MONEY Savings

5 Things to Consider Before Switching Bank Accounts After College

West Rock—Getty Images

Finding a bank account that doesn’t charge a minimum balance fee should be your top priority.

When you graduate from college armed with a degree, a strong work ethic and an open mind you can do anything — even navigate your banking future. Your financial needs are going to change in the “real world” and that means your bank account should too.

“There’s not necessarily a difference in the products, but what’s different is how you’re using these banking instruments,” says Bellaria Jimenez, CFP and managing partner at MetLife Solutions Group in New Jersey. “After college your first emphasis is on understanding your budget.”

Since your inflow of money, your bills and even your location might be different, you need a bank account that reflects your new life situation. As you get ready to switch bank accounts, there are a few factors to consider.

If you already have a student checking account or savings at a bank and you’re happy with the service so far, then switching over to a non-student account will be simple. Choosing a new bank and a shiny new account will take a little more thought.

Choosing a bank

Think about your physical banking needs.

  • Go local. If you plan to live and work in one place, you could consider a local credit union or bank.
  • Think national. if you plan to travel or aren’t sure where in the country you’ll end up, then a national bank might be the way to go.
  • Look for broad access. If you want to stick with a local bank, but you plan to travel, find one that partners with ATM or other networks that have nationwide access.
  • Online only. If you don’t need a bricks-and-mortar location, then an online only bank could be the right fit too.

Next, learn about the ATM network your bank is in to ensure you’ll have access to cash wherever you go. Then, get a feel for its mobile offerings. Banking apps may offer ATM locators, bill pay, mobile deposits, person-to-person payments and more.

Compare checking accounts

Not all checking accounts are created equal, Jimenez says. She adds, “There are so many banks competing for your money so there are great opportunities to see what banks are giving you the best opportunities.”

Compare accounts based on balance requirements, fees and any possible additional benefits. Check the fine print for these fees:

  • Overdrafts
  • Overdraft protection
  • Maintenance
  • Checks
  • Debit cards
  • Bounced checks
  • Minimum balances

Finding a bank account that doesn’t charge a minimum balance fee should be your No. 1 priority, says Phil Schuman, director of financial literacy at Indiana University. “You probably don’t have a whole lot to put into an account to begin with, so research accounts to make sure they’re not going to charge you for the money you have,” he says.

Opening the account

To get your new bank account started, close your current checking account first or take out only enough money for an initial deposit in your new account. If you keep your old account running and it requires a minimum balance, avoid fees by making sure the amount you have there doesn’t drop below the requirement. The minimum initial deposit amount will vary on an account-by-account basis. You’ll also need to provide a bank with your Social Security number as well as photo identification, such as a driver’s license, state identification card or passport.

Change your settings

Once you have a new bank account, remember to switch account information on any automatic bill payments you have and remove any linked accounts on shopping websites. To make sure you receive your paycheck, change over your direct deposit from work, or find out if it’s offered.

Make monitoring your bank account either online or through a mobile app part of your routine to check on balances, avoid overdrafts and ensure no errors are made.

What about savings accounts?

When you start working, it’s time to kick off good saving habits. A basic savings account with low minimum balances will be a good way to transfer money from your checking into a rainy day fund. Your savings may not be much of an investment, however — typical accounts offer annual percentage yields of 0.01% on all balances. Higher-yield savings accounts are possible, you just have to look. Start with the NerdWallet high-yield savings account comparison tool.

“The interest rate on savings accounts is so small that it’s not going to accumulate much. The fees are what to look out for,” Schuman says.

When you’re thinking about graduating from your current bank account, take the time to do your homework. This way, when you enter the working world, you’ll have the banking savvy to take control of your finances.

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MONEY Longevity

Will Living Too Long Ruin Your Retirement?

cupcake ruined by excessive amount of melting candles
D. Hurst—Alamy

Our life spans are getting longer, but we won’t all make it to 95.

“Longevity risk”—the possibility that people will live longer than expected, putting a strain on Social Security, Medicare, public and private pension funds, their own retirement savings, and the planet in general—has become a hot topic recently. Former hedge fund manager and Soros strategist Stanley Druckenmiller recently predicted that the aging population will precipitate a major economic crisis, while the Wall Street Journal took a more sanguine approach by devoting a whole section to “How to Add Life to Longer Lives.”

But before you start reciting “The first person to live to 150 has already been born”—a highly speculative prediction by Aubrey de Gray that Prudential decided to turn into a billboard—it’s worth taking a step back to see how longevity might impact your own retirement plan.

First off, according to the Society of Actuaries, which released new mortality tables late last year to help pension plans more accurately estimate their payouts, people are only going to live about two years more than had been previously thought. (For men who make it to 65, overall longevity rose from 84.6 in 2000 to 86.6 in 2014; for women age 65, longevity rose from 86.4 in 2000 to 88.8 in 2014.)

