Net Worth for 20-Somethings: 6 Moves That Could Help Boost Your Bottom Line

20s

Fact: 20-somethings are among the most financially confident people in America.

What?!

But, really, that’s what we found while researching our latest white paper on financial confidence—and, initially, it surprised us too.

But it makes sense: Sure, Millennials may have some daunting student loans to pay off on entry-level salaries, but they typically have few other major financial responsibilities. Plus, with some hard work, they can set themselves up for plenty of salary bumps down the road.

If you look at it this way, the financial outlook for a 20-something is pretty good—until about the age of 35.

That’s when financial confidence tends to take a nosedive, thanks to a combination of earning potential plateaus and demanding responsibilities—like kids and mortgages.

Now, we realize we’re not painting a pretty picture here, but there’s no reason to panic. Simply knowing what’s ahead—and taking steps to prepare for it—can help put you ahead of the game.

“You don’t have to live an austere lifestyle to mitigate those challenges,” says Latasha Kinnard, author of ‘20-Something & Rich.’ “You just have to make decisions that balance the benefits between your present self and your future self.”

Ready to grab onto this golden opportunity to help change the course of your money life? Then consider making these savvy, net-worth-boosting moves in your 20s—and you may reap the benefits for years to come.

Net Worth Move #1: Stash 10% Into Retirement

“If you get into the habit as a 20-something of spending just as much as you make, it’s very hard to change that pattern,” says Lise Andreana, a CFP® and author of “No More Mac n’ Cheese! The Real-World Guide to Managing Your Money for Twenty-Somethings.”

So start training yourself to live on less in your 20s by automatically funneling a minimum of 10% of your paycheck into your 401(k) or IRA account, Andreana says.

That may seem like a laughable sum—especially if you’re not making much—but there is a significant plus to pushing yourself to save at an early age: Your money will have more time to benefit from compound growth.

And if you keep stashing away a steady percentage as you bank a few raises, by the time you hit your 40s, you’ll likely have a pretty sizable retirement account balance—and hopefully get to a point where you’ll be comfortable putting away $1,000 or more each month without breaking a sweat.

Net Worth Move #2: Get a Money Discussion Going

As a member of the Millennial cohort, you have a distinct advantage over your parents: “Between Facebook and Twitter, Millennials tell people everything!” Andreana says.

And that can be a good thing when it comes to your money.

Allow us to explain: By the time you get to your late 30s and 40s, you may not feel comfortable sharing salary details with your friends, or how much you spent on your last vacation—your paths will have diverged too much. But now is the time when you can leverage your openness to make solid financial decisions.

So tell friends your budget for the month, so they don’t choose a restaurant that will break it. Email a trusted peer working at another company to get the dirt on his benefits package. And put up a social media post asking everyone which bank they recommend.

These tidbits may help you save more money, negotiate higher pay, and find a bank that offers a valuable credit card rewards program—all perks that can, of course, up your net worth.

Net Worth Move #3: Invest in an Insurance Policy—for Your Money

You wouldn’t dare forgo health insurance, would you? Without it, you could end up in big financial trouble—and foot a $55,000 bill just for getting your appendix removed.

That’s exactly why every 20-something should consider having an emergency savings account: Failing to fund one could mean you’re vulnerable to racking up credit card debt just to pay for unexpected expenses that crop up—a habit that could keep you in the red for years.

But that’s not the only reason to prioritize this net-worth-boosting to-do. “Without an emergency fund, not only do you not have something to fall back on, but you also don’t have that sense of confidence you need to move forward on the things youwant to do with your finances,” Kinnard says.

Translation: Once you’ve proven to yourself that you can successfully put away six months of net income into an emergency fund, you can confidently consider taking on bigger goals, like stashing away steady cash in your buying-a-home, travel-the-world, or investment accounts.

Net Worth Move #4: Pursue an Advanced Degree—If the Math Works

If you’ve heard that getting a diploma from a top M.B.A. program can increase your lifetime earnings by several million, you might be tripping over yourself to enroll immediately.

In many ways, your 20s could be the perfect time to go back to school. The student mind-set isn’t too far in the rear-view mirror, and you’d only forgo an entry-level salary if you were to enroll full-time.

But here’s the catch: Furthering your education isn’t always a slam-dunk when it comes to investing in your future. “The potential earnings have to be worth the costs,” Andreana says.

