.

It also allows you to use the money for other qualifying expenses such as medical equipment, prescribed medicine, and copays.

You can specifically use funds from the HSA on:

• dental treatment
• hospital services
• contact lenses
• chiropractic care, and
• crutches, among others

All in all, you can use the money from your HSA to pay for just about any type of medical expense.

Best of all though, the money you use to pay for these expenses comes out 100% tax-free.

The most amazing thing about an HSA is that it offers triple tax savings.

There is no other account available that offers this type of benefit.

Your contributions are pre-taxed, the growth of the funds within your account is tax-free, and when you withdraw money from your account to pay for qualifying medical expenses, the money comes out tax-free.

Sounds pretty amazing, doesn’t it?

The amount of money you could save in taxes over your lifetime by contributing to an HSA could easily amount to tens or even hundreds of thousands of dollars.

How Do I Open an HSA?

To open a health savings account, you must be enrolled in a high-deductible health plan (HDHP) through your work or individually.

As long as you have an HDHP, you have the option to open and contribute to an HSA.

And opening your HSA is also a pretty simple step. There are a number of banks and other financial institutions where you can open an HSA.

There could be fees associated, so be sure to do some homework.

Once opened, you can contribute up to a maximum amount to your HSA on an annual basis.

Within the HSA, typically after a certain amount has been accumulated, you can invest these monies within various mutual funds offered by your respective HSA.

Where you open your HSA will determine what investment options you have available.

So, What is A High-Deductible Health Plan?

Okay, let’s take a step back to define what an HDHP is so I don’t lose you.

For an individual plan, the IRS states that an HDHP must offer a minimum deductible of $1,350with an out of pocket maximum of $6,650.

For a family plan, The HDHP must offer a minimum deductible of $2,700 with an out of pocket maximum of $13,300.

The IRS can update and adjust these figures every year.

Many companies today offer both a standard health insurance option, such as a PPO or HMO, along with an HDHP.

Compared to a standard health insurance plan, an HDHP has a higher annual deductible but lower monthly premiums. High deductible health plans typically possess these characteristics:

• For every family, the HDHP uses one calendar year for the deductible.
• HDHPs still deliver the same quality health insurance.
• After meeting the deductible, an HDHP can cover expenses up to 100%.
• HDHPs can be considered more affordable than other health plans. However, it truly depends on your personal and family medical situation.

With the above being a few advantages of an HDHP, there is one major disadvantage you must understand:

You could face the potential for higher out of pocket expenses since you’re on the hook until you reach the threshold of the deductible.

If you don’t have the money set aside or can’t pay for it out of monthly cash flow, then an HDHP might not be the right policy for you, especially if you and your family are prone to regular doctor and hospital visits.

How Does an HSA Work?

So now that we’ve established you have to be participating in an HDHP before you can open an HSA, let’s dig a little more into how the policy works.

If you are an employee, you can set up your health savings account through a trustee such as a bank.

However, most employers who offer an HSA will most likely already have a relationship established with an institution where you will open your account.

Once your account is opened, it then comes down to determining how much you want to contribute out of your paycheck.

And, if you’re lucky, your employer might even be willing to make contributions to your HSA as well.

If your employer makes a contribution, it is not included as income; however, it does count toward your maximum annual contribution.

How Much Should I Contribute to the HSA?

When it comes to determining how much you should contribute, it truly depends on your own personal situation.

With all things being equal though, I always recommend contributing as much as you possibly can up to the maximum.

In 2018, the maximum is $3,450 for individuals and $6,900 for families.

And, if at all possible, I recommend not touching the money in your HSA and letting it grow so you can use it for health care expenses in retirement.

If at all possible, try to pay for current health care expenses out of your cash flow or other savings.

Granted, I know this isn’t possible for everyone, but the longer you can take advantage of the tax-free growth of the HSA without tapping into it, the more money you will have to withdraw 100% tax-free for medical expenses in retirement.

Does an HSA Expire?

Your health savings account does not expire. You can keep your account for as long as you want regardless of if you decide to change your insurance plan or change jobs.

Also, if you have an Archer MSA, you can place that money into your HSA.

Don’t confuse an HSA with an Archer MSA or flexible spending account (FSA) in terms of carryover policies and contribution limits, even though all three accounts can be used for medical and healthcare costs.

Unlike an FSA, the HSA doesn’t have the use-it-or-lose-it restrictions. An HSA will carry over year after year.

Pros and Cons

Advantages Of An HSA

Here are the notable benefits of an HSA and why so many people have chosen to set one up:

• An HSA is a pre-tax benefit. Contributions into the account are made before being taxed. This is extremely beneficial as it can lower the amount you pay in taxes.

• Growth in an HSA is tax-deferred and most likely tax-free. The growth of your investments within your account are tax-deferred and most likely will be tax-free as long as they are used for qualifying medical expenses.

• Money used in an HSA for qualifying medical expenses is 100% tax-free. Thus the power of triple tax savings. Contributions go in pre-tax. Once invested, they grow tax-deferred, and when your money is withdrawn for qualifying medical expenses, it comes out 100% tax-free. There’s no other account in the United States that offers triple tax-savings.

• There is no use-it-or-lose-it concept. The funds in your account are always yours. The only way they go away is if you spend them.

• An HSA is flexible. The money in your account has a wide range of uses including most medical expenses, prescription medications, office visits, eyewear, etc. Another benefit of an HSA is that you may use it for the health expenses of your dependents as well.

• More control over medical expenses. Basically, you’re trading reduced monthly premiums for the possibility of higher out-of-pocket expenses. If you are in good health and doctor visits don’t occur that often throughout the year, then an HSA could allow substantial savings.

Disadvantages Of An HSA

• There is a high deductible requirement. You may find it hard to come up with the required amount of money to meet a high deductible for your out-of-pocket expenses. This can be the case even though you have lower premiums every month.

• The costs of healthcare can show up unexpectedly. You cannot predict the future, and your health expenses may suddenly go beyond what you expected. When this happens, you may find yourself lacking the money needed to pay for medical expenses.

• You have to handle the pressures of having an HSA. You may choose not to seek medical care even when you need it because you do not want to touch your HSA funds or pay for them out-of-pocket.

• There are penalties and taxes. While the HSA is tax-free for medical expenses, that’s not the case if you have to withdraw it for other reasons. When you withdraw money before you turn 65 and it’s for a non-qualified expense, you will be taxed and receive a 20% penalty. However, if you withdraw money for non-qualified expenses you will still pay taxes, but the 20% penalty is waived.

• You must do some recordkeeping yourself. It is important to keep a record of all your withdrawals, healthcare expenses, and the receipts that come with them. They will be your proof that you used them for eligible healthcare expenses.

• There are some fees to pay. While it may vary by institution, your health savings account may require you to pay a fee per transaction or for monthly maintenance. However, these fees are typically pretty reasonable, and the institution may waive those fees if you keep and maintain a minimum balance.

