Your credit score is important when you decide to purchase a home or any significant purchase that requires loans or payments over a period. Your credit score measures how reliable you are in paying back a loan or making payments in general.

The most impactful thing you can do to build creditworthiness is to make payments on time. This history accounts for 35% of your credit score. Ways to help you accomplish this is to set up autopay on your recurring expenses and create calendars to track when those payments are due. You can also have the platforms through which you make payments send you reminders as you approach the due date.

Next, it is important to pay off revolving credit card balances. Focus on the balances that are higher first, making them a priority to pay off. If you are continually paying off your balance in full, but still have a high utilization rate, consider paying the balance before the monthly statement date. This will help keep your balance lower throughout the month.

The length of your credit history is another important factor that impacts your overall score. Consider keeping your old credit cards open and even using them and paying them off every now and then. Keeping these older cards active will benefit your score because your credit history won’t be erased.

Diversifying the types of credit you have also impacts your credit score. Having a mix of an auto loan and a mortgage loan, rather than one type, will have a stronger credit mix. This is something that will grow over time as you apply for new credit accounts as you need them. It is important to remember to not try too hard to take on more debt than is necessary when starting to build credit.

Applying for multiple credit accounts at one time can negatively impact your credit score. A lender will run a hard inquiry each time you apply for one, knocking points off your credit score. Strategize to only apply when you need to, and to focus on spacing out those inquiries. You can also see if a lender offers prequalification. This is when they review your ability to be applying for this loan and will keep the inquiry from impacting your credit score.

Inaccurate or fraudulent information on your credit report can be detrimental to your score. If this happens to you, you can dispute it with credit reporting agencies, who will investigate the situation. This is a good way to get any fraudulent activity removed from your account.

Becoming an authorized user on a loved one’s account can immediately impact your credit score. Of course, make sure that the user has a positive payment history and a relatively low credit utilization rate.

Building credit is not a hard thing to do. It just requires some knowledge and understanding of how your score is affected. Adopting these tips and strategies will improve your credit score, and contribute to a better financial future.

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There are specific life insurance policies that can become a financial asset to you. Think of it like an investment account, such as an IRA or mutual fund.

Permanent Life Insurance

Permanent life insurance policies allow you to invest in conservative investments, like mutual funds or ETF’s. You can customize your investments, allowing your policy to align with your goals and risk tolerance. There are two types of permanent life insurance.

Whole Life Insurance

Whole life insurance is the most common type. This policy allows you to accumulate cash value. When you pay for the policy each month, a portion of it is placed onto a cash value account. This is basically a savings account component with the life insurance policy.  It is noteworthy that the premiums on these policies typically won’t increase over the life of the policy.

Universal Life Insurance

Universal life insurance is the second type that allows policymakers to grow an asset over time. What sets this one apart is that the premiums are not set and can change at any point. There is something called “variable universal life insurance” which allows investors to have more freedom over their investments. This could lead to higher returns in the long run.

How To Use Your Policy

To use your life insurance policy as an asset you must grow your investments and develop the power to borrow against what you have saved. These earnings are also growing on a tax-deferred basis.

• Use your policy as collateral for a loan: This will help you get approved for a loan or potentially get a better rate on the loan. This is a form of showing lenders that you are trustworthy as a borrower.
• Take a loan from your policy: You can borrow against the cash value of your permanent life insurance policy. When you do take a loan from your policy and it is not paid off by the time of your death, then that benefit is subtracted from what your beneficiaries would have received.
• Withdraw funds: You can simply take money from your policy that is cash. This is also money that will not be paid to your beneficiaries later. If your withdrawal is a large amount, then you may pay taxes from dipping into your investments.
• Option for accelerated benefits: This option is available in a time of severe medical emergencies.
• Surrender the policy: You can cancel your insurance policy and get back the cash value that you put in. Keep in mind to read the fine print, because often time there are quite high fees when doing this. Similarly, if you to withdraw from a retirement account early.

