January’s figurative clean slate inspires all kinds of aspirations, from consuming less to becoming more active. It’s also a good time to take stock of our financial selves. Winter weather lends itself to using hibernation for more than binge-watching: finally make time to sort through those piles and files of statements. With any new regime, make goals with timelines and try to make new habits stick. In this guide, you’ll find strategies for a new financial you!
The New Year is an ideal time to take an honest look at your entire financial situation – what you own and what you owe. Begin by making a list: on one side, list what you own. These are your assets. On the other side, list what you owe. These are your liabilities or debts. Subtract your liabilities from your assets. If your assets are larger than your liabilities, you have a positive net worth. If your liabilities are larger than your assets, you have a negative net worth.
Every child born to or adopted by Rhode Island families is eligible for a $100 CollegeBoundbaby grant to be used for higher education. Parents apply for the grant right at the hospital (yup, that early) by checking the box on the Birth Worksheet. Parents may also complete and submit the enrollment form before their child’s first birthday or within one year of the child’s adoption date.
A streaming service here, the latest phone there… it all adds up. Keep track of your income and expenses for a clear picture of what is actually going on. Write down what you and others in your family earn and spend each month, and include a category for savings and investing. If you are spending all your income and never have money to save or invest, start by cutting back on expenses. When you watch where you spend your money, you may be surprised how small everyday expenses can add up. Many people get into the habit of saving and investing by paying themselves first. An easy way to do this is to have your bank automatically deposit money from your paycheck into a savings or investment account.
When was the last time you looked at the withholding on your paycheck? Withholding is the amount withheld by an employer that goes directly to the government as a partial payment of income tax. According to the Internal Revenue Service (IRS), most employees are over-withheld on their taxes, meaning that more taxes than they owe are withheld from their paychecks and that’s how you get a refund. Visit IRS.gov to find a Tax Withholding Estimator tool that can provide the info you need to make any adjustments. From there, consult with your employer on next steps.
Most credit cards charge high interest rates – as much as 18 percent or more – if you don’t pay off your balance in full each month. Virtually no investment will give you returns to match an 18 percent interest rate on your credit card. While you should sock some money away for a rainy day, work to eliminate all credit card debt. Once you’ve paid off your credit cards, you can budget your money and begin to save and invest.
If you have credit card debt, it’s not going away overnight, but by making a plan, you can chip away at it.
• If you have unpaid balances on multiple cards, make the monthly payments on all, but work to pay down the card with either the highest interest rate or the smallest balance by paying more than the minimum. Remember: the smaller the balance, the less interest to pay.
• Combine several higher-interest balances into one card with a lower rate so you can pay down your debt faster without increasing payment amounts. This can be done by taking advantage of a low balance transfer rate to move debt off high-interest cards. Balance transfer fees are often 3-5 percent but the savings from the lower interest rate may often be greater than the transfer fee.
• Avoid using credit cards for purchases you aren’t able to pay off at once.
Investing is most often thought of as synonymous with the stock market, where you can buy, sell, and trade stocks (you’re probably envisioning the bustling beehive that is the New York Stock Exchange). However, there are alternative places to invest your money and diversify your portfolio (though, experts say, these should not comprise more than 15 percent overall).
Fine art and antiques are examples of wacky ways to invest that pay off – if you know your stuff. Ideally, you buy a collectible for less than its worth, and sell it for more, requiring knowledge of the item and its resale value.
Our state is filled with estate shops, antique stores, etc.
There’s a reason flipping houses is a popular pastime beyond HGTV. Investing in a piece of property is smart for many reasons, the first being that it’s a “real asset”, a physical commodity with value. You can rehabilitate and sell for a quick profit, or rent out for monthly income. When the market is low, you can find bargains, and when it booms, you can earn a fortune.
Stockpiling fine wines? That might sound appealing enough on its own, but you can make a pretty penny off of buying sought-after vintages and selling to wine connoisseurs. Find the right wines, keep track of when
and where you purchased it, store in a temperature-controlled room, and reap the benefits of an investment that literally gets better with age.
