Ask the Readers: What Helps You Relax?

The holiday season is usually very busy for many families, but you can relax now, right? Now that it’s over? Unfortunately, there are other sources of stress in our day-to-day lives; it’s important to remember the things that help us relax even when we’re not bustling through the busiest season.

What helps you relax? What do you do to get through especially stressful days? Do you set aside time for self-care?

Tell us what helps you relax and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
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Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

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Giveaway Rules:

  • Contest ends Monday, January 20th at 11:59 p.m. Pacific. Winners will be announced after January 20th on the original post. Winners will also be contacted via email.
     
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How to Get Your Kid Started With Investing

Wise Bread Picks

My daughter recently lost $80 in her bedroom. It’s just gone. One theory is that we accidentally donated it to Goodwill, since she had stored it in an old book and we’d been clearing out a lot of junk. But it got me thinking: What would be a better place to keep money she’s not using?

She’s been bringing in some respectable allowance earnings with the chores she’s taken on recently. Plus, she always receives some money for birthdays, and she doesn’t spend much. Maybe an investment account?

While the investing rules are a little different for minors compared to adults, it’s not hard to get your child started investing. Even if they only make a little money, the experience may encourage them to start investing for retirement early in adulthood, which can set them up for life. Here’s how to show your kid the basics of investing.

Determine what kind of account to set up

Children can set up savings, checking, or brokerage accounts using the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). All they need is an adult (presumably you) to sign on as the account’s custodian. This means you have to approve what your child does with the money until your kid is of age, which is 18 or 21, depending on what state you live in. Because the funds or investments in a UTMA legally belong to your child, once they’re in this account, they can only be spent for your child’s benefit. You can’t deposit $100 in your child’s UTMA account and later decide you want it back or transfer it to another child.

Setting up a UTMA account is much like setting up any other account. You can walk into a bank or credit union and open one for your child by filling out some paperwork and showing your identification, or you can go online to sign up for one with a firm such as Vanguard.

Your child could also set up a UTMA 529 savings plan. The 529 is a college savings vehicle that has tax advantages, but also comes with restrictions on how it can be spent. More on that below.

Aside from a traditional brokerage account, your child could also try a micro-investing account, since they’re likely to be starting with a small amount of money. You can set up a custodial account through Stash or Stockpile — in fact, Stockpile even works with BusyKid, an app that helps families track kids’ chores and pay their allowances digitally.

Besides an investment account, you may also need to open a checking or money market UTMA for your child and link it to the brokerage account, as a way to fund the brokerage account and a place to receive dividends and other proceeds.

Unless they have earned income from working, your kids can’t set up a traditional or Roth individual retirement account. (See also: 9 Essential Personal Finance Skills to Teach Your Kid Before They Move Out)

Figure out what investment vehicles to use

Once their account is set up, kids have access to the same investment products that adults do, such as mutual funds, individual stocks, or exchange-traded funds. Which products they choose depends on their interests, how much money they have to start with, and how actively they wish to invest.

A child who is interested in following one or more companies in the news and making active investment choices may want to buy individual stocks. Look for a brokerage firm with no minimum initial deposit (or a low one) and low trade fees. While this is a concrete and exciting way to start understanding the stock market, make sure that kids understand that for the long haul, many financial advisers recommend investing in funds over individual stocks.

If your child doesn’t have any individual companies in mind, but would like to invest in the market as a whole, a mutual fund such as an S&P 500 index fund is a great way to go. Good ones have low expenses, meaning that your kid gets to keep more of his/her investment. Unfortunately, mutual funds do tend to require minimum investments. For instance, to buy shares in Charles Schwab’s often-recommended S&P 500 index fund, you need to open a Schwab brokerage account with a $1,000 initial deposit. However, there is one way around that: You can also open a Schwab account with a $100 deposit — but you have to deposit an additional $100 each month until the account has a $1,000 balance.

Your child could also buy exchange-traded funds, which work a lot like mutual funds but tend to have lower minimum investments.

Another way to get started with a small initial investment is to use one of the micro-investing apps mentioned above, which split one share of stock or of an ETF and sells the investor a fraction of it. These apps can make getting started very simple for young kids by characterizing investments by category. In exchange for making things this simple for you, these services usually charge a monthly fee; Stash’s is $1 per month.

While your child could also opt to invest in Treasury bonds or certificates of deposit, at today’s low interest rates, this probably wouldn’t be a very exciting way for them to learn about investing.

What about taxes?

Does your child have to pay taxes on their investment gains? Do they have to file their own tax return? The answer to both questions is, “It depends.”

If your child’s investment income is less than $1,050, don’t worry about it; you don’t need to report this to the Internal Revenue Service. If the child’s investment income is less than $12,000, the parent can opt to report it on their own tax return, or file a separate return for the child. At more than $12,000, you have to file a tax return for your child.