How To Set Up An HSA

Setting up an HSA is simple. If one is provided through your employer, then it’s just a matter of signing when you are hired or during open enrollment.

If you’re self-employed though, you’ll have to find a bank or financial institution in which to open your account.

In general, you do not need a certain amount of money or a minimum balance in the account to qualify for an HSA.

But, some administrators may be willing to waive fees in the event you maintain a minimum balance.

Of course, when you are just starting out with your health savings account, an institution that offers a lower minimum balance can save you some money in fees.

1. Make sure to find out about the fees you need to pay and determine if they can be waived.

When looking for the most suitable place to open your health savings account, fees and investment options should be priorities.

Ultimately, you can make a comparison of several providers and pick the right one for you.

Here are some criteria to follow:

2. Identify Your Goals.

The main purpose of setting up an HSA is to have some assistance in covering your medical expenses either now or in the future. Any money left over in your account, as long as it is invested, can grow and earn interest.

With that being the case, you need to determine whether you’re going to use your HSA for current medical expenses or let the account grow over time to use in retirement for the inevitable expenses that won’t be covered by Medicare.

It doesn’t necessarily have to be one or the other, but having a plan in place can help you identify if and when you want to withdraw money from your account.

3. Understand Your Investment Options.

It is essential to assess what investment options are available in a specific health savings plan. You will know it’s the best plan if the HSA provides a wide variety of options with low expense ratios.

4. Pay Attention to Convenience.

Convenience is a vital factor regardless of if you pick an HSA at a major institution or a small bank. An ideal HSA will allow you to withdraw funds and contributions easily. For instance, an HSA will give you a debit card that you can use at a doctor’s visit or a pharmacy.

You can find HSA custodians that have ATMs and several branches across the country. There are also smaller institutions that communicate with their customers via a website, telephone, or mail.

5. Assess the Costs.

The monthly and annual fees vary among banks. Your account balance and your funds also determine the fees you will have for your HSA. Some providers will require you to have a minimum balance first. Make sure to know what a bundled fee covers as well as the schedule of fees.

Alternatives to Using a Health Savings Account

The information above states the rules on how you can qualify for a health savings account such as enrolling in an HDHP.

But, what if you do not qualify? What are your alternatives?

Other Health Plans Sponsored By Employers

• Stand-alone Health Reimbursement Accounts (HRAs): HRAs are used by small businesses to reimburse their employees for health insurance and out-of-pocket medical expenses.
• Flexible Savings Account (FSA): FSAs are plans established by employers which allow for reimbursement of eligible medical expenses, tax-free. However, you cannot use them on health insurance premiums.
• Healthcare Reimbursement Plans (HRPs): HRPs are plans funded by employers to be used for the individual reimbursement of their health insurance premiums, tax-free. HRPs do not have a maximum annual contribution.

PPO Health Insurance Plans

A PPO plan is a program in which an insurance company and healthcare providers have an agreement to provide discounted fees to their members.

Joining a PPO will enable you to acquire some discounts on healthcare expenses such as a doctor’s visit, an emergency procedure, or prescription drugs purchase.

IRA Accounts

An IRA is a kind of investment that is set up at a financial institution or a brokerage firm.

Over time, you add money to your account, and you may use the money to acquire investments like bonds, mutual funds, and individual stocks.

You may also withdraw the money at a later date and use it as an income during retirement.

Final Words

While there are some alternatives to a Health Savings Account, it is essential to make sure that you qualify for it to reap its benefits.

The good thing about an HSA is that you have full control of the money in your account.

Consult your bank about their health savings plans and talk to a broker or a financial advisor to help you review your options.

This is a post from Clint Haynes, a Certified Financial Planner and Financial Advisor in Kansas City, Missouri. He is also the founder and owner of NextGen Wealth. You can learn more about Clint at his website NextGen Wealth.

The post What Is A Health Savings Account? appeared first on Good Financial Cents.

Source Good Financial Cents https://ift.tt/2pycC4P

Questions About Trade Schools, Calorie Counting, 403(b) Cancellation, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. “Snow bird” planning
2. Midlife fork in the road
3. 403(b) ending
4. Trade school issue
5. State income tax challenges
6. Counting calories
7. Bio-enzymes in homemade cleaning recipes
8. Good shoes for concrete work?
9. Starting uses for slow cooker
10. Letters to loved ones
11. Inheritance and jealousy
12. Best sub-$10 computer games?

I get messages from all kinds of people in all kinds of situations. Sometimes, I get messages from people who make statements that seem to indicate a possibility of depression or other mental health concerns. Lately, I’ve heard from a few readers wondering why I don’t say anything about it.

First of all, I am not a mental health professional, and an off-hand comment in an email from someone trying to piece through a problem in their life wouldn’t be enough grounds for even the most seasoned of mental health professionals to diagnose any sort of problem.

Second, even if I were a mental health professional, I’m not in the business of calling out such concerns publicly. The mailbag is here to answer the question they’re asking.

However, if I see something that seems concerning to me, I’ll usually respond privately. I usually encourage a trip to a general practitioner, for starters, and some general blood work just to provide an all-around examination of their health.

As for identity concerns, I do try to “anonymize” many of the questions that come from readers by changing names and key pieces of personal identification. This is because several years ago I had a reader whose identity was figured out by their family and it caused them personal issues. Since then, I have “anonymized” most letters to the mailbag, changing names and locations and other bits of irrelevant info to keep their identity secure without changing the meaning of the question.

On with the mailbag!

Q1: “Snow bird” planning

My husband is 60 and I’m 49 years old and our 24 year son lives with us. My husband is able to collect a state of New Jersey pension with full health benefits for both he and I. We are building a house in Florida where we will eventually retire. For now, we want to be “snow birds”. I may add that I suffer from SAD (Seasonal Affective Disorder) and the quality of my life during the winter months is horrible. Between his pension and rental property income we will make $2,600 a month. We can definitely live on that when we are snow birding in Florida. My adult son will continue to live in our primary home and pay the mortgage and utilities for those months (about 4 to 5 months). We will pay for the property taxes (which amount to $7,100) in full before we leave for the winter months. I will also leave my teaching job to join him on this venture. The plan is for me to do substitute teaching work while in New Jersey. I estimate that I can make between $400-$500 per week doing this. By the time this plan comes to fruition, my husband will be six months away from being eligible to collect social security at a reduce rate. He plans to collect ss at 62 years old. We also have a $100K emergency fund that we plan to keep at that level all the time. In your opinion, do you think we have everything in place to make this happen? Do you think we are overlooking anything? I will continue to contribute to my Roth IRA.
– Daria

Given that you have full health benefits, I think your plan should work, provided you are both willing to return to some kind of work should things go awry.

In saying that, I am making a few assumptions in your story. I am assuming that both your NJ and FL residences are paid for and you only owe insurance and property taxes on them, and neither one of them is exorbitant.