When the dollar is weak, the coin reigns supreme. At least, the gold and
silver kind. While this investment is not the most reliable, as is the rise and fall of the dollar, it’s worthwhile to have precious metal coins on hand in case of an economic or financial collapse, during which they can be used as barter.
We’re all looking to save money – but how? Take these small, easy steps to start saving dollars that will quickly add up by the next new year.
• Cancel any unused or unnecessary services. Do you shell out monthly payments for a gym membership or streaming service you hardly use? Do you still pay for a landline when you only take calls on your cell phone? Double check to make sure you’re not paying for anything you don’t actually use!
• National Grid offers no-cost home assessments to provide you with a plan to save on energy costs while improving energy use. This entails a visit to your home by a specialist who will conduct an attic-to-basement evaluation. You’ll receive a custom home energy report outlining recommended energy efficiency improvements. You can also receive advanced power strips, LED bulbs, rebates, and more. Call 1-888-633-7947 for more info.
• You might not think you have any missing money but according to the Treasurer’s office, as of December 2, 2021, $267,184,050 had been returned. Maybe it’s an old bank account (Christmas Clubs, anyone?), unused balance on a gift card, or even a safe deposit box. Treasurer Seth Magaziner developed YOUR MONEY, a program that automatically reunites Rhode Islanders with missing funds. Little Rhody is only the second state to adopt this type of system; property is kept safe until it can be returned to its rightful owner. Visit FindRIMoney.com to search the database. You could be in for a nice surprise.
Working with a financial advisor means putting your investments and finances in someone else’s hands. That takes a trusting relationship. To find an advisor who is right for you, the National Association of Personal Financial Advisors recommends:
• Talk to family members about what you want to accomplish by working with a financial advisor. Are you seeking general investment advice? Paying for college or a house? Retirement?
• Ask for recommendations from friends, family, and colleagues so you have a list of advisor candidates to choose from.
• Research potential advisors’ websites and individual biographies.
• Meet face to face with each candidate before you sign up. Use NAPFA’s Financial Advisor Diagnostic tool at NAPFA.org to evaluate each advisor’s answers to your questions. These should include:
1. How are you compensated?
2. If you accept commissions, will you itemize the amount of compensation you earn from
products that your recommend to me?
3. Do you accept referral fees?
4. Are you held to a fiduciary standard
at all times?
5. Would you sign a fiduciary oath
committing to putting my financial
6. Have you ever been disciplined by the
Securities and Exchange Commission or the
Financial Industry Regulatory Authority?
7. Do you provide comprehensive financial
planning or just investment management?
8. Do you have many clients like me?
9. How will you help me reach my
10. What happens to my relationship with
the firm if something happens to you?
• Finally, once you choose your advisor, be sure to evaluate their performance on an ongoing basis.
Investment products include stocks, bonds, mutual and exchange traded funds, and insurance products such as variable annuities. There is risk but also the chance of returns. Even if you’ve never considered investing before, all the buzz about Bitcoin may have you intrigued. Bitcoin is a digital asset, or an asset that relies on blockchain technology. The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Commodity Futures Trading Commission’s Office of Customer Education and Outreach (a mouthful but we’re covering our bases) urge investors considering a fund with exposure to the Bitcoin futures market to weigh carefully the potential risks and benefits of the investment. Among other things, investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.
Fun fact: Taxes represent the most significant source of General Fund revenue for Rhode Island. Each year, the Division collects and distributes more than $4 billion; these funds are used to help pay for vital services – including public safety, education, transportation, and recreation – for all Rhode Islanders. Rhode Island State Income Taxes for Tax Year 2021 (January 1 - Dec. 31, 2021) can be prepared and e-filed now along with an IRS or Federal Income Tax Return. The Rhode Island tax filing and tax payment deadline is April 18, 2022. Customer support is available weekdays 8:30am-3:30pm at 401-574-8484 or you can email support at firstname.lastname@example.org at any time.
• Get your refund fast by combining direct deposit with electronic filing to get your money, without worrying about it getting lost, stolen, or unable to be delivered.
• Low- and modest-income Rhode Islanders may qualify for free help filing their taxes and applying for tax credits like the Earned Income Tax Credit from VITA, Volunteer Income Tax Assistance. Learn more at EconomicProgressRI.org
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