All posts by nextlevellifestyleblog

100 Words On: When Financial Perfection Is the Enemy of Good

When it comes to matters of personal finance, trying to find the optimal solution can be counterproductive simply because many decisions don’t require extensive research. One of the best examples of this is when comparison shopping for a certain product or service. Typically, a modest survey of three to five samples is all that’s necessary before enough information is available to make an enlightened decision.

The bottom line: Whether you’re choosing a new refrigerator or a 24 hour plumber, trying to make the perfect choice usually results in wasted time and energy. Sometimes “good enough” really is okay.

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6 Tips to Combat Time Poverty

In this video, Entrepreneur Network partner Brian Tracy discusses how time management techniques that can really make a difference in your daily life. Most people think they are too busy to stop and actually educate themselves on time management, but the truth is that you are too busy not to do so. Learning how to make the most of your time is a great way to improve your productivity and happiness, so stop putting it off.

To learn more, click play.

Watch more YouTube videos from Brian Tracy on his channel.

Related: The Biggest Obstacle to Financial Success

Entrepreneur Network is a premium video network providing entertainment, education and inspiration from successful entrepreneurs and thought leaders. We provide expertise and opportunities to accelerate brand growth and effectively monetize video and audio content distributed across all digital platforms for the business genre.

EN is partnered with hundreds of top YouTube channels in the business vertical and provides partners with distribution on Entrepreneur.com as well as our apps on Amazon FireRoku and Apple TV.

Click here to become a part of this growing video network.

Why are IRA, Roth IRAs and 401(k) contributions limited?

A:

Contributions to IRA, Roth IRA, 401(k) and other retirement savings plans are limited by the IRS to prevent the very wealthy from benefiting more than the average worker.

Contributions to traditional IRA and 401(k) accounts are made with pretax dollars, so they can offer a significant reduction to a worker’s annual income tax burden. The contributions to many retirement savings accounts are capped to ensure that those who can afford to defer large amounts of their compensation do not take advantage of this tax benefit.

401(k) Contribution Limits

In 2017, the maximum employee contribution to a 401(k) plan, either traditional or Roth, is $18,000. Also, employers can contribute through either non-elective deferrals or contribution matching. However, the total contribution from all sources must not exceed the lesser of the employee’s compensation or $54,000 for 2017.

To encourage those nearing the end of their working years to contribute more, the IRS also allows additional catch-up contributions for employees over the age of 50. In 2017, the catch-up contribution is $6,000, for those over 50.

Non-Discrimination Testing

A 401(k) is a qualified retirement plan offered through an employer. The IRS imposes certain limitations on the contributions of highly compensated employees, called non-discrimination testing, to encourage equal participation across all compensation levels.

For the 401(k) plan to retain its qualified status, contributions made by employees who earn large salaries – more than $120,000 must not exceed a certain percentage of the average contribution made by non-highly paid employees. This prompts higher-level employees, such as executives and management, to encourage plan participation among the rank and file. As the average regular employee contribution increases, the amount that more highly compensated employees are allowed to contribute increases, up to the annual maximum.

IRA Contribution Limits

For the 2017 fiscal year, IRA participants are limited to a maximum contribution of $5,500, or 100% of their compensation, whichever is lesser. Those over 50 can make catch-up contributions of up to $1,000 annually.

Like 401(k) plans, the contribution limits for IRAs apply to all accounts held by the same person. If you have both a traditional IRA and a Roth IRA, the total of all your contributions to both accounts cannot exceed $5,500, or $6,500 if you are over 50.

Leveling the Playing Field

IRAs are not qualified retirement plans because they are not offered through an employer. There is no provision for the type of non-discrimination testing that applies to 401(k) contributions.

However, IRAs were developed to encourage the average worker to save for retirement and not as another tax shelter for the rich. To prevent unfair benefit to the wealthy, the amount of your contribution to a traditional IRA that is tax-deductible may be reduced if you or your spouse is covered by an employer-sponsored plan, or if your combined income is above a certain amount.