So break out your calculator, and add up how much it’ll cost you to enroll, plus the earnings you’d be giving up if you decide to become a full-time student. Then compare that with how much the degree is likely to increase your income—and how long it would take you to recoup your expenses.

For instance, if you leave a $50,000 job for two years, and pay $60,000 in tuition, then you’re already out $160,000. A $10,000 raise after you graduate means it would take you 16 years to recover what you spent—or more if you took out student loans and have to pay interest.

The final step in this exercise is figuring out whether you think it’s worth it. Hint: In this case, it’s probably not.

Net Worth Move #5: Set a Deadline to Pay Off Your Student Loans

Knowing how to prioritize your student loan debt can be tricky. On the one hand, they tend to have lower interest rates compared to other types of debt, which may land them at the bottom of your financial priority list.

But on the other, they can shove your net worth so far into the negative category that it’s paralyzing. The average student left college in 2013 with more than $28,000 in student loan debt, and now needs to make payments on that debt while making only about $45,000.

If you don’t want to let student loans get in the way of your future priorities—like, say, becoming a homeowner one day—your 20s are the time to buckle down.

You can start by deciding on a specific date when you’d like to buy that home, for example, and declare that as your deadline to get out of debt and save up 20% for your down payment.

From there, calculate how much you’ll need to pay every month in order to wipe out your loans in time, and come up with a stricter spending plan that supports your goal.

“I know this isn’t necessarily something that you want to do,” Kinnard says. “But you can see the silver lining and understand that this is going to set you up for success for the rest of your life.”

A nice bonus? By the time your net worth is in the positive and you’re ready to put a down payment on your dream home, you can repurpose the money you were funneling toward student loan payments directly to your mortgage.

Net Worth Move #6: Don’t Blindly Accept a Job Offer

As you might expect, the career choices you make in your 20s can have a lasting impact on your future net worth. That’s why it’s crucial to thoroughly evaluate every employment offer you receive … and avoid making a decision based on salary alone.

“That would be an expensive mistake to make,” Andreana says.

It’s just as important to factor in the value of big-ticket benefits—like how much the company kicks in for health insurance premiums and retirement contribution matches—because they can amount to major savings over time.

Case in point: A 25-year-old making $30,000 with access to a company 401(k) match could potentially net more than $10,000 in additional retirement savings by 35, compared to someone who took a job that didn’t offer a company match.

So whenever you’re considering more than one job opportunity, rig up an apples-to-apples comparison.

Start by collecting all of the info you can about the benefits at each company. Then figure out things like: How much will you pay in out-of-pocket health expenses if you join Company A, which covers 80% of your insurance premiums, compared to Company B, which covers 75%? And assuming you funnel 7% of your paycheck to your 401(k) each year, how much would each employer’s match be worth?

Assigning a value to each benefits package—and then adding it to the salary numbers—can help you pick the job that’ll take your net worth to the next level.

 

via learnvest.com

9 Money Habits That Can Help You Build Wealth

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While a six-figure inheritance or high-paying job can land you in the top 1% of earners, it’s the little things—your money habits—that often make the difference between a life of prosperity and one of constant financial stress.

For example, “I do a periodic review of all the subscriptions I have—the ones that hit my credit cards each month,” says Blaylock. “You’d be surprised at how many subscriptions we all have and how many go unused. You could create some significant savings each month just by looking at those things.”

Taking inventory of your recurring subscriptions and services is just one habit that can get you on the road to better fortune.

So what are these easy changes that can help move you further along the road to prosperity? We asked two financial planners for their favorites.

1. Reverse Your Thinking

We know: After taxes are taken out and the bills are paid, your paycheck can seem a little anemic—which can make the idea of having to save for retirement too seem like a real stretch. But to build wealth, a change in mindset is required. Namely, instead of spending the rest of your take-home pay, you’d actually take another cut of your paycheck and put it toward your biggest financial goals.

“Most people spend some money, pay their bills and save what’s left,” says Butler. “And that’s backwards: You should be saving for your financial goals first, paying your bills and and then consider spending the money you have leftover.”  Another trap is putting your good money habits off till “later,” when life will get easier. The thing is, somehow the minute your income increases, the demands on your money seem to as well.

Now, keep in mind, we’re not suggesting you sock all of your money away and live on rice cakes. As Blaylock puts it: “I’m not asking you to put $1,000 away a month, I’m asking you to put away $50, or a small amount that you can afford. We really can’t underestimate the power of starting small, because most of the time that momentum builds, and once we see progress, we tend to repeat behaviors.”