These figures are broad averages, so can be used as a starting point in trying to figure out your time horizon, but there are many other variables to consider, such as, are you single or married? Single people don’t live as long as married people. For that matter, is your retirement plan based on how long either member of a couple might live—or the more likely scenario of just one person being alive for a certain portion of retirement? As financial planner Michael Kitces has pointed out, planning for the former can lead to overly conservative projections.

Your job also has an effect on how long you’re likely to live. As a new paper by the Center of Retirement Research points out, public sector workers live longer than private sector workers because the former, on average, tend to be more highly educated, which is another predictor of life span. At the same time, white collar workers, not surprisingly, live longer than blue-collar workers with physically demanding jobs. Rich white collar workers live longest of all, which suggests in some horrible Darwinian way that longevity risk may somehow take care of itself.

But the biggest factor of course is your family health history, and while that’s not something we can control, it’s certainly worth doing a bit of research to find out what kinds of diseases felled your relatives, as well as taking a hard look at your own exercise and eating habits. The issue of life span is really more a medical than a financial question, so you’d probably be better off addressing it with your doctor or a gerontologist than a financial advisor. With proper planning, you can turn longevity from something that’s currently being framed as a “risk” back into something to look forward to.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY consumer psychology

Fix These 4 Psychological Traps That Keep You From Saving

brain-shaped maze
Pasieka—Getty Images

Carpe diem doesn't work when it comes to savings.

Nobody likes a love interest that plays “mind games.”

It’s a waste of time, energy, and money. But you may be guilty of something almost as bad: playing mind games with yourself when it comes to saving. There are certain behaviors, inherent to many of us, that increase our chances of spending all of our paycheck. Avoid these top four psychological traps holding you back from saving:

1. Lizard Brain

Sometimes you can just blame it on your genes.

Back in the cavemen era, humans had a really hard time surviving. There was always a violent predator around the corner ready to take a bite out of them. This constant state of imminent danger put one part of our brains in overdrive — the amygdala. Sometimes known as the “lizard brain” (because that’s all a lizard has for brain function), the amygdala is in charge of very basic functions, such as as fight, flight, nutrition, and sex.

The lizard brain made our ancestors act very emotionally and live as if every day was the very last of their lives. Eat every last piece of food now, and leave everything behind at the first sign of danger, it said. The constant threat of danger kept cavemen on their toes and made them act impulsively.

Many centuries have passed and humans have evolved for the better, but the amygdala is still part of our brain, and many of us want to enjoy our money now. Fight the urge to splurge or analyze your financial situation constantly by reminding yourself that unlike your ancestors, you will probably have a long future to plan for.

How to Fix It

Keeping on top of financial needs every single minute of your day will let your lizard brain take control you and make you react emotionally. Set specific dates for review (e.g. every quarter, semester, or year) of your finances and take corrective action after careful analysis. Then, move on.

2. Extrapolation

We are creatures of habit. We all have a favorite movie that we could just watch over and over, or a brand of coffee that we can’t imagine living without.

The challenge with having favorites is that we tend to assume that the same conditions that once made them them our favorites still apply. This is called extrapolating. When you extrapolate your spending patterns without thinking, you ignore how much money you could be saving.

Take, for example, a daily $5 cup of coffee. Let’s assume that you picked up that habit on your first job. You were young, didn’t have a coffee maker, and you would enjoy it everyday on the bus to work. Now that you’re 10 years older, own a home with your spouse, and drive to work, should you still be buying that $5 cup every day? Well, if you were to stop spending $5 a day and put those funds in an investment with an 8% annual return, you would have a cool $28,553.01 by the end of 10 years.

How to Fix It

Don’t just do things for the sake of doing them. Take a look at your daily and weekly rituals and find cheaper alternatives. Then, commit to put those savings in your retirement or savings account. Already doing that? Start or strengthen your emergency fund. (See also: Here’s How Rich You’d Be If You Stopped Drinking)

3. Confirmation Bias

“There is no worse blind man than the one who doesn’t want to see,” goes a popular saying.

When you’re unwilling to seek out information that challenges your beliefs, you’re a victim of confirmation bias. This psychological phenomenon makes you pay attention only to the studies, news, and facts that reinforce your preconceived notions.

