10 Open Enrollment Mistakes to Avoid


How much time do you spend reviewing your benefits before open enrollment each year?

If your answer is “not much,” you’re not alone. A recent survey by insurer Aflac (http://workforces.aflac.com/about-the-study.php) says that 90 percent of Americans choose the same benefits year after year and that 42 percent forego up to $750 annually by making poor choices.

Rushing through annual benefits updates or making such uninformed decisions in insurance, retirement or other workplace-based benefits are actually part of a bigger story. Open enrollment is just one part of an overall financial plan: Unfortunately, too many employees see it as the only financial planning they have to do all year.

In reality, a safe financial future depends mostly on the savings, investing and spending decisions you make outside the workplace. As many employers are looking to shrink or discontinue the retirement and health benefits they offer, it’s time to take a fresh look at open enrollment.

Here are 10 benefits mistakes you might want to avoid.

  1. Not having an overall financial plan. Your company may offer excellent benefits now. However, the Labor Department reports that average worker tenure at U.S. companies is only 4.6 years, so the biggest open enrollment mistake might be assuming your current benefits assure your financial future. It’s important to work alone or with qualified advisors to determine the right work-based benefits as part of overall spending, savings and investment activities throughout your lifetime.
  2. Making choices at the last minute. Your benefits are important and deserve time for consideration. Put your open enrollment dates on your personal calendar with a reminder a few weeks ahead of time to coordinate with qualified advisors if you have them.
  3. Forgetting to coordinate with your spouse or partner. Many employers are planning big changes to spouse/partner benefits. While the Patient Protection and Affordable Care Act (ACA) lets parents keep children on their health plans until age 26, more employers are instituting “spousal surcharges” or excluding spousal coverage altogether if they already have access to employer health insurance.
  4. Ignoring your state’s Health Insurance Marketplace. Even if you have employer health insurance, things change. If you lose a job or cannot stay on your spouse or partner’s health plan, it might be worthwhile to familiarize yourself with your state’s ACA-mandated health insurance marketplace ahead of time.
  5. Underestimating how big life events might affect your benefits. Salary changes, marriage, divorce, serious illness or starting a family are big signals to check your benefits, preferably well in advance of open enrollment. Think through every potential situation you might face and ask questions about how those changes might affect your benefit selections.
  6. Passing on flexible spending accounts (FSAs) and health savings accounts (HSAs). FSAs are workplace-based accounts that allow you to set aside money on a pre-tax basis to help you pay for healthcare and dependent care expenses during the calendar year. HSAs, if you qualify, also allow you to set aside pre-tax dollars in a qualified investment or savings account for long-and-short term medical expenses not covered by insurance. They don’t require you to spend out those funds every year. Your workplace benefits counselor, qualified financial advisor and Internal Revenue Service Publication 969 can assist with eligibility, types of accounts, contribution limits and tax issues associated with these choices.
  7. Leaving retirement selections unchanged. As the Aflac data indicates, many individuals don’t change their investment focus in self-directed retirement plans for years. That’s why reviewing options in advance is essential.
  8. Overlooking wellness options. Many employers pay for exercise, cholesterol screenings, weight loss, smoking cessation, immunizations or related benefits that can make you healthier, save money and possibly lower health premiums.
  9. Bypassing transportation breaks. If you drive or take public or company-sponsored transportation to and from work, you may qualify for specific discounts or tax deductions. IRS Publication 15-B covers these programs and how to use them most effectively.
  10. Forgetting education benefits. If an employer is willing to train you to advance in your career, don’t pass it up. However, get advice on the possibility of tax liability for these benefits. Separately, check out employer-sponsored education grant or scholarship awards for you or your kids – that can be free money.

Bottom line: Open enrollment is just one piece of a well-organized financial puzzle. Make sure your employer provided benefits choices compliment savings, investing and spending decisions you’re making on your own.


By Nathaniel Sillin

Consumers and FIs Battle Rising Credit Fraud Together

a security lock with password with a credit card on white computer keyboard representing credit card data encryption for financial security

Online purchases are becoming an increasingly huge problem for American and other retailers around the world. A growing fraud of choice, known as “card-not-present” purchases, is replacing more traditional means of credit card crimes. Criminals presenting fake credit cards for in-person shopping is declining. However, the drop in “credit-card-present” abuse is currently offset by growing online fraud, forcing financial institutions (FIs) to search for solutions.

A more effective technology than the magnetic strip card is the EMV (EuroPay/MasterCard/Visa) chip. As of October 1st of 2015, if a merchant in the United States accepts a credit card with no EMV chip, they’re stuck with the bill for fraudulent purchases. Which may sound like a benefit to the consumer, but ultimately those costs will get passed on to the consumer somehow.

