Apr 30

Real Estate Pros Turning to Self Directed Solo 401k Plans


Real estate agents and professionals establishing Solo 401(k) Plan to take advantage of retirement and investment benefits. IRA Financial Group Introduces Special Self-Directed Solo 401(K) Solution for Real Estate Professionals to help them maximize benefits.

The IRA Financial Group announces the Special Self-Directed Solo 401(k) Solution for Real Estate Professionals. This plan is designed for self-employed professionals looking to maximize their retirement savings.

The rising popularity of the Solo 401(k) Plan is a result of the EGTRRA tax law change that became effective in 2002. The law changed how salary deferral contributions are treated when calculating the maximum deduction limits for contributions to a Solo 401(k) Plan. This change created an opportunity for self-employed professionals, such as real estate agents, with no employees to put away additional amounts toward their retirement.

A Solo 401(k) Plan, also known as an Individual 401(k) or Self-Directed 401(k) Plan, offers one the ability to use their retirement funds to make almost any type of investment on their own, tax-free and penalty-free without requiring the consent of any custodian or person. “Establishing a Solo 401(k) Plan offers a number of tax, retirement, and investment advantages,” stated Adam Bergman, a tax attorney with the IRA Financial Group. “IRA Financial Group’s Solo 401(k) plan is unique and so popular because it is designed explicitly for the self-employed professional,” stated Mr. Bergman.

Solo 401k for Real Estate

There are many features of the IRA Financial Group’s Solo 401(k) plan that make it appealing for small business owners. IRA Financial Group’s Solo 401(k) Plan high contribution limits will allow a plan participant to make annual contributions up to $51,000, with an additional $5,500 catch-up contribution for those over age 50. Additionally, IRA Financial Group’s Solo 401(k) Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading Solo 401(k) Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Apr 29

Eligibility Requirements for a Solo 401k Plan

A Solo 401(k) Plan plan is well suited for businesses that either do not employ any employees or employee certain employees that may be excluded from coverage. A Solo 401K plan is perfect for any sole proprietor, consultant, or independent contractor.

To be eligible to benefit from the Solo 401(k) plan, investor must meet just two eligibility requirements:

1. The presence of self employment activity.

2. The absence of full-time employees.

The Presence of Self Employment Activity

Self employment activity generally includes ownership and operation of a sole proprietorship, Limited Liability Company (LLC), C Corporation, S Corporation, and Limited Partnership where the business intends to generate revenue for profit and make significant contributions to the plan.

Generate Revenue for Profit

There are no established thresholds for how much profit the business must be generated, how much money must be contributed to the plan, or how soon profits and contributions must happen. It is generally believed that the IRS will consider you eligible if the business being conducted is a legitimate business that is run with the intention of generating profits. The self employment activity can be part time, and it can be ancillary to full time employment elsewhere. A person can even participate in an employer’s 401(k) plan in tandem with their own Solo 401(k). In such a case, the employee elective deferrals from both plans are subject to the single contribution limit.

The Absence of Full-Time Employees

Unlike a regular 401(k) plan, a Solo 401K plan can be implemented only by self-employed individuals or small business owners who have no other full-time employees and are not employed by any business owned by them or their spouse (an exception applies if your full-time employee is your spouse). The business owner and their spouse are technically considered “owner-employees” rather than “employees”.

The following types of employees may be generally excluded from coverage:

  • Employees under 21 years of age
  • Employees that work less than a 1000 hours annually
  • Union employees
  • Nonresident alien employees

If you have full-time employees age 21 or older (other than your spouse) or part-time employees who work more than 1,000 hours a year, you will typically have to include them in any plan you set up. However, a Solo 401k eligible business can have part time employees and independent contractors.

If you have any questions about the Solo 401k plan, please feel free to contact one of the tax experts at the IRA Financial Group today!

Apr 26

Are All Solo 401k Plans the Same?

When it comes to determining what type of 401(k) qualified retirement plan is best for a self-employed individual or small business owner with no employees, it is important to look at all the options the plan provides to make sure it will satisfy your retirement planning, tax, and investment goals.

Most financial institutions offer Solo 401K Plans, often called individual 401K Plans. However, if you do not want to be forced to invest all your hard earn retirement savings in the stock market, then these type of financial institution Solo 401(k) Plans are not very attractive. In addition, most financial institution Solo 401(k) Plans will not offer a loan feature or allow you to make Roth Type contributions.