What rate will your kid pay? Unearned income up to $2,100 will get taxed at between 0 percent and 10 percent, depending on what kind of income it is. After that, your child’s unearned income will be taxed at your rate, no matter if you file separately or together. So don’t imagine that you can save a bundle on taxes by transferring all your investment accounts to your kids — the IRS caught on to that gambit years ago.

If your child chose to put their money in a UTMA 529 plan, they never have to pay federal taxes (and generally not state taxes either) on the earnings, as long as they spend it on qualifying educational expenses, such as tuition and textbooks.

Will investing hurt their chances of getting college aid?

It’s important to note that when it’s time to apply for college financial aid, assets in the child’s name count against them more than assets in the parents’ name. Unless you’re sure your family won’t qualify for financial aid — and outside of the 1 percent, that’s not usually something you can be sure of in advance — encourage your child to choose shorter-term goals for their investment account. They could choose a goal of anything from buying a new Lego set, to a week of sleep-away camp, to their first car.

Again, putting their investments in a 529 plan changes the situation a bit. Even if the child is the account owner, the financial aid officers consider assets in a 529 account a parental asset. This is great, because only about 5 percent of parental assets count against financial aid eligibility, compared to 20 percent of student assets in a non-529 UTMA account.

If your student does invest college savings in their own name, have them spend their own money first before you tap into a 529 plan or any other savings you are holding for their education.

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Want to know how to get your kid started with investing? It’s a great way to help your children make money for the future. For personal finance tips here's how to show your kid the basics of investing! | #investing #personalfinance #moneymatters

Source: wisebread.com

Ask the Readers: What Are Your Goals for 2020?

Happy New Year! With the fresh new year ahead of us, now is the perfect time to take stock of your goals for 2020.

What are your goals for 2020? Why these goals? What steps will you be taking to achieve these goals?

Tell us about about your goals for 2020 and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
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  • Contest ends Monday, January 6th at 11:59 p.m. Pacific. Winners will be announced after January 6th on the original post. Winners will also be contacted via email.
     
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Ask the Readers: What Are You Most Thankful For?

As the year is winding down and we celebrate the holiday that’s all about gratitude (and food), it’s a good time to reflect on the things we’re thankful for.

What are you most thankful for? What impact does it have on your life? Has it changed your lifestyle in any way?

Tell us what you’re most thankful for and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
  • Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

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Giveaway Rules:

  • Contest ends Monday, November 25th at 11:59 p.m. Pacific. Winners will be announced after November 25th on the original post. Winners will also be contacted via email.
     
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Ask the Readers: What New Skill Would You Like to Learn?

The holiday season is usually very busy for many families, but you can relax now, right? Now that it’s over? Unfortunately, there are other sources of stress in our day-to-day lives; it’s important to remember the things that help us relax even when we’re not bustling through the busiest season.

What new skill would you like to learn? What positive impact do you think knowing this skill will have on your life? Where would you go to learn this skill

Tell us about a new skill you would like to learn and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
  • Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

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Giveaway Rules:

  • Contest ends Monday, January 27th at 11:59 p.m. Pacific. Winners will be announced after January 27th on the original post. Winners will also be contacted via email.
     
  • This promotion is in no way sponsored, endorsed or administered, or associated with Facebook or Twitter.
     
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What to Do Now to Prepare for Tax Season

Wise Bread Picks

Preparing for tax season often seems more like a sprint than a marathon. You receive your W2 forms in the mail in late January, and then it’s time to excavate your receipt shoe box and spend a stressful weekend trying to make sense of your tax return. All in all, it feels like a hurried, overwhelming, and nerve-wracking chore that you dread every year.

But what if filing your taxes didn’t have to be quite so stressful?

The trick to making your tax season a breeze is preparing for it early. As in, right now. If you want an easy and relaxed tax season, here’s what you can do now to get ready.

Make a list of the information you’ll need

One of the most frustrating moments in tax preparation is discovering you’re still missing one vital piece of information after you’ve gathered everything you thought you needed. And it’s even worse if you don’t know how to find the missing information. 

So look over the specific info you need to file now, to give yourself time to gather all the items well before Tax Day. Specifically, you’ll need:

  • A copy of last year’s tax return
     
  • The Social Security or Tax ID number of every member of your household
     
  • The income records of every member of your household
     
  • Receipts for your deductible expenses
     
  • Records of any taxes you’ve paid throughout the year

Putting together your list of necessary information and checking each item off as you gather it will ensure that you’re fully prepared when you finally sit down to file. (See also: The 7 Most Common Tax Questions for Beginners, Answered)

Organize your receipts

Keeping track of tax-related receipts throughout the year is one of the most difficult parts of handling your taxes. Many people throw all of their receipts for work-related expenses, charitable donations, mortgage payments, medical expenses, and interest statements in a single folder or box to deal with “later.” 

Now is an excellent time to dig out your receipts and start organizing them according to category. Having your receipts neatly separated now will make it easy to sort the last few that come in as the year comes to a close, and can help you get into the habit of putting them in order as you receive them.