Annual costs of payment card fraud is currently estimated to be around $10 billion. There are currently 1.24 billion cards and 15.4 billion POS terminals that accept the chip cards, but most of those are in other countries who are well under way with converting to this technology. It has been reported in Canada that after the conversion to EMV, card present fraud was cut by more than half, while card-not-present fraud doubled over a five year period afterward. The United States is lagging behind, but the looming deadline may put the conversion at the top of the priority list for financial institutions.

Because of the cost of the fraud and the shift, responsibility for preventing online fraud is falling onto the consumers’ laps more and more, whether they like it or not. However, it behooves both the financial institutions and the customers to work together to stop it.

Although most FIs have protection for unwitting victims, legitimate credit users have to be more aware of their credit card activity. Spotting criminal action on card-not-present transactions requires more vigilance than ever before. Immediately reporting suspicious activity to credit issuers is critical. Consumers need to monitor their credit card activity with ever-increasing voracity if card-not-present fraud hopes to be thwarted.

Using password-protected mobile wallets is another attempt at keeping online fraud transactions from reaching epic proportions. Financial institutions are always trying to stay a step ahead of clever cyber fakes such as implementing two-method authentication. Now, they are also adding features with layers of protection to these wallets, which has been successful in other countries.  Now it will be up to consumers to install these and learn how to use them appropriately.

In addition, software and app developers are implementing features that allow the consumer to control how they use credit cards for online transactions. For one, they can activate an option turning it on and off when they want to for online purchases.

Keeping PINs and passwords private is not going away either, so remember to use strong passwords and phrases and don’t give out PINs or passwords to anyone. No matter how nicely he or she may ask and change them often.

Ferreting-out cyber crooks from legitimate credit card holders is proving a difficult challenge for all financial institutions. Establishing password protection and on/off switches for bona fide credit card users is gaining momentum in the US. EMV chip or not, no amount of technology replaces the alert and watchful eye of consumers. Stay informed, act immediately and utilize the latest options for your credit safety.


© Copyright 2015 Stickley on Security

Lowering Pet Costs

Dog-Begging-For-MoneyIf you have a pet, you are probably well aware that the dough shelled out for four-legged family members can rival the money spent on two-legged members. Luckily, there are many things you can do to lower your pet costs.

Medical Care

When choosing a veterinarian, you never want to sacrifice quality, but the prices that even good vets charge can vary. Shop around – humane societies are often a good source for reasonably-priced veterinary care. You may also be able to save money by having some things done outside of your regular vet’s office. Many cities offer low-cost vaccination and/or spay and neuter clinics. (Check with your city’s animal control department.) Pet supply stores also often host low-cost vaccination clinics. If your pet needs medication, ask your vet for a prescription and fill it elsewhere. Many pharmacies carry pet medication in addition to people medication and typically charge less than vets’ offices. Purchasing online is another option.

In an attempt to save money, many people skip things like annual check-ups, vaccinations, and flea medication. Is this a good idea? Not really. In fact, it may cost you more in the long-run. Vaccinations and flea medication help prevent diseases, and annual check-ups allow problems to be caught early. Another thing you should not skip is spaying or neutering your pet. Fixed pets have less health and behavioral problems, and you won’t have to worry about having more mouths to feed.

Toys and Accessories

Before you buy your dog that glittery pink T-shirt or your cat that mechanical toy mouse, think if it is really necessary. Of course, you probably don’t want your pet to live a deprived, toy-free existence, but you may already have things in the home that would serve as perfectly good toys. Many cats love playing with paper bags (remember to cut off the handles) and boxes. Put a tennis ball in a sock and you have an instant dog toy. Your pet won’t know that you didn’t spend $50 in some chi-chi boutique.


It is a good idea to check out various pet supply stores and websites to see who offers the best price, but think twice about buying the cheapest food. High-quality food costs more but may keep your pet healthier, lowering your vet costs. If you feed your pet wet and dry food, consider if both are needed. (You may want to consult with your vet.)


Dog owners may be able to save on grooming costs by doing what they can at home. (Cats, in general, do not appreciate grooming assistance!) Dog shampoo and scissors only cost a couple of bucks. Of course, you should educate yourself on proper grooming techniques before doing it yourself. You won’t save any money if you have to take your pet to the groomer to fix your mistakes.

You can’t put a price on the love pets give us, but you don’t have to let pet costs overwhelm your budget.


