Money $ Tips

Every year May 29th (5/29) is celebrated as “529 Day.” It is a day to learn about the benefits of saving early for higher education for children, because a little savings can go a long way to building future dreams. Why “529 Day”? Because 529 College Savings Plans are named for Section 529 of the federal tax code. They are an easy way to save and invest for higher education, whereby anyone can set aside money for a child’s future education and watch that money grow tax-free.  

Parents, grandparents, and community members can all help a child realize their potential, by putting money aside for future education. When the child is ready to continue their education, the funds can be used for tuition, room & board, books and more. And the best part is that there are no income tax on those withdrawals. Plus, the depositor gets a Wisconsin state tax credit on their contributions. Watch a quick video about Wisconsin’s 529 plan  or visit edvest.com to learn more about 529 plans, Edvest, and Tomorrow’s Scholar.

Not sure about a 529? There are other ways to save for higher education. Extension Educators across Wisconsin encourage families and communities to consider whatever savings tools are the most accessible and the easiest to get started with. Why? Because even as little as $1 to $500 set aside for future education, encourages a child to do better in high school, and makes them three times more likely to enroll in a higher education program, and four times more likely that they will graduate from that program. These are big impacts from small dollars! 

Communities can help, too. Many communities are investing in their youth through Universal Child Savings Accounts so that all children in their area get the boost that small savings can provide for their future aspirations. 

This 529 Day, encourage a child to have big dreams for their future by setting aside some funds for their education. When combined with other forms of support, like having conversations about their interests and educational aspirations, being involved in school events, and exposing a child to new careers and experiences, these savings will make a big difference. 

Most couples have different opinions about spending and financial priorities from time to time. That’s to be expected. The challenge is learning how to talk about differences. When couples don’t talk about money, whether large amounts or small, misunderstandings can occur.

Money beliefs and Conflict

Arguments about money are one of the leading causes of divorce in the United States, but it doesn’t need to be a source of stress in your relationship. 

How often should you talk to your partner about money?

A monthly check-in is a great place to start because many bills are on a monthly cycle. A monthly check-in gives you the opportunity to look over finances based on your bills and budget. Be sure to add an extra check-in time during the month if a big expense comes up that might throw off the budget. Couples may want to discuss and agree on what a ‘big expense’ might be. Anything over $100? Or $200?

Where should you talk to your partner about money?

A comfortable, neutral place without distractions. Turn off the television and your notifications on your devices. Talking about money can be stressful. To lower your stress and maybe even make it more fun, include a treat or plan to do something you both enjoy after the check-in.

What money topics could you talk to your partner about?

Here are some ideas:

  • Monthly
    • Discuss your budget to compare income to spending. Some months will be more expensive than others because life is full of ups and downs. If you had an unusual month, you can talk about where to cut back, spend, or save for next month’s budget.
  • Quarterly
    • Talk about financial goals that you’d like to reach in a few months, next year, or even years from now and how to prioritize them. Financial goals might include retirement planning, children’s education, a new appliance, etc.
    • We all have only so much money to work with. Figure out what feels like a good compromise for both of you for a shared goal, or couples can discuss other options, like an equal amount of money that goes towards each of their top priority goals.
    • Every four months, get your free credit reports to share with each other. Order your free report at annualcreditreport.com.
  • Annually
    • Early in the New Year, talk about taxes, insurance, and annual expenses, such as back to school time or holiday spending.
    • Revisit your conversation about what a ‘big expense’ means before buying that more expensive item. Determine the dollar amount you both feel comfortable using as a guide for when to check in with each other. Is it $50 or $100?
    • Consider discussing topics related to Advance Directives for healthcare decisions and Estate Planning every year to talk about any changes in your family situation in the past year that could trigger a change in beneficiaries such as a new child or other paperwork that needs to be updated.

Need more help on where to start your money conversation? Take a look at this resource from UW-Madison on “How to talk about money.” 