IRA Financial Group’s Solo 401K plan is unique and so popular because it is designed explicitly for small, owner-only business.  There are many features of the IRA Financial Group’s Solo 401K plan that make it so appealing for small business owners.

High Contributions: Like all Solo 401K Plans, for 2012, IRA Financial Group’s Solo 401(k) Plan will allow a plan participant to make annual contributions up to $50,000 annually with an additional $5,500 catch-up contribution for those over age 50. The high contribution feature is one of the reasons a Solo 401K Plan is the most popular retirement vehicle for the self-employed.


Calculate Your Solo 401k Plan Maximum Contribution Limit Please click here to calulate your Solo 401(k) Plan Maximum Contribution Limit.


Tax and Penalty free loan: Unlike most Solo 401K Plans offered by the traditional financial institutions such as Fidelity, IRA Financial Group’s Solo 401K Plan allows plan participants to borrow up to $50,000 or 50% of their account value (whichever is less) for any purpose, including paying credit card bills, mortgage payments, or anything else. The loan has to be paid back over a five-year period at least quarterly at a minimum prime interest rate (you have the option of selecting a higher interest rate).

Checkbook Control: The most attractive feature of the IRA Financial Group Solo 401k Plan is that it offers the plan participant checkbook control over his or her retirement funds. In the case of a conventional Solo 401K Plan offered by most financial institutions, the plan participant is relegated to making traditional investments such as stocks and or mutual funds. In addition, the Solo 401KPlan account is required to be opened at the financial institution. With IRA Financial Group’s Solo 401K Plan, the plan account can be opened at any local bank, including Chase, Wells Fargo, and even Fidelity. In addition, with IRA Financial Group’s Solo 401K Plan, the plan participant can make almost any traditional as well as non-traditional investments, such as real estate, precious metals, tax liens, and much more. With IRA Financial Group’s Solo 401K Plan, the Plan participant has the freedom to make the investments he or she wants while at the same time opening the 401K account at any local bank. As trustee of the Solo 401K Plan, the Plan Participant (you) can serve as the trustee providing you checkbook control over your retirement funds. With IRA Financial Group’s Solo 401K Plan, making a Solo 401K Plan investment is as simple as writing a check.

Roth Contributions & Conversion: Unlike a conventional Solo 401K Plan offered by most financial institutions, IRA Financial Group’s Solo 401K Plan contains a built in Roth sub-account which can be contributed to without any income restrictions. In addition, the IRA Financial Group’s Solo 401K Plan allows for the conversion of a traditional 401(k) or 403(b) account to a Roth subaccount. However, the Solo 401K Plan participant must pay income tax on the amount converted.

Offset the Cost of Your Plan with a Tax Deduction: By paying for your Solo 401(k) with business funds, you would be eligible to claim a deduction for the cost of the plan, including annual maintenance fees. The deduction for the cost associated with the Solo 401(k) Plan and ongoing maintenance will help reduce your business’s income tax liability, which will in-turn offset the cost of adopting a self-directed Solo 401(k) Plan. The tax attorneys at the IRA Financial Group will help you take advantage of the available business tax deduction for adopting a Solo 401(k) Plan.

Easy Administration: Like all Solo 401K Plans, IRA Financial Group’s Solo 401K Plan is easy to operate. There is generally no annual filing requirement unless your solo 401K Plan exceeds $250,000 in assets, in which case you will need to file a short information return with the IRS (Form 5500-EZ). However, unlike a financial institution, the tax professionals at the IRA Financial Group will assist you in completing this form is required.

To learn more about the advantages of the Solo 401K Plan with Checkbook Control please contact a 401K Expert at the IRA Financial Group @ 800-472-0646.

Apr 25

Boosting Retirement with a Roth 401k

You may now have a choice when choosing your workplace retirement plan since many companies are now offering Roth 401k options in addition to traditional 401k plans.  The major difference between the two plans is when taxes are paid on contributions.  Taxes are paid on a Roth before you contribute so distributions are tax-free.  On the other hand, traditional contributions are made pre-tax and distributions will be taxed at ordinary rates.