2. Look Where You Want to Go

Just as performance athletes imagine themselves making the shot over and over again—check out this study for how goal setting improves motivation in athletes—knowing what you want your money to do for you gives your goals a better chance of being reached.

To get going on saving for the future, financial experts often suggest having a five-year plan, where you create specific money goals you’d like to achieve in five years and what you need to achieve those goals. For example, saving six months of income for an emergency fund, or saving for a big event, like a down payment on a house.

“Anytime we have a specific goal in mind, that helps us to save,” says Blaylock. “Whether that goal is emergency savings, or saving for a trip, or saving for college, it doesn’t matter.”

3. Adopt Your Own Private Mind Tricks

What if not spending $1,000 on a designer purse or new must-have gadget were as easy as following a rule that dictates you can’t spend more than $300 on something that isn’t essential to your life? The good news is you can create financial rules just like that for yourself; in fact, doing so can be a great habit to get into.

Also known as “heuristics,” these rule-of-thumb strategies we create for ourselves—such as not spending more than $15 on an item of baby clothing, or more than $50 on a pair of shoes—can help simplify the many choices we make in a day. Behavioral economists believe that adopting good heuristics can help one develop good money habits (see this piece for more on how and why they work).

If creating a great heuristic seems like an overwhelming task, Blaylock suggests starting with something simple, such as eating out only twice a week, or “not getting a cart at Target,” a heuristic that helped one of his colleagues save money.

4. Live Like a “Secret” Rich Person

For some, the image of a millionaire conjures visions of sprawling mansions and shiny Bentleys. But most millionaires don’t live large like that—rather, they tend to live well below their “means” and do more saving than spending. In other words, they’re not flashing their money, according to Dr. Thomas J. Stanley, co-author of “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy.” Stanley’s book, which details more than two decades worth of surveys and personal interviews with millionaires, reveals that much of the wealth in America is more often the result of hard work, diligent savings, and living below your means.

Las Vegas–based David Sapper, who owns a successful used car business, and his real-estate broker wife make a combined income of $500,000 per year. Yet they live like “secret” rich people, only spending $2,500 per month on all bills and extracurricular expenses like eating out, unlike many of their peers. By putting 90% of his income into savings and investments, Sapper says he’ll be able to retire early.

His advice? “Find the point that you get what you need and you’re happy and comfortable, and just stay there,” says Sapper. “I had an ‘aha!’ moment when I was watching MTV, and LL Cool J was saying, ‘I lease a Honda Accord for $399 a month,’ while other rappers are going broke.”

5. Tackle Retirement Now

If you’re in your twenties or thirties, retirement can seem eons away—and saving for it might not seem like a priority. It’s easy to understand: In between paying to attend weddings (which average something like $600 per guest), saving for a down payment on a home, and using anything leftover to put toward “necessities” like vacation, how are you supposed to save anything for retirement?

Unfortunately the later you start saving, the more you’ll have to save. But the sooner you sock money away, the more time it has to compound and grow.

If, for example, you’re 30 and putting $50 a month into a retirement account with a 7% rate of return, that $50 a month would turn into $56,000 in 30 years, says Blaylock. Should you wait to age 40, you would need to contribute $110 per month to get to that same goal. This is because your money has less time to grow which minimizes the impact of compound interest. (For more on compound interest and why losing time on retirement can hurt you, check out.

6. Know What’s Coming in, and What’s Going Out

Most of us have good intentions when it comes to saving money. But if you don’t know what’s coming into your bank account and what’s going out, chances are you don’t know how much you can devote to your goals. And most people generally don’t track their income and spending, says Blaylock. “It really is shocking to me that clients I work with don’t always review their pay stub,” he says.

7. Getting Out of Debt

Everyone has debt at some point in their life. But if you have bad debt—not student loans and mortgages, but credit card debt, where you’re paying high monthly interest rates—nixing it and getting out of the habit of being a debtor—should be priority number one. “I want somebody to develop a plan to have them out of that debt in 36 months or less,” says Blaylock. “It’s hindering you from making progress on your other goals.”

At the same time, emergencies happen—and a $600 car repair can hit anytime. That’s why Blaylock advises putting half the money you could put into paying down debt into an emergency savings account. So, for example, instead of paying $600 toward credit card debt, consider putting $300 toward emergency savings and $300 toward credit card payments. While this means it will take longer to get out of credit card debt, you’ll have money stored up for an emergency.

