Money Considerations When Becoming a Caregiver for Aging Parents
As Americans live longer, more adult children are stepping into a new and emotionally complex role: caregiver for aging parents. While this caregiving journey is often rooted in love and duty, it comes with significant financial, legal, and emotional challenges—many of which families are unprepared to navigate.
At Gatewood Wealth Solutions, we help families prepare for life’s key moments. Becoming a caregiver is one of those moments, and having the right plan in place can help you support your parents without jeopardizing your own financial well-being or confidence.
The Situation Many Couples Face
The typical scenario starts subtly. One parent begins needing help with errands, then medications, then transportation. Eventually, the need grows to include daily support—bathing, dressing, managing bills—or even full-time care.
For couples in their 40s, 50s, or 60s, this can be a difficult balancing act. They may still be working full-time, saving for retirement, or even supporting children in college. When caregiving duties grow, it creates stress, financial strain, and difficult decisions:
- Should one spouse reduce hours or leave work entirely?
- How do we pay for in-home care or assisted living?
- Are we prepared for the legal and medical decisions ahead?
- Will this derail our own retirement?
These are deeply personal—and deeply financial—questions.
Financial Considerations for Caregiving
Caring for a parent can quickly become a financial responsibility. Common costs include:
- Home modifications (ramps, walk-in tubs)
- In-home caregivers or visiting nurses
- Adult daycare programs or respite care
- Transportation services
- Medications, co-pays, or specialized therapies
- Long-term care or assisted living facilities
Medicare Vs. Medicaid: What They Cover (and what they don’t)
Medicare is health insurance primarily for those 65 and older. It covers hospital care, doctor visits, and short-term rehabilitation—but NOT long-term custodial care such as help with bathing, dressing, or eating.
Medicaid, on the other hand, is a needs-based program that can cover long-term care in a facility or at home—but only for individuals with very limited income and assets.
Coordination Between the Two:
In some cases, individuals can qualify for both Medicare and Medicaid (known as “dual eligibility”), but coordinating these benefits is complex and often requires professional guidance. Timing, asset structuring, and proper documentation are key to avoiding disqualification or delays in coverage.
Legal and Estate Planning Issues to Address
When you step into a caregiving role, you also step into a world of legal responsibilities. The following should be reviewed or created:
- Powers of Attorney (Financial & Medical): Ensure someone has legal authority to act on your parent’s behalf.
- Living Will/Advance Directive: Clarifies wishes regarding life-sustaining treatment.
- HIPAA Authorizations: Grants access to medical records.
- Updated Wills and Trusts: Review beneficiary designations, successor trustees, and asset titling.
- Asset Protection Planning: If long-term care may be needed, there are legal strategies to protect family assets within Medicaid’s lookback rules.
Gatewood can work alongside estate attorneys to help ensure the proper legal structures are in place and coordinate with elder law specialists when necessary.
Emotional and Lifestyle Strain
Many caregivers experience:
- Guilt over not doing enough
- Burnout from juggling work, children, and caregiving
- Conflict with siblings or spouses over roles and responsibilities
- Grief as they watch a parent’s health decline
We often remind families: you cannot pour from an empty cup. Planning ahead financially and legally can ease the stress and allow more energy for the emotional and relational aspects of caregiving.
Resources for Caregivers
You’re not alone in this journey. Here are a few reputable resources:
- Area Agencies on Aging (AAA): Local support and information services
n4a.org
- Eldercare Locator: A free service to connect caregivers with local help
eldercare.acl.gov
- Family Caregiver Alliance: Tools, education, and support groups
caregiver.org
- Medicare.gov: Coverage information, providers, and cost estimators
www.medicare.gov
- Medicaid Planning Resources: State-specific resources available through local elder law attorneys or planning professionals
How Gatewood Can Help
At Gatewood, we guide families through the complexities of caregiving—from financial planning to legal coordination to emotional support strategies. We:
- Model the impact of caregiving expenses on your own retirement plan
- Coordinate with estate attorneys and elder law professionals
- Identify insurance and long-term care funding options
- Help facilitate family conversations and clarify roles
- Help ensure planning stays aligned across generations
A Final Thought
You may never feel fully ready to become a caregiver—but with thoughtful preparation and the right support, you can approach it with confidence, clarity, and compassion.
