How to Save for a House?

How to Save for a House?

Sep 2021

It's the biggest purchase most people ever make, and with good planning and some preparation, it can be a solid financial move.

If you don't already own a home, the idea of affording one can seem daunting. And with the national median house price expected to top $270,000 in 2020, just saving for the down payment can be a challenge(1). But it's one you can meet with a good plan and some discipline.

While there are various ways to buy a home with less than 20% down payment, many experts don't recommend doing so. You may be required by your lender to take out Private Mortgage Insurance (PMI) to ensure that they get paid back if you default on your loan(2). On an average home loan, that 20% down payment equals $54,000. Since the average household has about $8,800 in savings, that's a big gap to bridge(3).



Begin planning before you buy - several years before, if possible. Start by researching neighborhoods to find ones you like that are in your price range. Check statistics that can indicate greater stability: Crime rates, turnover, school performance and activity of religious and charitable organizations. Educate yourself about the home buying process. Real estate agents are generally anxious to sell you a house immediately, but find one who's willing to share what they know about neighborhoods, values and trends. Don't let them talk you into buying a "bargain" fixer-upper either unless you have some serious DIY expertise. Getting trapped in a broken house with problems you didn't anticipate - after spending your savings on a down payment - can be a nightmare.

This is also the time to start saving. You're probably not going to scrounge up $54,000 in a year, but look at your budget and see how much you can save each month. Some financial experts recommend the 50/30/20 rule:(4) Spend half your take-home pay on essentials such as housing, transportation and food. Allocate 30% on things you "want" but don't need - an occasional night out or vacation. Then save 20%. If your take-home pay is $3,000 a month, that would put $600 a month into savings. Not considering any interest earned, you'd have your down payment in seven and a half years. Reverse the rule - save 30% and spend 20% - and you'd cut that to five years.

Here are some ways to reach that 30%, or more:

  • Earmark yearly income tax refunds for the down payment fund. The average refund is about $3,000.(5) Do that four years in a row in conjunction with your $900 monthly savings, and you'll be close to your goal.
  • Cut expenses. Do you really need that supermax cable TV package? Can you delay buying new cars? Do you have to have a Hazelnut Mocha Coconut Milk Macchiato each and every morning? That alone could save $100 a month.(6)
  • Re-evaluate all of the recurring online purchases in your household. You may be surprised by the number of "vampire" charges - such as $3 for cloud storage or $10 for a streaming service - lurking on your credit cards.





Make a point to talk about your plans with your financial advisor. They can help you with tips, savings advice and maybe some ideas you haven't already thought of to reach your goal - and you just might be having that housewarming party sooner than you think!

#save #largepurchase #home #house #buying #wellcents

ACR# 342327 02/20

Family Finances: Saving to Have Children

Family Finances: Saving to Have Children

Sep 2021

What do you do when your heart demands something, but your bank account says no? That's the dilemma that many, especially Millennials, find themselves in when they think about having a family.

Even if your idea of a happy family isn't necessarily 2.5 kids, a dog and a house with a picket fence, financial realities are making it hard for many Americans to envision having any kind of family at all. When a New York Times/Morning Consult survey asked men and women aged 20-to-45 about their plans for having children, 64% said they were not planning to have children soon because childcare is too expensive, 43% said financial instability was holding them back, and 44% said children were just too expensive.(1)

According to the U.S. Department of Agriculture, the average cost of raising a child to age 17 has ballooned to over $230,000.(2) For a generation saddled with student debt,

job insecurity and slow growth of real wages, waiting to start a family is a pragmatic - if unsatisfying - response. But like other financial goals, having a family is achievable if you have a plan and stick to it.

If having a happy - and financially secure - family is in your future, here are some ways you can start planning and saving now:

  • Start a savings account earmarked for family expenses and, if possible, have money from each paycheck diverted into that account automatically. If you receive your income by direct deposit, your bank should be able to do this.
  • When picking a house, a smaller-than-ideal house in a better school district may be a better choice than a sprawling ranch in an area where public schools are weaker. If you're in an underperforming district, you may feel the need to send your kids to private school, which can be an additional major expense.
  • Start accumulating baby gear now. Tell your family and friends what you're doing and start a baby registry at Target or an online source like Amazon or This can significantly cut into the first-year budget hit.
  • Plan for the unexpected. Think through how you'd handle it financially if one of your children is born with a disability. Even a relatively mild disability can impact the parents' earning ability. And does either parent have a family history of twins? While having two doesn't double all of the costs (a two-seat stroller isn't much more than a single-seater), it definitely increases the workload for both parents. And until there's a two-for-one college plan, that cost will be significantly higher.
  • Maybe pick up a side hustle to help boost savings before you have additional parenting responsibilities. As you're thinking that through, look for one that could produce more than supplemental income if one parent needs - or wants - to stay home with a child for an extended period of time.
  • Start a 529 college savings plan early. Under current law, the regulations are far less restrictive than what they used to be. Perhaps ask if the children's future grandparents would consider starting a 529 for their benefit(3).
  • Talk with your financial advisor about your family plans and how they may impact your short- and long-term goals.

