The top six New Year Resolutions for 2015 included, in order:
- Lose weight
- Get organized
- Spend less, save more
- Enjoy life to the fullest
- Stay fit and healthy
- Learn something exciting
Did your 2016 list resemble any of these items? It is now the end of January. During a recent staff meeting, one of my co-workers asked, “How are your resolutions going?” According to London Business School, 25% of us have given up by the first week. Sixty percent of us will make the exact same resolution year after year. Are you one of them?
If you’re struggling with your goals, ask yourself why? Many times, people fail because they had set the bar too high to succeed. Keep in mind also that it takes at least 30 days to replace a bad habit with a good habit; in other words you need to give yourself time to learn new habits. Checking to be sure your goal is realistic, and then being patient and persistent in putting it into action, can improve your chance for success.
If you’re a parent, you already wear many hats. Adding a finance hat can help your children become more financially well-informed. How financially responsible is your family? Research has suggested that most kids absorb the family “money story.” You may wonder what that is: the family money story is what your children see at home.
If you’re like most households, where both parents work, your time to spend with your kids may be limited. That may mean that children are more exposed to media – TV commercials and other marketing – which may lead them to want items they would never otherwise consider. Fortunately, there are ways in which you can influence the “money story” that they learn.
A key way to help write your children’s money story is to get them involved in household financial activities. Some examples are:
- $ Grocery shopping – where you can share your beliefs about needs vs wants.
- $ An allowance – where they have the ability to practice making their own spending decisions.
- $ Being an entrepreneur – where they earn money, whether by selling lemonade, baking cookies, or walking dogs.
- $ Visiting the bank – where they can learn how to open and use a bank account. You can also use it as an opportunity to explain how debt and credit cards work.
Teaching children how to balance between savings, spending, investing, and giving is an important part of parenting. By putting on a financial hat, parents can use real life experiences to help children learn a money story that will serve them well throughout their life.
My daughter-in-law is a busy woman. She has a full time job, a beautiful 3-year old daughter who needs lots of attention, and she puts a significant amount of time and energy into gigs (short-term jobs) which she hopes will grow into a full-time business.
A study by Intuit predicts that by 2020, 40% of American workers will be independent contractors. The trend toward a gig economy has begun. A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.
Over the past few years, I have seen an increase in the number of individuals earning a majority of their income from self-employment; this requires a Schedule C when filing taxes. The biggest mistake made by these individuals is the failure to plan for taxes.
Self-employed individuals generally must pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. For 2015, the self-employment tax rate is 15.3% (12.4% for social security and 2.9% for Medicare.) Owing this tax on top of income tax can be a shock, and it can be made worse by penalties if you have failed to make quarterly payments.
It can be hard to learn all you need to know about being self-employed. Working with an accountant may be an added cost you don’t think you can afford, but you may find you can’t afford to NOT have their expert advice.
I was recently asked by my supervisor for performance goals (key actions I plan to work on); these are due by the end of the year. We do this so we keep moving forward, rather than standing still or sliding backwards in our skills and our work.
As we turn the New Year calendar, it may also be time for us all to consider setting goals for our personal lives. As the ball drops in Time Square in New York City soon, many of us make resolutions or set some goals for our lives in the next year.
As I consider my personal goals for the coming year I approach it from several directions:
- Things I want to do – “bucket list” items. I am sure travel will continue to be on my list.
- Major projects that need to be done around my home: some updating of the electrical system needs to be on my list.
- Smaller projects – I want to cull through my closet and pull out clothes I haven’t worn for a while; I can give these items to Goodwill for others to use.
Last year, I replaced a car. I visited the Grand Canyon and saw parts of Arizona I had not seen before – Sedona, Flagstaff, Jerome and Williams (where I felt like I was in the Cars movie!). It feels good to look back and see what I accomplished in the past year. I now want to set some clear goals for the coming year, so I can keep moving forward.
What’s on your goal list for 2016?
During this holiday season, many of us experience a lot of gratitude. We receive gifts, we enjoy the beauty of holiday decorations and light displays, we sing along to holiday music, we enjoy special foods that we only make once a year. We even send thank you notes to express our gratitude.
