Beware the Ides of March… if only Julius Caesar had taken that advice, this would just be a normal Tuesday. Just a reminder that the Federal Open Market Committee (FOMC) is meeting today and tomorrow, and members are expected to cover whether or not to raise interest rates, the employment report and global issues that affect U.S. markets. Bankrate puts the chance the Fed will raise interest rates at low. We’ll report notable outcomes next week, but here are some other things to keep in mind today…
What’s the best way to build wealth in your twenties? Kiplinger says there are five: knowing where your money goes, building a credit history, putting together an emergency fund, investing in your 401(k) and keeping track of student loans.
Now, I won’t try to rank these in order of importance, because the fact is that they’re all vital to a healthy financial future. But I want to take a minute and highlight emergency funds. According to last month’s America Saves Week survey, only 28% of Americans are saving at least 10% of their income — and recent research suggests 15% is ideal because we’re living longer. We can’t control life’s curveballs, but an emergency fund is the best way to prepare for unexpected costs like medical bills, car repairs and even losing one’s job. Another key way to build wealth? Adding to your 401(k). The more you sock away in your twenties, the less stressful the future will be — and not taking advantage of employer match programs basically means throwing away free money.
Out With the Old, In With the New… Retirement Advice
While we’re on the subject of earning for the future: Maybe little black dresses never go out of style, but the same isn’t true for retirement advice. That’s because the economy — and because of this, retirement — looks different now than it did a couple of decades ago. U.S. News & World Report has a revamp of some of the facts and figures you may have heard over the years, starting with portfolio splits.
The classic advice is to put 60% of your money in stocks and 40% in bonds, but in today’s low-interest-rate economy, it may make more financial sense to upend that ratio and go with an 80/20 split in favor of stocks. Worried about risk? Keep in mind that whatever the short-term, stocks have a tendency to go up in value over a 10-year period — and low-earning bonds may not earn enough to sustain a possible 30-year retirement. Another out-of-date figure? 4%, as in the idea that it’s safe to withdraw 4% each year from your retirement account. Not all accounts have a 4% gain every year, so taking out too much could hurt your base. Instead, use each year’s market conditions to make your decision.
The Real Deal on Rental Car Insurance
Renting a car for a spring break trip? Before you say an automatic “no” to adding their insurance, consider preparing for the worst and hoping for the best. The New York Times has 8 things you should know about rental car insurance, including what, if anything, may already be covered. Some credit cards and personal auto insurance policies offer coverage for rental cars, but you’ll want to check where you stand before making any decisions. Personal car insurance with comprehensive and liability means rental cars are probably covered, but call to verify — and remember that filing a claim could raise your premium.
As far as credit cards go, primary rental car insurance more or less guarantees coverage (again, call to check), and secondary insurance means you might have to get your personal car insurance involved as well. Other tips to note? Take advantage of AAA memberships, take phone pictures of the car right off the bat and keep copies of everything — and I mean everything.
Stay In and Save
Whether you’re staying in tonight due to superstition or you’re just planning to take a load off this week, Money has some frugal ways to relax, unwind and have fun. Bubble baths in lieu of spa days, at-home yoga instead of the gym and BYOB board game nights all made the list.
If you’re looking to save a good amount of pocket money, consider hosting a dinner party this weekend instead of going out with friends. Look up a famous chef’s recipe and split the price of ingredients or encourage everyone to bring a dish of their own made from whatever they have in the house (Supercook gives you recipes based on the ingredients in your kitchen).
Have a great week,