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Introduction

Financial planning integrates your lifestyle with your long-term goals, equipping you and your family to best prepare for the future. Planning can feel tedious and overwhelming, but your future self will be grateful you did the work now. Like with most things in life, financial plans are not black and white, but flexible and designed for your unique circumstances.

What is a Financial Plan?

A financial plan is a comprehensive analysis of your financial situation, and the steps needed to take to reach your financial goals. Financial plans reveal where you need to adjust your lifestyle to get back on track. The time horizon of a financial plan depends on your goals and how far away you are from achieving them. Financial plans are flexible, providing cushion for medical emergencies, marriage, the birth of a child, and other life events.

Components of Financial Planning

• Budgeting is an important component of planning because it reveals your income sources and expenses, your assets and liabilities, and your financial strengths and weaknesses.
• Investing is another component, because it is important for building wealth and moving towards retirement if that is your goal.
• Retirement planning looks at your retirement and social security income and assesses the lifestyle you want to live during your retirement.
• Estate planning looks at inheritance tax estimates, any wills, and plans to give to philanthropic organizations.
• Tax planning deals with 401(k) and IRA contribution plans and returns on capital gains and income tax.
• Risk management has to do with LTC, disability, and life insurance. It also ensures beneficiaries and survivor benefit plans.

Determine Your Financial Goals

This step is vital to crafting your plan for what your needs are. Gather short-term and long-term goals but focus on looking at the whole picture of your financial future. These goals could include buying a home, retiring at 65, or paying off debt. Be honest with yourself about what you want out of life and how that translates financially.

Determine Financial Situation

It is important to know what you own verses what you owe. This will help in calculating your Net Worth, the value of everything you own. Knowing how much money you are bringing in and how much is going out is also important for budgeting and assessing where adjustments can be made.

Construct Plan

Next, piece together a plan outlining the actionable steps needed to stay on track. This typically involves saving money for retirement, building an emergency fund, and saving for traveling or desired purchases. Investing will also likely be part of your plan, because it is the optimal way to build wealth. You will need to discern your preferences and risk tolerance when building an investment portfolio. Paying off any debt is usually a piece of the plan, whether it’s car loans, student loans, or credit card debt. Building credit could also be a part of your plan if you are wanting to make big purchases, like a home or new car. Certified Financial Planners are educated and qualified to provide recommendations regarding your specific situation.

Implement Plan

Now, it is time to act. Once you have created your plan, you can now implement these adjustments to your everyday life. If your plan includes some extreme cutbacks to how much you are spending or increasing your savings, it is okay to start small and build up to your goal. Taking things incrementally will give you a better chance of sticking to the plan. Remember to stay flexible when things inevitably change.

Periodically Review & Revise

We are all faced with challenges and changes, making it important to reassess your plan and adjust accordingly. Adjustments like lengthening your timeline, saving more, or changing your goal altogether will help guide you back to the path.

Conclusion

A financial plan will help you manage your wealth wisely and keep you on a path towards the vision you have for your life. Seeking out a financial advisor is a great place to start when beginning this journey. Lets all take a leap towards a lifestyle that complements our finances.

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Throughout your life you come to milestones where insurance is a given, while others are simply encouraged. How do we know which ones to purchase and when? Insurance is a financial contract between an individual and an insurance company that insures you are protected from financial loss in severe circumstances. Insurance is another ever-changing area of life. Throughout different stages of life will require different policies and different coverage.

Insurance In Your 20s

Health Insurance

Medical debt is one of the largest sources of debt among US consumers. Most people cannot afford healthcare on their own. This makes health insurance very important to consider as you roll off your parent’s plan and enter your adult life. Fortunately, many companies provide health insurance plans for their employees. Health insurance is one that you will most likely always have.

Auto Insurance

In most states, auto insurance is required. There are different amounts of coverage that you can purchase, like liability and full coverage. Rates for auto insurance are tied to age, car make and model, driving record, location, and sometimes gender. If you are driving a car, you will need auto insurance.