I encourage you to focus your attention on feeling and expressing gratitude during the holidays. One reason, of course, is that it’s a happy feeling, and it’s also a matter of courtesy to feel and express gratitude to those who share gifts with you.
But there’s another reason why I think gratitude is important. Feeling gratitude causes us to focus on what we have, rather than what we don’t have. As we deal with our finances and try to make choices about the best uses of our money, being mindful of and grateful for what we already have makes it easier to:
- Say “no” to impulse or unnecessary purchases
- Set money aside for future needs (including college, retirement, or other long-term goals)
- Build an emergency fund
- Give to worthwhile charities
Pausing and reflecting with gratitude on our possessions, and on the people and experiences in our lives, makes it easier to be satisfied. Being satisfied makes it easier to put our money toward important uses rather than being distracted by spending opportunities with only short-lived value.
What are you feeling grateful about?
My only memory of a great-grandmother on my mother’s side is of her home; a small, silver, drag-behind camper. It was parked about 50 yards from my mother’s childhood home. My mom was the oldest of 9 and I loved going to visit her family in the wooded acreage deep in the Missouri Ozarks. We (my twin aunts who were a year younger than me, a cousin and my siblings) were a noisy, wild and crazy bunch that ran around, exploring and climbing trees. I can understand why my great-grandmother would want a place of her own with all the chaos that took place in the main house.
I stumbled across an article (https://seniorcareadvice.com/my-mother-lives-in-the-backyard-the-granny-pod-evolution.htm) addressing the looming problem of how to care for America’s rapidly aging population. The “Granny Pod” is a pre-fabricated and pre-equipped medical cottage that can be parked in the backyard of a caregiver’s home…assuming the zoning laws permit it. This tiny house is then hooked to the existing sewer, water and power lines.
I need to point out that the article describes one particular “granny pod” product, and is not a comprehensive non-commercial overview of everything available on the market. Even so, it provides great insight into new types of options that are arising as families seek the best environment for aging family members. The homes described in the article cost up to $125,000 installed, complete with all things needed to age in place, including interactive video and devices that monitor vital signs and transmit real time readings to caregivers and physicians. Cameras and sensors alert caregivers to any falls, the toilet seat records weight and temperature, a hammock-like chairlift transports a resident from bed-to-bathroom, and a computer reminds residents when it is time to take medications.
The 12’ x 24’ bungalows resemble a hotel suite with living space, small kitchen and bathroom. The initial cost may seem steep, but compared to nursing home care (which can be more than $50,000 a year for a semi-private room) it will not take long to recoup the cost. What’s more, this particular company will buy back the unit when it is no longer needed. These units offer older adults some independence and closeness to family and friends instead of isolation in a distant nursing home.
It looks like my great-grandma was ahead of her time living in a Granny Pod/camper. Unlike the Tiny Houses I talked about on 12/8/15, I could see myself living out my final years in one of these. The question is…which of my kids won’t find this too close for comfort?
There are a couple of new shows on TV that focus on Tiny Houses. These are homes that have less than 500 square feet of living space. Some of the home owners are looking to reduce their environmental footprint and minimize their impact on the environment. Others are looking to live debt free so as to have more money to spend on traveling or other priorities. All had to drastically downsize the amount of stuff they owned.
Many of these homes are on wheels and can be moved – some more easily than others. One young woman had a job that required her to move every 6 months and she was tired of packing and unpacking her belongings. A tiny house on wheels eliminates many of the hassles that come with each relocation. She did not want to have to spend an estimated $1500 every six months to pay someone with a semi truck to move her tiny house so…she was looking for a VERY tiny and lightweight home that she could move herself, using a pickup.
The designers/builders of these micro homes take into account the needs of each family. Some have small children. Others have teens. Some have lots of craft hobbies and wanted space to store and engage in those activities. Others love to preserve food, cook and bake…requiring full-size appliances. Some want to live off-the-grid by using solar power, collecting rainwater and using a composting toilet. Some of these structures are built with all reclaimed materials; others with all new but recycled materials. All tiny homes need a place to park. Some can set down on the property of friends or family members; others choose to purchase land.