Hypothetically, if tax rates were constant, a traditional 401k plan is basically the same as a Roth IRA.  Meaning, it doesn’t matter when the taxes are paid.  Taxes are deferred with a traditional account so more money is invested and greater earnings are seen.  When taxes are paid, the taxes on the higher earnings is equal to the lost earnings of the Roth account.  They cancel each other out and the balances are equal.

In real life however, taxes are not constant.  Typically, you’ll be in a lower tax bracket when you retire than when you’re earning the bulk of your money.  Further, more money can be saved in a Roth account than in a traditional account.

Now as far as the tax rate goes, if you expect the government to raise taxes, then a Roth is the better option.  It makes sense to pay the taxes on the lower rate now.  Alternatively, if you think you’ll be in a lower tax bracket come retirement, it’s better to opt for the traditional plan and wait until then to pay the taxes.

From usnews.com contributor, Ann G. Schnorrenberg: “What is less commonly understood is that a Roth account allows you to save more money in a tax preferred manner. In 2013, the maximum contribution to a 401(k) is $17,500. This is the same whether you use pre-tax dollars for a traditional 401(k) or post-tax dollars for a Roth 401(k). However, tax has already been paid on the Roth account. Implicitly, this means you are saving more money in a tax-deferred manner using a Roth than a traditional once you approach the investment limits. Each account may start out with $17,500, but once money is withdrawn, the traditional account will be taxed, meaning it has less money.”

What plan is right for you?  You best bet is to invest in both.  This will help lower your retirement tax rate.  If choosing this path, invest in a Roth earlier on.  Your tax rate will be lower than when you reach your full earning potential and it’s better to have Roth assets grow longer since distributions will be tax-free.

Everybody is different and each individual has his or her own financial goals in life.  To see what best suits your needs, contact the tax experts at the IRA Financial Group who will help lead you down the path of financial freedom during your golden years.

Apr 24

Back to Basics – The 411 on 401k

There’s about $3.5 trillion held in 401k assets as of 2012.  If you have money in a 401k plan (or plan to), you should know the basics of how to save with one.  In this ‘Back to Basics’ article, will give you a few things you should know about your retirement plan.

First of all, how much can you contribute each year?  You can contribute the lesser of the compensation (salary) you receive from your employer or the yearly contribution limit.  For 2013, that limit is $17,500.  The limit may increase from year to year to keep up with inflation (usually increasing by $500).  If you earned less than that amount for the year (say $15,000), that’s the max you can contribute.  Further, once you reach age 50, you’re entitled to a “catch-up” contribution.  This year, that additional amount you can contribute is $5,500.  Note that your total contribution plus any contribution from an employer match cannot exceed $51,000 for 2013.  A match is an amount of money that your employer will contribute on your behalf relative to your contribution.  Typically, the match is 50% and is capped at 6% of your annual salary.  You likely won’t reach that $51,000 match unless you’re self employed and utilizing a Solo 401k plan.

Next, what are the tax benefits of contributing to a 401k plan?  Any money you contribute to your traditional 401k plan does not count towards your taxable income in the year you contribute.  Further, you don’t pay taxes on your contributions or earnings from that money until you take distributions during retirement.  This is known as tax-deferred saving.  This allows your money to grow even faster.  This is especially beneficial if you expect to be in a lower tax bracket when you retire.  On the other hand, Roth 401k contributions are used with after-tax money.  You don’t get an immediate tax break, but generally, distributions are tax-free.

You’ve contributed money, when can you start spending it?  The easy answer is that you have to wait until you reach age 59 1/2.  Distributions before that time will incur a 10% early withdrawal penalty unless you qualify for an exception.  This rule is in place since the money is supposed to help you during your retirement years, not before then.  Some exceptions to this penalty include becoming disabled, certain financial hardships and medical coverage if you lose your job.  Don’t forget that taxes are due when you take out the distributions.

The last question for now is can you borrow from your 401k?  That first depends on if your plan allows loans.  If it does not, then the answer is no.  However, if your plan does allow loans you may borrow up to half of your vested balance or $50,000, whichever is less.  Usually you must pay it back within five years.  You’ll pay interest on the loan back to yourself which will help make up for lost investment gains.  If, after taking out a loan, you lose your job, you have 60 days to repay the loan.  Failure to do so and the loan will be treated like a distribution subjecting you to taxes and the early withdrawal fee if required.  401k loans should be a last resort.  The more money and the longer it’s in your plan, the more earning power it has.