By falling victim of your own reality distortion field, you can waste a lot of money by making suboptimal choices. Let’s assume that you really like Mac laptops and you’re looking to buy a new computer. Here’s how confirmation bias would work against you:

  • The only research that you do is to read sites focused only on Mac computers. You ignore sites that cover a wide variety of laptop models, such as Consumer Reports.
  • You only visit an Apple retail store because you subconsciously favor information that confirms what you already believe.
  • You go out of your way to attack any data or evidence that proves that you could get an exact product that performs just as good (or better) at a cheaper price from another brand.
  • When asked about the main reason behind buying Apple, you can only answer “I like it” or repeat an ad or catchphrase from an Apple clerk.

How to Fix It

Don’t make purchase decisions based on a hunch or first result from a Google search. Be open to checking unbiased information from multiple sources, and be ready to dismiss an idea if the data proves you wrong.

4. Carpe Diem

A day doesn’t go by that I don’t see somebody quoting “carpe diem” on my Instagram or Facebook feeds.

While the most common interpretation of carpe diem is “seize the day,” the official definition from the Merriam-Webster dictionary is the “enjoyment of the pleasures of the moment without concern for the future.” Or in fewer words, immediate gratification. Given the choice of enjoying $300 right now or receiving $5,000 in six years, most of us would take the $300.

However, our parents were right in teaching us self-restraint. Data from over four decades of experiments has shown that a child’s ability to delay gratification is critical for a successful life. Best known as the The Marshmallow Test, the experiment from psychologist Walter Mischel explains how self-control makes you better prepared to tackle any challenge, including financial ones. (See also: 10 Investing Lessons You Must Teach Your Kids)

One of the most successful investors of all time, Warren Buffett, is a major advocate of learning self-restraint. “Someone’s sitting in the shade today because someone planted a tree a long time ago,” he wrote in a past letter to his company shareholders.

How to Fix It

Studies have shown that the most efficient way to learn or teach delaying gratification to achieve later, greater rewards is to provide reliable experiences. For example, if you promise yourself that you won’t use your credit cards for three years to pay down debt and that at the end of those three years you will take a small trip to Las Vegas to celebrate, then take the Vegas trip if you’re successful.

Not keeping your own word will make you say “I didn’t get anything in the end anyways” the next time you’re trying to reach a financial milestone, and make you abandon your goals. Deliver on your promise to yourself or others.

What other psychological traps are slowing down or eating away at your savings?

More From Wise Bread:

MONEY retirement savings

Women Are Better Retirement Savers Than Men, but Still Have a Lot Less Money

woman's coin purse and men's billfold
iStock; Getty Images

It's all about the difference in wages.

Income inequality doesn’t end when you quit working. A report out Tuesday finds that women lag far behind men in retirement savings, even though women save at higher rates and take fewer risks with their investments.

According to Vanguard’s How America Saves report, women are more likely than men to be in a 401(k) plan: 73% of women vs. 66% of men. The difference is even larger at higher income levels. Last year, 81% of women earning $50,000 to $75,000 a year participated in their 401(k) vs. 62% of men. Among people earning $75,000 to $100,000, 86% of women put away money in a 401(k) vs. 70% of men.

Women also save at higher rates than men: Women put away 7% to 16% more of their income than men. And women are less likely to engage in risky investment behavior, such as frequent trading.

Despite those good habits, women are significantly behind men in the amount they have put away. Men have average account balances that are 50% higher than women’s. The average account balance for a man last year: $123, 262, compared with $79,572 for women.

“Women are better savers, but the difference in account balances comes down to the difference in wages,” says Jean Young, senior research analyst at the Vanguard Center for Retirement Research and the lead author on the report. “It’s not surprising. Women typically earn less than men do.”

Still, Young says, the Vanguard report revealed a lot of positive trends among retirement savers.

Among the findings:

  • More people are enrolled in 401(k)s. One-third of companies have auto-enrollment programs that automatically put new employees into 401(k)s unless they choose to opt out. That’s up from 5% a decade ago. Among large companies, 60% have auto enrollment. More companies are doing this not just for new hires but about 50% of plans with auto enrollment are also “sweeping” existing employees into plans during open enrollment, with a choice to opt out. Auto-enrollment has been criticized for enrolling people at very conservative deferral rates, typically 3%. That’s changing slowly: 70% of companies that have auto enrollment also automatically increase contributions annually, typically 1% a year. And, while 49% of plans default people to a 3% deferral rate, 39% default to 4% or more vs. 28% in 2010.
  • More retirement savers are leaving it to professionals. Thanks to the rise in target date funds and automatic enrollment (which typically defaults people to target date funds), 45% of people in Vanguard plans have professionally managed accounts vs. 25% in 2009. The number of people in such accounts is expected to surpass 50% this year, and that’s a good thing, says Young. According to Vanguard, people in professional managed accounts have more diversified portfolios than those who make their own investment decisions.“A professional helps you find the appropriate asset allocation, rebalance, and adjust the portfolio to your life stage,” says Young.
  • The bull market continues to deliver. The median total one-year return for people in Vanguard 401(k) plans was 7.2% in 2014. Over the past five years, 401(k) participants returns averaged 9.9% a year.
  • Few people max out. Only 10% of 401(k) participants saved the maximum $17,500 allowed in 2014. But the number rises with higher earners: One-third of people who earn $100,000 or more a year max out.
  • Savers are doing better than you think. Most financial planners recommend putting away 12% to 15% of annual income to save enough for a comfortable retirement. While the average 401(k) deferral rate is just 6.9%, combined with employer contributions, it’s 10.4%, close to that mark.