If you’re facing—or anticipating—the responsibility of caring for an aging parent, let’s have a conversation. We’re here to help you prepare financially and emotionally for one of life’s most important roles.
Important Disclosures:
This material was created for educational and informational purposes only and is not intended as tax, legal or investment advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither LPL Financial nor any of its representatives may give legal or tax advice.
Smart Cash Strategies for Today’s Investors
At Gatewood Wealth Solutions, we believe your cash should do more than just sit in a savings account. Whether you need short-term income or are planning for a future large expense, there are smart, managed strategies designed to keep your money working while staying aligned with your financial goals. That’s where our Cash Flow Advisory Strategy and Lump Sum Advisory Strategy come in.
What Are These Strategies?
Both strategies are actively managed cash and cash-equivalent allocations designed with a goal to help clients capture higher short-term yields while maintaining liquidity and stability. However, they serve two distinct purposes:
- Cash Flow Strategy is for ongoing income needs, such as monthly withdrawals in retirement or other recurring distributions.
- Lump Sum Strategy is for specific future expenses, such as a home down payment, tax payments, or a major purchase 6 to 24 months out.
How Do They Work?
Each strategy is structured using a tiered bucket system, with allocations managed by our Investment Committee. The funds are invested in a mix of ultra-short-term, high-quality bond funds and cash equivalents, allowing you to earn a competitive yield while keeping the risk low.
Both strategies use the same four investment buckets but are customized by time horizon and client-specific goals. Here is a breakdown of each bucket and its role within the strategies:
1. Cash Sweep (0–4 months)
- Purpose: Immediate liquidity
- Description: This bucket consists of FDIC-insured cash. It’s fully liquid and used for near-term distributions—typically covering 1 to 2 months of expenses in the Lump Sum Strategy and up to 4 months in the Cash Flow Strategy. This is your most accessible cash, designed to meet known, immediate needs.
- Why We Use It: It protects against the need to sell investments at an inopportune time and ensures quick access to funds.
2. Cash Equivalents (4–15 months)
- Purpose: Short-term stability with a yield advantage over traditional savings
- Description: This bucket is made up of high-quality, ultra-short-term bonds or money market funds with average maturities under 60 days. These investments aim to maintain a stable $1 value while earning a higher yield than FDIC-insured cash.
- Why We Use It: These instruments are low-risk and highly liquid, making them suitable for short-term needs while delivering higher interest income.
3. Government Duration (10–16 months)
- Purpose: Incremental return potential with modest volatility
- Description: This bucket contains U.S. government bonds with slightly longer maturities. These securities may have minor price fluctuations but offer a yield advantage when the interest rate outlook justifies extending duration.
- Why We Use It: When interest rates are expected to fall or stabilize, this bucket helps add return without taking on credit risk. We may hold this bucket selectively depending on the market environment.
4. Credit (16–24 months)
- Purpose: Higher return potential for mid-term needs
- Description: This bucket includes short-term corporate bonds. These offer higher yields than government securities but also carry credit risk. When credit spreads are attractive, this bucket adds value. When spreads are tight, as they are currently, we avoid this allocation.
- Why We Use It: When appropriately timed, it enhances returns without overextending risk. It is used only when the risk-reward tradeoff is favorable.
Here’s a simplified breakdown:
Making It Simple: A Helpful Analogy
To make the distinction even clearer, think of these two strategies like packing for a trip:
- The Cash Flow Strategy is your carry-on bag—it holds everything you need right away: monthly withdrawals, bills, and short-term expenses. It’s always close, easy to access, and organized to support your daily needs without touching your long-term investments.
- The Lump Sum Strategy is your checked luggage—it’s packed for something coming up later in the journey. Maybe it’s a major purchase, a home remodel, or another large one-time expense. You don’t need it today, but it needs to be ready when the time comes.
Both “bags” are thoughtfully packed to serve a specific purpose. By separating your short-term needs from your near-future plans, you avoid overloading your portfolio with cash—or worse, being forced to sell long-term investments at the wrong time.