As an aside, I get mild seasonal affective disorder. I find that the number one thing that helps is routine physical activity with at least 15 minutes of sunlight a day.

Q2: Midlife fork in the road

Married couple, starting anew in our mid-40’s having lived a very hedonistic lifestyle in Manhattan.
No debt.
$45k in savings.
Earning $160k annually.
We have no plans to leave NYC until we retire.
Both of us have $401k’s and my company gives 3% of my salary ($109k) towards my $401k.

Our living situation:
We currently are illegally subletting a rent stabilized apartment in a very desirable (to us, as in, it is quiet, lots of space and green areas) neighborhood. I can walk to work. The apartment is spectacular, like the neighborhood. Top floor, quiet, lots of space and light and private. We love it. We are paying $3000 monthly. This includes utilites and cable (which we are planning to cut). The going rate for the same apartment not rent stabilized is $6000. We have been here for 5 years.

We are looking at options for long term.
1. Stay here for as long as we can save a downpayment to buy an apartment in the burbs. Our budget is about $400k and we will have 20% downpayment saved by end of next year.
2. Move to a cheaper rental in the burbs. Cheapest we can find within easy commute to both jobs is $2000 (does not include utilities) and save quicker for a downpayment.
3. Move to a cheaper rental and rent forever instead of buying.
4. Stay where we are forever!

I have no favorites in this scenario. As long as the place I live is safe and cosy and easily commutable to work.

Any suggestions?
– Sandra

If I were in your shoes, I would basically do #1, although I wouldn’t necessarily aim for buying an apartment in the ‘burbs. Instead, I’d aim for saving as much as possible to keep your housing options open if your current situation falls apart. While it’s lasted five years, it eventually won’t.

Doing this gives you flexibility. Right now, you’re looking at a future that has you on the same exact life and employment track that you’re currently on. Having money saved up gives you some strong flexibility regarding whatever may happen: children or a job change or a career change or a decision to go your separate ways or whatever may come.

A move to the suburbs might make this saving a little easier, but, as you mention, it’s $2000 without utilities while your current apartment is $3000 with utilities, and the lower rent place requires a commute while your current place does not. I’m not sure you gain a whole lot by moving.

Q3: 403(b) ending

My husband’s employer offers a 403 (b) plan where the company matched funds up to 5% (dollar for dollar on the first 3%, then 50 cents on the dollar up to 5%). Last night my husband said the company is ending the 403 (b) plan and the account balance will be given to all employees. My husband is 55, so we need to reinvest the money to avoid IRS penalties (and because we want to keep saving for retirement). What do you recommend we do with the funds (about $150,000)? And is there a way to offset the loss of matching funds from the employer as we move forward?
– Lisa

In your situation, I would roll all of that money over into an IRA, as described here. Basically, you just take that full distribution and use it to fund an IRA and you shouldn’t owe taxes on that money at the end of the year as it resides in the IRA. If I were you, I’d figure out where you’re going to invest that IRA money now and contact them to make the transfer as smooth as possible.

As for replacing the matching money… well, that’s up to your employer. If your employer is ending the matching and not adding other compensation, this is effectively a cut in salary.

Regardless, you should be contributing to the new IRA once it’s established, as this appears to be your best retirement option at this point.

Q4: Trade school issue

This is for Trent and his mailbag question he got regarding a parent and his son. The dad wanted him to be an electrical engineer and the school counselor suggested going the trade school route. Your answer was on point except for not calling out the dad for saying people that attend trade school are stupid. That is a real slap in the face to the blue collar world that takes care of the college folks. (BTW, I’m a teacher)
– Daniel

I wholeheartedly agree with you about the value of trade school. It’s going to be something that’s on the table for my own kids as an option for them to consider when they’re in high school and thinking about career options.

At the same time, I’m not really in the business of “calling out” readers for their viewpoints. Rather, I’d hope that they read my responses and my reasoning for particular stances and use it to influence their own thinking. Calling people out is something that rarely works to change minds; rather, it’s a good way to vent emotion.

In my eyes, the best approach is to simply reiterate the benefits of trade school – it’s inexpensive, it leads to a high-paying career, and it provides a great opportunity for people who aren’t enthusiastic about sitting behind a desk or in a lab.

Q5: State income tax challenges

I was supposed to get a NJ state tax refund this year, I e-filed everything, got a letter saying they needed more information. Sent in the additional information at the end of May. I still haven’t heard anything back and when I call the number from the website it’s automated with no information and then hangs up on you. What do I do about this?
– George

Go back to that automated number and keep trying. Alternately, you can check on your refund status at the NJ Treasury website.

It sounds to me like your refund is in some kind of bureaucratic black hole. It’s probably going to take some work to dig it out.

If the amount is significant, you can contact a lawyer about what the next steps are, but that will eat into your refund pretty quickly.

Q6: Counting calories

In a recent article you mentioned calorie counting. What tool did you use to track calories? I’ve found it difficult to do so when every stir fry I make has different ingredients, depending on what vegetables are cheaper that week. The same goes for most of the dump meals I make.
– Claire

I use the Fitbit app for counting calories. It’s really easy to use – you just add the food and the portions.

For recipes like what you describe, I don’t try to be perfectly accurate. I approximate by looking for something similar and then use that as my number. The reality is that even if I counted every single ingredient it’d likely still not be perfect.

The thing to remember is that calorie counting isn’t an exact science anyway. The calories listed on the back of a package are approximations. This Scientific American article spells it out quite well.

Q7: Bio-enzymes in homemade cleaning recipes

I love your posts on making your own dishwashing and laundry detergents. Have you ever considered making “garbage enzymes” or bio-enzymes as part of your household cleaning arsenal?
– Nina

I assume here that you’re referring to making a form of detergent from fruit skins and brown sugar, as described here?

I actually tried a process like this a couple of times, but I was pretty dissatisfied with the results. It did a solid job of cleaning, but there was substantial effort involved in making the detergent and it wasn’t all that cheap because of the cost of brown sugar.

The thing to note is that most such recipes are essentially making vinegar of some kind, typically a fruit vinegar like apple cider vinegar. This is undoubtedly a good cleaning agent, but you can effectively get the same results from just buying vinegar at the store.

Q8: Good shoes for concrete work?

After 20 years of white-collar work, I’m taking a job in my company’s warehouse (picking/packing/shipping books). I’m excited to get out from behind a desk, but I want to make sure my body will hold up. Any “buy it for life” footwear recommendations for walking around on concrete all day?
– Jim

It really depends on what your proportions of walking and standing and sitting are and what your shoe budget is. My honest advice to you is to contact the foreman in the warehouse and ask what his or her recommendation is for footwear. That’s because not all warehouse work is the same, and I’m not 100% sure what you’re going to be doing there.

The thing to remember is that the first few weeks are going to be tough on your feet no matter what you’re wearing. Your feet are going to have to “toughen up” a little bit.