It's tough to think dispassionately about such a deep-rooted emotional issue. But if you do - and take steps to prepare - you'll be in a better position to have the financial resources necessary to raise the happy family of your dreams.





ACR# 342328 02/20

Marrying and Money: How to Save for a Wedding

Marrying and Money: How to Save for a Wedding

Sep 2021

While the cost of nuptials has held steady over the past few years, too many couples are planning to borrow to cover the cost. Here's how to avoid the debt trap.

A wedding ceremony can range from picking out some nice suits and heading over to city hall to reserving a 200-guest blowout, with varying costs. But according to a survey by wedding website The Knot, the average cost of a wedding in the U.S. was $33,900 in 2019.(1)

All too often, young couples are planning to borrow in order to pay for their weddings. A Student Loan Hero survey found that 74% of respondents said they planned to take on debt to cover the costs.(2)

Having that perfect day is important, but carefully consider the ramifications if it creates financial burdens you'll have to carry while you're adjusting to married life. Not to mention how that much debt could impact your retirement savings or any plans to start a family.

The two ways to get to your goal sooner are to reduce costs and save more. Here are a few tips:

  • Think about the balance between spending on the ceremony and spending on your honeymoon - consider splurging on one and not the other.
  • Consider location, location, location: According to, the average wedding in Mississippi costs around $13,000, while tying the knot in New York can easily top $88,000. A destination wedding - which wraps wedding and honeymoon together - is somewhere in the middle at about $27,000. (3)
  • The biggest drivers of wedding costs are the size of the guest list, the venue (whether it's at your backyard or the Four Seasons) and the style (tiaras or blue jeans). You might be able to plan an elegant wedding for 20 guests or a barbecue for 200 for around the same price. Decide on your wedding style and the size of the guest list, then stick to them.
  • If you must get married in a big city, think about hiring a caterer from a less expensive suburb who'd be willing to drive in. Also, venues tend to charge less on Fridays and Sundays.
  • If parents or others are helping with the expenses, find out how much they intend to contribute?
  • Deduct contributions from your budget to see what you need to save, then divide that by the number of months between now and the big day. That's how much you need to save each month to make this happen without borrowing. If that number is overwhelming, think about pushing back the date to give you more time to save.
  • Automate your savings by setting up a separate savings account and have part of your paychecks deposited there.
  • Get a side hustle. Maybe sell some stuff on LetGo or Craigslist. Consider postponing other big purchases (car, house) until after the wedding.
  • Don't drink so much Starbucks! Seriously, cut down on out-of-home food and beverage and put that money in the savings account. It'll add up faster than you think.

Finally, while talking with your financial advisor isn't on many pre-wedding checklists, it should be. Your advisor can help you evaluate your current situation as well as your vision for the future.




#wedding #save #largepurchase #wellcents

ACR# 342322 02/20

The Risk of Avoiding Risk

The Risk of Avoiding Risk

Sep 2021

What comes to mind when you think of investment risk?

  • Picking the wrong mutual funds for your 401(k)?
  • Buying into a tech bubble?
  • Purchasing a stock based on a tip from your buddy?
  • Having too many stocks in your portfolio too close to retirement?

Indeed, some of these things quite legitimately could be considered risky. But have you given any thought to the risk of doing nothing? In other words, the risk associated with not investing your money, not contributing to your 401(k), not increasing your contributions on a regular basis, waiting to start investing? Or perhaps not even facing the idea of retirement planning at all?

Choices like these may in fact be among the riskiest behaviors of all when it comes to investing.

It's pretty clear that unless you actively take charge of - and plan for - your retirement, no one else will do it for you. And when the day comes that you're no longer willing or able to work, you won't have the funds you'll need to enjoy a comfortable retirement.

It's very easy to let retirement planning become one of those "I'll start next year" items on a perpetual to do list. There may always seem to be a compelling reason that you can't "afford" to take some portion of your earnings and put them away today for tomorrow's retirement. Maybe you're saving up for a car, a vacation you badly need, a wedding or starting a family. Sometimes it can feel like there's just never a good time to start.