When Is Each Strategy Appropriate?
- Use the Cash Flow Strategy if you:
- Are taking monthly or quarterly withdrawals
- Are in retirement and need predictable income
- Want to insulate your investment portfolio from market-driven withdrawals
- Use the Lump Sum Strategy if you:
- Have a known upcoming expense in 6–24 months
- Are saving for a home, wedding, remodel, or other large goal
- Don’t want to leave the money in a low-yield bank account but also don’t want the risk of the market
Cash Hub vs. Planning for the Future
The Cash Hub is part of our broader retirement income strategy. It represents a specific number of months’ worth of expenses we recommend keeping liquid to avoid selling long-term investments during downturns. For many retirees, we target 18 to 24 months of non-covered expenses in cash, creating a buffer for down markets.
The Lump Sum Strategy, on the other hand, is designed for one-time planned needs. Rather than letting those dollars sit idle in a checking account or risk losing value to inflation, we position the funds in a stable, managed solution.
Example: How a Client Might Use Both
Meet Sarah, age 62, recently retired. She has:
- $140,000 in cash from a recent bonus and stock option payout
- Monthly expenses of $10,000
- Social Security and a pension covering $6,000 per month
Her Plan:
- $96,000 goes to her Cash Flow Strategy (24 months of net cash needs: $10,000 – $6,000 = $4,000 × 24)
- $30,000 goes to her Lump Sum Strategy for a kitchen remodel in 18 months
- The rest stays in her investment portfolio for long-term growth potential
This allows Sarah to keep her distributions steady, avoid selling stocks in a downturn, and earn more on her near-term funds than she would at the bank.
Why Not Just Use a Savings Account or CD?
While savings accounts and CD’s offer less volatility, they fall short in three key areas:
- Low yields: Even high-yield savings accounts often return less than our managed strategies
- Inflexibility: CD’s lock your money for a set term, which may not align with your needs
- No strategy: Bank accounts are static. Our strategies are actively managed based on interest rates and your goals
That said, it’s important to note: unlike bank accounts, these funds must be sold before cash becomes available. However, the process is simple and only takes 1–2 business days to settle, and we handle the logistics for you.
Bottom Line: Purpose-Driven Cash Management
Your short-term cash shouldn’t be an afterthought. With thoughtful planning, strategic allocation, and active oversight, your money can stay accessible, and productive.
If you’re holding significant cash in the bank or unsure how to structure your liquidity, let’s talk about how these strategies can work for you.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risk including loss of principal. No strategy assures success or protects against loss
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
CDs are FDIC insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk including loss of principal.
An investment in the Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing
Five Easy Steps to Building Your Emergency Fund
In today’s unpredictable world, having an emergency fund is not just a financial recommendation – it’s a necessity. The reality of unexpected expenses, whether they come from a medical emergency, sudden unemployment, or urgent home repairs, can create significant financial stress.
An emergency fund acts as a financial safety net, empowering you to manage these unforeseen costs without resorting to high-interest debt options like credit cards or loans.
Building an emergency fund requires a systematic approach, and here’s how you can do it in five practical steps:
1. Decide How Much to Save
The first step in creating an emergency fund is to determine the amount you need to save. A common guideline is to have enough to cover three to six months of living expenses. This figure should include rent, utilities, groceries, and any other regular expenses that would need to be paid even during a period of financial distress. To personalize your fund, consider your job security, the stability of your income, and any dependents who rely on your earnings.
2. Set Your Savings Target
Once you know how much you need to save, the next step is to set a realistic timeline for achieving this goal. Start by reviewing your budget to see how much you can comfortably set aside each month without compromising your daily financial health.
For some, this might be a modest amount, while others might be able to save more aggressively. The key is consistency; even small amounts can grow significantly over time due to the power of compound interest.
3. Choose Where to Keep Your Fund
The ideal location for your emergency fund is somewhere accessible but not too easily spent. High-yield savings accounts are a popular choice because they offer higher interest rates than regular savings accounts, helping your fund grow faster. These accounts also provide liquidity, allowing you to withdraw funds quickly and without penalties in case of an emergency.
