With mask mandates and occupancy limits easing and/or lifting, millions of Americans are looking forward to a summer getaway with more excitement than usual. Entertainment venues are opening, attractions are up and running again and for some, it’s been two years since they’ve enjoyed a real summer vacation.
While it’s great to get away for some fun in the sun, it’s important to stick to a budget, even when on vacation. An over-the-top vacay you can’t really afford can mean spending months catching up on credit card payments and paying high-interest rates that may make it not worth the price. This year, attack your vacation with a financial plan that you can actually keep by following the tips outlined below. Rethink your vacation Everyone needs a time-out from the daily grind, but for those who are struggling just to get through the month and don’t have any money socked away for vacation, it may be a good idea to consider an alternative to a conventional getaway that can provide an escape from real life without the prohibitive price tag.
Create a budget If you absolutely need to splurge on a real getaway, here’s how to create a realistic budget for your vacation.
Stick to your budget while on vacation Now comes the hard part: sticking to your budget while on vacation. Fortunately, with careful planning and willpower, this is not as difficult as it sounds. Here are some tips: First, consider using cash only while on vacation. You’ll be forced to stick to your budget with no way to overspend. If you’re anxious about traveling with limited funds, you can keep a card at the back of your wallet, but be sure to keep it strictly for emergencies. Also, make sure you have a plan to keep your cash secure at all times since cash is not recoverable if lost or stolen. Next, make reservations for whatever you can while you’re still at home. Think hotel, car rental, entertainment venues, and more. This way, you’ll leave fewer spending choices to make when you’re actually on vacation. Finally, keep a copy of your vacation budget handy for easy reference throughout your vacation. Pull out your budget for review whenever you come up against a spending challenge. Planning and sticking to a vacation budget will help make your time away so much more enjoyable. Instead of stressing over paying back sky-high credit card bills when all the fun is over, you can rest easy, knowing you’re covered and that you’re spending within a budget. This summer, enjoy the getaway of a lifetime, but don’t let your budget go on vacation. Your Turn: Share your best vacation-budget tips with us in the comments.
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The Child Tax Credit, a part of the American Rescue Plan Act of 2021 that takes effect in July, is already drawing the attention of scammers. The newly expanded Child Tax Credit (CTC) will provide monthly payments of up to $300 per child for approximately 40 million households across the country. Payments will be issued via direct deposit, paper check, or debit cards, providing a plethora of opportunities for scammers to get in on the action.
Here’s what you need to know about Child Tax Credit scams and how to avoid them. How the scams play out There are several variations of the Child Tax Credit scam, each ultimately designed to trick parents and guardians out of their rightful CTC funds. In one variation of the scam, victims receive phone calls, emails or social media messages appearing to be from the IRS and asking them to authenticate their personal details or share sensitive information in order to receive their CTC funds. In lieu of pretending to represent the IRS, the scammer may also claim to be in the position of “helping” the victim receive their funds. Unfortunately, in either scenario, if the victim follows the instructions of the contact, they will be playing right into the hands of a scammer. In another variation of the scam, victims land on a spoofed government website where they are prompted to input their personal information. This scam is especially common, as the IRS has announced that it will be launching two web-based portals for families who’d like to update their information for the CTC: one for taxpayers who file annual returns and would like to share their banking details or a change in the number of dependents they have in their household, and one for taxpayers whose income level falls below the threshold for filing returns. While the two separate sites will make the application process smoother for the IRS, they also open the door for more bogus sites to spring up and snag unsuspecting victims in their trap. What you need to know about the Child Tax Credit As always, knowledge is your best protection against potential scams. Here’s what you need to know about the CTC and the way the IRS operates:
If you’ve been targeted As the date of the first advanced CTC approaches, scams are exploding everywhere. If you believe you’ve been targeted by a CTC scam, follow the cardinal rule of personal safety by never sharing sensitive data with an unverified source. Triple-check the URL on any IRS webpage you visit, as these are easily spoofed. Note that all authentic government sites will end in .gov. Finally, report all suspicious activity to the IRS and the FTC immediately. For additional information on the upcoming Child Tax Credits, to check if you qualify or to update your dependent or banking information, visit the IRS’s CTC webpage directly at IRS.gov. The advanced Child Tax Credits will help millions of families struggling with the economic fallout of the pandemic, but scammers can ruin it all. Follow the tips outlined above and stay safe! Your Turn: Have you been targeted by a Child Tax Credit scam? Tell us about it in the comments. One of the most important parts of setting up a monthly budget is separating needs from wants. Before assigning dollar amounts to any categories, it’s important to know which parts of your monthly expenditures are an absolute need, and which items would be nice to include, but are not a necessity. Many people find this particularly challenging, and many even give up on budgeting when they can’t move past this step.