Hope this answers some of your basic questions dealing with 401k plan.  If you have more detailed questions, contact the tax experts at the IRA Financial Group who can help you out based on your personal needs.

Apr 23

401k Plan Options for Entrepreneurs

Starting your own business comes with certain risks, both personal and financial.  However, your retirement plan should not be one of them.  No matter your age or how stable your finances are right now, you never what the future will bring, so saving for retirement should be one of your top priorities in life.  You may have contributed to an employer-sponsored 401k at a previous job, but what are your options when starting your own business?

Even if you’re a sole proprietor, you can still have a 401k plan.  You can set up and contribute to a Solo 401k plan (also known as an Individual 401k or a One Participant 401k).  This is true even if your spouse works for the business.  You cannot have any other employees to utilize this type of plan.  You can setup the plan at a bank or other financial institution.  You can then contribute pre-tax funds into a savings, mutual fund, or money market account.

Since you are both the employer and employee, you can contribute to your retirement plan as both.  As the employee, you can contribute up to 100% of your earned income up to $17,500 per year.  If you are at least age 50, you can contribute another $5,500.  Further, as the employer, you can contribute another 25% of your earned income.  The total contributed amount cannot exceed $51,000 per year.  These limits are for 2013 and will increase by $500 per year to counteract inflation.

So, what if your business is growing and you need to hire some help?  Offering a retirement plan can help attract better employees and doing so will allow you to offer less in salary.  Moreover, you can deduct the cost of the plan from your business’s taxes every year.  However, since it’s not a solo proprietorship now, you cannot use a Solo 401k plan, but there are alternatives.

A traditional 401k plan will allow you to make contributions on behalf of your employees, match employee contributions or both.  Employees can contribute through pre-tax payroll contributions.  Benefits must be proportional to all employees and employer contributions are subject to a vesting schedule.

A safe harbor 401k is very similar to a traditional plan.  The differences include: employer contributions are fully vested when made, there are fewer complex tax rules which make it easier to run and the plan is exempt from nondiscrimination testing.

The automatic enrollment plan allows employers to deduct a certain amount from each employee’s wages and contribute it to a retirement plan on the employee’s behalf.  The employee must choose to either opt out or elect to contribute a different amount.

Finally, there’s the SIMPLE 401k plan.  This is a simple plan specifically for small businesses (those with less than 100 employees).  It’s easy to set-up and maintain and is very cost efficient.

Whether you’re just starting your own business or already have one, a retirement plan option is very important.  You can set up a plan on your own, but it’s not recommended unless you’re very familiar with tax laws.  The experts at the IRA Financial Group are the nation’s leading facilitator of Solo 401k plans.  Give them a call at 800.472.0646 or visit their website today to get your business’s retirement plan rolling.

Apr 22

End of Tax Season Offers Tax Planning Opportunities for Self-Employed


Now that the tax season is over, IRA Financial Group clients begin planning for next year’s filing deadline.

IRA Financial Group’s Solo 401(k) solution allows investors to take advantage of the high contribution limits of a Solo 401(k) Plan. Investors can contribute up to $56,500 and take advantage of the asset protection and estate planning features of a Solo 401(k) Plan. Additionally, IRA Financial Group’s Solo 401(k) Solution allows investors to borrow up to $50,000 from their retirement funds and use it to fund a new business or partake in other investments. Now that tax season has ended, investors can take advantage of the benefits of a Solo 401(k) plan and maximize their deductions for next year’s filing deadline.

“Many retirement investors are looking to maximize the returns on and tax advantages of their retirement funds,” stated Adam Bergman, a tax attorney with the IRA Financial Group. “Using a Solo 401(k) presents a number of exciting tax planning and investment opportunities that allow investors to maximize their gains and take advantage of tax-free profits,” Mr. Bergman added.