© 2013 BALANCE

How to Raise Your Kids to Be Smart with Their Money

allowanceWe all want our children to learn what’s best for them at the earliest age possible, whether it’s something as simple as hot vs. cold, or a concept that’s a bit more in depth like right vs. wrong. While the latter is a conversation that will likely carry on throughout your child’s life into adulthood, there are several other important things that parents can instill within their kid’s brains while they are young, including the value of money. Now we know what you are thinking- “let kids be kids, heck they’ll have to worry about money for the rest of their lives!” While experts would agree with you to a certain extent that kids should be left to be kids, there are also significant positives that come with developing an understanding of money sooner rather than later in your young one’s life. In today’s whirlwind economic climate, we all need to be a little wiser with out expenses and savings, so why not equip our children with the education they need right from the start? It is in this light that we present to you these three great tips on how to raise your kids to be smart with their money.

Get That Piggy Bank Out Early: Experts suggest it’s very important to introduce the concept of money itself as something that needs to be collected, saved, and valued as early as possible. Since it is also essential to not overburden the child with this concept, and please keep in mind that there are plenty of more important things to teach them first, the introduction of money should be a fun activity for the whole family. Get that comical piggy bank and make a big deal of it when birthday or tooth fairy money comes in; explain the idea of saving up and of course get excited when it’s time to cash in on some toys. You should also let your children interact with the clerks while they are out shopping with you. Let them see the actual value of money being exchanged for groceries and as they get older be sure to explain the concept of sales at the store. A toy cash register is also a great way to get your child thinking in terms of cost, while also helping out their math skills!

Chores Should Equal Allowance: Once your kids get older, it is important to introduce other ways of earning money to them outside of just birthdays and graduations. They’ve learned the value of money, but they haven’t truly learned the value of money they themselves have earned yet. There’s no need to make the allowance itself any extraordinary number, in fact, the mere concept of work equating a means to something they want is the most important takeaway. They’ll start to explore more of what’s available to buy as they get older too, so as their tastes grow, it’s time to implement the chore system. Once videos games, toys, bikes, clothes, sneakers, etc. become accessible to them, it’ll be the easiest way to teach them to work hard for what they want in life. Don’t forget a few dollars for good grades too! You’re kids should already want to do good in school, but stressing the importance of staying focused and educated through small financial rewards can work wonders for kids that need a bit of extra motivation.

Don’t Bail Them Out: Obviously, this one is within reason, but if your child breaks something around the house or loses a piece of clothing out with friends, hold them financially accountable for it. Now don’t be ridiculous and make them wait freezing while they save up to buy their own coat again in the winter, but after getting them a new one, carefully explain that it’ll be their responsibility to work off the cost of the jacket. They’ve learned the value of money, and money they’ve earned through hard work, now it’s time for the final lesson- the concept of losing money personally earned for being irresponsible. They’ll start looking at things from a much more mature perspective once they’ve had to pay for a few things rather than get what they were saving for.

Are We Born to Spend?

woman-with-shopping-bags-and-boxesWhen people routinely makes poor decisions regarding spending and borrowing money, should they blame their genetic background (“I inherited my mom’s shopping gene”), or rather, fault the inadequate financial education they received at school? In other words, can their financial behavior be couched in terms of the classic “nature vs. nurture” argument?

According to Dr. Hersh Shefrin, Professor of Finance, Santa Clara University, the answer is, “it’s complicated.”

In his recently published Born to Spend? How Nature and Nurture Impact Spending and Borrowing Habits, Dr. Shefrin argues, “Understanding what drives our financial behavior is important because we know that strong financial literacy and good spending and borrowing habits are closely linked.”

He cites strong evidence that nature (i.e., genetics) impacts financial decision-making just as it does athletic ability and physical traits. At the same time, however, research shows that through smart nurturing (education), people can be encouraged to make better financial choices and tame their more irresponsible instincts.

Why traditional financial literacy approaches aren’t working.

Dr. Shefrin posits that traditional financial education has been largely ineffective at increasing financial literacy. He cites results of the biennial Jump$tart Survey, a test administered to thousands of randomly selected 12th graders nationwide, which revealed that students who had taken a high school class aimed at improving financial literacy fared no better on the test than those who had not.

(Interestingly, students who said they regularly played the Securities Industry and Financial Markets Association’s Stock Market Game, where they invest a hypothetical $100,000 in an online investment portfolio scenario, did show increased financial literacy scores . This underscores the importance of including fun, competitive games into the educational mix.)

He further asserts that most current financial education programs don’t take into consideration the importance of psychology and the knowledge of how our brains make decisions. “The key to better financial literacy involves identifying what motivates us and then designing programs that help people develop and maintain strong spending and borrowing patterns,” says Dr. Shefrin.