Protecting Ourselves from Inflation and Economic Uncertainty 

Avoid the myths:  

1. Myth: Buy Gold. Fact: Invest in Stocks and Bonds 

2. Myth: My money is safer buried in the ground. Fact: It would take $1.67 today to buy the same amount of goods and services that your buried $1.00 bought in 2000.  

Buy and Hold is the Best Strategy ​(regardless of inflation)​ 

Highest rates of return:​ 

  • Invest in yourself: Human capital​ and Overall health​ 
  • Most homes appreciate in the long-run​ 
  • Diversify your portfolio of stocks and bonds​ “Buy low, sell high”​ 

Build an Emergency Fund 

  • Make regular automatic deposits into a saving account.  
  • Save at least ten percent of any income you receive. ​ 
  • Using a tax refund to build an emergency saving is a good strategy. ​ 
  • Save “bonus” income​ 
  • Collect loose change​ 
  • Break a habit​ 
  • Save lunch money​ 
  • Have a “nothing week”​ 

Best Strategies When Facing Economic Uncertainty: Keep Calm and…​ 

  • Be adaptable: think about what you can do without and find cheaper ways to entertain yourself. It won’t be forever​ 
  • Find new income streams. Use your creativity to find ways to “monetize” your skills with what others would value​ 
  • Prioritize monthly bills and when they are due​ 
  • Build an emergency fund while you are paying down debt 
  • If one must, it is okay ​to use retirement funds (talk to a financial advisor)​ and to pay only the minimum on credit card bill​ 
  • Communicate with creditors before getting into trouble​ 
  • Only pay off large sums of money only if you have plenty of liquidity for emergencies​ 
  • Talking about one’s estate shows love to those you care about: make sure wills and advance health care directives are in place ​ 

Where are we heading?​ 

Two years after the beginning of the pandemic:​ 

  • Basics of the overall economy are strong​ 
  • Real GDP is growing​ 
  • Labor market is “tight”​ 
  • Biggest uncertainty factors​ 
  • Impact of Russian war on oil prices, commodity prices, fertilizer prices​ 
  • latest COVID wave; shut down in China impacting supply chains again​ 
  • Congress sets Fiscal Policy through direct spending and changes in tax rates​ 
  • Stimulus propped up demand through Expansionary Policy​ 
  • Supply shrank due to massive shutdowns. Had this been shorter, inflationary pressure wouldn’t have been nearly as bad​ 
  • Federal Reserve conducts Monetary Policy which influences interest rates and the money supply​ 
  • They want to get back to 2% inflation “neutral” rate​, they need to use Contractionary Policy, but want a “soft landing,” so they don’t overcorrect us into a recession​ 
  • They don’t have tools to manage the supply side of the economy 

https://www.federalreserve.gov/faqs/economy_14419.htm

Cash in your wallet: Which bill do you think gets worn out the quickest?  

You might guess the dollar bill, but both the $5 and $10 bills have shorter life spans. The $5 bill is in circulation about 4.7 years and the $10 bill lasts about 5.3 years… and the $1 bill lasts 6.6 years. Now the $100 bill must not change hands too frequently because those last about 22.9 years!

If you have other questions about currency and coins, head over to the Federal Reserve website and check out their FAQs at https://www.federalreserve.gov/faqs/currency-coin.htm

With gas prices passing $4.00/gallon in Wisconsin many of us are feeling the pinch at the pump. While many families are still recovering from losing income during the pandemic, the current spikes in prices for gas and food can feel particularly hard to manage right now.

Consider trying some of the strategies listed below to keep costs down, allow you to meet your obligations, and to make room for the things you love to do.

Check out these tips to save on transportation costs.

  • Plan ahead and combine trips. If you need to run to the grocery store, buy new shoes for your child, and pick up a prescription at the drug store, try to run all of those errands at once. That will save time and money over driving to and from your home for each one.
  • Are there any opportunities to carpool? If your neighbor goes to the same house of worship as you, take turns driving each other to services. Do you pick kids up after school or from sporting activities? Try creating a carpool schedule with other parents so that you only have to make the trip a few times a week.
  • If you live in an area that offers public transit, consider that as an alternative for some of your trips.
  • As the weather warms, are there any places to which you can walk or bike instead of drive? We recognize this idea isn’t feasible in many parts of the state.
  • Consider temporarily transferring some of your activities closer to home, e.g. if you eat out for many of your meals try eating half of those meals at home.