Renters Insurance

If you are renting a home or an apartment, you will need renter’s insurance. Most properties require their tenants to have renter’s insurance. Renter’s insurance protects you from natural disasters, theft, and more.

Disability Insurance

This provides income should you be disabled and unable to work a job. If you are reliant on a paycheck to support yourself or your family, disability insurance is worth the expense. Employers typically offer policies for traditional workers, while self employed people take out an individual policy. Disability insurance should be prioritized until you exit the workforce and rely on your savings to live through retirement.

Insurance In Your 30s

Life Insurance

The age at which someone becomes dependent on you, for most in their 30s, is the age encouraged to get a life insurance policy. This could be a spouse, aging parents, or children. There is term life insurance and permanent life insurance. Term is when the policy runs out after a certain period and is typically recommended because it is affordable and straightforward.

Homeowners Insurance

When you purchase a home, it is wise to consider homeowners insurance because it covers everything from liability to the structure itself. Most mortgage lenders require you to have homeowners’ insurance. If you live in wildfire, tornado, or hurricane prone area, there will always be a higher premium.

Pet Insurance

At the end of the day, you might be willing to spend $10,000 if it means your dog will get better. This is not a necessity but could be worth considering for some people. Some plans cover up to 90% of your routine visits and vaccinations.

Insurance in your 40s

Long-Term Care Insurance

This may be a good idea for those who are aging or disabled and need professional help with daily functioning. Keep in mind that as you age you are more expensive to insure. It may be a good idea to consider long-term care insurance well before you need it, even if you think you may never need it.

To be insured is to protect you as an individual and anyone dependent on you in the face of perils that no human could afford. It can be confusing as you enter adulthood to know what is vital and what is not. Having the knowledge of what insurance is most important in your stage of life will bring a sense of security and peace to you financial well-being.

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The post Understanding Insurance appeared first on New Century Investments.

Building a foundation of financial literacy starting from a young age is key to setting your child up for financial success. The question is how do we do it? Especially if we did not come from a home that taught us to be financially literate.

What is financial literacy? Financial literacy is a skillset founded on knowledge that equips people to make informed decisions about their money. This is not about having the most money or having a confining budget. This is about having a healthy relationship with your finances, creating a fulfilling experience with using your money.

Research suggests that many financial habits are formed by the age of 9. Learning these skills is so formative for helping your child develop positive attitudes and habits towards money. Starting to instill these skills as early as you can is the most psychologically beneficial thing you can do for your kids.

Saving

The first practical tool is teaching your child to save for something they really want. Instilling some “skin in the game” or financial responsibility will teach the child that what you do with your money matters. Help your child plan for how much the item they want costs and how they’re going to achieve saving that amount. Teaching children delayed gratification builds character qualities like patience and learning to be content with what you have. It is important they know that adults also save for items they want, or bigger purchases like a home or a family vacation.

Practicing Managing Money

Hands on experience is always a great way to learn and become confident in that skill. It can be a fun experience for you and your child to go to a coffee shop and have them practice paying for a coffee and treat. You can also set savings goals together, set up a savings account, and teach them to allocate certain portions of their earnings to savings and spending. Practical ways to give agency to your kids is through a weekly allowance as they complete chores or for Christmas or birthday gifts.. It is healthy for a child to learn that earning and saving is linked to work. For children, they can help with the laundry, the dishes, the garden, or even helping neighbors with household tasks.

Be The Example

This last tool might be the most important. Children mirror what they see, and that means they will learn how to handle money and think about money from the perspective of their caretakers. Work on yourself to develop healthy money management and invite your children into open conversations about why certain decisions are made. Involve your children in financial activities, and the process of deciding what to purchase. Teach them about finding discounts, buying secondhand, and comparing prices. For older children, you can begin to teach them about investment accounts and the power of compound interest.