If I had to point at one shoe as a “buy it for life” option that’s good for walking a lot on concrete, I’d probably point at the Brooks men’s Addiction shoe. My mother-in-law, who worked as a nurse for many years (think hospital floors) recommends them highly for both comfort on concrete and durability.

Q9: Starting uses for slow cooker

My family got me a Crock Pot for Christmas last year and it is still in the box! I want to use it but I don’t know where to start!
– Jenny

Start with soup. It’s really, really hard to mess up soup in the crock pot. Most soup recipes involve adding all non-pasta ingredients, cooking on low for eight hours, and then serving it. If it has pasta, you usually add it for the last 30 minutes or so.

To be honest, soup is the most common thing we make in our slow cooker, even now. It’s just easy to do it.

Another meal that’s really easy to make in a slow cooker is a pot roast. It’s another meal where you can just put in the roast, some carrots, some potatoes, some water, and some salt and pepper and just let it sit all day. It’s really, really hard to mess it up.

The advantage of a slow cooker is that you can start a meal in the morning and let it sit without even checking on it all day until you have a finished meal in the evening. The first time you do that, you’ll be hooked – make something in the morning, let it sit all day while you’re out and about, and come home to supper that’s ready to be eaten.

Q10: Letters to loved ones

When my grandfather died, everyone in the family received a few letters from him that he had written at various points in our lives. I asked the executor how this was done and he just said it was “bundled” with the will. I would like to do this for my own children and grandchildren. How would one go about this? I want to write letters for my kids/grandkids to remember me by.
– Andy

Do as the executor suggests and bundle them with your will. Include a mention of the letters in the will and ask that they be distributed to the people on the front of each envelope; any trustworthy executor will happily handle that task.

This is a really good idea for giving everyone you care about something deeply personal and meaningful after you pass away. However, I’d consider whether or not it’s a good idea to say the things you’re saying in those letters before you pass away. Say them with your own voice, to their face, rather than bottling it up and waiting.

These letters should be a capstone of feelings already expressed, not a way to express things once you’re already gone. If you feel the need to write something in a letter that they’ll read after you’re gone, think carefully about whether you should say it now.

Q11: Inheritance and jealousy

My husband and I have been friends with another couple since college. We have similar careers and yet they always seem to have way more money than we do for everything. We assumed that they were in debt up to their ears but we recently found out that they had received a pretty large inheritance from her grandfather. It is hard to maintain our friendship when they’re jetting off to Paris all the time and we can barely afford the mortgage.
– Brenda

It sounds to me like there’s a mix of jealousy and incompatibility going on in this friendship. Your friends are living a lifestyle that you can’t afford and you’re letting their perks bother you and allowing the fact that they have an inheritance to spend bother you.

You have to decide for yourself whether you’re going to continue to let something out of your control bother you. What would you do if you had that inheritance? Do you blame them for having that inheritance and spending it that way? Would you do any different in their shoes?

Celebrate their good fortune. Don’t let jealousy or other such feelings get in the way. They have an inheritance – that’s good fortune for them, not some sign that they’re bad people. Celebrate it.

Q12: Best sub-$10 computer games?

What computer games under $10 do you enjoy? I am going to be house watching a rural house all winter long for an older couple. They are paying me well but there’s honestly not much to do around here and there’s internet but it is really slow dial-up speed and poor cell signal and so I’m stocking up on a variety of entertainment. I don’t like shooting/action games but I like think ones. I looked on review sites for well reviewed games but they’re all pretty expensive. I wanted to download 3-4 good games before I go on my laptop. Suggestions?
– Joe

If I were you, I’d start by using the “under $10” search on Steam. Add filters to that search as desired. You’ll come up with a lot of games that fit the bill.

If you’re sticking strictly with the $10 limit, my picks would include Civ 3 Complete, Stardew Valley, and FTL. However, I usually just get computer games during the semi-annual Steam sales, where they offer tons of games at big discounts.

There are a lot of good sub-$10 computer games out there, though, depending on your tastes. Just dig around and see what you can find in the sub-$10 category.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About Trade Schools, Calorie Counting, 403(b) Cancellation, and More! appeared first on The Simple Dollar.

Source The Simple Dollar https://ift.tt/2QUTydm

10 Ways Machine Learning Is Reshaping Marketing

Advancements in technology are constantly changing our world. This is no secret.

As a marketer, you need to have a better understanding of this technology that goes far beyond the latest smartphone release. If you recall, artificial intelligence made my list of the top marketing trends to look for in 2018.

While artificial intelligence and machine learning are often used interchangeably, they are not the same.

Basically, artificial intelligence has a broader meaning. It’s the idea that machines and computers can complete tasks normally requiring human intelligence.

Machine learning is a branch of AI, and it automates model building for data analysis.

The concept behind machine learning is that a computer can learn from the data it analyzes by identifying patterns. Ultimately, this technology can make decisions without humans.

What does this mean for marketers?

I know some of you might be thinking you’re not currently using this technology, so the information isn’t relevant to you. That couldn’t be farther from the truth.

The reality is, marketers are already using this technology to help improve their marketing campaigns and increase revenue by optimizing the customer experience.

If you don’t have your finger on the pulse, you could fall behind your competitors. Even if you’re not ready to implement machine learning today, you should be prepared to do so in the future.

I’ll explain the top 10 ways machine learning is reshaping marketing.

1. Improved lead scoring accuracy

Lead scoring helps rank prospective customers on a scale representing their value to your company. Improving your lead scoring accuracy will help you prioritize your lead generation strategies.

Right now, marketing professionals don’t have the highest confidence levels in their lead scoring methods:

But as they embrace machine learning, I believe their confidence levels will increase.

That’s because many factors go into these calculations, and machine learning can help you make them.

Marketers use machine learning to monitor customer behavior. They write algorithms to track:

• websites visited
• emails opened
• downloads
• clicks

A consumer’s social score is a factor as well. It monitors and analyzes how a user behaves on social networks, e.g.:

• accounts they follow
• posts they like
• ads they engage with

Using machine learning to qualify prospects is helping businesses create more accurate customer profiles, improving their marketing.

2. Easier to predict customer churn

Customer churn is also known as customer turnover. It measures the number of customers who ended their relationship with a business.

For a SaaS business, it occurs when a customer cancels its service or unsubscribes from its membership.

Churn rates are calculated by the percentage of customers or subscribers who leave a business within a specified period of time. For a company to grow, the number of new customers must be higher than the churn rate.

You need to know what your churn rate is to know how satisfied your customers are with your product or service. And you also need to be able to predict your churn rate so you can minimize it.

How can you predict the churn? You need to monitor customer behavior.

Here’s a machine learning discovery model that can make predictions based on certain behaviors:

Examples of behaviors that get monitored include how customers engage with a product or mobile app.

When was the last time they signed into their profile? When was their last purchase?

For example, let’s say one customer visits your website twice per month. On the first visit, they research products, and on the second visit, they buy something.

