Category : savings

The Right Small Steps in the New Year Can Make a Big Impact

Have you ever noticed how a lot of financial blog headlines read like they’re introducing the latest diet trend?

“Ditch the Starbucks and Retire Ten Years Earlier!”

The premise of this kind of financial advice always boils down to the same basic principle: in order to grow your money, you need to spend the money you already have more wisely. Makes sense, right? Especially around this time of year, it may even sound like a pretty good New Year’s resolution. And yet,somehow, it is simultaneously unattainable.

“Abandon your morning latte fix and you’ll become rich”, they say.

“That’s easy! I can do that!”, we say. But for a lot of us, we can’t seem to make it work.

Starting in February, there might be an attainable way to save more without sacrificing anything. Some people will see their take home pay increase due to the new tax code. This could be money you can invest into your retirement and still keep drinking those lattes guilt-free.

Sidenote: Want to know how the tax rate will affect your paycheck? There are many options, but this is one we found that’s easy to use.

The problem with saving money, whether it’s on ditching lattes or getting a little more in your paycheck, is that unless you’re taking the money and putting it directly into your piggy bank, you’re likely just spending it on other things throughout your day or rest of your week, so none of it ever actually makes it back into your savings or retirement account. It’s all of the sacrifice with none of the reward.

How I learned to stop worrying and love automation

So what’s the solution? In today’s technologically-driven world, the trick may lie in automation. The old adage to ‘pay yourself first’ becomes surprisingly easy if you can set it up once and then forget it. There are a growing number of tools to help you do just that.

Many banks have round up programs to automatically save your change – i.e if you buy that latte for $3.81, your account rounds up to $4.00 and automatically saves $0.19 into your account. Or if you’d rather route your money to the market instead of bank account, you can sign up for a penny stock provider like Acorns. It may not seem like a lot, but think of how many purchases you make in a day, in a week, in a month. It adds up!

Let your paycheck do the work

Additionally, you might be surprised by the programs offered through your workplace. If you’re not already contributing to your employer-sponsored retirement plan (401k, 403b, or similar), start contributing a percentage of your paycheck. Most employers will match your contributions with some of their own. Some employers also offer other types of savings plans, or will allow you to split your paycheck among multiple accounts, so that a portion could be directly deposited into your savings account.

But maybe the most powerful automation you can make is the annual contribution increase in your retirement plan. The chart below illustrates the difference between steadily saving 5% of income, and starting at 5% but increasing contributions by 1% annually until the recommended goal of 15% of income. As you can see, the amount saved with small incremental savings is more than 2× that with no increase. While you may initially notice the difference in your wallet for the first couple of months (or if you’re lucky you won’t, depending on how the new tax code affects you), after that, it will just become the new normal.

So if your New Year’s resolution is for better financial health in the coming year, make sure you’re doing the things that will really make a difference. That way, you can buy your morning latte with a clear conscience (and maybe a little extra whipped cream), knowing you’ve already taken care of your savings goals.


Please note: Blooom does not provide tax advice. Consult a tax expert for tax-specific questions.

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A Penny And 401k Fees Both Overpriced

Penny for Your Thoughts: You Pay More For 401k Than You Think

The U.S. Government has recently engaged in serious talks to abandon the production of the penny. Why? Because each penny costs 1.4 cents to produce, resulting in a cost of more than $100 million per year to taxpayers. If you’re a 401k investor, does this sound familiar? How so, you ask? The answer lies in knowing how much you’re paying in the hidden investment fees associated with your 401k account. Based on NerdWallet research, nearly 92% of people have no idea what they’re paying in 401k fees.

Why Paying 401k Fees Can Be a Big Deal

Fees unnecessarily sap the potential long-term results of your 401k. The average American will pay $138,336 in 401k fees. That’s 2.5 years of earnings for the average U.S. household.

Want to see the fees you could strike from your life? Check out our hidden fee calculator to get an estimate. Or, evaluate your actual account for a truer picture.

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Common Traits Hamilton And Blooom

5 Unexpected Reasons Why We Love Alexander Hamilton

Hamilton the Broadway musical has been the hit of the New York stage for several years now. Even before his hip-hop reinvention, we at blooom shared some sensibilities with our founding father. Here are the Top 5 Alexander Hamilton traits we live when providing 401k help:

Alexander Hamilton Was an Innovator

When there was recent talk of removing Hamilton from the $10 bill, it was no surprise that there were a number of supporters who reached out to the press to challenge the move. Hamilton is rooted in the origination of several of our country’s financial and business institutions.

