To help you manage your money and reach your saving goals:
Create a Budget
A budget is your plan for how you will spend money over a set period of time. Consumer.gov offers more information about what to include, along with a spreadsheet that you can use to create your own budget.
Look for Best Prices
Saving money involves looking for deals and buying the items you need at the best price, using coupons or by shopping around. Check out MyMoney.gov's spending tips for ideas. You can also set up a saving plan to help you save for emergencies and for short term and long term goals. MyMoney.gov offers tips on saving, including helping you achieve your saving goals.
A financial professional can have multiple titles and be authorized to provide various services, including investment, financial planning, and insurance products. When researching a financial professional, find out what the titles and licenses mean, as well as the educational, work experience, and ethical requirements. Keep in mind that a professional title is not the same as a license. The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and state regulators do not grant or endorse any professional titles.
When choosing a broker or investment adviser, research the person's education and professional history as well as the firm the person works for. Make sure you have answers to all of these questions:
Has the person worked with others who have circumstances similar to yours?
Is the person licensed in your state? Your state securities regulator lists individuals and firms that are registered in your state. Ask whether the regulatory office has any other background information. To find out how to contact your state securities regulator, consult the North American Securities Administrators Association (NASAA).
Has the person had any run-ins with regulators or received serious complaints from investors? Contact your state securities regulator or the SEC. To review licensing, employment, and disciplinary information, use FINRA'sBrokerCheck tool.
How is the person paid? Is it an hourly rate, a flat fee, or a commission that depends on the investments you make? Does the person get a bonus from their firm for selling you a particular product?
What are the fees for setting up and servicing your account?
Resources to Help You Choose a Financial Professional
For more information on choosing a financial professional, refer to these resources:
The Commodity Futures Trading Commission's (CFTC's) SmartCheck allows you to check the background of financial professionals and stay informed on the latest fraud schemes.
Crowdfunding is a way for companies, entrepreneurs, artists, or individuals to raise money to complete a project or pay for a serious medical need or disaster recovery. After setting a fundraising goal and deadline to reach that goal, the creator markets the campaign to potential backers, or investors. While fundraising websites may conduct a background check on the company or cause, you should still do your own research before contributing:
Research the company, artist, or cause - Is there any independent information available about the product, service, or situation they need help funding? Are there complaints related to the company or campaign creator online or with their state attorney general about fraud?
Type of campaign - Is the campaign an “all or nothing” or “flexible funding”? If it's an “all or nothing” campaign, the creator only gets the money that has been pledged if they reach their fundraising goal. If the campaign is a “flexible funding” campaign, the creator will receive all the donations, even if they did not reach the fundraising goal.
Timing of payments - Does the fundraising website charge your credit card immediately after you pledge your support or wait until the funding deadline or goal is reached?
Additional fees - Does the fundraising website charge backers additional credit card processing fees?
Rewards - What rewards, or returns, will you receive in exchange for your investment? Do you get to pre-order the product that the company is producing? Are there different rewards, based on how much you invest?
Ownership control - If you invest, do you have an ownership stake or any control in the project?
Refunds - Are you able to get a refund if the campaign does not reach its fundraising goal or if the project isn't completed? If so, do you need to get the refund from the website or directly from the campaign creator?
A pyramid scheme, also known as Ponzi scheme, is an illegal form of multilevel marketing. In these programs, your ability to earn profits is based on the number of new participants you recruit, instead of the amount of products or services you sell. Sometimes there actually aren't any real products that are being sold. These types of schemes are common with investment and independent direct selling opportunities.
These schemes rely on the income from new participants in order to pay fake "profits" to people that have been part of the scheme for longer amounts of time. However, the scheme falls apart when there aren't enough new recruits to pay into the system, so the earlier participants no longer receive earnings.
Tips to Avoid Being a Victim
You can take steps to prevent yourself from getting involved in a pyramid scheme:
Be wary of "opportunities" to invest your money in franchises or investments that require you to bring in more investors to increase your profit, or recoup your initial investment.
U.S. savings bonds are one of the safest types of investments because they are endorsed by the federal government and, therefore, are virtually risk free.
Visit TreasuryDirect, a website from the U.S. Department of the Treasury, to learn about savings bonds, treasury bonds, and securities: how to buy and redeem your investments, what to do in the event of the death of an owner, and much more. TreasuryDirect is your one stop shopping site for government securities where you can find information about the wide range of savings options, including EE/E, HH/H, and I savings bonds.
Manage and determine the value of savings bonds using these tools:
Do you have a financial goal in mind, such as saving for retirement, paying for college, or buying a new house? If so, then you may decide to invest your money to earn enough to fund your goals. Before you invest, make sure you have answers to all of these questions:
How quickly can you get your money back? Stocks, bonds, and shares in mutual funds usually can be sold at any time, but there is no guarantee that you will get back all the money you invested. Other investments, such as limited partnerships, certificates of deposit (CDs), or IRAs, often restrict your ability to cash out your holdings.
What can you expect to earn on your money? While bonds generally promise a fixed return, earnings on most other securities go up and down with market changes. Keep in mind, just because an investment has done well in the past, there is no guarantee it will do well in the future.
What type of earnings can you expect? Will you get income in the form of interest, dividends, or rent? Some investments, such as stocks and real estate, have the potential for earnings and growth in value. What is the potential for earnings over time?
How much risk is involved? With any investment, there is always the risk that you will not get your money back or the earnings promised. There is usually a trade-off between risk and reward--the higher the potential return, the greater the risk. While the U.S. government backs U.S. Treasury securities, it does not protect against loss on any other investments.
Are your investments diversified? Some investments perform better than others in certain situations. For example, when interest rates go up, bond prices tend to go down. One industry may struggle while another prospers. Putting your money in a variety of investment options can reduce your risk.
Are there any tax advantages to a particular investment? U.S. savings bonds are exempt from state and local taxes. Municipal bonds are exempt from federal income tax and, sometimes, state income tax as well. Tax-deferred investments for special goals, such as paying for college and retirement, are available that let you postpone or even avoid paying income taxes.
More Information on Investing
To learn more about investing, refer to these resources:
You can find useful tips on investing at Investor.gov, a website from the Securities and Exchange Commission (SEC).
Treasury securities are debts issued by the federal government's Bureau of Fiscal Service. When you buy a treasury security, you are lending money to the federal government for a set amount of time. In return the government promises to pay you back the entire amount, also known as the face value, when the security matures.
There are several types of treasury securities:
Treasury Bills—Short term securities that mature between a few days and 52 weeks.
Treasury Notes—Medium term securities that mature between one and 10 years.
Treasury Bonds—Long term securities, with a 30 year term that pays interest every six months, until the bond matures.