4. Open Your Account
With a clear idea of where to keep your emergency fund, the next step is to open an account. Look for banks that offer competitive interest rates and low fees. Online banks often provide higher yields than traditional brick-and-mortar banks. Ensure that any account you choose is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) for added security.
5. Know When to Use the Fund
Finally, establish clear guidelines for when to use your emergency fund. It should only be used for true emergencies, such as unexpected medical expenses, crucial home repairs, or during a job loss – not for planned expenses or discretionary spending. After an emergency, focus on rebuilding the fund as soon as your financial situation stabilizes.
Financial Planning Matters
Building and maintaining an emergency fund is a fundamental aspect of a sound financial strategy. It provides not just financial confidence, but potentially may lead to less stress, knowing that you are prepared for life’s unexpected events. Start small, be consistent, and watch your safety net grow.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by FMeX.
If You Don’t Control Your Money, It May Control You: 8 Tips for Money Management in a Volatile Market
Money management and investment strategy are critical areas that deserve undivided attention, particularly for HENRYs – High Earners Not Rich Yet. This demographic often earns a significant income but has yet to amass substantial wealth due to various lifestyle choices or financial obligations. Moreover, they are usually in the early or middle stages of their careers, which leaves them vulnerable to market volatility and other uncertainties. Here, we outline eight vital tips for HENRYs on money management and investing in a volatile market.
Understand your financial situation.
The first step towards effective money management is understanding your financial status. Money management includes knowing your salary, savings, investments, debts, monthly expenses, and future financial responsibilities. Once you know your financial situation, you can work with a financial professional to create a plan responsive to changing market conditions.
Create an emergency fund.
An emergency fund is not just a financial safety net; it’s a source of security and peace of mind. It’s there to support you in case of job loss, medical emergencies, or unexpected expenses. Financial professionals recommend having at least three to six months’ worth of living expenses saved in an easily accessible account. This fund can provide you with confidence and financial stability, even during times of economic downturn or market volatility.
Manage debt.
Managing debt is a crucial aspect of financial responsibility for HENRYs. While they may have a significant income, it’s important to avoid accumulating debt without a clear plan for repayment. A high income doesn’t guarantee timely debt payment if it isn’t managed appropriately, which can lead to unnecessary financial stress.
Diversify investments.
One of the tried-and-true strategies for weathering a volatile market is diversification. Diversifying your investment portfolio across different asset classes, such as stocks, bonds, real estate, and commodities, can mitigate risk and improve returns. Diversification is not just about spreading your money across different investments; it should also consider geographical regions and sectors.
Manage risk.
Investing involves a certain level of risk. However, understanding and managing this risk is crucial, especially in volatile markets. To help manage risk, work with your financial professional to establish a risk tolerance level that helps guide your investment decisions. Always remember that high-risk investments can lead to high returns but can also result in substantial losses.
Another type of risk management to consider is having appropriate insurance coverage, such as property and casualty, liability, health, life, etc. Insurance coverage is imperative to protecting assets and avoiding premature liquidation if an unforeseen event occurs.
Keep a long-term perspective.
While short-term market fluctuations can be unnerving, HENRYs should maintain a long-term perspective as they work toward their goals. History has shown that markets tend to rebound over the long term, so emotion-driven reactions to market volatility can harm an investment portfolio.
Stay informed.
Staying informed about market trends, financial news, and economic indicators can help make informed financial decisions. Numerous online resources are available to learn more about personal finance and investing. Also, working with a financial professional can help HENRYs stay informed regarding how market volatility may impact their portfolio and goals.
Practice patience and discipline.
Finally, patience and discipline are pivotal in managing money and investing, particularly in a volatile market. It’s essential to stick to your long-term strategy and resist the temptation of short-term gains or panic selling.
In conclusion, HENRYs have a unique opportunity to accumulate wealth despite market volatility. By implementing these tips and working with a financial professional, HENRYs can navigate market volatility and set sail toward financial independence.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance is no guarantee of future results.
This article was prepared by Fresh Finance.
