Category Archives: Budget

Budgeting Basics: 5 Ways to Get Your Finances Organized

Photo by 401(K) 2012 via Flickr

Photo by 401(K) 2012 via Flickr

Does just thinking about your finances seem overwhelming? Are you living paycheck to paycheck? Do your bills keep piling up? Creating a budget and knowing your exact financial situation can help to make things more manageable and get you back on track. Many of the household items have probably increased in cost over the past few year, such as food, gas, healthcare costs, and other consumer goods, probably outpacing any cost of living raise that you may have received. These increases, while relatively small, can really start to squeeze your finances. So in order to get to a point where your finance are manageable, you have to get a financial plan in place that takes into account your entire financial situation. A little bit of organization can take the frustration and confusion out of managing your money.

Steps to organize your budget and create a financial plan:

1. Create a budget—The first thing that you need to do is have a clear understanding of the money that you have coming in each month and how much is going out for expenses each month. Make a spreadsheet or list of all of your monthly income sources and monthly bills, or expenses.

  • Income sources: wages, tips, alimony, child support, pension, IRA, SSI, investment income
  • Fixed expenses—mortgage/rent, auto loan, insurances (health, life, auto, home), 401k/IRA contribution, personal/signature loans
  • Variable expenses—utilities, food/consumer goods

Add up all of your income. Add up all of your expenses. Once you subtract all of your expenses from your income, the amount that is left over is your disposable income. From the disposable income, you can set aside additional money in a savings account, have some spending cash, or just have money set aside for any unexpected expenses that pop up during the year.
*Notice that 401k/IRA contribution is listed as an expense. Even though it is optional, look at it as a necessary expense that you must budget in each month. Making this a part of your budget each month will set you up for financial freedom in retirement.

2. Limit credit card use. Only charge on your credit cards each month an amount that you are able to pay off. Don’t let the balance carry over month after month; most credit cards have high interest rates that compound daily. Paying only a minimum payment will take years (maybe even decades) to pay off.

 

3. Use cash when possible. After creating a budget, it is easy to see how much money is left over each month that is considered expendable. Obviously, using cash, it is impossible to overspend. Once the cash that you have set aside for the month is gone, the spending stops.

 

4. Be an informed consumer

  • Clip coupons—also look for stores that offer to double your coupons.
  • Purchase items when they are on sale. Most stores have websites, which have weekly ads, and email sign-ups, which send out coupons, promotions, and savings events information.
  • Comparison shop—the internet makes it easy to look up the price of an item at multiple stores or online shops to figure out where it is offered at the best price.

5. Save for the future

  • Savings account—even though interest rates are low now, putting money into a savings account is still a good idea. If you set up direct deposit, that money will go there before you get your net paycheck; it is much easier to save when the money is taken out of your paycheck directly.
  • Retirement account—if your employer offers a 401k or other similar retirement plan, you want to contribute to the maximum matching level. If you employer matches to 4%, that is the level to which you want to minimally contribute, otherwise, you are turning down “free” money.
  • Emergency Fund—it is suggested that you have at least six-months salary set aside in case of a life emergency, such as accident or loss of job. These funds can help get you through if something were to unexpectedly happen; you will still be able to pay your monthly bills, even if there isn’t any current income coming in.
  • Open a Return of Premium Life Insurance Policy—While this type of life insurance policy provides protection for a certain period of time, it also provides a sort of forced-savings account. If the benefit is never used, policy holder gets all of the premiums back.

This article has also been published at: Bella Home Goods and on my Personal Finance Examiner page.

Daily Habits that are Costing You Hundreds of Dollars

Daily Habits Costing You Hundreds | Money Savvy Living

When you are trying to save money, there are, typically, quite a few places that you can look. The obvious place to start is with monthly bills: evaluate your telephone package, cellular plan, satellite/cable options, and internet connection service. Many times, companies are able to give you special promotions that are currently going on or you can even down-grade your current options, based on what you actually need and use. Although, there are some ways to save that you may not have even considered. These money-usurping habits often slide under your monthly budget radar because they aren’t individual bills that come in the mail each month. You may pay cash or put them on a credit card used for other household items, so these expenses may go unnoticed, but could, literally, be costing you hundreds of dollars each year.

 

The morning coffee addiction

If you are like most of us, you probably can’t really get going in the morning without a cup of coffee. However, it can make a huge difference in your budget where you are getting that coffee. If you are stopping by your favorite coffee shop and ordering a specialized coffee from a barista, you are probably spending around $4.00 each work day, or about $88 each month. While the gourmet latte each day is delicious, it is costing you over $1000 per year, if you buy a gourmet coffee each workday! Don’t lose heart, though, there is a much cheaper way that is still going to taste great. If you aren’t good at measuring out and making your own coffee, invest in a coffee maker that you can simply place a K-cup in and have a perfect-tasting cup of coffee every time. The least expensive way to enjoy a K-cup is buying at a wholesale store (I go to Sam’s Club). You can get a large box of 84 K-cups for just under $40. Buy some flavored creamer and you will get a great tasting cup of coffee for around $0.50 per cup! Making your own coffee at home costs about $11 per month and will save you $77 per month; that is a savings of over $900 for the year!