Fortunately, it doesn’t have to be this way. Below, we’ve outlined how to tell the difference between wants and needs, as well as how to separate these two categories on a monthly budget plan. Defining needs and wants A need is something that is necessary to live and function. A want is something that can improve your quality of life. Using these criteria, a need includes food, clothing, shelter and medical care, while wants include everything else. However, as you’ll find when creating a budget, these terms are more fluid than they appear to be at first glance. While working through your lists, you may find that some items can fit into both categories, making the process confusing. A good trick for dividing wants from needs is to let some time pass before fulfilling your desire for the item, either theoretically or practically. The desire to obtain a need only grows stronger as time passes, while the desire to fulfill a want will weaken with passing time. Listing your needs and wants Now that we’ve defined each of these budget categories, you can begin listing your own needs and wants. Start with your needs, including the basics, like food, rent or mortgage, as well as other fixed expenditures that are necessary for you to live and function. Those things may include transportation costs, health insurance coverage and any clothing or tools you need for work. It’s important to note that needs will vary from one person to another, and even for one person at different stages of life. For example, a family with two working parents who live in a community where there is no reliable public transportation may require two vehicles. Conversely, a family living in a city with several dependable transportation systems may list a second car as a want. Similarly, a four-bedroom home may be a need for a family while they’re raising several young children, but turn into a want later when the kids go off to college. If you get stuck on a particular item and don’t know where to place it, hold it up to the following questions:
After completing this exercise, review your list of needs to see if anything can be removed. Will you still need these items a few years from now, or even a few months from now? Can any of your needs be swapped for a cheaper option? For example, you may need clothing, but do you need eight pairs of designer jeans? Do the same for your list of wants. Which of them are only there because of pressure to keep up with others or look good? Which of your wants were more important to you in the past than they are today? Which are status symbols? Pare down your list until you’re only left with the wants that truly add value to your life. Now that you know how to tell the difference between needs and wants, creating a monthly budget is simple. Assign dollar amounts to your fixed and non-fixed needs, set aside money for savings and use the rest to pay for your wants. Going forward, you’ll likely also have an easier time keeping your impulse buys under control. Before purchasing an item, ask yourself if it’s a need or a want. If the item is a want, consider its importance and other wants you’ve recently bought before going ahead with the purchase. Separating wants and needs can be one of the most challenging parts of creating a monthly budget. Follow the steps outlined above to learn how to make the distinction between these two spending categories with ease. Your Turn: How do you separate wants from needs? Share your tips and tricks with us in the comments. Re-acclimating to normal life as pandemic restrictions are lifted and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap. You’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or, maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.
As you prepare to leap back into normal life, proceed with caution. Be sure to consider your full financial picture as well as long-term and short-term goals. Here are some forward-thinking money moves to make as you adjust to post-pandemic life. Review and adjust your budget Pandemic times required their own budget, as people cut down on costs like dining out and updating work wardrobes, but spent more on things like at-home entertainment. Others may have had to adjust their spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted something in some people’s mental list of needs and wants, as they found they can live with a lot less than they’d believed. As you adjust to post-pandemic life, take some time out to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as a readjustment to pre-pandemic spending or changed priorities. You may need to review and adjust your budget, and maybe even your spending behaviors, every few months until you find a working balance. Rebuild your savings If you are one of the many Americans who were forced to dip into savings, or even to empty them completely, during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income, or use a windfall, such as a work bonus or tax refund, to get the bulk of your emergency fund in place. Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it’s always best to be prepared, because you never know what can happen. Rethink your long-term and short-term financial goals The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you’d originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car. Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly. As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can. Spend with caution It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but it’s best to spend with caution. First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently, and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting it out a bit until prices cool off. Also, you may be eager to make up for lost time, but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned. The restaurants and movie theaters are open for business again, and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here. Your Turn: What post-pandemic money moves will you be making now? Tell us about it in the comments. Q: I’ve heard that the IRS will start making advance payments toward the Child Tax Credit of 2021 this summer. What do I need to know about these payments? A: The advance payments of the Child Tax Credits of 2021 will be distributed monthly to eligible families, beginning on July 15, 2021. Here’s what you need to know about these payments. What are the changes to the Child Tax Credits for 2021? As part of the American Rescue Plan Act (ARPA) of 2021, the Child Tax Credit (CTC) for tax year 2021 will be significantly expanded. Here are the most important changes to the CTC for 2021:
Who is eligible for the Child Tax Credits? Taxpayers who have a primary residence in the U.S., and reside in it for at least half of the year, are eligible to receive the child tax credits. The payments will begin to be phased out for married taxpayers filing a joint return and earning more than $150,000 a year, for heads of household earning more than $112,500 a year and for all other taxpayers earning more than $75,000 a year. Income eligibility will be based on 2020’s tax return (more on this later). Do I need to take any action to receive the monthly payments? Taxpayers need not take any steps to receive the advanced Child Tax Credits. Of course, taxpayers need to file their 2020 taxes, which were due on May 15, 2021. Filing electronically may speed up the receipt of the CTC payments. How much money will I receive each month through the advanced Child Tax Credits? The advance payments being sent to qualifying families from July through December will be equal to up to 50% of each family’s total Child Tax Credit. The payments will be based upon the income information found in taxpayers’ 2020 tax returns. If these were not filed yet, the 2019 tax returns will be used to determine each family’s eligibility. Families eligible for the full CTC will receive half of the total across a six-month time span. This means eligible families will receive a total of $1,800 for children under age 6, or $300 a month per child from July through December, and a total of $1,500 for children ages 6-17, or $250 a month per child from July through December. How will I receive my monthly payments? The IRS has announced that payments will be issued in the same way as the three stimulus payments distributed to all eligible taxpayers since the start of the pandemic. If you received your stimulus payments via paper check, you’ll likely receive the CTC payments the same way, and if you received them via direct deposit, expect the same now. The one caveat here is for those who have not signed up to receive their Economic Impact Payments via direct deposit but have filed their 2020 tax returns electronically. These taxpayers will receive their CTC payments the same way they filed their taxes; either electronically or via direct deposit. Can I decline the opportunity to receive the advance payments of the 2021 Child Tax Credits? Eligible taxpayers who do not want advance payments of the 2021 Child Tax Credit can choose not to receive them at this time. The IRS has provided the public with instructions for how to officially decline the advance payments on its website. Is it a good idea to decline the advance payments of the 2021 Child Tax Credits? While it is generally better to receive money owed to you upfront, under certain circumstances it may be better to decline receiving the advanced Child Tax Credits. If you have reason to believe you will not be eligible for the full CTC amount at the end of 2021, you may end up owing the IRS some or all of the money you received when you file your 2021 taxes. This can happen if your income level rises in 2021, or if you have primary custody of the child(ren) receiving the credit in 2020, but not in 2021. If either of these may apply to you, consider opting out of the advance CTC payments. You won’t miss out on these payments, as you’ll receive whatever is owed to you at the end of 2021. The advance CTC payments will be a boon for families who are struggling with the financial fallout of the pandemic, but it may not be in every taxpayer’s best interest to accept these payments now. Use our guide to brush up on the details of these payments so you can make an informed decision. For more information, visit the IRS website. Are you constantly dealing with a barrage of junk mail that clogs up your mailbox? Drowning in papers needing sifted through? Are you always afraid to throw out any paper from your financial institution, fearful that you’ll be throwing sensitive material into the trash and making it an easy steal for would-be scammers?
If this sounds familiar, you may benefit from switching to electronic account statements. Electronic statements (eStatements) are similar to paper statements, except for the fact that they’re delivered electronically. At the end of each statement period, which is generally monthly for checking accounts and quarterly for basic savings accounts, you’ll receive a notification from the credit union informing you that your statement is ready to view through the online banking portal, app, or by downloading from a secure site. Once you access the eStatement, you’ll find it has all the information you’re used to receiving in your paper statements. You can also access your eStatement by logging into your online banking site or app at any time throughout the month. Quick, convenient and clutter-free, eStatements are the way of the future. Here are six reasons to consider switching to eStatements. 1. Check your accounts at a glance With eStatements, there’s no need to wait for your monthly statement to arrive in the mail. Just a few clicks and you get your account statement at any time, from anywhere, using the mobile device of your choice. Some financial institutions also offer members the option of signing up for financial alerts, such as a warning when your account is running low and in danger of being overdrawn. With eStatements, managing your accounts is easy. 2. Clear out the clutter Why bother with piles of paperwork when you can access your accounts online? It’s neater, cleaner, and helps cut down on the correspondence you have flooding your mailbox. You’ll also save time sorting through papers when you can find your last account cycle balance with just a few quick swipes. 3. Keep your information safer No matter how careful you are with papers containing sensitive data, there’s always a chance you can miss something and it’ll end up in the wrong hands. It can also be a pain to keep track of every incoming piece of snail mail and to dispose of it properly. With eStatements, you’ll never have to worry about losing a paper that contains confidential banking information, or mistakenly tossing it into the trash where it can be easily accessed by identity thieves. Some people are wary about sending sensitive information online and are fearful that an eStatement can easily be hacked. However, you can access your account balance online with confidence, knowing that Ingersoll-Rand FCU uses several layers of protection to keep your information absolutely safe, including multi-factor authentication, encryption, and sign in reporting. 4. Monitor your accounts frequently for fraud When you have instant access to your accounts throughout the month, it’s a lot easier to check for signs of fraud. Plus, when you spot the fraud sooner, you can take steps to mitigate the damage earlier and have a better chance of a full recovery. 5. Eco-friendly When you choose to receive your monthly account statements electronically, you’ll be doing the environment a favor. Less paper statements means less paper waste and fewer trees getting felled for something that will ultimately be tossed. Go green for the environment with eStatements! 6. Safe and secure storage Filing cabinets are so last century. With eStatements, you’ll never stress about misplacing your account statements again. Your online banking portal or app acts as a convenient and secure filing cabinet, storing your account statements for you to access as needed. Ready to make the switch to eStatements? Signing up is easy! Just follow the instructions here. Your Turn: What do you like best about eStatements? Tell us about it in the comments. |
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