This Week In Your Wallet: The Boring Secret To Getting Rich
Happy Tuesday/Tax Week. Before we get to the meat and potatoes (and there’s a lot going on this week), I want to thank you for all the help and support with the HerMoney with Jean Chatzky podcast launch. You guys are the best! We are currently #6 on the list of top business podcasts on iTunes. And for those of you who aren’t on iTunes, I didn’t mean to neglect you — but thanks for letting me know I left you out! You can listen to the show here.
Now, to the news of the day: You’ve got until April 18 to file your taxes this year or to file an extension. I covered last-minute tax tips for filing electronically, making sure you grab all the deductions for which you’re eligible and (gulp) avoiding an audit, this a.m. on TODAY. If you missed it, here it is.
A Surge In ATM Fraud
Over bagels and The New York Times this weekend, my stepfather Bob said, “Here’s a good story for your newsletter.” He was right. The Times reported that fraud using ATM “skimming” devices is surging. A skimmer is a device placed over the ATM card reader that stores card information and can sometimes even record a user’s PIN number. According to FICO’s Card Alert Service, there were six times as many machines compromised by criminals in 2015 as opposed to 2014. Non-bank ATMs were hit the hardest (think places like convenience stores).
So what’s a card user to do? Personally, I don’t use ATMs that aren’t associated with a financial institution I trust. (I also try like really hard never to use one that’s not associated with my own bank because I hate paying the $3 fee). My default for getting cash if I’m in a pinch is to use debit at the grocery store or drugstore and make a simultaneous withdrawal. It also pays to note anything that looks strange about an ATM — does a fixture wiggle or look like it’s attached with glue? Bad sign. Also, cover the keypad with your hand while you enter your pin in case of unwarranted cameras. Finally, always, always, always keep a close eye on bank statements for fraudulent activity.
The Boring Secret to Getting Rich
If I had to dial down the essentials of personal finance to one basic rule, it’d be as simple as this: Live below your means. Money agrees— and notes that just because it may sound “boring” doesn’t mean it’s easy. Yes, the bigger the difference between your earnings and expenditures, the more financial freedom you’ll probably have. But that’s often easier said than done. People you might immediately think of as wealthy, with large houses and expensive cars, could be far in debt — and therefore not technically wealthy at all. True wealth comes from spending less than you earn consistently over time and putting the rest away.
Finance in Your 40s
And once you’ve put that money away? Kiplinger has four aggressive moves to make in your 40s to achieve long-term financial goals. Among them? Beef up investing. Preparing for your retirement should come first, and that means maxing out contributions to the retirement plan offered by your employer. Don’t forget that the money in 401(k)s and traditional IRAS is taxed upon withdrawal, so it might be a good idea to split your contributions so that some money is going into either a Roth IRA or Roth 401(k) if you have that option.
Sit down with a financial planner and go over your mix of investments, don’t put college savings over your retirement — people can’t borrow money for the latter — and work as hard as you can to pay off debt. Just think about what a relief it could be to retire mortgage-free.
Checking Accounts
Every little bit counts when it comes to saving — but what if some of us are saving in the wrong place? A new Bankrate.com study found 21 checking accounts offered by U.S. banks and credit unions that yield 2% or more. For comparison, the average money market account yields 0.11%. Those high-yield checking accounts can mean earning hundreds of extra dollars a year. But customers must meet certain requirements each year to qualify for the highest rates, including paying bills online and making a designated number of debit card transactions each month. They also often have maximum (not minimum) balance caps, the average of which is about $16,336. A 2% yield rate on that would bring in an extra $327 a year for the account holder. That, to put it in perspective, is a car payment.
Long Live the Store
It may be the age of the Internet, but a new survey shows online shopping hasn’t overtaken in-store just yet. (That’s great for those of us who love a little retail therapy with our BFFs). 90% of consumers said they plan to shop in stores this year just as often as they did last year. And shoppers aren’t just interested in the stores themselves — service is the real draw. 54% said prompt service was their number-one priority, and almost one-third are looking for a personalized shopping experience.
Another tidbit that could inspire in-store updates? 59% of consumers said they’d like store associates to know what items are in their online cart so they can answer any questions. For the best deals, don’t forget to stay up-to-date on your favorite stores via their websites or email — take advantage of both in-store and online sales. Pro tip: April is the best month for deals on spring clothing, plus home, garden and auto supplies.
Have a great week,
Jean
