Author Archives: johnowen

The 6 Numbers You Need to be Smart With Your Money


That’s the amount that gets withheld from the median household income of $46,000. Do you know how big a bite gets taken out of your paycheck for federal tax withholding, Social Security, and Medicare combined? How about the amount that’s left after state and city taxes and other deductions for insurance and retirement? To calculate how much you net, pull out your pay stubs for the past month (if you’re married, grab your spouse’s docs too). You can’t even begin to get a grip on spending and saving if you don’t have a clear picture of what you’re bringing in. Now you know.

100 minus your age

The difference equals the percentage of your investments that should be in stocks; the rest should be in bonds. So a 35-year-old woman ideally has 65 percent of her money in stocks and 35 percent in bonds. Don’t let recent market trends scare you–those who wait out the rocky times end up with more money than those who switch up their investments out of fear. If the market tumbles, you’ll have time to let your portfolio rebound. You want to grow your money aggressively until you get close to needing the funds, which is why the ratio should slide toward more conservative, less risky bonds as you age. Reset the balance once a year on your birthday–or consider a “target date” mutual fund, which does it for you automatically.



Multiply that by your salary to determine how much life-insurance coverage you need, and your partner should do the same. Some employers offer group life insurance plans, but they’re rarely customizable to fit your family’s specific needs, and typically only pay for coverage equal to one to two times your salary. Compare rates for term-life policies that will protect your kids until they’re grown at


This is the national average for credit card interest rates. If you’ve got a card in your wallet with a higher rate, pay that balance off first, because you’re getting slammed with major charges. The good news: Interest rates are generally negotiable. If you regularly pay at least the minimum on time, try haggling your way to a better rate, or consider moving the balance to your card with the lowest one–but do that only if you won’t get socked with hefty fees for the transfer.


It’s the minimum percentage of your salary that you should contribute to your 401(k) plan. Roughly 41 percent of workers at businesses with retirement plans get a match of up to 6 percent, says the U.S. Bureau of Labor Statistics; many companies put in between $.50 and a dollar for every buck you save. So if you make $50,000, you could be getting an extra $3,000 every year if your employer contributes dollar for dollar. Whether your company has a matching program or not, sock away up to 10 percent if you can–but start by making sure you never leave any free money on the table.


It’s the maximum you can contribute to an individual retirement account, or IRA, each year. If you have a 401(k) through your job, make sure you’re contributing at least 6 percent there. Then, if you can swing it, aim to put away the full $5,000 in an IRA to further expand your retirement savings and get sweet tax breaks. There are two types: a traditional IRA, which lets you defer paying taxes on the money and what it earns until you retire, and a Roth IRA, where you pay taxes on the contribution now, but the earnings are tax-free. My advice: Go with the Roth (which is only an option for couples earning less than $183,000), because it lets you tap into that money without penalty, if you need to, before your golden years.


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