Personal Finance

More Young Adults Live With Parents

June 11, 2016 By Twila Van Leer

More millennials are choosing to still live with their parents. — More millennials are choosing to continue living with their parents.

For the past century and more, young adults were prone to leave the nest and set up housekeeping for themselves. Now, they are more likely to be residents in the family home, either as singles or with a spouse, according to the Pew Research Center.

Young Adults Waiting To Get Married

The phenomenon, statistically changing the 130-year trend, is as result primarily of young people who delay marriage until into their 30s, the Pew study concluded. In 2014, the percentage of young adults living in their parent’s home was 32.1. It is the largest percentage since 1940, when some 40 percent were living at home.

Young Adults With Less Education

Choosing a spouse or living partner is the most likely condition to prompt living with a parent when the young couple is not prepared financially to be independent. Status of education is also an important factor. Young people with less education may be more likely to remain at home, the study found. The statistical breakdown showed that in 2014, 19 percent of young adults with a bachelor’s degree were living at home; 36 percent of those who had some college but not a degree; and 40 percent of those who had failed to complete high school.

Since 1980, the level of education has been more telling, with college education being a definite benefit in the job market and more of those without a high school diploma dropping into less well-paying jobs.

The trend not to marry as early has had a definite effect, a Gallup Poll shows. In a survey, 60 percent of Millennials said they had never married, compared with 16 percent of Generation Xers and 10 percent of Baby Boomers. The increasing trend for women to succeed in the job market, while more males are floundering is one of the reasons, experts say. The Great Recession had a greater impact for men than for women.

Attitudes also have been in play. Marriage formerly was considered a step to help young couples to reach employment and financial goals. Now, marriage is seen to be the final step to reaching such goals, the researchers report. They delay commitment to marriage until they feel their education and career goals are stable.

The rising costs of education, with a larger percentage of young adults saddled with overwhelming education debt, also enters into the equation. Expectations for “living high” in marriage, which most of their parents did not harbor, have an effect on marriage decisions as well.

Unemployment

Relatively high unemployment rates over the past decade also have been a factor. The number of young men who are unemployed and living at home far outstrips the number who are employed and living independently.

The effect on the parental household of having young adults still in residence is the flip side of the new trends, with some parents delaying retirement and other decisions to accommodate the extra persons they are helping to support.

Quit Making Excuses. Be Debt-Free

May 3, 2016 By Twila Van Leer

Quit making excuses when it comes to eliminating debt. — Making excuses only keeps you in debt.

Excuses are one of the most available of commodities. Easy to find. Easy to use. But if they are what’s keeping you from becoming free of debt, ditch them and get on with making your personal finances more healthy.

Sometimes, it’s attitude more than finances that keep you shackled to debt. Some self-examination of your beliefs may convince you that you can do better. Here are five common reasons that people stay debt-bound:

I Deserve It

This attitude leads some people to opt for a pricey vacation or a new car of electronic gadget (on credit, of course) that would require only a swift glance at the budget to see it is clearly out of reason. What you’re really saying is “I deserve to be in debt.” And it’s true. The result, however, is more stress, less savings and planning for retirement.

I Don’t Know Where To Start

If you don’t want to look honestly at your debt and accept responsibility for it, this may be the point at which you stop trying. It can be overwhelming to see what a mess you’ve created. But there are some options to consider. Debt consolidation may give you some more wiggle room. Balance transfer credit cards may offer lower interest. Or go to an expert for help. You have to be willing to face the magnitude of your debt load, but keep always in mind that things will be better if you get a handle on it.

I’ll Deal With It Later

The procrastination approach is just another excuse. Waiting for a better job, for your rich uncle to die and leave you wealthy – whatever allows you to delay the process will do just that – delay the process. This is one of those situations in which there’s no time like the present to act. It falls into the same category as the “I’ll diet next week, as soon as the company party is over” delaying tactic.

I Only Need To Make The Minimum Payment

Paying as much as you possibly can on credit card or other debt is a wise move. They longer it takes to pay off a balance, the more interest you pay and the longer you are burdened with the debt. Don’t look at your monthly statement and focus on the lowest figure that catches your eye. Adding a little extra to each payment, even if it is a small amount, will erase the debt faster. And of course, adding to the balance faster than you pay it off will leave you scrambling forever. You damage not only your current financial state, but may rack up less-than-satisfactory credit reports.

I’m Not Responsible

Placing blame on other people or circumstances, even emergencies, is the ultimate excuse. It allows you to refuse to accept responsibilities for your actions. Emergencies happen to all of us and do, inevitably, require changes in financial arrangements. Many creditors recognize genuine budget stress and will cooperate. But too often, debt is caused by trying to live like an upper-class family on a middle-class paycheck. When you get serious about debt reduction, you may have to steel yourselves to bypass your favorite high-end shopping outlets, avoid friends who tend to encourage free spending, and economize on things like eat-out lunches and high-cost entertainment. The best thing you can do is accept that your debt is your debt and you are responsible for it. Getting control of it may be the best feeling you’ve ever had.

Giving Money to Relatives Or Friends Common

April 26, 2016 By Twila Van Leer

Many households give or lend money to help others out. — Many people give or lend money to help family and friends out.