In addition to the tremendous 401(k) benefits (tax-free profits, high tax contribution deductions – up to $56,500, asset protection and estate planning), the Solo 401(k) allows entrepreneurs to invest tax-free in investments that they know and understand and even allows them to borrow up to $50,000 or 50% of the account value for any purpose. Aside from certain “prohibited transaction” investments outlined in Internal Revenue Code Section 4975, a Solo 401(k) Plan can invest in most commonly made investments, including real estate, private business entities, public stocks, private stocks, and commercial paper.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading Solo 401(k) Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate, without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Apr 19

Invest More in Your 401k

Here’s some good advice from abcnews.com:

You’ve doubtless heard of the government budget “sequester” — a fancy word for making budget cuts and keeping them separate from other fiscal considerations. Just as a sequestered trial jury is kept separate, so, too, are Congress’ austere spending cuts.

Perhaps this action by the broke federal government can set an example for those of us who are also broke. People who do their own sequesters will spend less and will be able to contribute more to their 401(k) plans.

This is important because, although it seems quite obvious, many people don’t seem to get the point that it’s not enough to just have a 401(k) plan; you also must put money in it by having it deducted from each paycheck. The less you spend on unnecessary items now, the more money you’ll have for necessary ones come retirement.

Unless you’re Warren Buffett, you’ll need to be on a budget during retirement.

But how can you budget then if you’re not budgeting now? Budgeting now encourages you to tone down your lifestyle so you 1) have more money for retirement and 2) don’t become accustomed to a lifestyle of the rich and famous — one that you won’t be able to sustain during retirement. This mentality is all about taking personal responsibility now to enable a more realistic yet comfortable retirement than you otherwise might experience.

Of course, all this is more easily said than done, especially if you’ve already cut your spending as much as you can. If you’re living frugally paycheck to paycheck, without any excesses or obligations that might be eliminated, and you’re just getting by, there’s little you can do to increase your 401(k) contributions.

But many of us are not in that situation. As the nation’s budget deficit reflects, Americans tend to overspend. Historically, the average individual savings rate in this country has long been far lower than those of other countries.

So it’s no wonder that so many 401(k) plans are underfunded.

To break with this American tradition and assure a better retirement, you can take a tip from Congress and enact your own personal sequester. Here are some ways to make this work:

• Try sequestering 10 cents out of every dollar by just not spending it. If this money is deducted off the top of your paycheck every month, you’ll never notice it: out of sight, out of mind. If you spend $25 a week on lunch every day, all you have to do is cut that back by $2.50. But for this to work, you can’t spend your paycheck as though the 10 cents had never come out of it and go into debt. Just because you may not be able to contribute the maximum allowable amount to your 401(k) plan doesn’t mean you shouldn’t try to come as close as possible. This is a matter of degree; every little bit helps.

• Learn to cook (if you don’t know how already). Eating out is not only expensive, it doesn’t tend to be good for you either. When you cook, you not only spend far less, but you also know what’s in your food, so you can cut down on sodium and fat.

• Cut back on credit card spending. Pretend you are Superman and your credit cards are kryptonite. Millions of people carry high credit card balances, and this is a real budget buster. Instead of contributing to their 401(k) plans, they’re making payments on cards that include compounding interest. “Compounding interest is the eighth wonder of the world,” said Albert Einstein. “He who understands it, earns it, and he who doesn’t, pays it.”

If you are running a $10,000 balance on a credit card, with compounding, your annual interest payments could be as high as 25 percent of the balance. Over time, this amounts to financial indentured servitude. Instead, gain your freedom by budgeting, using spending discipline to pay off your card and get out from under those payments. If you refinance your home and use the gains to pay off your cards, you’ve delayed true, mortgage-free home ownership for the trifles you see listed on your credit card charges every month.

Unfortunately, many people have done this. While such spending is good for the nation’s economy, it’s not good for your personal economy. One way to end the syndrome of credit card spending is to force yourself to realize that this spending is real. Because the money for credit card transactions doesn’t immediately come out of your checking account, you might not think it’s real spending. But when you see your balance mounting and compounding, it gets real — real fast.

Learning to spend less involves the discipline to do, or not do, two things:

• Stop spending on non-essential items.

• Or, if you must, spend less on the items in question. Instead of a $12 bottle of wine, is there a $9 wine you like, or might like, just as much? Often, there might be.

To paraphrase Warren Buffett’s classic statement on investing, cutting spending is like dieting: easy to understand but hard to execute. The key is that you learn to budget now so you can budget later — during retirement, where controlled spending will be critical.

This is the route to a dignified retirement. This road starts now – with every dime you spend.