In addition, Roth IRAs are only available to those who meet certain income requirements. In 2017, the contribution limits for single persons who earn more than $118,000, and married couples filing jointly who earn more than $186,000, are reduced. Individuals who earn more than $133,000 and couples who earn more than $196,000 are not eligible to contribute to Roth IRAs.

3 Ways to Build a Business That Gives You Mental Balance

When you are launching a new venture, it can sometimes feel like balance is a complete myth. Michael Schultz knows firsthand about working long, crazy hours, having worked in the restaurant industry since he was 12 years old. He has worked for big names such as Ruth’s Chris Steak House and Wolfgang Puck, and in 2015, opened Goddess and the Baker, a well regarded cafe in Chicago.

This spring, when he launched his new company, a specialty food and beverage chain called Fairgrounds Coffee & Tea Brew Bar, Schultz wanted to make work/life balance a part of the company’s mission from day one. While it’s something that’s incredibly valuable to Schultz now, he says that wasn’t always the case.

Related: 4 Innovative Ways to Motivate Your Team

His wake up call came seven years ago, days before his first daughter was born, when he wasn’t able to attend his wife’s last ultrasound appointment. When he met her in the hospital afterwards, he recalled that she asked why he was there, since he had meetings that day.

He found himself thinking about all the moments that he had missed, and he told her that he would quit his job with Ruth’s Chris Steak House. Though they had a baby on the way and had just bought a new house, he knew that he couldn’t stay on the path he was on. “I said, ‘I want to create opportunity for others. I want to build a business that inspires people, makes them feel valued and feeds that entrepreneurial spirit,” Schultz said.

Schultz has three pieces of advice for entrepreneurs who have a similar goal in mind.

Related: Does Work-Life Balance Exist? See What These 12 Founders Think.

1. Contribute to your community.
Schultz says he wants the spirit of giving back to permeate every aspect of his company. “Each team leader has a budget for doing random acts of kindness,” he says. “The success of our company can be judged when we impact people’s lives in the community in which we operate.”

The first Fairgrounds location will open on March 29 in the Bucktown neighborhood of Chicago. Twenty percent of the store’s opening day sales will go to the A.N. Pritzker School. The second location, set to open in May, will be in the Chicago Athletic Association hotel. The Chicago Children’s Choir will be that store’s charity partner, and will also receive 20 percent of the first day sales. Members of both the Chicago Teachers Union and employees of Chicago Public Schools will have a standing 10 percent discount at the city’s stores.

Schultz says that there are plans in the works for charity partnerships with every new location that opens, starting in Los Angeles this summer, with Houston, Minneapolis, Brooklyn, N.Y., and Miami following.

Related: 3 Effective Ways to Manage Employee Burnout

2. Be a leader in all aspects of your business.
“I take 30 minutes every day to meditate to regroup, refocus and center my energy. That is a behavior we encourage with our team members in trying to help them to create balance in their lives,” Schultz says.

His first priority is to instill in his employees the value of taking time for themselves, even if it’s something as simple as reading a book or talking a walk to take a break during the day, he says. “Having great balance between family, health and business allows you to achieve higher levels in all of them.”

3. Don’t play the “what if” game.
Schultz says it is impossible to move forward and maintain any sort of balance if you find yourself consumed with regret. “There is a moment that comes in everyone’s life you look back and you think about what could have been,” he says. “Don’t put yourself in a position where you can look back and say, ‘What could have or what would have happened [if I had done this’]. Take that leap and have that courage to believe in yourself.”

100 Words On: Why Frugality Has Its Limits

The main benefit of frugality and saving is they’re good habits that lay a strong personal finance foundation. That being said, the frugal lifestyle definitely has its limits. Although scrimping and cutting corners can result in significant savings, at some point, it simply becomes impractical to cut anymore. Meanwhile, those trying to save their way to prosperity will sadly discover that it’s a painfully slow process.

The bottom line: Frugality has its merits to be sure, but for those looking to build wealth or get out of debt as fast as possible, increasing income is a much better strategy.

Photo Credit: coneslayer

 

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