Equipping children with financial literacy is essential for their financial well-being throughout their lives. Nurturing your children financially with tools and dialogue, will help them develop strong money management skills that they can continue to pass on.

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Introduction

Entropy – a scientific term used to describe the ever-growing disorder in the universe. This manifests not only in space, but in the structures and systems of the world. People’s homes are full of stuff, their minds are filled with instant access to news and media, and their finances are filled with never-ending credit card payments and messiness. Minimalism is a growing idea in our culture, because the world is tired of unorganized and complex living. As humans, we desire structure and order to our days, calling us to delve into our financial life and bring some calm to the chaos.

1. Consolidate Bank Accounts and Retirement Accounts

First, having multiple different accounts to manage can be overwhelming and only creates extra stress when checking accounts. It is recommended to have one account for spending purposes and one savings account. It is also recommended to rollover any previous job 401ks to a self-employed retirement account. When consolidating your retirement accounts, make sure to double check for any tax implications.

2. Get Rid of Paperwork That Isn’t Necessary

Take some time to sort through your filing cabinet and purge paperwork that is not necessary. It is especially therapeutic to categorize and label each section of your files to relieve additional stress. It can be helpful to only keep what you need a hard copy of in a file. For extra measures you can also create a folder on your computer and store documents electronically.

3. Choose One Credit Card

Credit cards can also build up quickly, because that is the goal of the businesses marketing them to you. It can simplify your wallet and budgeting if you focus on using just one credit card. Choose the card that will serve you the most and forget about the rest.

4. Review Your Subscriptions

It is important to review your subscriptions now and again and consider the ones you are not using. This simplifies your life and creates one less bill you must worry about. If you are a budgeter, it will make tracking your expenses so much easier if you can simplify how many you have.

5.  Automate

Technology is always working to create a more efficient way to do things.  For monthly bills, like insurance, rent, and utilities, check into setting up auto-pay that will automatically charge your account on the day that it is due. This simplifies your finances and clears space in your mind, because you know your bills are taken care of. You can also automate a certain amount of money to transfer into your savings account, completely customizable to your preferences. There is even budgeting software that you can invest in to link your bank accounts and budget for you, just to make your life a little simpler.

Conclusion

Simplification brings quiet to a loud mind and peace to your financial life. I hope these recommendations can add value to how you manage your assets and create more intentionality in calming the chaos around us.

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Introduction

Nobody wants to have a loved one pass away and not be able to access their belongings with ease during a time of grief. Unfortunately, this is the case for many. Not having beneficiaries on your account and policies can be detrimental to your family members and loved ones who are grieving your loss. Taking the time now to review and update your beneficiaries will leave a lasting impact on those you care for.

Why?

Designating a beneficiary is important because it ensures that your assets will be transferred to the place you desire. You can name beneficiaries on life insurance policies and investment or retirement accounts. Typically, with a life insurance policy, the chosen beneficiary will receive some benefit that the policy pays. With investment or retirement accounts, the balance of your assets will transfer smoothly to your beneficiaries.

Naming a beneficiary is not required, meaning we need to take the responsibility to ensure our beneficiaries are updated across our holdings. Once you pass away, and you have no beneficiaries, the financial products you own will not be governed by your will anymore. Without beneficiaries, there is no clear answer to who is entitled to your assets. This creates a lengthy and grueling legal process to determine how your assets are distributed. Probate is one of those processes that gives power to the court to decide where your assets are distributed.

How?

With any financial service, you should be able to designate beneficiaries through the website or filling out a form. When setting up accounts through your employer, you can also have them keep your beneficiaries on file. If you work with a financial professional, they will also keep up to date with your beneficiaries.