If you have any questions regarding your retirement, contact the tax experts at the IRA Financial Group.  If you don’t have a 401k available to you, you can look into a Solo 401k as well.

Apr 17

Your 401k Bond Options

“Your workplace retirement plan account — 401(k), 403(b) or 457 plans are the most common flavors — is designed for long-term investing, so it’s typically inappropriate to become overly concerned about short-term capital market trends when managing it. Nevertheless, you can still apply some lessons gleaned from following the markets to the management of your account,” says MarketWatch.com contributor Joseph Masterson.

Since the stock market is hot, bonds are typically not.  Depending on your age and stage of your career, there are some things to consider when considering bonds and bond funds in your retirement plan.

Your retirement plan might offer an alternative to bond funds known as a stable value fund.  There are some differences between the two.  First off, bond funds represent a different area of focus, but usually these funds invest in government, corporate, municipal and convertible bonds, in addition to debt securities.  Stable value funds, on the other hand, look to offer “to deliver safety and stability by preserving principal and accumulated earnings. They are similar to money market funds but seek to offer higher returns”.

Historical returns show that they are akin to intermediate bonds with less volatility.  Also, they are the largest conservative investment in defined contribution retirement plans according to the Stable Value Association.  Some are offered by insurance companies which provide a fixed interest rate.  Others are provided by bank trustee companies that invest in bonds and insurance contracts to provide a stable return.

Point being, is there usually is an alternative to bond funds in your retirement plan.  Since there’s uncertainty in the interest rate environment, stable value funds offer benefits to their counterparts.

Fixed income rates are more volatile in a rising or falling interest rate environment.  As the name says, the stable value fund looks to create more stability in your plan and protect you from such volatility.  Experts say that rising interest rates could come sooner rather than later.  This could happen to protect against inflation if the economic recovery continues to accelerate.  If the rates are increased, bond prices will fall.  Stable value funds are designed to protect against the decline in market value.

In summary, don’t forget to utilize all available options in your retirement plan.  The plan might offer investments that could help you in your retirement planning.  If you have any questions, feel free to contact the tax experts at the IRA Financial Group today!

Apr 16

Saving a lot When You Make a Little

From foxbusiness.com:

Retirement fears may loom large when your income is small. Today, 38% of households say they live paycheck to paycheck, according to a study by the Consumer Federation of America and the Certified Financial Planner Board of Standards. And one-third of Americans worry they’ll never be able to retire, according to a survey from Pentegra Retirement Services.

“For so many Americans, planning for retirement seems too enormous to tackle, and it feels like it is already too late,” says Rich Rausser, senior vice president at Pentegra. “But it’s not so.”

Save $15 a week for 25 years, for instance, and you’ll have $62,183, assuming an 8% annualized return. Save $30, and that’s $124,365. “When I tell people that, they’re stunned,” says Rausser. “You can have an amount of money you never thought you’d be able to save.”

Follow these steps to save for retirement, even if you don’t make a lot.

Make a budget

Say “budget,” and many people run for the hills. According to Bankrate’s July 2012 Financial Security Index survey, 38% of Americans don’t track their spending.

“When I ask people, ‘How do you spend your money?’ they don’t know,” says CFP professional Dee Lee, author of “Women and Money.”

“They’re living with what they’ve got, from paycheck to paycheck. They aren’t planning.”

Having a firm grasp of where your money goes enables you to set some aside for emergencies and future goals. You can track your spending using apps, software such as Quicken or by hand — with pencil and paper. The only thing that matters is developing a budget that is grounded in reality.

Start with bank and credit card statements, and keep receipts for items you pay for with cash. As you look back at where the dollars went over the past month or two, assign your spending to the appropriate category — clothing, travel, car expenses.

Add a line item for emergencies. Generally, you’ll need three to six months’ worth of living expenses to pay for mishaps without reaching for credit cards or going into debt.

Your budget also should reflect your commitment to save for retirement. Don’t be discouraged if you only have a little. Twenty-five dollars a week will be worth $56,669 in 20 years, assuming a 7% annual return. Just be sure to start. “The first dollar you save is the most valuable,” says Rausser. “Start with 1%, 2%, 3% of salary. Commit to a plan of auto-escalation, each year increasing to your retirement plan by 1%. The numbers will move.”

