Welcome to the September edition of Top of Mind!
Good news first: Inflation has fallen dramatically from a staggering peak of nearly 10%. The bad news? The high cost of living is here to stay.
In this month’s Top of Mind, we share practical money-saving ideas to cope with high prices. While no single tip is a magic bullet, these strategies can make a real difference in your finances.
Additionally, we tried something new and different this month. We used the popular Artificial Intelligence program DALL-E to generate digital artwork inspired by iconic works of art, visualizing the high cost of living. We loved the results and hope you will too!
Now, here are our top tips, tailored by generation:
Retirees
- Shift funds from low-return bank accounts into higher-yielding options like CDs, Treasury Bills, or Money Market funds. It’s a simple move that can boost the return on your savings.
- Buy your leased car. Most leases include a buy option at the term’s end. If your lease is a few years old, you may be able to buy the car at pre-pandemic prices.
- Explore tax efficient ways to support children or grandchildren. With prices soaring for college tuition, new homes, and cars, it’s not easy for young adults to get ahead today. Talk with us about the best ways to transfer wealth across generations.
- Claim Social Security benefits wisely. You can begin collecting Social Security at age 62, but waiting can lead to higher monthly benefits. We can guide you through the specifics.
- Consider Qualified Charitable Distributions (QCDs). If you're 70 1/2 or older, free up money in your budget by using QCD's to donate directly to charity from your IRA.
- Consider part-time work…provided you love it. Hourly wages have soared! If you’d like to retire but are worried about the high cost of living, consider working part-time to ease the transition. Just be sure it’s something you enjoy!
Mid-Career:
- Don’t get mad, get even (through stock ownership). Frustrated by the high cost of living? High prices can mean higher profits for corporations. That’s partly why stocks have delivered long-term protection against inflation.
- Tackle variable rate debt! Interest rates have soared on credit cards, home equity loans, and other types of debt. You’ve heard of the “magic of compounding” for stock market returns? That “magic” applies to liabilities, too: high-interest debt can snowball.
- Fund 529 College Savings Plans early on. Tuition costs keep rising. 18 or 20 years of compounding in the stock market can make a big difference versus just 5 or 10.
- Catch up on your 401(k). If you're over age 50,you might be eligible to make "catch-up" contributions to your 401(k), allowing for additional tax deferrals.
- Maximize Health Savings Accounts (HSAs). HSAs are a powerful savings tool to confront healthcare costs. They come with numerous tax perks:
- Employer HSA contributions are tax-free.
- Your HSA contribution reduces your taxable income.
- HSA funds grow tax deferred.
- Eligible withdrawals are tax-free.
- Join Digital Resale Marketplaces. Outgrown that baby equipment? New online marketplaces simplify selling. Bonus: you’ll help the next generation of parents to save money. Beyond baby gear, these marketplaces are vast and easy to use.
Young Adults
- Negotiate your salary. With companies struggling to find workers, you may have more negotiating power than you think.
- Use credit card travel awards. Enjoy traveling? Certain cards offer impressive rewards for flights and hotels. Just be certain to pay off your balance every month!
- Limit impromptu dining out. Meal plan instead. Prioritize “experience dining” like a special night out with friends, and limit dining out for the sake of convenience. Instead, plan meals in advance. You’ll save money on restaurants and waste less groceries.
- Seek the 401(k) match. Invest at least enough in your company's 401(k) plan to receive the company's match. (It's free money!)
- Audit your Apps. Many Apps raise prices quietly or auto-renew unexpectedly. Check your App store receipt for any unexpected charges.
- Join Digital Resale Marketplaces (as a buyer!). Especially for younger parents or new homeowners, these marketplaces offer great deals on lightly used items like baby gear and home furniture.
Always remember, while we can’t control the stock market, economy, or inflation, we can control our responses to them. Every little money habit counts!
Thanks for reading this month’s edition of Top of Mind! As always, we’d love to hear what’s top of mind for you.
Sincerely,
Kurt, Cassidy, Ken, Teresa, Brian, and Jacque
p.s. The Top of Mind logo, inspired by the Greek mythological figure Sisyphus whose fate was to roll a stone up a mountain, was not created by artificial intelligence but rather our own Teresa Davis.