I know I need to downsize my stuff. It takes time, energy and space to maintain, store and insure STUFF. I have tried to picture myself living in a Tiny House after I retire, but for me retirement means I will finally have time to quilt, paint, weave baskets, garden, fish, kayak…you get the picture. I have a lot of stuff I am hanging onto and looking forward to using in retirement. Despite the real merits of this lifestyle, I don’t think a tiny house is in my future. How about you?
Have you ever wondered how your Social Security Number is created?
We each have a nine digit number that is used by the Social Security Administration, IRS, and employers. Created in 1936, the Social Security number was first designed to track your earning history. We all know that it is also used by financial institutions, insurance companies, courts and creditors.
The secrets to the numbers include: The first three digits are the area number – the geographic area where your number is registered. Since 1972, the number has been assigned according to zip code. The next two digits is your birth indicator. The last four digits also known as the serial number, completes the nine digit number. It is common to be asked for these last four digits to verify your identity when doing banking, insurance, credit history, and medical.
When I was in college, my social security number was my student ID. As identity theft, in which thieves take on someone else’s ID, became common, it was time for colleges to create their own ID system. Even when I started work, my SS number was on travel reimbursement papers; luckily that has changed now. Some businesses now scrub computers to make sure sensitive numbers are no longer stored on computers.
To deter identity theft, be careful about sharing your SSN and other key personal information (birth date, mother’s maiden name, place of birth, etc). For more information, see: http://www.consumer.ftc.gov/features/feature-0014-identity-theft
If your name changes, notify the the Social Security Administration so they can make changes in your account. To contact the Social Security Administration: www.ssa.gov; there you will be able to find your local office.
Last December I purchased material and a pattern to make my granddaughters a very popular costume. It was not a simple construction project so it was easy to postpone the task, while “thinking about it.” My only incentive to get the job done was the nagging feeling that they might move on to another character or outgrow the pattern before I got it done. Then this fall the call came: both of them had decided they wanted this costume for Halloween. It’s funny how someone helping you set a deadline finally makes a thought turn into action.
I think personal financial goals are the same. Individuals have good intentions to change how they manage their money, but until they have specific steps to take, a deadline for getting it done, and the support and expectation of someone else, it isn’t likely to happen.
The Extension store has available a Money Management Calendar, created by our Extension partners in Alabama. Changes in the 2016 edition include a goal writing page. That’s smart, because until you actually plan to earmark $10-$25-$50 each month (each or pay period) toward a money-related goal, it will probably be something you only “think about.” A clear plan can lead to action.
Another key to taking action is to find someone who will benefit from or support the goal. It can be tough to stay on track if you are alone in your effort; when an obstacle arises, it’s easy to reason your way out of following through with your plans. Another person’s expectations and their voice saying you can do it can keep you on track and moving forward. Get started by taking a look at the goal page of the new calendar. What do you want to move from “thinking about” to action?
Joyce Lash is a Family Finance Specialist and pleased she reached a goal! Happy Dance!
I often talk to people who feel like failures financially. They’re focused on all the things they’ve done wrong. Often they regret past purchases, past borrowing decisions, failure to save… that sort of thing.
It’s natural to regret your past mistakes. But after you’ve learned whatever lesson the past has taught you, there’s no point in dwelling on it. In fact, it is downright harmful.
The best way to improve your financial situation is to focus on what you CAN do. The past is outside your control. So is the price of gas. Thinking about them is just a waste of time. Instead, look for what you can do today to move you toward your goals.
Most importantly, notice when you take a positive step. Did you go to the store and avoid impulse purchases? Pat yourself on the back! Did you return a purchase to the store after deciding it wasn’t very important after all? Hooray! Did you shop around to find the best deal on your new tires? Three cheers for you! And when you reach a savings goal, that’s something to post on Facebook so your friends can celebrate with you!
Noticing the positive steps you take helps you believe that you can be a smart financial manager. As long as you focus on past failures, you will have trouble being optimistic about the future. But when you stop and look, you will see many smart decisions you make, too — both small and large.
People don’t reach for goals until they have reason to be optimistic. By noticing your own smart financial moves, you build confidence and optimism that will help you set and reach even larger goals.
What is a positive financial decision you made this week? ~Barb
Barb Wollan is a Family Finance specialist and a firm believer in the power of attitude