Plug in fixed costs. It’s easier to stick to spending plans when expenses are steady, so build a budget with as many fixed costs as possible. For instance, heating bills rise when the temperature drops, and air-conditioning bills climb during sweltering summers. But your bank account shouldn’t be iced every time a nor’easter blows through. For a period of time, consider enrolling in your utility’s budget plan, so you pay the same amount every month — based on an average from your past use — to avoid periodic high bills that can throw budgets out of whack.

Find and seize savings

Because fees can take a big bite from your budget, it pays to evaluate how much you pay in interest and fees on your mortgage, insurance policies and credit cards at least once a year to see if you can find a better deal elsewhere. Online price comparisons at sites such as Bankrate.com make that chore relatively easy.

Cutting back on things we love is harder. Can’t live without that daily vanilla soy latte? Fine. But you’ll need to be creative about trimming elsewhere to save money.

College freshman Ben Ellenberg, 18, loved his new cellphone, but he swapped it for a prepaid plan that saved him $840 a year. He made the switch after digging post holes under the blazing sun last summer. “I worked too hard for my money,” he said.

It’s easier to save if you consider what today’s expenditure could be worth tomorrow if you invest the money instead. For instance, if Ellenberg puts his hard-earned $840 into a Roth individual retirement account, it would grow to $9,708 by the time he’s 60, assuming a 6% annualized return. If he saves $840 for three more summers, he’ll have $33,638, thanks to his cheaper phone.

Going green helps, too. Just ask the 78 million Americans who gave up credit cards for cash. “Sure, it’s easier to use debit cards,” says Lee, “But when you use cash, you’re going to be more likely to ask yourself, ‘Do I really need that — or do I want it?'”

Be ruthless about debt. Consumer debt “is like cancer,” says CFP professional Drew Tignanelli, president of Financial Consulate, a financial planning firm based in Hunt Valley, Md. Because interest compounds, the sooner you pay it off, the more you’ll pocket over time.

Slash the most expensive debts first, whether that’s a student loan or a credit card with a double-digit interest rate. Consider a second job to eliminate it as soon as possible, and commit to paying more than the minimum amount due.

Pocket savings you already have: Take a look at store receipts. When Michelle Malone did, she was stunned to see she had slashed more than $400 from her supermarket bill last year by using coupons and enrolling in the store’s loyalty program. Now the Connecticut mom takes the next step by transferring what she saved on groceries and gas into to a dedicated savings account. “I was looking for a way to move ahead,” she says. “I didn’t expect it to be so easy.”

Pay yourself first

It bears repeating: “Pay yourself first,” says IRA pro Ed Slott. “Pay yourself before you get your hot little hands on the money.”

If you don’t have a retirement plan at work, open one of your own. You may need a required minimum deposit to open an IRA — generally about $1,000 to $3,000 — but some banks and brokerages waive their requirement, so you can start saving with just a little. Ameritrade, for example, currently has no minimum balance for its Roth IRAs. Fidelity and Charles Schwab waive minimum opening balance requirements when you sign up for monthly direct deposits into Roth accounts.

That appealed to Rich Rausser’s son Matthew, 19. “After getting a part-time job in high school a couple of years ago, my dad recommended that I start saving. It wasn’t a ton of money, but I took his advice,” says Matthew Rausser. “The account is set up to debit $100 a month that’s automatically transferred to my Roth IRA.”

Employer plans are often your best bet, however. So if you have access to a 401(k), 403(b), or Roth 401(k) plan, enroll pronto. Earnings are stashed before they’re spent — or taxed, if you’re in a traditional 401(k) or 403(b). And most employers match a percentage of contributions, up to certain limits, but generally only if you chip in, too. So contribute enough to qualify for all of the free money available to you.

Tamara Carson, 24, is paying off debt from college, but she made a point to save for retirement — enough to get her company’s 401(k) match. As she pays off loans, she’ll boost her retirement savings. “Every dollar you contribute up to 6%, they’ll put in 25 cents. Over time, that’s a lot,” says Carson, who began working as a human capital consulting analyst at Deloitte Consulting in Atlanta last summer. “I have student loans, rent (and) credit card bills I’m still paying for, so it’s nice to think about being able to have a nest egg and the money I’m keeping.”

If you have any retirement-related questions, feel free to contact the tax experts at the IRA Financial Group.