Budgeting for Summer Expenses
With summer on the horizon, many of us are eagerly awaiting exciting activities and well-deserved getaways. However, these adventures can also lead to higher expenses that put extra strain on our wallets. The key to enjoying a stress-free summer lies in effective budgeting. By planning ahead and managing your finances wisely, you can make the most of the season without breaking the bank.
Creating a summer budget
The easiest way to begin building your budget is by considering what expenses you already have planned, such as vacations, summer camps, or home improvements. You’ll want to factor in costs for travel, accommodation, transportation, dining out, entertainment, or any other activities you may be interested in. You can assign a specific dollar amount to each category, ensuring you account for both fixed and variable expenses.
Of course, the summer months may also bring several unexpected expenses, whether that’s surprise home or car repairs, spontaneous trips, or suddenly higher bills. So it’s always a good idea to leave extra wiggle room in your budget. Take these steps to help ensure you have the funds you need to cover all your costs this season.
Assess your financial situation
When creating a budget, first take a moment to review your income and savings. Be sure to consider all potential sources of income this summer, including your regular salary, possible bonuses, and any other side hustles you might have or could pick up. This will give you a better idea of what you can expect to bring in during the summer months and what you may be able to afford.
Besides your income, it’s also important to make note of your regular fixed monthly expenses such as rent or mortgage, utilities, and groceries. By subtracting them from your expected income, you can get an estimate of how much discretionary funds you’ll have available for summer activities, allowing you to create a more accurate budget.
After you have a good idea of your income and expenses, you can create goals for what you want to do this summer. Whether you dream of a tropical vacation, exploring local attractions, or simply enjoying quality time with loved ones, having a clear vision to guide your budgeting process will help you allocate funds to the areas that matter most to you.
After you’ve established your budget, you’ll need to work to keep to it by using these strategies throughout the season.
Before booking flights, hotels, or attraction tickets, it’s important that you thoroughly research and compare prices and look for deals, discounts, or early-bird specials. Doing so may take longer, but it could make a world of a difference by helping you save money and more comfortably afford what’s ahead. If you can discover a way to cut costs significantly in one area, you can then adjust your budget by shifting that money toward another summer-related expense.
Throughout the summer, take care to monitor your spending and check to see that you’re staying on budget. If you find that you’re deviating in a certain area, you can adapt accordingly and be more mindful about where and on what you’re spending your money. Utilize spreadsheets, online tools, or budgeting apps like Mint to simplify the process. By maintaining a detailed record, you’ll have a clear understanding of where your money is going and be able to make adjustments if necessary.
Because life is unpredictable, unexpected expenses may arise during the summer, so it’s essential to be flexible with your budget when you need to. Consider building an emergency fund you can use to handle unexpected costs, and prepare ways you can shift your budget as needed without derailing your overall financial goals.
While it’s always better to save in advance, it’s never too late to begin budgeting for your upcoming expenses. By taking this step now, you can better ensure that you have a fun-filled, stress-free season spent doing the things that you love.
This article was prepared by ReminderMedia.
Building Financial Resilience: Determining Emergency Cash Reserves
At Gatewood Wealth Solutions, we prioritize empowering our clients with robust financial strategies, including effective cash management to weather market uncertainties. Understanding the importance of maintaining liquidity during bear markets while remaining confidently invested for the long-term, we review and update cash needs regularly. Here’s how we determine appropriate emergency reserves tailored to different life stages using our Gatewood Rules-of-Thumb:
Cash Management: Pursuing Stability During Market Fluctuations
The primary strategy is to maintain sufficient cash reserves for liquidity needs, especially during bear markets. By holding targeted cash reserves during one’s financial journey, individuals can mitigate the risk of selling investments during down markets and remain confidently invested for the long-term.
Determining Emergency Cash Reserves by Life Stage
Emergency reserve targets are based upon an individual’s life phase and total monthly expenses.
We follow the Gatewood Rules-of-Thumb below for the number on months’ worth of total household expenses one should keep in cash:
- Life Phase 1 – Early-Career Accumulation (3-6)
- Life Phase 2 – Mid-Career Accumulation (6-18)
- Life Phase 3 – Late-Career Nearing Retirement (12-24)
- Life Phase 4 – Retirement Income Distribution (18 – 30)
We then determine one’s near-term lump sum expense needs. These include significant financial commitments, such as making a down payment on a new house, buying a new car, funding a home renovation project, or covering tuition fees for a child’s education.