This pattern goes on for a year. But after a year, the customer visits your site only once per month and doesn’t buy anything. You could predict they’ll stop using your business altogether soon.

Machine learning helps analyze this data on a much larger scale.

The technology gives marketers information to predict the churn so that it can be prevented. Now these brands can do something to make sure they don’t lose the customer before it’s too late.

3. Profitable dynamic pricing models

A dynamic pricing strategy allows businesses to offer flexible prices for the products and services they offer.

It’s a common model in hospitality, travel, and entertainment industries. With machine learning and AI, the dynamic pricing strategy is penetrating the retail industry as well.

Basically, this strategy helps you segment prices based on customer choices.

Dynamic pricing is also related to real-time pricing, which is when the value of goods is based on certain market conditions.

Purchasing an airline ticket is a great example of this. The price of the ticket depends on how far in advance you purchase it, the number of tickets already purchased, and the location of the seat.

This isn’t a new pricing strategy. But machine learning makes it easier for companies to implement and improve their dynamic pricing models.

Setting the right prices is critical to the success of your business. You can generate more profits by focusing on your pricing strategy.

Machine learning helps you use regression techniques to make market predictions.

It’s also used for sales forecasting to optimize the pricing structure based on market spending habits.

4. Sentiment analysis

When you’re having a conversation with someone face-to-face, it’s easy to understand how they’re feeling.

You can make judgments based on their facial expression, tone, and body language.

This helps you determine if their satisfied, excited, or unhappy. But this can sometimes be lost with digital communication—the current trend.

We’re not having as many face-to-face interactions with consumers because they’re reaching us online.

When a customer sends you an email or direct message, you need to know how they’re feeling in order to properly respond. Machine learning can do this for you.

AI technology can analyze text to determine whether the sentiment there is positive or negative.

Sentiment analysis is being used by marketers to better understand their online reputation.

Computers read through social media comments and alert the marketers to negative content. The company can then address the problem raised.

AI can also identify people happy with your products to help you find social influencers and brand ambassadors.

You can use machine learning to help you read the emotions of consumers online.

5. Improve website experiments

Are you currently running tests on your website? A/B testing is a great way to improve the features of your site, mobile app, and email marketing content.

I’m a big advocate of using this strategy.

While A/B tests ultimately give you results to optimize your website, there is some downside to this method.

Yes, the end results of your testing will help you maximize conversions in the future. However, to get there, you miss some opportunities.

Let me illustrate. Let’s say you’re testing the CTA button on a landing page. By design, you’ll send 50% of your site traffic to a page generating fewer conversions than the other.

That’s how you test your hypothesis.

But what about the missed opportunity to convert those directed to the underperforming page?

Machine learning will help you solve this problem by improving your bandit testing.

With bandit testing, the solution with the highest value gets prioritized.

The algorithms of such tests will minimize missed opportunities and make your experiments more profitable.

6. Prioritize ad targeting and customer personalization

AI and machine learning are helping marketers target their ads more effectively.

Right now, your ads might be great, but they can’t be effective if they aren’t being seen by the right audiences. With the help of AI, you can make sure your target audience is reached.

In addition to improving the way your ads get targeted, machine learning can help personalize the customer experience on your platforms.

Algorithms can predict which type of content would be the most popular with each unique visitor. You and I could both visit the same website and see different content:

Let me give you an example. Delta Faucet used AI and machine learning to improve its website.

A case study was conducted on this technology and the new strategy.

After implementing machine learning, Delta Faucet saw a 49% increase in page views per visitor. Further, 45% of the traffic that came from paid ads resulted in visitors spending at least 40 seconds reading the content.

The clicks on the CTA buttons quadrupled.

And 37% of the visitors viewed multiple pages in a single session.

Machine learning made it possible to run personalized and targeted ads that led to higher visitor engagement.

7. Computer vision for product recognition

You might not be familiar with this technology. However, it’s increasing in popularity, and marketers are using it to their advantage.

Machine learning for computer vision helps brands recognize their products in images and videos online. Software such as GumGum can accomplish this.

Miller Lite used machine learning technology to scan through user-generated content on social media.

The algorithm looked for images without any relevant text to find posts related to the brand. It also tracked information about competing brands and influencers.

The software collected data about users who posted on social media about Miller Lite. These were the results:

As you can see, machine learning helped this company find over 1 million posts associated with the brand.

It would be nearly impossible for a human to complete this task.

8. Relevant recommendation systems

Recommendations can go a long way.

If a friend or family member tells you about a restaurant you’d like or a book you’d enjoy reading, chances are, you’d actually like it.

That’s because these people know you. They won’t recommend a sushi restaurant to you if they know you have a seafood allergy.

They won’t recommend a historical non-fiction book to you if you’re a fan of science fiction novels.

Machine learning can identify your preferences as well and probably even better than the people who know you best.

Here’s an example to show you what I mean.

If you have multiple profiles on your Netflix account, you know that each time you launch the platform, it asks you “who is watching?”

Then it has “recommendations for you,” based on shows, movies, and documentaries you have already watched.

These recommendations improve the customer experience. The same concept can be applied to your marketing efforts.

Machine learning helps marketers discover which types of products consumers want based on their browsing histories and shopping behaviors. Relevant product suggestions increase conversions.

9. Chatbots

Live chat has a 92% customer satisfaction rating. Studies show 63% of customers are more likely to return to a website if it offers a live chat feature.

You can learn how to provide better customer service by implementing live chat.

These are the top reasons why consumers prefer live chat:

Chatbots can help you improve your live chat features.

That’s because they use some of the machine learning elements I’ve previously talked about.

Machine learning improves how chatbots operate by using sentiment analysis to judge the mood of a message from a customer. When paired with social media, machine learning can gather more information about customers when it receives a new message.

As a result, this will improve your targeting and product recommendations. Basically, machine learning helps chatbots further personalize the customer experience.

Chatbots keep your customers on pages for longer and also decrease the wait times for customers waiting to connect with customer service representatives.

10. Improved audience insights

I see business owners make the mistake of grouping their customers into one category all the time.

Just because all these people buy from your brand doesn’t mean they are the same.

You need to segment your customers into groups. This can help improve engagement when you target them.

Software that uses machine learning, like Affinio, can help you with this.

With machine learning, you can learn valuable information about your customers.

This information will give you more accurate data to use when you’re building a customer persona to help you improve personalization and target people accordingly.

Affinio helps you discover various aspects of your customers’ behaviors, e.g., how many of your customers are foodies, how many watch a certain TV show, and which customers have traveled to similar places.

Now you can segment these customers into different clusters to improve their experience and increase the likelihood of them converting.

Conclusion

Artificial intelligence is here, and it’s not going anywhere.

Marketers are already using machine learning technology to change the way they operate.

Even if your company isn’t ready to implement this methodology today, you need to keep up to date with the latest trends. Otherwise, you could fall behind your competitors.