The study identifies several ways to improve financial literacy education, including:

  • Design smart, nurturing programs that motivate people to set goals, develop budgets, track expenses, identify ways to increase income, choose appropriate lenders, pay down credit card balances, and so on. For example, a program called Save More Tomorrow™ has proven extremely effective at helping employees save more money for retirement through their 401(k) plans.
  • Use modern technology (specifically personal financial management tools) to provide people with their spending data in a straightforward way that helps them acquire better habits. For example, personal financial management tools like Mint.com help consumers recognize spending patterns and correct their bad behavior.
  • Turn finances into fun by using games to help instill better spending and borrowing habits in children and young adults. Research shows that challenging, interactive video games motivate students’ competitive instincts and activate the reward centers of their brains more so than traditional classroom lectures and exercises. For example, Visa’s Financial Soccer is a fast-paced, multiple-choice question game that tests players’ knowledge of personal finance skills as they advance down field and try to score goals.

Existing efforts to promote sound financial decision-making, while well-intentioned, may not be keeping pace with what psychologists, economists and others know about how the human mind works. “Now is the time to use this knowledge for a collaborative approach across public and private sectors to instill mindful spending and borrowing habits in our classrooms and beyond,” concludes Dr. Shefrin.

Copyright© Visa


How To Start Investing With A Small Amount Of Money

smallmoneyOutside of a 401(k) or other employer-sponsored retirement plan, do you invest? If you answered no, you are not alone. Investing is often seen as the domain of the wealthy, not for people who only have a small amount of money left over at the end of month. True, brokers may not be rushing to roll out the red carpet for you if you can only invest $300 a year, but there are many investment choices for those of us without a lot of cash to spare.

Why is investing a wise financial move? Because of inflation (the rise in the cost of goods and services over time), if you keep all of your savings in a safe vehicle that provide a low return, such as savings account, certificate of deposit, or shoebox buried in the back yard (just kidding about the last one!), the real value of your money will decline over time. While you should keep your emergency and short-term savings in an easily accessible account that you know won’t lose value, it is a good idea to put long-term savings in vehicles that have the potential for a higher return. (One caveat, if you have credit card or other high-interest debt, it is a good idea to pay that off before investing – chances are that the interest you are being charged is greater than what you will earn on your investments.) Historically, in the long run stocks have provided the highest return, followed by bonds, with cash equivalents (i.e. the safe vehicles mentioned above) providing the lowest return.

Dividend Reinvestment Plans and Direct Stock Purchase Plans
Direct stock purchase plans (DSPs) and dividend reinvestment plans (DRIPs) can be a great option for the small-time investor. Under a DSP, you purchase stocks directly from the company offering them, allowing you to skip using a broker (and the commission charges that go along with that – although be aware, some companies charge a fee for their DSP.) You can make a single purchase (usually the minimum is set fairly low) or set up an automatic regular purchase plan. In order to participate in a DRIP, you must already have at least one share in the company. Instead of receiving cash dividend payments (a distribution of a portion of the company’s profits to stockholders), you receive an equivalent in additional shares of stock. So if the stock is selling at $10 a share and the dividend payment is $20, you would get 2 shares. Many DRIPs also allow you to purchase additional shares after you enroll. To get started, go on-line – there are many websites that list what companies offer a DSP and/or DRIP.

Mutual Funds
One of the most fundamental rules of smart investing is that you should have diversity. Think about it – if your whole investment portfolio consists of shares in Company X and Company X goes out of business, you are sunk, But if you are also invested in Company A, B, and C and have some bonds as well, it will have less of an impact. Purchasing shares in a mutual fund is an easy way to get diversity. In a mutual fund, money from several investors is pooled to buy different stocks, bonds, and/or cash equivalents.

One potential downside to investing in mutual funds is that they can come with sizeable fees that eat away at your profits. When selecting a fund, you should pay attention to its expense ratio – the percentage of the funds assets that are used to pay for expenses. Index funds, which track a particular index, such as the S&P 500, often have a very low expense ratio because there is no advisor actively picking funds. Also look at the load – the sales commission that is charged by the broker and/or financial advisor. There are many no-load funds available as well as on-line/discount brokers that charge low commission fees.

Another challenge for the small-time investor is that the minimum amount required to invest is commonly a thousand dollars or more, so you may have to do some research to see what mutual funds allow you to buy in with a lower amount. Often the minimum amount is lower if you are investing through an Individual Retirement Account (IRA). But because it is a tax-advantaged account for retirement, there are rules about withdrawing money. (See the IRS’s website, www.irs.gov, for more information.) Roth IRAs offer a bit more flexibility than Traditional IRAs – you can withdraw your contributions at any time without paying a penalty.

Invest your pennies today, and you can have dollars tomorrow.


© 2013 BALANCE