The complete guide to managing your money

According to a 2019 survey, 9 in 10 adults say nothing makes them happier or more confident than having their finances in order. This guide is your ticket to joining in.

　　

Stymied as to where you can find the extra money to add to the highest-rate card? Time to scour that budget you’ve got running in the background. Maybe an expense gets totally chopped, or maybe you do some strategic nipping and tucking to reduce monthly outlays for some of your expenses.

With the “snowball” strategy, on the other hand, you send your extra monthly payments to the card with the smallest unpaid balance. The allure of this pay-back method is that it provides a nice bit of psychological mojo: By focusing on the card with the smallest balance, you’ll get it paid off faster. Seeing a card balance hit zero can be valuable motivation … if you need it. Otherwise, the avalanche system actually will save you more money.

Save for retirement

Even if you have decades to go until retirement, the time to get started saving was yesterday. The longer you wait to get serious about this big honking goal, the more you will need to contribute to land in retirement in good shape.

There’s no one rule for how much you’ll want (read: need) to save for retirement, but a solid guideline is to have a multiple of your salary set aside at different ages. As you can see below, having retirement account balances equal to two times your salary by age 35 sets you up for success. When you’re 50, the aim is to have six times your salary in retirement account, and by your late 60s, having 10 times your salary saved up is recommended.

The best way to save for retirement is to use special accounts that give you valuable tax breaks. Many workplaces offer retirement accounts that you contribute to, such as 401(k) and 403(b) plans — the former by private employers, the latter by nonprofits and the government. And everyone with earned income can contribute to their own individual retirement account — or IRA, for short. Many brokerages offer IRAs.

With both 401(k)/403(b) plans and IRAs, you may be able to choose between a “traditional” account or a “Roth” account. The difference is when you grab your tax break

With traditional 401(k) and 403(b) accounts, you get an upfront tax break: Your contribution reduces your taxable income for the year. Traditional IRA accounts may also qualify for this upfront tax break, depending on your income. When you eventually make withdrawals from traditional retirement accounts, you owe income tax on every dollar you withdraw.

Roth 401(k) plans and IRAs deliver the tax break in retirement. The money you contribute today doesn’t reduce your current income and your contribution is made with after-tax dollars. But when you make withdrawals in retirement, there will be no tax owed.

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.