If you know how to use it to your advantage, machine learning can be a valuable tool for your business.

When you’re ready to move forward with this technology, refer to this list to help you determine the best ways to improve your marketing strategy.

How is your company planning to use AI and machine learning to optimize your marketing efforts?

Source Quick Sprout https://ift.tt/2QS5HzD

6 Gas Rewards Programs to Try if Fuel Prices Are Draining Your Savings

You Could Earn $74K a Year as a Dental Hygienist. Here’s How to Get Started

No Four-Year Degree? An Apprenticeship Could Be Your Ticket to a New Career

Shawn Farrow was working for a moving company when he caught a tantalizing glimpse of his future.

“Being in Seattle, we moved a lot of the tech workforce,” Farrow says. “I was seeing how these people were living, and I was like, ‘This is what I want.’”

But Farrow, 32, who has an associate’s degree, couldn’t find work in the high-tech industry and struggled to cover the costs of a pricy coding bootcamp while making $20 an hour in his job as a mover .

The director of the bootcamp advised Farrow to check out Apprenti, a tech apprenticeship program that would pay for the rest of his coursework.

Farrow took the online tests and went through multiple interviews before receiving an offer to become a software engineer apprentice with Avvo, an online legal marketing service. He accepted the offer immediately.

“I had no hesitations,” Farrow says. “I was at a point in my life where I was like, something needs to change.”

Avvo paid Farrow 60% of the market-value salary during his year-long apprenticeship — meaning he earned roughly $45,000 plus benefits.

And before Farrow even completed his apprenticeship, Avvo offered him a full-time position with an annual salary of more than $75,000 — double what he earned as a mover.

“I feel like I got one of the biggest breaks ever by being chosen in this program,” Farrow says.

If you’re wondering whether an apprenticeship could be the path to your dream career, we have what you need to know about earn-and-learn programs — and where to find one near you.

Evolution of Apprenticeships

Apprenticeship programs, as defined by the Department of Labor, require participants to earn wages from an employer as they train. Throughout the program, which can last one to six years, participants must work under the guidance of another employee and must earn an industry-recognized credential.  

In the United States, the building trades, such as carpenters, plumbers and electricians, have historically used the apprenticeship model.

As a result, apprenticeships have been unfairly stereotyped as a lesser training program for people without degrees, according to Eric Seleznow, senior advisor for Jobs For The Future Center for Apprenticeship & Work Based Learning.

“There are a lot of myths and misperceptions about apprenticeships — that it’s a second-rate pathway, that it’s only for non-college people, it’s only in the building trades — and that’s not the case,” says Seleznow, who notes that Europe has a long history of using apprenticeships as tracks to highly skilled jobs. “It is just an alternative pathway.”

But as the model evolves in the United States, apprenticeships offer an entrance into fields that participants may have previously considered beyond their reach, according to Tricia Berry, the director of the Women in Engineering Program at the University of Texas at Austin.

“From a standpoint of making STEM fields accessible, it brings in so many positives, such as role models,” Berry says. “Or for adults that are looking to change careers — it gives them those connections to others who have worked in this space.”

Because an apprenticeship is a skills-based learning program, the model can expand to other industries, too.

“It can be applied to IT and is being applied in healthcare… almost any occupation that requires some level of education, training, skill and certification,” Seleznow says. “It’s mostly to try to get people to middle skill positions or even higher.”

Alternative to College — or a First Step

The number of apprenticeships grew by 42% from 2013 to 2017 — more than 533,000 people participated last year — according to the Department of Labor.

In the current tight labor market, industries that previously required a four-year degree are going to have to find alternatives or face talent shortages, says Jennifer Carlson, executive director and cofounder of Apprenti.

“At the end of 2017, according to CompTIA research, there were 2.8 million job vacancies in the tech sector,” Carlson says. “If you look at the fact that we’re conferring four-year college degrees in computer science and related degrees on fewer than 60,000 people a year, that’s a massive gap, and it’s only going to accelerate.”

And unlike college, apprenticeships pay you to learn instead of the other way around.

Farrow says his biggest financial hurdle was completing the unpaid training at the coding bootcamp before he started his apprenticeship. He supported himself by continuing to work at his moving job on the weekends.

By starting out with an apprenticeship program, participants can decide if the field is right for them and can even help them decide if they want to continue to pursue a degree.

“The companies might even pay for it down the road,” Berry says.

Apprentice vs. Intern

Although apprenticeships may sound similar to internships — working while learning at a company — there are definite distinctions, according to Carlson.

She points out that internships can vary greatly but are often geared toward college students gaining work experience, while an apprenticeship is for a job that is currently vacant.

“An internship is try before you buy, and an apprenticeship is train to retain,” Carlson says. “The ultimate end goal for the company in the case of an apprenticeship is: I’ve taken the time, I’ve invested in this person, I’ve gotten them to the level of proficiency I need and now I want to retain this person in this job.”

Farrow says he witnessed the difference when he was an apprentice and Avvo brought on summer interns.

“The time there [for interns] was so short — like 10 weeks or something — that they couldn’t quite all the way be thrown into the team,” Farrow says. “They were treated as team members but were more or less given a side project… whereas as an apprentice, I’m grabbing tickets to change the website.”

How to Become an Apprentice

The most successful apprenticeship candidates are those who excel at hands-on learning, according to Seleznow, who advises students to shop for an apprentice program the same way they would research a college.

“Sometimes an entry point is through community colleges… which are typically in partnership with business,” Seleznow says. “Or you could go to a local workforce development board, of which there are 2,500 across the country.”

The Apprenti program is currently available in six states — Washington, Michigan, Oregon, Virginia, California and Tennessee — and Carlson says that the program is expanding to Louisiana, Ohio, Massachusetts and Arizona. Applicants can begin the process by taking free assessment tests on the site.

On a national level, the Department of Labor is launching an apprenticeship website in fall 2018 that will allow job seekers to search for apprenticeships by geographic area as well as skill set.

Breaking Stereotypes

Farrow admits he experienced “imposter syndrome” initially at Avvo because it was his first office job. He didn’t feel like his education levels matched that of some of his coworkers.

But he says his team helped him realize he didn’t have to fit a stereotype to make it in his new role.

“Coming from moving and a low-income neighborhood, I don’t fit the exact mold of the programmer,” says Farrow. “But my team looked at me as a junior developer before I was one, so they treated me as one.

“More people can do this job than the stereotype of the math geniuses. Sure, those people are here, but there are also a plethora of other people here doing this job.”

Tiffany Wendeln Connors is a staff writer for The Penny Hoarder who covers interesting ways to make money. Data journalist Alex Mahadevan contributed to this story.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

source The Penny Hoarder https://ift.tt/2Ibd817

Freelancer? These 7 Free or Cheap Tools Will Boost Your Productivity

Whether you’re just dipping your foot into freelance waters or you have a full-fledged freelance enterprise, online tools and apps can help you be more productive.