In addition to serving as our first U.S. Treasury Secretary, Hamilton co-founded the Bank of New York, which still lives on today as BNY Mellon. The bank’s stock was among the first to be traded on the New York Stock Exchange. His strategies were also instrumental in the formation of interest-paying bonds, the chartering of a national bank and the first U.S. incubator.

Disruptive like Hamilton, blooom’s founders created a revolutionary online 401k app to fix the plans for EVERY American. The key distinction between blooom and other robo-advisors is that we are the only firm managing individuals’ employer-sponsored retirement accounts like 401ks and 403bs.

And, blooom clients also have access to unbiased professional financial advice beyond their 401k. Our goal is to provide access to help everyday Americans, not just millionaires who can typically afford financial advice. We do it for only $10 a month.

Alexander Hamilton Championed Transparency

In 1801, Hamilton started a daily federalist news sheet that eventually became the New York Post. At the time, Hamilton used the paper to voice his opinions publicly and attack conventional wisdom.

Transparency is no act for us, as blooom is a fiduciary. This basically means we are required to act in your best interest, not ours. We wish this was the case for all advisors in the good ol’ US of A, but it’s not.

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Savings Crafts For Pinterest

How to Get Savings Crafty With Your BFFF

Your BFFF of 401k savings here (go figure that the company with three OOOs would throw an extra F in the BFF).

Okay. Full disclosure: I’m probably doing this in the reverse order of what I should … but you really should stick around for the fun.

So … a fear fact, a friend to help and then like good friends do … we’re going to go out for some fun.

Fear Fact: We’re Not Saving Enough. Period.

First, the savings fear fact. According to The Associated Press – NORC Center for Public Affairs Research, 66% of Americans would struggle to pull together $1,000 to cover an emergency.

If you’re a homeowner, it’s not hard to imagine $1,000 bill of any kind. And, apparently, this statistic is not isolated to people making less than $50,000 year. Even America’s wealthiest households would be challenged to collect the money without selling something or borrowing it. Of the households earning more than $100,000 a year, 38% say they would have some difficulty coming up with $1,000. 1. 

And this saving struggle affects people’s ability to save for retirement. Our wheelhouse, for sure. When the same Associated Press poll asked people if they will have enough money to retire on time, 54% called the likelihood … dubious.

Why We Care? We’re Your 401ks Best Friend

We know every dollar counts. That’s why we provide education on all manner of savings approaches, not just getting mooola into your 401k.

If you’re a saddled with debt, we outline the common question of whether it’s better to pay off the debt (the student loan variety in this example) or investing in your 401k .

Or, if you have no debt and are eager for a saving strategy, we implore you to try the 10% Savings Trick for retirement and an emergency fund.

But friends should not only be about lending advice but also ready to have some fun.

Some Saving Crafts Fun: The New Piggy Bank

A couple months back, I go into get a haircut and Lauren (she, Michelle or Parker generally cut my hair – I like to diversify) and I get to talking. At first, it’s the typical stylist/client small talk.

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Millennials Drink Your Coffee

Coffee Is Not The Enemy of Your Retirement

Can you think of starting your day without a cup of your freshly brewed coffee? I bet you can’t!

I can’t either. I love coffee. So … apparently do you. In spades.

But, take a minute and think…. is getting that morning buzz more important than creating your retirement nest egg? According to some recent research, coffee is the enemy of your retirement.

I’m sorry. It simply isn’t.

The Right Steps Don’t Discriminate Against Coffee

In my last post, I lamented the clickbait financial wisdom exclaiming how if we just gave up our latte, we’d be rich. Little did I know at the time that Acorn had based an entire survey question around the dreaded cup of coffee.

In their Money Matters survey, the findings reveal that 41% of millennials – my generation – spend more money on coffee than investing in our future. (1.)

The SAME survey of 1,911 Millennials (914 of the respondents were 24-35 vs. 18-23) also found that Retirement (at more than 40% of respondents) was the group’s top financial concern. It outpaced Daily Expenses and Debt.

Then I found this Forbes Fake News Fact Check gem bolstering the Millennial cause. Could Millennials actually be better at saving for retirement than previous generations? The article references an American Enterprise Institute study where, in 2015, Millennials reported that they first began saving for retirement at age 23, versus age 28 for Generation X and age 34 for Baby Boomers.

If you believe the anti-coffee hype, apparently my generation isn’t thinking rationally about saving for our retirement. That might be true, but we’d be placing the blame on the wrong thing.

The Right Steps Include Paying Yourself First

Just to set things straight, our advisor team doesn’t warn clients about the evils of coffee.

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