A beneficiary can be a person, charity, trust, or your estate. Typically when choosing your beneficiaries, the immediate people who will suffer financially, will prioritized as beneficiaries. When naming beneficiaries, you can also split the benefits across multiple names. For example, say you have 3 children, and you want to split equally across them. They would each receive 33.33% of the assets in that account. It is important to research state laws before naming your beneficiaries on your accounts. Beneficiary laws vary by each state, and some states make it a requirement to list your spouse as your primary beneficiary. Updating beneficiaries happens in specific circumstances, such as divorce, remarriage, or the death of a loved one who was one of your beneficiaries.

When designating beneficiaries, you will likely provide the full legal name as well as their relationship to you. When providing beneficiary information, be as detailed and thorough as possible. This will ensure that the benefits entitled to your beneficiaries will be expedited to them as efficiently as possible.

Conclusion

To secure the financial stability of those important to you, consider naming, reviewing, or updating your beneficiaries. The whole purpose of this system is to be able to honor your desires once you are no longer here, making it advantageous to put thought into the futures of your loved ones today.

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The post Secure & Honor: The Importance of Beneficiaries appeared first on New Century Investments.

If you are dreaming of buying your dream home, traveling the world, or funding your kids through their education, then how do you even begin to save for all these goals? How do you know what is enough to store away each month? This does require some planning and critical thinking but is worth the effort.

Prioritize

The first step is to write down a list of all the things you want to save for, and how much is needed for each one. It is recommended to keep the list as small as you can. Now, it is time to prioritize your list based on needs, wants, and wishes. There are essential things you should be saving for, including retirement and an emergency fund. Then, you can prioritize buying a home or planning to have a child.

Categorize

Next, sort your goals by the length of time it will take to save. The 1^st category is for your short-term savings goals that you want to achieve in the next 2 years. The 2^nd category is for savings goals that you want to achieve in the next 3 to 10 years. This could be for a down payment on a home or for your child’s wedding. The 3^rd category is for long-term savings goals that will not be touched sooner than 10 years from now. This could be for retirement or education. It is important to categorize this way because it will help you decide how to invest.

Invest

It is important to spend more time in the market than to try and time the market for great returns. For short-term goals it makes more sense to invest in less volatile investments, such as certificates of deposits, money market funds, or cash. This will keep your funds more stable to ensure you have the amount you need. If your goals are 3 to 10 years from now, you can strategize a moderate portfolio. More money can sit in stocks but have a good balance of safer investments to preserve capital. For long-term goals, you can have a riskier portfolio that is invested in aggressive stocks. It is still important to have some measure of safety and to not forget about diversifying. Focus on investing first for the goals that are at the top of your priority list.

Review

Taking quarterly, semi-annual, or annual meetings to re-assess your goals and your investment allocations are vital to keeping you on track. You may need to rebalance your portfolio, like selling some stocks and buying more bonds, if your stocks appreciate above your target allocation. The closer you get to your goals, the safer your portfolio should look. This also gives you the space to change your goals or adjust where needed as you realize you may need to save more for a specific goal. Have the long game in mind when planning your investment strategy to save for your goals. Stick to the plan and thank yourself later.

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Introduction

Some choose to rent for the extent of their life while others are sold on homeownership. Is there truly one that wins? This decision is a gray area of life, beckoning us to weigh the costs and come to a decision that aligns with our finances, values, and lifestyle.

Renters POV

• Renters typically have more financial flexibility in the short term, due to the lower upfront cost compared to a down payment for a home. The average rental rate in the US is $1,536 a month compared to a median down payment of $34,248 or average of 14.4%.
• Renters have zero property taxes and maintenance expenses. This is convenient to have a landlord or maintenance staff prepared at your beck and call to replace your refrigerator or fix the garbage disposal – a luxury homeowners’ do not typically have without a much higher cost.
• Renting also has the advantage of lease terms. Renters typically do not feel as tied down to a geographic location compared to homeowners. This is beneficial for people who have travel goals or a lifestyle that requires you to move frequently.
• Renting typically lends itself to predictable monthly expenses. Homeowners have more unexpected costs that surface because they are responsible for the upkeep of their home.
• Renters have less responsibility regarding their place of residence, when compared to homeowners. The rental property is responsible for the upkeep, requiring renters to merely maintain and notify of any issues with their apartment. Homeowners carry this extra burden of responsibility to manage their homes.