That doesn’t mean that most people are all set for retirement. Vanguard reports little change in account balances: The average 401(k) balance is $102,682, while the median is $29,603. The typical working household nearing retirement with a 401(k) and an IRA has a median $111,000 combined, which would yield less than $400 a month in retirement, according to a recent report by the Boston College’s Center for Retirement Research. But those who have access to a 401(k) and contribute regularly are in much better shape, regardless of whether you are a man or a woman.

TIME Retirement

This Is the Worst City to Retire In

Philippe Huguen—AFP/Getty Images An elderly couple walks in le Touquet, northern France, on September 8 ,2013

Retirees should look to Arizona instead

If you want to retire well, set out for Arizona. According to a new Bankrate survey out Monday, the Grand Canyon state is home to three of the country’s best cities for retirees, ranked by metrics like cost of living, weather, crime rate, health care, taxes, walkability and the well-being of seniors living in the area.

“It’s just a great place for a low-maintenance, outdoor type of lifestyle,” Chris Kahn, a Bankrate analyst, told USA Today. “Your dollar is going to stretch further in Arizona.”

But where’s the worst place to call it quits? That’s New York City.

The survey’s full results for the best places to retire are as follows:

1. Phoenix metro area, including Mesa and Scottsdale

2. Arlington/Alexandria, Virginia.

3. Prescott, Arizona

4. Tucson, Arizona

5. Des Moines, Iowa

6. Denver, Colorado

7. Austin, Texas

8. Cape Coral, Florida

9. Colorado Springs, Colorado

10. Franklin, Tennessee

Meanwhile, the worst cities for retirees include the Big Apple; Little Rock, Ark.; New Haven, Conn.; and Buffalo, N.Y.

MONEY Savings

3 Strategies for Rebuilding Your Emergency Fund

first aid kit with money in it
Steven Puetzer—Getty Images

Car expenses top the list of unexpected bills that can derail your savings plan.

This is the final installment in Money’s Midyear Financial Checkup. Read our last installment on how to save on health care costs here.

Last year 47% of households surveyed by American Express reported getting hit with some unexpected expenses.

That’s what an emergency fund is for. But once you’ve tapped the account, what if it takes more than a year to rebuild it?

Lean on a Roth. Say you’re contributing $200 a month to a Roth IRA. You don’t have to stop to rebuild emergency savings, says Austin financial planner Garrett Prom. Just “keep those new contributions in a money-market fund.” This way your Roth acts as a backup safety net until you replenish your real one. Contributions to a Roth (which you’ve paid taxes on) can be tapped penalty-free, though investment gains cannot.

Sell bonds. If you aren’t funding a Roth and are looking to rebuild emergency savings all at once, do it in the most tax-efficient way. Instead of tapping a 401(k) or selling stocks, San Francisco adviser Milo Benningfield recommends selling short-term bonds in taxable accounts, since they are less likely than equities to generate big capital gains bills. Doing so could lead to a stock-heavy portfolio. So Benningfield suggests shifting some stock holdings in your 401(k) to fixed income.

Get a HELOC. Home-equity lines of credit charge 4.7%, but in some places you can get one for 3.25% with a credit score of 700 or higher. HELOC interest payments are typically deductible. But since one possible emergency is a job loss, it’s best to open the line of credit now, while you can still get the best terms, says Manhattan Beach, Calif., planner Phil Cook. “The only time bankers want to lend you money is when you don’t need it.”

MONEY Budgeting

Stop Living Paycheck to Paycheck

man adding expenses
Getty Images

.. and say hello to financial freedom

Every month you receive a paycheck and every month that paycheck is gone before you know it. You have not managed to put anything toward savings, and it takes all you can earn just to keep from sliding further into debt. How do you break this cycle and stop living paycheck-to-paycheck?

It’s easy. Earn more, spend less, or both.

We do not mean to be flippant, but the only true way to savings and getting out of a paycheck-to-paycheck living situation is to control your spending. Even if your paycheck increases, without control of your spending habits, you are just going to spend the excess and be no better off than you were.

Here are some suggested steps to help you initiate a savings program and achieve fiscal freedom.

