2/16/18

Five Finance Friday Q&A - 2/16/18



What's up, Smart Money Squad! It's that time again for another edition of our weekly series, Five Finance Friday. We finally got some questions submitted on the page, so we're switching things up this week with a quick 5 question Q&A session. We would love it if you could let us know what you think and whether you prefer this format or the weekly article roundup format.

The topics will vary between all the different topics we write about, blogging, entrepreneurship, hot topics or really whatever we happen to be drawn to that week (basically we'll do whatever the hell we want).

Q1: What's the best way to save for my vacation this summer?

A1: This question really has two potential answers depending on how ambitious you are. The first answer is all about supercharging your savings. A good place to start is with our Unconventional Ways to Save Money tips. If you're really serious about saving, try putting away all your $5 bills and your $20 bills. Also, you can setup a direct deposit from your checking account to your savings account to happen right after your paycheck hits your account. That way you don't even see the money come in, so you're not tempted to spend it. Chances are, you could direct deposit 5-10% into checking without even noticing it's gone. You just might have to make a couple sacrifices in spending along the way.

If you're really ambitious and willing to step outside your comfort zone in your vacation planning, travel hacking is the way to go. We took you through a step by step guide in our 3rd most popular post ever! You'll save some serious cash without making sacrifices to your fun.

Q2: What should my retirement investment allocation be?

A2: If you don't need the money in the next 5-10 years, you shouldn't really have anything substantial in bonds or cash. If you want a little bit in bonds just for peace of mind, that's fine, but you're costing yourself money in order to be risk averse. I'm not criticizing -- just educating. . . okay, maybe criticizing a little.

My strategy is very simple. My company's 401k plan allows me to pick from several exchange traded funds, mutual funds (those two are pretty much the same thing), or individual stocks. I allocate 70% to an ETF that is essentially an S&P 500 index fund and 30% into a growth stock ETF which captures the sexy up and comer type companies like Tesla and Facebook. 

You can also choose a target date fund, but I would recommend recasting past your target retirement date for the majority of your money since you're probably not going to make a 100% withdrawal the day you retire. If you plan to retire in 2050, you could put a small amount in that fund, a small amount in 2055, some in 2060, and so on until you reach the furthest date available. Most people like these funds since they view them as a set it and forget it type option, but I warn you that they get too conservative too quickly if 100% of your money is invested at your retirement year's target fund.

Q3: What should I be focusing on to add to my resume?

A3: I think this answer really depends on your personality and goals. However, two universally positive resume enhancers are certifications and leadership positions. Certifications are important because they show not only your commitment to your field but also your commitment to learning and growing into the most knowledgeable employee you can be. Think of a certification as a glowing letter of recommendation. Your diploma, degree, or certification universally tells potential employers that you have mastered a particular set of skills and knowledge.

Leadership positions are a way to really stand out from the crowd in a sea of resumes flooding a hiring manager's desk. Companies like hiring well-rounded employees, so regardless of whether you're a leader in your church, your child's sports league, or even your book club, it shows the employer that you take initiative and that you can handle leading projects, teams, and initiatives. Leadership positions also provide an opportunity for positive and interesting conversation in an interview.

Q4: Should my significant other and I have a joint bank account?

A4: If you're not yet married, then I would absolutely recommend against a joint bank account. That just smells like a whole bunch of trouble during a relationship that hasn't yet grown into a marriage, especially if things go south. 

Now I'm no marriage counselor, but if you're married, I think you should definitely have a joint bank account. Financial transparency is key to a healthy and trusting relationship, and a joint bank account helps ensure both people know where you stand financially and can work together more visibly to make financial progress.

Q5: Should I be seeing changes to my paychecks as a result of the new tax plan?

A5: All companies are handling this differently, but yes the new tax plan did take effect at the beginning of the year. My company made changes to my federal tax deduction, so I have effectively received a raise consistent with the changes in the tax plan. If you haven't yet seen a difference in your 2018 paychecks, I would recommend reaching out to your supervisor or HR representative to learn more about your company's plan to take the new tax plan into account on your paychecks. 

What did you think?

We need your feedback so we can keep growing the Smart Money Squad! Do you like the Q&A format or the articles for Five Finance Friday? Also, the more questions we get, the higher quality the Q&A sessions will be. Submit your questions through FacebookTwitteremail, or in our Ask The Authors section on our website (right side desktop, bottom mobile).

Thanks for stopping by, squad, and have a kick ass weekend!

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