Homeowners POV

• Owning a home can create more room to save for retirement, home improvements, travel, and other goals you may have. Once you own your home you have more margin in your budget for other things you want to prioritize.
• Owning a home creates more opportunity to build community because neighborhoods tend to have the same people who live there for extended periods of time. This is shown to benefit children as well, because their home is a place of consistency and stability.
• Rental rates have increased dramatically and are typically more volatile than mortgage rates. This is something to consider in determining if homeownership is right for you.
• Decreased tax burdens are prevalent in homeownership, because you will not receive tax breaks for renting. The IRS offers tax breaks to homeowners specifically, creating a window of opportunity to experience tax relief.
• Owning a home means that you may build equity. Every mortgage payment adds to your home’s value, creating the opportunity to tap into that equity if you need cash. Owned properties can also be rented out later, becoming a greater investment. Homes also increase in value over time, meaning you may be able to profit from selling your home.
• Homeownership also allows for creative freedom. There is a sense of pride in making all the decisions regarding your home. It is truly yours. You get to decide the paint on the walls, the décor, the landscaping, additions, and all the little details in between.
• Homes can be more affordable when purchased outside of populated cities. We have more freedom than ever to work remotely or hybrid, allowing workers to extend their place of dwelling beyond city limits.

There are so many factors to consider when making this decision. Keeping up to date with the renters and housing markets, and being aware of the advantages and disadvantages, can help your home truly be sweet.

Matt’s Corner

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In the world of investing, much like in life, perspective shapes reality. Imagine two investors: one, an optimist who sees the stock market as a landscape filled with opportunity, even in the darkest of times; the other, a pessimist who views every downturn as a signal of impending doom.

The optimist, let’s call her Sarah, has been investing steadily for years. She knows that the stock market is inherently volatile, but she also understands that history shows a consistent upward trend over the long term. When the market dips, Sarah doesn’t panic. Instead, she sees it as a sale—a chance to buy high-quality stocks at a discount. During these times, she carefully evaluates companies, looking for strong fundamentals and solid growth potential. While others are selling in fear, Sarah is buying, confident that the market will eventually recover and reward her patience.

On the other hand, we have Jack, the pessimist. Jack is wary of the stock market, always fearing the next big crash. He believes that today’s world is fundamentally different—full of political turmoil, economic uncertainty, and technological disruptions that spell the end for traditional investments. Jack remembers the crash of 2008 all too well and is convinced that another one is just around the corner. So, when the market starts to drop, Jack sells his holdings, cutting his losses before things get worse. He avoids investing during downturns, preferring to wait until “things get better.”

Over the years, Jack’s pessimism costs him dearly. While he sits on the sidelines, the market recovers from each downturn, often reaching new highs. Sarah, meanwhile, sees her portfolio grow. Her willingness to invest when others are fearful pays off as the market rebounds, often stronger than before.

This isn’t just a story about two people; it’s a lesson rooted in history. The stock market, despite its ups and downs, has trended upward over time. Investors who have the courage to stay the course during tough times—when stocks are shifting from weak hands to strong ones—often come out ahead.

In fact, some of the best returns in the stock market have come from investing during downturns. The pessimists who fled to safety missed out on these opportunities, while the optimists who stayed invested or even added to their positions reaped the rewards. It’s a testament to the power of optimism and the belief that, despite the noise and fear, the market will continue its long-term upward march.

The story of Sarah and Jack highlights a fundamental truth about investing: it’s not just about what the market does, but how you react to it. The optimist sees downturns as opportunities, not threats, and this perspective makes all the difference. So, the next time the market dips, ask yourself—are you a Sarah or a Jack?

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