“Credit card debt is a result of the ‘uh-oh’ moments,” says Blaylock. “We still don’t have any savings built up because we put it all toward our credit card. So while you’re also working to pay your credit card down, you should consider putting an equal amount to an emergency savings account. I often tell clients that their emergency savings are their insurance policy against falling into credit card debt ever again.”

After you get out of debt, Butler suggests only having one credit card, and come to an agreement with yourself (or your significant other) that it will only be used during an emergency. “Let’s say the car broke down and you can’t fix it—that’s an emergency,” says Butler. “Something’s on sale, and I know I’m going to need it in six months—that’s not an emergency.”

8. Increasing Your Earnings

There are two ways to increase your net worth: Spend less or save more money. “And spending less is only part of it – you have to save, and when appropriate invest, the rest,” says Natalie Taylor, a CFP® with LearnVest Planning Services.“Earning more often doesn’t lead to higher net worth because lifestyle expenses grow along with it.” 

But if you grow your income, and set some of those earnings aside, you can grow your bottom line. Aside from getting a raise or winning the lottery, there are a few ways to get more money flowing in.

One suggestion: Diversify your income streams by working a second, part-time job doing something you love. As far as earning more, there are a few things one can do. “For those who cannot cut their expenses enough, I love the idea of working part-time,” says Blaylock. “I have a great friend who is an attorney. She has a big travel habit that she is unwilling to pull back on. So, she works at a flower shop on Saturdays during wedding season. It’s a win for everyone: The flower shop has a dependable employee, and my friend loves flowers so she does not think of it as work.”

RELATED: How I Did It: Opened My Own Etsy Shop

Another idea: Look for investment opportunities—perhaps with the help of a financial planner—or other ways to get income to come to you. “I think retirement income should come from multiple sources such as rental income, part-time income and retirement assets,” says Blaylock.

9. Consider Consulting an Expert

There are times in life when consulting an expert pays you back in spades. Even if you’re doing everything you can to start good money habits, using a qualified financial planner can help keep you on track—and help you see the big picture.

“Often times most of us are too emotionally involved in our finances to make really good decisions,” says Blaylock. “So what you’re looking for when you’re getting a professional is accountability and an outside view of what you’re doing. I look at your finances very objectively, where you can’t because you’re that person.”

 

via learnvest.com

Consumers Beware: Not All Businesses Can Charge GST

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Come April 1, many merchants and businesses that have registered with the Royal Malaysian Customs will be charging Goods and Services Tax (GST) for the various products and amenities they provide.

GST will be charged as long as these goods and services are not zero-rated or exempted, or the consumers have been granted relief from the tax.

Some unscrupulous business owners will no doubt seize the opportunity to increase prices. Some consumer groups claim that they have started doing so even before the implementation of the GST. This has created distrust and confusion among consumers, with many still unsure on how the new consumption tax works, and how it will affect them.

To avoid getting ripped off, consumers must ensure that they pay GST only to merchants or businesses that have been duly registered and authorised to charge the tax.

 

Don’t all businesses need to be registered under GST?

Actually, no. Only businesses with an annual sales turnover of RM500,000 and above are liable to be registered under GST.

The threshold is fixed at RM500,000 to ensure that smaller businesses do not have to bear the costs of registration (including start-up and compliance costs) under the GST. It is estimated that about 78% of total business establishments in Malaysia will not fall within the GST system.

However, businesses that have not reached the RM500,000 turnover threshold can apply to be registered under the GST. Once registered, the businesses must remain in the system for at least two years.

 

Which companies/businesses can charge GST?

Consumers can find out by accessing the Taxpayer Access Point (TAP) website by the Royal Malaysian Customs at:  https://gst.customs.gov.my/TAP/
GST1a
Click on “Lookup GST Status” on the right tab to search for a company’s GST-registration status simply by inputting its business name, business registration number or GST number.

GST2
If a company is registered for GST, there will be a match. This is proof that they are allowed to charge GST under the law. Make sure you fill in the criteria displayed on the screen using the same names and numbers according to what is printed on the invoice or receipt.

For example, Golden Arches Restaurants Sdn Bhd, master franchise holder of McDonald’s in Malaysia, is registered and therefore, authorised to charge GST.