According to Vanguard, one person at age 25 who starts putting away $10,000/year into their retirement account for 15 years with an employee match will have contributed $150,000 into their account and end up with more than $1 million by age 40, while someone else who waits until age 35 to start saving at the same rate with the same match over 30 years (twice as long) will have contributed $300,000 during that time, yet their account would only be worth around $838,000 by age 65.

Delaying saving for retirement can cost you - a lot.

Another way that excessive risk avoidance can be a risk in and of itself is when, in an attempt to avoid investment losses, you fail to put yourself in a position to capitalize on upswings in the market. It's important to remember that your gains are always offset by the effects of inflation increasing your cost of living over time. If, for example, you aren't earning 3% interest during a period where inflation is also at 3%, you're not making any headway.

Investing can be intimidating. After all, some degree of risk is inherent in the process. But it's important not to let fear stand in your way of building a solid financial future. Doing things like investing over a longer number of years and at regular intervals (dollar cost averaging) can help even out the bumps along the way.

Gaining an understanding of what exactly you're investing in and the overall allocation of your assets, as well as how a prudent investment plan can help mitigate risk, may help you feel more confident to move forward.

Sitting down with your financial advisor to discuss your concerns, learn about managing risk and invest in a manner that's in line with your individual risk tolerance is a great place to start.



ACR# 342330 02/20

Managing Risk During Retirement

Managing Risk During Retirement

Sep 2021

One of the prime risk protections for your nest egg is time: Time to recover from market downturns. But what about once the sun sets on your working years and rises on your golden years? The first thing you have to remember is that there are different kinds of risks — aside from those posed by financial markets.

Risky Business

Many financial advisors recommend reducing the inherent risk in your portfolio as you approach and enter retirement. That often means moving investments from typically riskier stocks into cash equivalents, government or tax-free municipal bonds, solid dividend stocks or even annuities. During retirement, it’s important to reassess your allocation among asset classes, keeping in mind that you may have a longer time horizon than you think. What kind of lifespan genes are you working with? And, if you took an early retirement, you could be looking at two decades of investing — which is a lot of time to add to your nest egg and recover from market reversals.

Rising Prices

Inflation has been relatively modest for the past two decades, but that doesn’t mean it always will be. For example, the average rate of inflation in the 1960s was 2.45%, but jumped to 7.25% in the 1970s . In addition to eroding the buying power of cash assets, inflation can damage fixed-rate investments, such as long-term bonds, which can particularly impact retiree nest eggs.

Ways to hedge against inflation include owning assets that can increase cash flow if inflation spikes. The rent on homes, apartments and commercial spaces — owned through a real estate investment trust (REIT) — tends to increase. Another possibility is commodities. When inflation occurs, the price of materials like oil, iron ore and wheat also tend to rise. Precious metals, like gold, platinum and silver, along with industrial metals like copper, also generally appreciate in value during periods of higher inflation.

Live Long and (Still) Prosper

Increasing numbers of Americans are living into their 80s and 90s. One way to defend against running out of money is to purchase lifetime annuities. You pay the issuer a lump sum or sometimes a series of monthly payments in return for a guaranteed fixed amount of income for the rest of your life. If you have a fixed-benefit pension, you’re in luck. Assuming the business or union that manages the pension remains solvent, you should maintain a fixed income stream to tap during retirement.

Adjust Social Security Income Projections

Social Security can help too, but there are circumstances that you may have to adapt to. Currently, the government has the funding to pay existing benefits until about 2035, just 15 years from now. While this program is expected to survive in some form past this deadline, you should prepare for scenarios such as an increase in retirement age or reductions in benefits.

Many Healthy Returns

Prepare for the possibility that you’ll have medical expenses that exceed your Medicare coverage. One forecast says that a 65-year-old couple retiring in 2019 would need $285,000 for medical expenses — over and above what’s covered by Medicare — in retirement. If you open a Health Savings Account while you’re still working, you can sock away pre-tax money in that account and enjoy tax-free growth. And, unlike withdrawals from a 401(k), money you take out to pay for qualified medical expenses is also tax-free.

In addition, consider long-term care insurance. These policies pay for some of the costs of a nursing home or home care workers if you’re aging in place. Ideally, you want to have a policy in place before you develop any chronic health conditions that will increase premiums.

Work with your financial advisor to come up with a plan that accounts for how long you think you’ll live, the possibilities of market losses and inflation and the cost of healthcare as you get older. With a solid plan in place, your golden years can truly shine.

#riskmanagement #risk #retirement #wellcents



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