Do you "envelope" budget? Credit: PinkMoose/Flickr
A friend emailed me with a bit of budgeting advice passed on from her mother, the professional organizer Janet Fishman:
Set up separate bank accounts for: living expenses, play, long-term savings, education, charity, and retirement and have either a percentage or fixed dollar amount from each paycheck go into these accounts. Most all companies that offer automatic deposits for payroll have the ability to automatically deposit into multiple accounts. Figure out how much you need to pay taxes, divide by the number of weeks you work, and that constitutes the dollar amount to set aside for each week. Repeat this for the categories above and you will be fully prepared and organized year round!
This ads up to six accounts – or more if you set up one for taxes and other categories. Phew! That strikes me as a lot to manage. Plus, you would have a harder time hitting minimum balance requirements to keep your account free or low cost.
On the other hand, how much money you have to spend on any given thing would be crystal clear. No pushing money earmarked for one expense to cover something else. Plus, retirement is singled out, which makes it more likely that you will save for retirement.
What do you think of this modern take on the “envelope” system? Would you use it?
tinyfroglet / Flickr
I share five must read blog posts about saving money every Friday.
Tax issues – Five reasons you might not get your tax return. (Wisebread)
Free postage – Avoid the long line, here’s how to print USPS postage at home for free. (Bargaineering)
The golden years – Five tips to dealing with long term care and expenses in your later years. (The Digerati Life)
Don’t pay retail – Ten things you should always buy used. (MainStreet)
Money brain – Ever wonder why it’s so hard to save money? Watch the video of Laura Rowely to get the answer. Plus, learn at what age people begin to make the right financial decisions. (Daily Finance)
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Winner and runner ups announced below!
Visiting family and traveling were the two retirement activities most desired by the 42 readers who entered our contest to win “Can I Retire?” by Mike Piper, a self-published blogger who I met at a conference recently. Olivia made me laugh out loud when she said her priorities were “God first, then family, and finally fishing.” But I decided to declare as the winner…
Start early, and your IRA will grow into a mature account. Credit: Rev Stan/Flickr
I want to give my little brother his very own IRA retirement account as a college graduation present. Just what every new grad needs!
He just started a new job and is working on creating a budget that fits his $513 a week salary. One of his main goals is to get his car on the road, but I’m gently trying to persuade him to buy a monthly bus pass and contribute to an IRA retirement account. This may well be his quickest way to become a millionaire. (In case you wondered, he said my post about his new budget was “legit.”)
I waited far too long to establish an IRA (mid-20s) and regret I did not begin contributing as early as possible. In fact, I don’t know of any age (more…)
Over time, your IRA should grow like this guy! Credit: o5com/Flickr
Do you have a retirement account? Are you contributing?
If not, make it a goal to set one up by the end of the year. You can make a contribution for calender year 2010 as late as the date you file your 2010 taxes, which means you have until April to save up!
I recently set up a SEP retirement account, which is like a 401(k) for self-employed folks. I did not contribute a cent to a SEP last year because after maxing out my Roth IRA, I did not have anything left. It was the first year I launched BargainBabe.com and my income was meager.
This year I am delighted to (more…)
m kasahara/Flickr
Here’s another great tip from my interview with author Laura Rowley: BrightScope.com. The siteranks 401k plans for some of the country’s biggest employers, from 0 to 100. Is your company listed?
- Home Depot
- Apple
- Hewlett Packard
- Lowe’s
- Dell
- General Electric
- Microsoft
- IBM
- McDonald’s
- Walt Disney
- Exxon Mobile
- Walmart
- Boeing
- Qualcomm
- Nike
- Proctor and Gamble
- Sears
- Nike
- Coca-Cola
The ratings consider 200 factors, including total plan cost, company generosity, and investment menu quality. For each of these factors and others (like participation rate, salary deferrals, and average investment) you can see how each plan ranks compared to others.The Google401kplan, for instance, is in the top 15 percent of plans with the lowest fees, but is in the 35th to 64th percentile for average account balances. Those young computer whizzes are banking on their stock options, apparently. You can also get a report on the fees associated with your 401k when you register for the site.
BrightScope’s goal is “to increase the retirement security of America’s workforce by bringing transparency and efficiency to the 401k plan market,” the site says.BrightScope claims to be “the only 401k analytics firm that is truly independent and does not accept compensation in the form of revenue sharing from mutual fund companies or plan providers.”
So how does the sitemake money?BrightScope is “aligned with plan sponsors,” which is allthe websitesays about its bottom line. That leaves me slightly suspicions. It seems the site means well, but if the folks behind BrightScope are not willing to explain how it makes money then they are hiding something. You can read more about the company on their About page.
As for the data sources, the site culls 401kinfo from the Department of Labor, the Securities and Exchange Commission, the U.S. Census Bureau, the Equal Employment Opportunity Commission, and the Bureau of Labor Statistics. Some mutual fund and investment data come from mutual fund prospectuses, and a few companies provided information.I hope this site is a resource for you!