Calculating the Cash Total Target
To determine the total cash target, we assess:
Emergency Reserves (3-30 Months’ Expenses – Life Phase Based)
+ Near-Term Lump Sum Expense Need (0-24 Months from Now)
= TOTAL CASH TARGET
Conclusion
By targeting emergency cash reserves according to your life stage and financial needs, we aim to provide investor confidence during economic uncertainties. Contact Gatewood Wealth Solutions today to explore how we can tailor a cash management plan to align with your specific financial goals and aspirations.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
High Income, High Debt: 10 Ways High Earners Can Prevent a Credit Loss
A personal credit crisis is something many people fear, as it can lead to financial ruin and burden an individual with immense debt. Fortunately, steps can be taken to avoid such a crisis, even for high earners who may seem financially secure. When managed poorly, credit can invite various potential issues, including problems with enforceable legal judgments, fraud, overspending, and negative impacts on your credit score. Here are ten ways high earners can strategically manage their finances.
1. Budget and track expenditures
It’s essential to maintain a strict budget irrespective of the size of one’s income. Uncontrolled spending can lead to incurring a significant amount of debt, which in turn can trigger a credit crisis. High earners should always keep a detailed record of their expenditures to prevent overspending and stay within their budget.
2. Diversify income streams
While high earners may seem financially secure, relying on a single source of income can be risky. Diversifying income streams is an effective way to help address financial stability and mitigate a credit crisis by using credit when funds are scarce. If appropriate, consider passive income sources like real estate, stocks, or bonds.
3. Conduct regular financial audits
High earners must regularly audit their financial health to check uncontrolled spending, investment performances, and wealth accumulation. High earners must also periodically audit their credit reports to detect any errors or anomalies that could negatively affect their credit scores. In case of discrepancies, it’s crucial to initiate a dispute promptly to preserve a favorable credit status.
Another aspect of financial audits is monitoring interest rates, which impact the interest rate on credit cards, revolving lines of credit, and some loans that high-earners may carry. The higher the interest rate, the more the credit will cost over time.
4. Avoid unnecessary debts
Due to the vast credit card limits that high earners enjoy, using credit cards responsibly is essential. The higher the balance on a credit card, the more adverse the effect on a credit score.
High earners should avoid taking on unnecessary debts, which can lead to financial instability and potentially trigger a credit crisis. Avoid debts incurred through credit cards, unsecured loans, and high-risk investments.
5. Maintain an emergency fund
An emergency fund can be a safety net to cover unexpected expenses. Emergency funds provide a financial buffer that prevents the need to take on high-interest short-term debt, which could lead to a potential credit crisis.
6. Stay insured
Maintaining appropriate insurance policies to protect against unforeseen circumstances that may cause financial hardship is crucial. These include health insurance, disability insurance, liability insurance, property and casualty insurance, and long-term care insurance to protect assets against unforeseen legal judgments or collections.
7. Engage in Financial Education
High earners should continuously educate themselves about personal finance, investment strategies, tax laws, and other relevant topics to make informed financial decisions and prevent financial mishaps that could lead to a credit crisis.
8. Hire a financial professional
A financial professional can provide professional guidance on managing wealth and debt, tax planning, retirement planning, and other financial aspects. They will provide valuable advice and strategies to help high-earners work toward their goals while addressing credit issues.
9. Protect against fraud
Due to their wealth, high earners can be attractive targets for scammers. Therefore, preventing fraud by regularly checking credit reports, safeguarding personal information, and setting up fraud alerts on credit and bank accounts is crucial.
10. Save for retirement
High earnings do not guarantee a financially confident retirement. Therefore, it is essential that high-earners consistently save and invest for retirement, regardless of their current income level. Without financial confidence, high-earners may resort to credit use during retirement, which could lead to financial insecurity later in life.