Gather your paystubs together

Though the majority of filers will receive either a W2 or 1099 form from their employer(s), it’s still a good idea to gather your paystubs before the end of the year to get a rough idea of your income. That will help you identify any potential mistakes on your W2 or 1099 forms as soon as they arrive. It’s far better to catch a mistake early rather than find you need to request a corrected form close to the IRS deadline.

Plus, checking over your paystubs all at once gives you a chance to take a look at your federal and state tax withholding over the year, as well as any pretax contributions you’ve made to your 401(k) or IRA. 

Review your W4

Another great reason to look at your paystubs now is that it gives you a chance to review your W4 with your employer. 

The W4 form determines how much tax withholding is taken from each paycheck. If you expect to receive a large refund this year, you can adjust your withholding allowances now to ensure that more of your paycheck will come home with you in 2020. If, on the other hand, you worry that you may owe money because you didn’t have enough withheld, now is a good time to adjust your W4 to be sure you don’t have the same problem in the coming year. (See also: Are You Withholding the Right Amount of Taxes from Your Paycheck?)

Send more money to your retirement fund

If you have access to a tax-deferred retirement account like a 401(k) or an IRA, now is the time to see how much money you have set aside this year, and try to increase that number. 

As of 2019, workers under 50 years old can save up to $19,000 in a 401(k) and up to $6,000 in an IRA. And every dollar you put into these kinds of accounts reduces the amount of income you have to pay taxes on. 

Now is an excellent time to try to maximize your 2019 contribution. You have until the end of the calendar year to maximize your 2019 401(k) contribution, but you can continue contributing to your 2019 IRA until April 15, 2020. 

Getting into the habit of increasing your contribution now can also help you reach the maximum in 2020, which is going up to $19,500 for 401(k) accounts, although the IRA maximum will hold steady at $6,000. (See also: 8 Tax Return Mistakes Even Smart People Make)

Plan ahead for your refund

If you expect to receive a refund this year, start thinking about the best way to use the money now. We tend to think of a tax refund as “free money,” even though it’s just your own salary being returned to you. But with a free money mindset, it’s very easy to go overboard spending the refund on fun stuff, like a vacation or a new gadget.

There’s nothing wrong with enjoying your tax refund, but taking a hard look at your budget and finances now can help you to determine if having fun with your refund is the best use of the money. Is there some debt you could pay down (or pay off) with the refund instead? Or is there a major goal you’re saving toward — like a down payment on a house — that would benefit from an injection of cash? 

Thinking through the best use of your tax refund before you have it in your hot little hands makes it more likely you’ll make good decisions with it. Once you have the money in your possession, it’s very tempting to make it rain instead of saving for a rainy day.

Make your tax season less stressful

Getting a jump start on your filing chores will not only make tax season much easier, but it can also help you prepare for your finances in the coming year. Start 2020 on the right financial foot by starting your tax season preparation early.

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The trick to making your tax season a breeze is preparing for it early. As in, right now. If you want an easy and relaxed tax season, here's what you can do now to start planning. | #tax #taxreturn #financetips

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Ask the Readers: Do You Volunteer?

Volunteering is a great way to give back to your community, and you can gain a lot from the experience, too! It’s an opportunity to meet a lot of different people and learn a bunch of new skills while making a difference in your community.

Do you volunteer? What are some of your most memorable volunteer experiences? If you aren’t volunteering right now, what organizations or projects would you like to be a part of when you have the time and energy to give?

Tell us about your volunteer experience and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
  • Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

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Giveaway Rules:

  • Contest ends Monday, March 9th at 11:59 p.m. Pacific. Winners will be announced after March 9th on the original post. Winners will also be contacted via email.
     
  • This promotion is in no way sponsored, endorsed or administered, or associated with Facebook or Twitter.
     
  • You must be 18 and U.S. resident to enter. Void where prohibited.

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Ask the Readers: How Do You Fight the Winter Blues?

Many of us experience the winter blues as the days get colder and darker, some of us may experience it more severely as seasonal affective disorder (SAD). Fortunately, there are steps you can take if you’re feeling usually gloomy or lethargic, such as getting natural light whenever you can or doing moderate exercise.

How do you fight the winter blues? What works as a quick pick-me-up when you’re feeling down?

Tell us how you fight the winter blues and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

  • Follow us on Twitter
  • Tweet about our giveaway for an entry.
  • Visit our Facebook page for an entry.
  • Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

a Rafflecopter giveaway

Giveaway Rules:

  • Contest ends Monday, December 2nd at 11:59 p.m. Pacific. Winners will be announced after December 2nd on the original post. Winners will also be contacted via email.
     
  • This promotion is in no way sponsored, endorsed or administered, or associated with Facebook or Twitter.
     
  • You must be 18 and U.S. resident to enter. Void where prohibited.

Good Luck!

Source: feeds.killeraces.com