But it’s easy to drown in the latest tools to hit the market. A quick Google search might bring up hundreds of the “best” ones, but those lists can overwhelm even the most seasoned freelancers.

“There are so many tools,” says Dayne Shuda, owner of Wisconsin-based Ghost Blog Writers. “The thing to be careful of is using too many. In my experience that leads to productivity issues.”

So we kept it simple. Below are seven must-have tools that came highly recommended by freelancers from all over the country.

1. G Suite

Maybe you’ve heard of Google. The company is kind of a big deal, and it’s probably taking over the world. But hey, they make some great products, right?

Most people use the search engine and probably Gmail, but Google offers much more than that. If you’re just starting out as a freelancer, start with G Suite, a collection of Cloud-based software such as Drive, Docs, Slides, Sheets, Voice and many other apps. It’s a more comprehensive version of Microsoft Office that seamlessly integrates across all operating systems and several other tools listed below.

“Google Suite is the biggest toolset that keeps it simple for freelancers,” Shuda said.

Many other freelancers echoed Shuda’s sentiment.

“First off, it’s free. You can’t beat that,” said Natalee Gibson, a full-time public relations freelancer in Denver. “G Suite is really intuitive and easy to use.”

2. Slack

“An absolute must for any freelancer,” said Penny Seale, an Oklahoma-based freelance business owner.

Slack, an app that allows for instant messaging and file sharing in real time, started out as an internal chat tool during the development of a video game. It has grown into a hugely popular communication portal that is rivaling email.

For freelancers, Slack is especially helpful because it aggregates multiple client channels in one searchable platform. The app provides a way to cut through the formalities and sluggishness of email.

So it’s great for those quick questions — or, you know, dog memes.

“It's also a great way to tap into communities within my line of work,” Gibson said. “The ability to upload documents and search through messages makes it a much faster communication tool than email.”

3. Asana

Asana is a web-based task management system that helps users keep track of assignments and due dates on a collaborative workflow table. Founded by Google and Facebook alumni, Asana has grown to a $900 million valuation since its 2012 launch.

Freelance performance coach Ili Rivera Walter said that Asana helps her career coaching company track both team and client progress.

“I use Asana to assign tasks to my team, keep track of client’s weekly coaching goals and seamlessly manage my business overall,” Walter said.

But what makes Asana a must-have for freelancers is its robust free features and integration with other applications, particularly ones on this list.

“I can turn messages from Slack into tasks in Asana or create a channel in Slack for certain Asana tasks,” Seale said. “Due date notifications help me keep my workflow moving and assure that I finish projects on time.”

4. QuickBooks

Freelancers already have it tough enough when it comes to taxes. And as projects start to pick up, tracking invoices and clients can quickly snowball if you go it alone.

“Freelancers sometimes try to make do with spreadsheets and invoices based on templates,” says Ben Taylor, founder of Home Working Club, an advice portal for freelancers.

“It doesn’t take long before trying to do all this manually becomes a false economy, costing more in time than a cheap subscription to a Cloud accounting package.”

Taylor uses and recommends QuickBooks, accounting software powered by Intuit. The software aims to alleviate the headaches involved with filing quarterly freelance taxes and tracking money as a freelancer.

QuickBooks is not free, unfortunately. But it does offer a discounted freelancer package for $5 a month. That package includes a feature that helps freelancers estimate quarterly taxes.

5. Toggl

At its core, Toggl is a no-frills time tracker. It’s optimized for use directly on its website, as a mobile or desktop application or as a browser extension for Chrome.

However you use it, Toggl keeps simplicity in mind to help you stay focused on being productive. It allows users to track projects and clients via an interactive time tracker or through manual data entry. Reports are easy to pull, so you can visualize where most of your time is spent, too.

“Toggl is incredibly easy to use,” said Antonella Pisani, the founder of Eyeful Media, a freelance e-commerce consulting firm. She said her whole team uses the app.

Besides working on just about any device, Toggl also integrates with several apps and tools, including ones on this list: G Suite, Asana, Slack and QuickBooks.

“They offer a free version for up to five people on a team, as well as several paid options,” Pisani says.

And we love free.

6. Dropbox

Founded by MIT alumni in 2007, Dropbox has grown to be one of the most successful applications on the web, winning several accolades from Forbes, Inc., Business Insider, MacWorld and others.

Dropbox functions very simply: Download the app and add files in the Dropbox. Any device with the application can access the files instantly. Files are also accessible directly on the Dropbox website.

Dropbox simplifies file sharing across email and chat applications, as well.

“It’s easy to share a link without attaching files,” Gibson says. ”And the added functionality of the Business feature lets you easily edit and upload right through the application.”

As Gibson mentions, there are multiple tiers of Dropbox. The basic features are completely free and include an initial two gigabytes of storage. Refer friends to Dropbox to earn up to 14 additional gigabytes. Paid features include additional storage and sharing capabilities.

7. Paypal

In 1998, Elon Musk and several other co-founders started Paypal, formerly known as Confinity, as a simple way to transfer money using the internet. The company is now nearing a $100 billion valuation.

Paypal is one of the easiest ways to send and receive money online. After signing up and syncing Paypal to your bank account, you can receive money through the email address associated with your account.

Creating an account is free, but there are varying fees associated with sending and receiving money depending on the amount of money and the amount of recipients. If you have a large client base, you may want to consider a PayPal Business account.  

“I love the integration. I love anything that works together with other tools,” Robinson says. “PayPal syncs with my accounting software to capture every transaction.”

Syncing Paypal with accounting software like Quickbooks is easy, and when your accounts are synced, you’ll get automatic breakdowns of invoices and fees associated with your Paypal account.

The tools above are focused on simplicity, affordability and integration.

“It’s incredible how much time I can save having the right tools that integrate well together,” Robinson says. “As a freelancer, the more work you do, the more money you make.”

Hey, apps aren’t for everyone. Consider incorporating one or all of them into your freelance toolkit. And if you find yourself spending an unnecessary amount of time learning how to use a tool, ask yourself if you truly need it.

Adam Hardy is an editorial assistant at The Penny Hoarder. He lives off a diet of stale puns and iced coffee. Read his full bio, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

source The Penny Hoarder https://ift.tt/2NCXilG

Over 100 Work-at-Home Jobs and Opportunities For Moms

Do you dream of working from home? Well, good news! We have a huge list of work-from-home companies that regularly hire individuals for work-at-home jobs. Some positions are freelance, some are independent contracting, and others are full-time jobs with benefits. While all companies are believed to be legit, they have only been soft checked, meaning […]

The post Over 100 Work-at-Home Jobs and Opportunities For Moms appeared first on The Work at Home Woman.

Source The Work at Home Woman https://ift.tt/2xv6tuv

Nine Secret Weapons That Could Save Millennials’ Finances

(This is the second post in a two-part series, the counterpoint to yesterday’s article, “Seven Headwinds Threatening to Capsize Millennial Finances.”) 