Financial independence for high earners is about earning a high income and managing it responsibly. These preventive measures can help high earners manage their wealth and credit, maintain a positive credit score, and help mitigate a credit crisis.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by Fresh Finance
7 Simple Ways to Control Your Spending
Financial responsibility isn’t always easy to learn, but it’s an essential part of taking control of your finances and using your income to its fullest. This responsibility can lead to better spending tendencies that can, in turn, help you pay off your debts faster and build up savings to protect you in the future. So if you’ve struggled to stay on top of your spending, here are a few key ways you can adjust your habits and mindset to better meet your financial goals.
Create and stick to a realistic budget
Budgeting is a great first step toward managing your finances. In fact, according to a survey conducted by the Certified Financial Planner Board, people who budget feel more financially secure and confident than those who don’t. When you budget, you’re being strategic with your spending and controlling where your money goes each month. Budgeting strategies like the 50/30/20 method—where 50 percent of your income goes toward necessary living expenses, 30 percent is spent on your additional wants like eating out and entertainment, and 20 percent is put directly into savings—can help you create a realistic budget and become more financially responsible and secure.
Keep all your monthly expenses in one place
It’s essential to know what bills you must pay each month and when they’re due since missing one can hurt your credit score and end up costing you more money. It’s a good idea to have a spreadsheet that lists all your recurring expenses and their due dates. If spreadsheets aren’t your thing, you can instead use an app like Mint or even just make a note on your phone to better track your recurring expenses. It’s also important to automate your payments so you won’t have to actively think about them. Whatever method you opt for, tracking bills and expenses can help you keep up with your spending and give you an idea of how much will be coming out of your account and when.
Start giving yourself a weekly allowance
Many people receive an allowance growing up, but this tends to stop when you’re an adult and start earning a paycheck. However, setting up a weekly spending allowance for yourself can help you cut back on excess spending. You can set aside cash for each week or simply have a set number in mind to put on your debit or credit card. Either way, an allowance shows you how much money to dedicate to lunches, coffee, home goods, and anything else that you might want to buy in a given week. Having a specific number helps you to say no to that extra dinner out and instead save money by making something at home.
Consider saving as a payment to yourself
Setting aside a specific portion of your income each month can help you save for an upcoming trip, additional spending during the holidays, or emergency expenses. Putting money directly into your savings can give you a sense of security, so look at it as a payment to your future self. You’re preventing potential headaches down the road when it comes time to spend extra money on something, and you’ll be grateful that you had the forethought to put money away when you did.
Plan for larger purchases
Before making an expensive purchase, be it for a new piece of furniture or a nice outfit, it’s important to think it through. You don’t want to make a rash decision, especially if the item far exceeds what you’re used to spending. Give yourself some time to consider the purchase and plan out how you’re going to save for it. You can set aside money every paycheck for the item, allocate funds outside of your usual savings, or, if you’re dipping into your savings, check to make sure the purchase won’t bring the total amount too low for comfort. Taking control of your spending is about being strategic with your purchases and giving big expenses more consideration than you may have in the past.
Pay off your credit cards every month
Credit cards can be a great financial tool to have, but paying off the full balance every month is an important part of being more financially responsible. Just as important, they often have high interest rates that can significantly increase your debt if you don’t pay the entire balance—so it’s important to manage them the best you can. If you find that you can’t pay the full amount each month, consider adjusting your spending habits. Instead of picking up coffee every morning, eating all your lunches out, or adding a new item to your virtual cart every day, you can save money by making your own coffee and lunches and cutting back on your online shopping. These expenses may not seem like a lot in the moment, but they can quickly add up and create a high monthly balance that isn’t always easy to pay in full.
Regularly review your spending
To make sure that you’re continuing to stay on top of your finances, you want to regularly review your spending. Look at your credit card statements and your savings and checking accounts, and see what you are spending your income on each month. Carefully reviewing your accounts can help you better understand your financial habits and see where perhaps you’re spending too much and need to cut back. It’s simply a way to hold yourself accountable, allowing you to adjust your spending accordingly.
By taking a few easy steps to better control your spending, you can manage your finances and become more financially secure.
This article was prepared by ReminderMedia.