    • Change Your Mindset – You have to get past this first step for any of the following steps to work. Make savings a priority. Otherwise, there will always be a reason to spend your money and something on which to spend it.
    • Track Expenses – Do you know where all your money goes? You would probably be shocked at the answer.Either use the old school method of writing down every expense in a notebook, or find an app to do the same thing on your smartphone. Include all the seemingly trivial items like vending machine candy bars, subway fares, and random sodas or cups of coffee. Do not forget to include any automatic payments that you have set up through your bank account.At the end of the month, total and categorize the expenses to find out where the majority of your money is going.
    • Prioritize Your Spending – Start by isolating the necessary spending, such as rent, from your other purchases (“needs” vs. “wants”). How many of your larger sources of spending fall into the wants category?Take a closer look at your needs category and see if some of them are really wants. For example, do you really “need” to eat out once a week? Move anything over that is not really a need, and then prioritize again within your wants category. This will give you an idea of which spending to cut.
    • Set a Realistic Budget – Apportion your income toward all your needs first and then set aside a certain amount for savings. Even if it is $100 or just $20, it is a good start toward the savings mindset. Use another portion to pay extra against any high-interest debt like credit card balances, then take whatever money is left and decide how to divide it among your wants.It is important that your budget be realistic. If you have nothing left for any wants or if your savings goals are unattainable, you probably will not stick with the program.
    • Reduce Credit – A long-term key to controlling spending is to slow credit card use. Try not to put any more on your credit card than you can pay every month, and pay your balances promptly. However, do not cancel the account — that will hurt your credit rating.
    • Look for Savings Opportunities – Consider coupons and restaurant offers that you may have ignored in the past. Buy non-perishables in bulk. Sign up for loyalty discount programs. Look around your home for potential areas of energy waste. Every little thing contributes to the overall mindset of savings, even if the savings are small. However, keep savings in perspective — do not buy things that you do not need just because they are on sale.
    • Look for Extra Income – Consider part-time jobs, or selling unwanted items as a way to cut down your debts and the corresponding interest. However, it is important you take care of the spending part of the equation first. Otherwise…poof, your savings are gone in an instant. (That is why this tip is last in the list.)

These are not easy steps, but they are necessary ones in order to succeed. However, as we mentioned, the first step is the most important. Are you ready to make some sacrifices for long-term gain? If so, congratulations! If not, go ahead, whip out that credit card, and head off to the mall. However, the next time you try to control your spending, we guarantee it is going to be more difficult.

More From MoneyTips:

MONEY Savings

The Shocking Gender Gap You Never Knew Existed

male and female piggy banks, female piggy bank has holes
Sarina Finkelstein (photo Illustration)—Getty Images (2)

The financial position of many women in America is shamefully fragile.

While many Americans are ill-prepared for a financial disaster, women are far worse off than men, according to a new study by BMO Harris Premier Services. The financial services firm says that men with any emergency savings have an average of $58,061 put away to deal with the situation, compared with only $33,558 for women.

In other words, women have roughly half the emergency savings of men. Let that sink in for a moment.

The “rainy day” fund story is a broken record. Depending on how you count, something like one-third to one-half of all Americans have no savings, and are one paycheck away from piling up credit card bills and heading toward the financial abyss. But the gender gap in savings puts a new face on problem, and hopefully rings some new alarm bells.

I’ve written nearly 100 stories as part of The Restless Project so far, and read thousands of emails from readers. Perhaps the most poignant came from an older, single woman who took me to school about the real problems that keep people up at night.

“How do single people, people who do not have access to another paycheck, survive at all? Half the country is divorced. Millions are older and alone. Tons of people are childless on purpose because they couldn’t afford to have any,” she wrote to me. “If you don’t work for a major company, benefits depend upon the kindness of strangers. It is an unpleasant poverty-stricken future that I face. I will NEVER be able to retire. I will have to work until the day I die in order to survive…. just survive…. and women of age cannot get other high-paying employment because of their age. Double bind, no exit…. Just the ultimate one, and doing so on the job.”

Gender-based income and savings stories are fraught with statistical peril, which I’ll try to tiptoe through here. But when looking through other available data I could find about women and savings, this seems undeniable: The financial position of many women in America is shamefully fragile.

What Research Shows

First, back to the BMO Harris “rainy day fund” study. The firm conducted an online survey of 3,000 Americans and asked how much money consumers had available in an emergency. The amounts that consumers self-reported — which is always a hazard — could have included retirement accounts, though the way the question was asked, it’s possible some consumers didn’t include 401(k) balances, etc., when answering the question. Also, the figure is an average, which means the amounts could be skewed by very large or very small entries. So I went looking for other data to round out the picture.