Opening one’s wallet to help a family member or friend is “a hidden dimension of the financial system,” according to a study from the Pew Charitable Trust. “Transfers of money across household lines are really important for keeping families afloat.”

25% Of Households Lent to Friends Or Family.

About 25 percent of American households gave or lent a median of $1,000 to friends or family in the past year, the study showed. More than 7,800 households were included in the survey. Black households are most likely to give or receive such help, but the practice is spread among all demographics.

Burden Created.

It isn’t always easy. One in five of the respondents said the “gift money” creates a burden on the giver. Not unexpectedly, the households with the least income saw their donations as a difficulty. But even those making $85,500 per year reported that their generosity was a burden.

Single Mothers Receive And Give The Most.

Single mothers are among the most common recipients, but they also are more likely to give when necessary. Half of all the single-mother households either received or gave help, compared with 30 percent of two-parent households. Some 75 percent of the single parents said it was hard to give, but they also are the group that recognizes it may need a boost at some time. They are, in essence, investing against future need, creating a safety net that they can use to tide them over emergencies.

More Common For Parents To Help Adult Children.

The study showed that adult children in the period from 2005 to 2013 were more likely to draw on cash from their wealthy parents than was common in the 1980s. About 10 percent of those in the more recent group received help with a home purchase, Pew found. Slightly more than 30 percent were given money to help with education costs, enhancing their ability to become more wealthy in the future.

The bottom line of the Pew Study: Poor people tend to help each other out so they can get through tough times. Wealthy families benefit financially when they donate to kin.

Investment Trends For Personal Finance In 2016

March 7, 2016 By Twila Van Leer

What’s happening in the world matters to your personal finances. The larger socioeconomic trends filter down to your own pocketbook whether or not you want them to. Following are current trends that may affect your finances over the next five years, according to the experts:

Interest income will continue to be dismal.

Cash and savings accounts are being affected by global debt, aging populations and low energy prices. Countries have lowered interest rates they pay on short-term notes, in some cases paying negative interest rates. That means the lenders have to pay a fee to own debt securities. The results trickle down to the individual. To offset, the experts advise that you modestly increase your allocation to global stocks and real estate.

Too much information can swamp you.

Technology makes an excess of data available through blogs, social media and emails. With so many options and relatively easy access to competitive products, analysis paralysis can cloud decisions. Turn off the “cookies” feature in your browser and avoid an overabundance of ads.

The costs of investing will continue to drop.

In the investing world, where so many factors are beyond the control of individuals, it is smart to lower expenses in hopes of increasing returns. But cost isn’t the only factor. Consistent savings, investment diversification and comfort with volatility are also to be considered. The experts say that instead of focusing solely on low fees, you should create an investment strategy that aligns with your goals.

Life insurance costs are going up.

Insurance companies earning less on their portfolios may opt for premium increases for whole and term life policies. The companies make their money on premium income and investment performance and they share the pain with customers when things are not going well for them. To counter, you might consider buying term insurance for the longest time span that makes sense to you. Term life, unlike whole life and other so-called permanent policies, has no cash component and usually expires after a set number of years, so it usually is cheaper. If you want permanent life insurance, look at a variably policy from a lower-cost but reliable provider. You then take a moderate risk over a longer time and grow the policy’s investment.

An Expert Shares Money Management Secrets

March 4, 2016 By Twila Van Leer

Anna Sergunina of Nerd Wallet has learned how to manage money effectively and she is willing to share. Here are her tips on how to keep a tight control on your personal finances:

Managing Money

Many people accumulate debt because they want things they can’t really afford. But debt also happens when we don’t understand the flow of our income and expenses. We can’t accurately estimate how much money we have available to spend. Sergunina developed a “money flow” system to help her family track spending. Here’s how it works:

Set up two free checking accounts.

One to pay fixes expenses such as mortgage or rent, car payments, utility bills, etc., and one to pay variable expenses such as groceries, gas, clothing, etc.

Create a high-yield online savings account.

This is your emergency fund to handle life’s curve balls such as medical bills, loss of job or other income reduction, major repairs and so forth.

Plan ahead for big-ticket purchases.

The Serguninas agreed to use their one joint credit card for such things as airline tickets and hotel stays. They still have separate credit cards, an essential in maintaining a good credit score. Closing cards could hurt your credit rating.

Create a budget.

To determine how much you will need in your “fixed expenses” checking account be sure to include all the items that come around regularly, including ongoing household expenses, insurances, health care premiums, cable, Internet and phones, membership fees, debt payment, and savings. (Making savings part of the “must pays” helps you avoid putting it off.)

List the variables.

Such as groceries and eating out, gas, clothing, personal services, medical co-pays, entertainment.

When your paychecks arrive, divide the money into the two accounts.

Have the savings deposited automatically. Most fixed-cost bills can be paid automatically as well. That eliminates the need for a debit card. A cushion of several hundred dollars can be maintained to take care of the unexpected expenses or bills that arrive before the paycheck does. With the second account, take care of the variables, remembering to stop when the money is gone. No new shoes if the tank is empty.

Link your “curve ball” savings.

Link to both checking accounts so you can make a quick withdrawal if necessary.

This systematic approach to money management makes tracking less cumbersome, Sergunina says. It eliminates the need for constantly checking account balances and gives you a better “big picture” view of your spending.