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Inflation and How It Affects Every Industry
Inflation is the rate at which the cost of goods and services rises. Inflation affects and is measured by the consumer price index (CPI), which monitors the average prices of goods and services across categories like food, vehicles, apparel, and healthcare services.
Avoid Overspending During the Holidays
It is not surprising that the holiday season is one of the most expensive for individuals. Giftgiving, decorating and holiday treats can tap into the budget if a few general rules are not followed. Here are five tips to avoid overspending this holiday season.
Set a Strict Budget
To alleviate the stress of spending over the holiday season, a strict budget should be set even before the holiday season begins. If a person is giving gifts to a few individuals, their names can be written down and a budget planned for each individual. A decision should be made on how much to spend and how many gifts will be given. A budget should also incorporate holiday spending on food and decorations. It is easy to get into the festive mood during the holidays but that is when overspending creeps up on a person and they spend more money than they should.
Avoiding Retail Tricks
When a person decides to shop for items, it is easy to get tricked by retail stores. Even when a budget is firmly in place, many people tend to overspend. While it all comes down to discipline, retail stores are good at enticing money out of people’s wallets. When shopping smart, a person should watch for decoy pricing, loyalty cards and loss leaders. Often, a retail store will entice a buyer with a low-priced item. Unfortunately, that item will be sold out and require a person to spend even more money. However, there is a good way to save money when shopping for gifts. Gift cards are often discounted at chain stores such as Office Depot, Best Buy or Costco. Using these as gifts can help save a few extra dollars.
Track Every Penny
One of the secrets to keeping a budget is to keep track of spending every day. While this is true throughout the year, it is especially important when a holiday season rolls around. Overspending during the holidays can quickly occur when a person is in a joyous mood or feels like they can splurge. Free online software that helps with budgeting can be used to track expenses or a simple pen and paper pad.
Spending On Yourself
It is easy overspend on yourself when out shopping for others—a person sees something that they like and treat themselves. In fact, statistics indicate that about 60 percent of individuals are giving themselves gifts during the holiday season. This can be limited by following an overall budget and writing down specific items to be bought when shopping online or in a brick-and-mortar store. Another caveat to watch out for is the purchase of gift cards. Over 70 percent of people shopping for gift cards will also purchase one item or more for themselves. Discipline must be followed so that a person does not overspend.
Set Limits on Spending
If a person’s budget is tight, they shouldn’t feel guilty about purchasing less than in previous years, or not at all. Living comfortably without stress is much more important than handing out material goods. If a person’s budget is tighter than other years, they should decide early on how many gifts they are going to give. Setting limits also includes spending money on holiday decorations or food. It can all be budgeted.
https://www.nfcc.org/consumer-tools/consumer-tips/avoiding-to-overspend-during-the-holidays/
https://www.becomingminimalist.com/avoid-holiday-overspending/
What You Need to Know About IRA and 401k Contributions In 2021
The Internal Revenue Service recently reported changes to the 401k and IRA. The agency’s announcements to Congress issues new regulations. Each alteration will impact retirement accounts and 401(k) contribution limits in 2021. Here are a few things Americans need to know regarding their announcement.
What Savers Can Expect
Most 401(k), 403(b), 457 plans, and Thrift Savings Accounts will be within the same framing as before. The current rules would allow people age 50 and over to save money by contributing $19,500, or $26,000 to a traditional IRA. Likely, regulations will not change for SIMPLE retirement accounts. They typically maintain $13,500 contribution limits. The IRS allows individual retirement account contribution limits to remain at $6,000. Additional catch-up contributions for older contributors will also stay at $1,000.
There are a few changes that the IRS has announced regarding IRA and 401k contributions for 2021:
Tax Deduction Phase-outs for Traditional IRA Contributions
Taxpayers will be able to deduct traditional IRA contributions. To qualify, recipients may not participate in employer-sponsored retirement accounts. They also may not make above earnings limits. This change subjects employees to reduced or eliminated deductions. This ruling also includes spouses covered by the same plan as the primary recipient.
2021 Phaseout Ranges
In 2021, single taxpayers must consider the phaseout range which will increase by $1,000. Ranges for spouses who file jointly with coverage from employer-sponsored plans have changed. It is now $66,000 to $76,000 and is set to increase at $105,000 to $125,000. Limits to Couples’ workplace plans that only cover spouses individually are necessary. The traditional IRA contribution will require a higher phaseout range. The changes to IRA and 401k regulations are not necessarily the same for every situation. If separate plans cover both spouses, the range is consistent with 2020, remaining at $0 to $10,000. Look at the IRS publications for the most current regulations and info regarding other aspects specific to your overall financial situation.
Roth IRA Contributor Prerequisites
Some of the changes include income limits for Roth IRA contributions. Their income phaseout ranges for 2021 include the following.
Roth IRA phaseout ranges:
• Single and heads of households – $125,000 to $140,000 (an additional $1,000 from 2020)
• Married couples who file jointly – $198,000 to $208,000,
• Married couples filing separately – $0 to $10,000 (unchanged)
Saver’s Credit income limits:
• Low- and moderate-income couples file jointly – $66,000 (an additional $1,000 from 2020)
• Heads of the household – $49,500
• Single individuals / married filing separately – $32,500
Rules for IRA and 401k contributions, when first released, will underline many adjustments. It is up to you to stay updated. If you are curious about what is in store for you, it is always wise to be alert. Remember, tax changes happen every year. The IRS has to release any changes to the public before they become active.
Most will want to wait for more detailed information from the IRS before taking any action. It would be best to learn as much as you can about the forthcoming changes. They will likely affect any significant decisions.
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