Neighbor Works America released an emergency fund survey on March 31, and it found that 34% of adults in America — more than 72 million people — said that they don’t have any emergency savings. The figure had grown in the past year, despite the improving economy. And 47% said they’d burn through their emergency savings fund in 90 days or less.

The report broke out data showing that low-income and minority Americans were less likely to have savings, but was silent on gender. Neighbor Works was kind enough to dig up gender data from its study for me, but it was inconclusive. Women and men reported having any emergency fund at about the same rate, and women were only slightly more likely to say they have little confidence they could withstand a financial emergency (35% to 31%).

That doesn’t contradict the BMO Harris findings, however, because it makes no mention of dollar amounts.

And Neighbor Works’ Douglas Robinson offered a logical explanation for the dollar gap.

“While a great many women have been in the workforce since they became adults, their workforce participation rate still lags men, and is often interrupted,” he said. “That would mean that their matched 401(k) would be reduced.”

Other research suggests that’s true., in an excellent story on women’s readiness for retirement, hit this point on the head: “American women age 55 to 64 with retirement savings have accumulated an average of $81,300 compared with $118,400 for their male counterparts,” according to a Black Rock survey. The story cites similar reserch on “retirement readiness” by the Employee Benefit Research Institute that claims single baby boomer women have a savings shortfall of nearly $63,000, compared to single males, who have a deficit of $34,000.

… And Women Appear to Be Better Savers

What makes this savings gap more painful is that there is some data to suggest women are actually better savers than men. Fidelity looked at its 401(k) accounts last year and found that women in lower-income tiers put considerably more into their retirement funds than men.

“Women earning between $20,000 and $40,000, for example, have saved an average of $17,300 in their 401(k), as of the year ended Sept. 30, 2014. Men in that income range have an average of $15,200 in their account,” reports Bloomberg, in its story about the study.

Critically, retirement savings and emergency savings are not the same thing, though they can end up smashed together in surveys and in consumers’ minds. For younger people, having an emergency fund can be much more important, despite the reality that our our tax code heavily favors retirement savings (actually, our tax code does NOTHING for emergency savings, which is a travesty).

For young adults, there can be understandable reasons to postpone retirement savings — after all, it’s hard to worry about the future when the present is challenging (though it’s unwise, mathematically). But failing to have a personal safety net is a much greater menace. You can’t stand up to an unfair boss when you fear losing your home. You might even be afraid to job hunt. You don’t go to the doctor when you are afraid one medical bill could send you to ruin. Most important, you don’t sleep very well at night when you can’t see even two or three months into the future.

Back once more to the Harris report. The average emergency savings for all Americans, male or female, was $46,000. That’s barely enough to handle a single medical emergency, so there is no gender war over these results. Many Americans’ live far too close to the edge right now, and have been for some time.

But my Restless Project correspondent called my attention to a group she felt wasn’t getting enough attention: “the working poor who cannot get a fair deal….. single women and single women of age.” And she’s right. The numbers, rough as they might be, tell a story that can’t be ignored — women have about half the emergency savings that men do, and that’s an emergency we must deal with now.

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MONEY Wealth

5 Secrets of Self-Made Millionaires

man peering over fan of cash
Erik Dreyer—Getty Images

#3: Avoid time wasters.

When I finished my five-year study on the habits of 233 self-made millionaires, I made a breakthrough discovery. Nearly every one of the millionaires attributed their success in life to habits they learned primarily from their parents or some mentor in life. The secret to success is our daily habits. I thought this was a secret that needed to be shared with everyone so I began writing books about these habits. To date, I’ve identified more than 300 of what I call Rich Habits — and here are a few of them.

1. They Create Multiple Streams of Income

Self-made millionaires do not rely on only a single source of income. They develop multiple streams. Three seemed to be the magic number in my study. Sixty-five percent had three or more streams of income that they created over time. Diversifying your sources of income allows you to weather the economic downturns that always occur in life. These downturns are not as severe to the rich as they are to the poor. The poor put “one pole in one pond” and when their single income stream is negatively impacted in some way, they suffer financially.

Conversely, the rich have “several poles in several ponds” and are able to draw income from other sources when one source is temporarily impaired. Some of the additional streams might include: real estate rentals (each rental unit = a stream of income), REITs (each one = a stream of income), tenants-in-common real estate investments (each one = a stream of income), triple net leases, stock market investments, annuities (each one = a stream of income), seasonal real estate rentals (beach rentals, ski rentals, lakefront rentals), private equity investments, part ownership in side businesses (each one = a stream of income), financing investments, ancillary products or services and royalties (patents, books, oil, timber etc.).