The millennial generation is associated with a boatload of financial woe, including but not limited to student loans, jobs that don’t pay enough, and the threat of being replaced by robots.

Cheer up, folks. Yes, even those of you who’ve been un- or underemployed or have particularly heavy loan balances. All is not lost. Your generation has some serious advantages that could outweigh the doom and gloom.

Note: If you read yesterday’s piece, you’ll notice there is some overlap between the “liabilities” and “advantages” sides of the ledger. One person’s challenge could be another person’s asset.

1. Time

With an age range of 22 to 37, millennials still have time both to save for retirement and to develop better money skills. You’re not like those people in their mid- to late 50s who have huge mortgages and/or are seriously behind in saving for retirement.

Learn all you can about smart money habits (a great place to start is in The Simple Dollar archives). Get saving, too; thanks to the magic of compound interest, the best time to begin saving is in your 20s. The second-best time? Right now.

2. Education

Young workers are more likely than ever to have at least a bachelor’s degree: 40 percent do, according to the Pew Research Center.

While college educations often result in college debt, they have another and more salubrious effect: higher lifetime earnings. According to the U.S. Bureau of Labor Statistics, median weekly salary for those with a bachelor’s degree is $1,173; for those who have only high-school diplomas, it’s $712. That’s a difference of almost $24,000 each year.

A study from The College Board indicates that the average borrower will reach the break-even point on college loans in 12 years. That means that by age 34, someone who graduated at age 22 will have earned enough not only to pay back their debt but also to make up for having been out of the workforce during college. (The study assumes students graduated in four years and pay 4.3 percent interest for 10 years.)

In a perfect world, you’d earn enough grants and scholarships to pay for college, or have parents who put enough in an education fund to cover four years. But if you do have loans, keep your eye on the big picture: That sheepskin should help you earn more over the long haul.

3. The Sharing Economy

Why buy a power washer when you can borrow one, or maybe even get one for free? Social networking possibilities abound on sites like Nextdoor and the Freecycle Network, and on Buy Nothing Facebook pages. You could find someone who wants to get rid of a rocking chair, a table saw, a bin of Legos, or something else you need.

Pro tip: Be sure to give as well as ask. That’s what keeps the sharing economy robust.

• Related: Four Habits Making Some Millennials Rich

4. Shared Housing

Some millennials aren’t as wedded to the idea of living alone. Quite a few are living with their parents. Others throw in with one or more roommates, or take advantage of sites like HubHaus or The Collective to find communal living situations.

This doesn’t just reduce rent and utility expenses, either. Millennials who live at home can help their parents with heavier chores, and possibly care for younger siblings or help with medically frail grandparents.

Those in multi-roommate situations get built-in socialization along with rent reduction, and the “we’re all in this together” mentality can lead to budget-boosters like shared meal prep and evenings devoted to games or binge-watching Netflix vs. spending a ton of money on entertainment.

5. The Gig Economy

Need a side hustle? So many freelance gigs are out there – and think beyond the traditional pizza delivery and weekend bartending gigs, or even beyond things like ride-sharing services.

Think about what you’re good at and look for opportunities at sites like SideHusl.com, Care.com, Rover.com and Freelancer.com. Or put it out in the universe – especially through your social networks – that you’re available to babysit (which can pay really well), build websites, detail cars, clean apartments, or whatever it is you’re good at doing.

The extra money can go toward building an emergency fund, saving for a financial goal (e.g., new car for cash or eventual down payment on a place of your own). It can also go toward retirement planning. Speaking of which…

6. Retirement Awareness

Once upon a time people had a much better chance of getting a pension and/or were pretty sure they’d get by on Social Security (and maybe living with one of their children).

Employer-funded pensions are as scarce as hens’ teeth these days. Social Security doesn’t always cover even the basic cost of living. As for living with your kids, well, they might be unable (or unwilling) to host you.

Sounds glum – but on the bright side, millennials know now that they must save for retirement. No false hopes there that somehow everything will magically all work out.

That doesn’t make saving easier, mind you. But at least millennials are going into this with their eyes open.

7. Delayed Marriage

Marry in haste, repent in leisure. Divorce is expensive and also emotionally draining.

Millennials aren’t rushing into things: 57 percent of this cohort have never been married. By contrast, only 17 percent of their grandparents (aka “the Silent Generation”) remained unmarried at this age.

It’s not that millennials don’t believe in love. They do. About two-thirds want to get married some day. Here are the most-cited reasons they’re not betrothed yet: not financially ready (29 percent), not ready to settle down (26 percent), and haven’t found the right person (also 26 percent).

About that last: The longer you take to get to know a potential mate, the better your chances at finding the right partner. Don’t rush things.

8. Delayed Parenthood

Sure, we’re super-fertile in our early 20s. But waiting a few years can help position you and/or a spouse for optimal health insurance and parental leave.

That half-time fry cook gig at the mom-and-pop diner got you through the lean times when you couldn’t find a job right out of college. But suppose you’d started a family right out of college. Businesses with fewer than 50 employees aren’t required to provide maternity leave.

And even if the diner owners (or the gas station owners, or the pizzeria owners, or whoever employed 22-year-old you) could afford to give maternity leave, would you have been able to survive without working?

Being situated in a decently paid job with better benefits makes pregnancy or adoption a lot less stressful. And having five or six (or 10) years of working life before you become a parent could make it easier to step back into the career should you decide to take some time off.

9. Delayed Homebuying

Not everyone is cut out to be a homeowner at a very young age. Rushing to buy a house, townhome, or condo without thinking it through is a terrible idea.

You might be able to afford it right now, but present performance is no indicator of future results. If you buy in your early 20s you’re likely to be doing so on a wing and a prayer, i.e., it will take most of your salary just to cover expenses. You won’t have much of an emergency fund, and one change in circumstances – layoff, illness, parenthood, tree roots in the sewer line – could wipe out anything you do have.

Of course, you could luck out and have everything go right. Just don’t count on it.

In addition, buying too early means you’re now landlocked. Taking an opportunity elsewhere becomes problematic: If you can’t sell or rent your place, how will you set yourself up in the new city?

Finally, not everyone wants to be a homeowner. It’s really OK to admit it, despite the pressure from those who tout “the American Dream” as something everyone should want. And you might indeed want it – just not until later. Do what’s right for you; don’t let other people decide your future.

Award-winning journalist and veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.” 

More by Donna Freedman:

• Seven Headwinds Threatening to Capsize Millennials’ Finances
• Social Media Will Try to Bankrupt You – Here Are Four Tips to Stay Solvent
• How Much Do Subscriptions Cost You? Probably More (and Maybe Much More) Than You Think

The post Nine Secret Weapons That Could Save Millennials’ Finances appeared first on The Simple Dollar.

Source The Simple Dollar https://ift.tt/2QRJNfT