However, McDonald’s Malaysia has announced that there will not be an increase in their prices following the implementation of the 6% GST. This is because the new 6% GST replaces the former 6% government service tax, which was already being paid by customers at all McDonald’s Malaysia restaurants.


No price hikes for McDonald’s menu line-up post-GST.

Also, once GST is implemented, all invoices by a GST-registered business will come with a 12-digit GST number in its tax invoice/receipt.

Consumers can check for the authenticity of the number and its registration using the same TAP website above. Make sure that the GST number and company or business name that appears on the screen matches what is printed on the invoice.

Finally, all price displays on any taxable supply of goods and services shall include GST, like the receipt below:

What if there’s no match?

If there is no match for the business or company in the system, it means they are not authorised to charge GST to its customers.

Consumers can take action on these businesses by lodging a report with the Ministry of Domestic Trade and Consumer Affairs so that action can be taken against them.

But hold your horses! Since GST is effective only from April 1 onwards, the Customs Department is still in the midst of processing the registration applications received.

 

Do businesses benefit from GST?

Business owners do stand to gain some advantages from GST. They include:

1) Lower business costs

Under the current Sales and Service Tax (SST) system, some businesses are required to pay multiple or cascading taxes for business inputs.

With GST, tax paid on business inputs (including labour, raw materials and incurred expenses) can be claimed as tax credit (which offsets tax liability), and thus reducing overall costs.

2) Increased global competitiveness

Local exporters stand to gain a competitive edge in the international market as GST will not be imposed on exported goods and services. This will elevate our export industry and contribute to the  country’s growth.

3) Reduction of red tape

Under the SST, businesses need to apply for approval to get tax-free materials, as well as special exemption for capital goods (such as office buildings, equipment and machinery).

With GST, this system is eliminated and businesses can automatically offset the taxes they pay on inputs in their returns.

4) Greater transparency

With GST, taxes are levelled fairly among all businesses involved, which include the manufacturing, wholesaling, retail and service sectors.

5) Fairer pricing for consumers

The new GST system eliminates double taxation under SST. As such, consumers will pay fairer prices for many goods and services in the market, compared to SST. Also, consumers will know exactly whether the goods or services they consume are subject to GST and the amount they pay for.

With GST just around the corner, many Malaysian consumers may be feeling from the edge from all the debates surrounding the topic. While some will experience an initial shock or even a feeling of apprehension when the system comes into force, it is important to note that GST is not an “additional tax,” but simply as a replacement for an older consumption taxation system.

via imoney

He Got Me At Hello And I Couldn’t Wait To Say Good-Bye!

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Written by Michael Oliver, Natural Selling Sales Trainer, Best Selling Author, Speaker and Consultant

When I had an office way back in my foolish days, a sales rep came in one day and asked me what business I was in. I told him, and he asked if I had a few minutes to see whether a service he was offering might be able to help me!

I liked that!  Nice start!  He got me at hello! He sat down and for the next 5 minutes gave me a pitch using phrases like;

  • This is what we do
  • Let me show you how you can benefit from this
  • If you’re not doing this already this is what you should be doing
  • I’ve found the best way to do this
  • We’ve got the best

In two minutes my mind was elsewhere.

Why wasn’t this working for me?

What wasn’t working was, I didn’t care what he thought! I didn’t care being told what I should do without him understanding what I’m already doing, etc. I didn’t feel involved!

You might ask yourself the same thing. Do you talk with people and tell them what you think they should hear?

Do you think they really care about what YOU think? Come to that, do you really care what I think?!!!

If you do, here again is the secret to successful Natural Selling!

Find out information before you give it!

Whether they will listen to you is also in direct proportion to whether they believe you understand them! This means gathering and feeding back information by asking the right types of questions (very easily learned) and listening with an OPEN EAR.

Then you’ll have all the information you need to make a presentation in a way they relate to.

So, instead of saying:

  • This is what we do. Ask instead, what are you looking for?
  • Let me show you how you can benefit from this. Ask instead, so why is that important to you?
  • If you’re not doing this already this is what you should be doing. Ask instead have you thought about doing it another way?
  • I’ve found the best way to do this. Ask instead, what if there was another way that could get you the results you’re looking for?
  • We’ve got the best. Ask instead, what if you could do it another way that would better suit you?

That’s it! Discover first. Present second! They have all the information so save yourself a lot of trouble and ask them!

Michael Oliver