2. They Dream-Set Before They Goal-Set

Dream-Setting is the act of clearly defining a dream. Sixty-four percent of the millionaires in my study were pursuing one single dream. Here’s the two-step process to Dream-Setting:

  • Step One – In 500 words or less, write down what you’d like your ideal life to be 10, 15 or 20 years out. Include specific details of your ideal future life: the income you earn, the house you live in, the boat you own, the car you drive, the money you’ve accumulated, etc.
  • Step Two – Using this script of your ideal future life, make a bullet-point list of each one of those details that represent your ideal life. These would be the income you earn, the house you live in, the boat your own, etc. These details represent your wishes or dreams.

Only after you’ve defined your wishes or dreams does the Goal-Setting process begin. Fifty-five percent of the millionaires in my study set goals around their dreams. This Goal-Setting process requires you to build goals around each one of your wishes or dreams. In order to build goals around each wish or dream, you need to ask yourself two questions:

  • Question #1: What would I need to do, what activities would I need to engage in, in order for each wish or dream to come true?
  • Question #2: Am I capable of performing those activities? Do I have the necessary skills and knowledge?

If the answer to Question #2 is yes, then those activities represent your goals. Goals are only goals when they involve physical action and you have the capability to perform the action required.

Let’s summarize this process:

  1. Paint a picture with 500 words or less of your ideal life.
  2. Define each wish or dream that must be realized in order to have that ideal life.
  3. Establish specific goals around each one of your wishes or dreams.
  4. Take action. Pursue and achieve each of the specific goals that will make each wish or dream come true.

You then repeat this process for every other wish or dream. When you realize each one of your wishes or dreams, your ideal future life will then become your actual life.

3. They Avoid Time-Wasters

When most people think of risk, they think of it in terms of some financial investment they make: investing money in a new business; investing money in stocks, mutual funds, bonds etc.; playing the lottery, gambling or lending money to someone. But financial risk is not the greatest risk most take. You can always earn more money. Money can be recouped. But there is another risk almost everyone takes for granted. This is a risk that, when made, can never be recouped. It’s gone forever. What is it? The greatest risk we all take is time. When we invest our time in anything, it’s lost forever. It never gets renewed or returned to us. Yet, because we are all given what seems to be an abundance of time, it has very little value to us. So we spend an enormous amount of our time engaged in wasteful activities such as sitting in front of a TV, on Facebook, watching YouTube videos, sitting at a bar, lying in bed or engaged in some other time-wasting, non-productive activity. And when we waste time, it’s gone. It will never return. We don’t consider how precious time is until we are older and we realize our time is running out.

Time needs to be invested wisely in pursuing goals, dreams or some major purpose in life. Any investment we make of our time should pay dividends down the road in the form of happiness events, financial security, creating a legacy or in helping improve the lives of others. When you see time as the greatest risk of all, it forces you to become more aware of exactly how you invest your time. Invest it wisely, because you will never get it back. Sixty-seven percent of the self-made millionaires in my study watched less than one hour of TV each day and 63% spent less than one hour a day on the Internet (recreation-related). This freed up time for them to pursue their dreams, goals, read, learn, exercise, volunteer and network.

4. They Found at Least One Success Mentor in Life

The average net liquid wealth of the 233 rich people in my research was $4.3 million. If you do the math, finding the right mentor in life is like someone depositing $4.3 million into your bank account. Ninety-three percent of the self-made millionaires in my study who had a mentor in life attributed their wealth to their mentors. Sixty-eight percent said that the mentoring they received from others was the critical factor in achieving success.

Success Mentors do more than simply influence your life in some positive way. They regularly and actively contribute to your success by teaching you what to do and what not to do. They share with you their mistakes and valuable life lessons that they learned either from their own mentors or from the school of hard knocks. Finding a success mentor in life is one of the least painful ways to become rich. It can put you on the fast track to success. In my research, I discovered five types of Success Mentors:

  1. Parents – Parents are often the only shot any of us have at having a mentor in life. This is why parenting is so important. Parents need to be success mentors to their children. They need to teach their children good daily success habits. If they don’t, it is likely their children will struggle in life.
  2. Teachers – Good teachers = good mentors. Teachers can reinforce the mentoring children receive at home from their parents, or step in to provide the success mentoring absent at home.
  3. Career Mentors – For those not fortunate enough to have had parents or teachers who provided success mentoring, finding a mentor at work can lead to success in life. Find someone at work who you admire, trust and respect and ask them to be your mentor. This person will be at least two or three levels above you in the pecking order at work.
  4. Book Mentors – Books can take the place of actual mentors. Sometimes the best source for mentors are found in books, particularly books about successful people. Fifty-eight percent of the self-made millionaires in my study read biographies of other successful people.
  5. The School of Hard Knocks – When you learn success habits through the school of hard knocks, you essentially become your own mentor. You teach yourself what works and what doesn’t work. You learn from your mistakes and failures. This is the hard path to success because those mistakes and failures carry significant costs in both time and money. But this is also the most powerful type of mentoring you can get because the lessons you learn are infused with intense emotion, and thus never forgotten.

