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Redo U: Money - Stacey Tisdale Viewer Q & A
In today's "Redo U: Money" financial journalist Stacey Tisdale shares tips on how to budget your income from saving for retirement to buying a house. Tisdale shares more advice below by answering some viewer questions.
1. How do you budget for the unexpected things? (from Theresa S. Sampson)
Create a safety net by creating an emergency fund. Emergency funds are insurance that things like job loss or illness don't throw our financial lives into turmoil. I recommend setting aside enough to cover nine months worth of expenses. Don't get freaked out by the number, this is something you are working towards. Try and take 10 percent of your salary and have it automatically deposited into this fund each month until you hit that mark. Figure out places where you can cut back. Maybe you can bring your lunch to work a few times a week instead of eating out. Be creative, you'll feel more secure.
2. How can you save money when you're struggling to pay your mortgage? (from Magan M. Siegrist-Paulson)
As a rule, you shouldn't be spending more than 30% of your paycheck on your housing costs, mortgage, maintenance, etc. If you're struggling to pay your mortgage, you need to step back and think about your priorities. What are your most important goals? Would selling your home and creating a housing option you can afford be a better option? Would you feel better? Also, look at your spending and income. Are their places you can cut back? Are there other ways you can create income like selling unnecessary assets or finding extra work? The most important thing is to think about the lifestyle you want and decide if what you are paying for your home is worth the cost.
3. How much should I save for retirement? (from Dylan Mitchell)
It starts with your goals. Imagine how you want to live retired: How are you spending your days? Where are you? How much does your lifestyle cost? Do a simple search on the internet for a retirement calculator. You'll see how much you should be putting away. The affects of inflation, and adjustments you may need to make. You may see you need to have to work a few years longer to create to support your lifestyle, but you'll feel much better when you know where you stand, and what you need to do.
4. What's the best way to save for my daughter's future? (from Raeleenia Lehman)
I'm not sure how old your daughter is but a great way to save for her education is through Section 529 Plans. These plans are offered by each state. You can pick a plan from any state; you are not limited to your own state's plan. Why use them? You control the money if you set up the account, but it's out of your estate and in your child's name. It does not, however, count against your child for financial aid purposes. And - very important - although you contribute the money after tax, the money builds tax-free and there are no taxes on distributions if used for qualified educational expenses. Money can also be transferred among family members.
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