At the grocery store there are many ways to save.

  • Shop with a list. This is one that many of us have likely heard before, but it really is effective. If you commit to sticking to the list you made before arriving at the store, you’ll be more likely to resist those tempting purchases that just add to your bill.
  • Use coupons. This is another one that is likely an old favorite but bears repeating. Taking the time to look at what items on your list are on sale can result in big savings at checkout.
  • Plan your meals for the week using the grocery store sales ads.
  • Replace some of the meat products in your cart with non-meat protein sources. Foods like eggs, beans, and some nuts are great sources of protein and can cost a lot less than beef, chicken, fish, or pork.
  • When buying fruits and vegetables, consider whether you can save money by getting frozen or canned instead of fresh. If you choose ones that don’t have added sugar or sodium, the nutritional value is very similar. Plus, you won’t have to worry about them spoiling as you do when fresh ones aren’t eaten fast enough. The best way to save money on fresh produce is to choose fruits and vegetables that are in season.

Here are some general tips for saving money when times are tight:

  • Write down your expenses and categorize them according to “fixed” and “flexible.” Fixed expenses are ones that don’t change much from month to month and ones over which you usually have little control, e.g. rent or mortgage, cell phone bill, or monthly loan payments (auto, student). Flexible expenses are things like food, gas, home utilities (electricity, natural gas, heating oil), and streaming services. Look at your list of flexible expenses and see if there are any you can cut back by using the strategies listed above or other tips.
  • A good way to keep records of your expenses is to hold on to your receipts and organize them by categories. You can also use apps or other online programs to help with tracking—lots of financial institutions are offering these for free to their customers so check with your bank or credit union to see what tools they have.
  • When listing expenses, don’t forget to capture irregular or seasonal ones that don’t occur every month. These include things like auto insurance, back to school supplies, spending for birthdays and holidays, and taxes. They can sneak up on you because they only happen once or a few times a year, so it is helpful to anticipate them so you’re not caught off guard.
  • Limit your use of credit cards. Interest charges and fees can add up fast if you can’t pay your monthly bills in full, so try to only charge what you’ll be able to repay.
  • Involve all household decision makers (spouse, partner, roommates) in conversations around money. Schedule a regular time to have financial discussions. Explain what the current challenges and opportunities are and get everyone’s agreement on plans for cutting back or making spending adjustments.
  • If your income and other resources aren’t enough to meet your obligations, see if you qualify for any assistance. In many parts of the state, you can call 211 or visit https://211wisconsin.communityos.org/ to get help with food, rent, child care, utilities, healthcare, and mental health or https://access.wisconsin.gov/access/ or call 1-888-256-4563.

One-on-one free financial coaching is also available to any Wisconsin resident from UW-Madison Division of Extension. Visit https://finances.extension.wisc.edu/people/contact-a- uw-madison-division-of-extension-financial-educator/ to find get in touch with your local financial coach or to contact one of our colleagues who provide this service across the state. Financial coaching is free and confidential and can be done in- person, by phone, or online.

Visit this site for more ideas on how to cut back and keep up when money is tight: https://finances.extension.wisc.edu/files/2020/12/Cutting-Back- UW-3.20.pdf


Celebrate 529 Day
Every year May 29th (5/29) is celebrated as “529 Day.” It is a day to learn about the benefits of saving early for higher education for children, because a little savings can go a long way to building future dreams. Why “529 Day”? Because 529 College Savings Plans are named for Section 529 of the federal tax code.


Celebrate 529 Day
Every year May 29th (5/29) is celebrated as “529 Day.” It is a day to learn about the benefits of saving early for higher education for children, because a little savings can go a long way to building future dreams. Why “529 Day”? Because 529 College Savings Plans are named for Section 529 of the federal tax code.