5. They Never Quit on a Dream

Self-made millionaires are persistent. They never quit on their dream. They would rather go down with the ship than quit. Twenty-seven percent of the self-made millionaires in my study failed at least once in business. And then they picked themselves up and went on to try again. They persisted. Persistence requires doing certain things every day that move you forward in achieving your goals or life dream. Persistence makes you unstoppable. No obstacle, mistake or momentary failure can stop you from moving forward if you keep at it. These millionaires learned to pivot and change course, growing in the process. Persistence allowed them to learn what didn’t work and continuously experiment until they found what did work. Persistence is the single greatest contributor to manifesting good luck. Those who persist eventually get lucky. Some unintended consequence emerges, something unexpected and unanticipated happens to those who persist. Sometimes, those closest to you will urge you on and encourage you. But more often, those closest to you — those directly impacted by the obstacles, mistakes and failures that are part of the success journey — will try to stop you from persisting. It takes superhuman effort to continue to pursue success when there are so many forces fighting you. That’s what makes successful people so special — and also so rare. If you want to be successful in life, you must persist in the face of unrelenting adversity. Successful people are successful because they never quit on their dream.

There are many other Rich Habits, but I think these are some of the most powerful.

Habits, I learned from my research, dictate your circumstances in life. They unconsciously program us for success, failure or mediocrity in life. They can determine our social status – rich, poor or middle-class. Habits, I also learned, can be changed. The key to habit change is awareness and tracking. You need to become aware of the habits you currently have and would like to change and then you must track your new habits until they take hold. It takes an average of 66 days to replace an old habit with a new one. When you eliminate old bad habits and adopt new good habits, your life will begin to change for the better. It takes time, but it’s worth the effort.

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MONEY retirement planning

Here’s the Unsettling Truth About the Retirement Crisis

mature office worker
Paul Bradbury—Getty Images

It all depends on whether you're on the right side of the retirement divide.

It’s late spring, and retirement surveys are falling like so many cherry blossoms from the trees. Some of the results are profoundly grim, especially for Gen Xers. In one survey, 67% of Gen X respondents felt that the targets for how much you need to retire are way out of reach. Meanwhile, another survey, this one from Transamerica, found that 37% of workers expect one source of income in retirement to be…working. Finally, 18% of working Gen Xers don’t think that they will ever be able to retire, according to a Northwestern Mutual survey.

By contrast, the Employee Benefits Research Institute’s annual survey found that retirement confidence is actually improving, with 22% of respondents now very confident about having enough money to retire, up from 13% in 2013, but concluded: “This increased level of confidence does not appear to be grounded on improved retirement preparations. In the aggregate, worker savings remain low and only a minority appears to be taking basic steps needed to prepare for retirement.”

Given these scattered and disconnected findings, it’s very hard to know how much stock to take in such surveys. Perhaps, as with sex surveys, people are simply unreliable when asked questions about money. Self-assessments are always subjective, and respondents could be not only deceiving the survey-takers but themselves as well. Studies have shown that self-assessments about finance tend to be a poor measure of financial well-being. People with low financial literacy are unaware of far-off deficits such as retirement, while people with high financial literacy are not only more aware but also tend to compare their wealth relative to peers in their socioeconomic group.

If that’s really the case, then the people who are most pessimistic might actually be in fine shape, while the people who are in the most need of help are also most oblivious. But that might be a bit of a stretch. A more obvious factor is that it’s much harder to save for retirement when you have a low-wage job with no employer-sponsored savings plan, such as a 401(k). Retirement account ownership is heavily concentrated among higher-income households. That’s the key reason Obama created the MyRA plan, which is designed to make retirement savings accounts more accessible to lower-income workers and those just starting out.

The term “retirement crisis” is invoked frequently, but as Scott Burns of the Houston Chronicle recently suggested, it might actually be more accurate to say that what we are currently facing is a retirement triage:

“One-third of households are well equipped to retire. They have multiple sources of income in greater amounts than most people.
One-third of households have assets to work with. They can make decisions that will make a major difference in their retirement security and success. One-third of households are lost causes. They have Social Security but little, or nothing, else.”

In other words, it would be more helpful to concentrate on hard data on savings and investing trends, rather than whether people are feeling confident that they will have enough money or not. Feelings are real, but numbers speak volumes.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

Read next: The Big Mistake That Most 401(k) Savers Are Making

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