 

Eating out for lunch

Mornings can be hectic, especially if you are trying to get your children ready for school, help kids finish homework, make breakfast, and make sure everyone gets out the door on time. It can be really hard to add one more thing to the morning checklist. Honestly, we all know that it is just easier to buy lunch rather than take the time to pack one. Buying lunch at a restaurant each day can make quite a dent in your budget. Even if you are getting a value meal at a fast food restaurant, you are probably spending at least $5 per day, which would be about $1250 per year. This is an expense that can approximately be cut in half by packing a lunch each day.

 

Happy hour

It may not seem like a big deal to stop by your favorite sports pub after work and have some wings and a beer with a few co-workers to wind down after work, however, you may be spending more than you think. There are always “happy hour” specials so it seems relatively inexpensive. Of course, if you go every day, you are probably adding at least $5-10 to your daily expenses, and potentially, a whole lot more, depending on how long you stay.

 

The best way to limit the amount that you spend each month on these “daily habits” is to budget for them. You don’t have to give everything up altogether. Build a certain amount into your budget each month and then stick to it.

 

Money Advice: From a Kid’s Perspective

Money Advice: From a Kid's Perspective

Money Advice: from an 8-year-old

 

“Out of the mouths of babes oft times come gems.” I think the old saying is quite appropriate here. I asked my 8-year-old son what he thought was good advice regarding money. He immediately came up with “don’t spend it on junk.” He took a bit longer to come up with the other two: “store it in a bank” and “give some of it to someone else.” But he did think of these on his own, without any help. I would have to say that he nailed it! I am pleased to think that at 8 years of age, he has a better understanding of personal finances than many adults do.

 

Don’t Spend It On Junk
Seems obvious, right? I think he probably gets the term “junk” from the fact that whenever we are at a store, if he wants to get a cheap little toy, I tell him not to waste the money on it because it is made so inexpensively it will just break– probably about 5 minutes after he starts playing with it. Junk. For adults, it is a bit different though, maybe we aren’t spending a couple of dollars on something cheaply made and easily breakable, but maybe, just maybe, we are making unnecessary purchases. I mean, how many times have you bought something that you really didn’t need? Maybe it was on sale, maybe it was even a great deal as an end-of-season clearance item, but you really didn’t need it or hadn’t even thought about buying it… but it was on such a good sale, you just couldn’t pass it up? Sound familiar? I know I have done this before. And all those little purchases add up.

 

Store It In A Bank
While my 8-year-old has a money jar that he loves to store all his money in from birthdays and Christmas, his advice to store it in a bank is right on target. Every time you get paid, put some money aside in a savings account and 401k or IRA. A savings account will get you through the unexpected expense times, or allow funds for family vacations, or even just give you a safety net for the unforeseen life event, such as an unexpected layoff from your job. But a savings account isn’t enough, you also need to store money in a retirement account. Start saving for your future NOW. The earlier you start saving, the better. The compounding effects of interest over time will greatly increase your account value.

 

Give Some Of It To Someone Else
I love that my son has a giving heart. It isn’t too hard to look around to find a local church or other worthy charitable organization that could do a lot of good with a donation. Not only does someone in need benefit, but the giver gets to experience the joy of giving and making a difference. “Give, and it shall be given unto you…” Luke 6:38

 

*Article also published on my Examiner.com page.

Your budget tells you what you can’t afford, but doesn’t stop you from buying it

Budget1

Take control of your finances. It all starts with a budget: knowing how much your have coming in each month, and how much you are paying out. But just knowing your financial situation is not enough. You have to actually take steps to ensure that you are paying down the bills that you want to get rid of or not overspending and creating more bills.

Simple things to do to cut down on overspending:
So, instead of eating out for lunch everyday at work, you pack a lunch and take with you. Maybe that means not buying some new shoes that you really didn’t need anyways (even if they are on sale!). Perhaps that even means giving up your fitness club membership and working out at home. And this may sound obvious, but don’t go shopping with money that you don’t have; in other words, do go to the mall just because you are bored. Living within your means, sometimes means giving up the things you want, for the things that you need.

So how can you stick to a budget and not feel totally strapped? Make sure to budget in a little fun money each month. For example, if you budget in $100 of spending cash, then you are allowing yourself to spend money on something that is not in your budget without feeling guilty, and still work toward achieving your goals.

Money Savvy Living Amazon Store

NOW OPEN: The Money Savvy Living Amazon Store!

There is a lot of information to sort through when it comes to personal financial resources. The goal of Money Savvy Living is to make finding the answers you need easy.

Find books, workbooks, ebooks, video downloads, mp3 downloads, DVDs, and educational finance games to get your finances in order. Money Savvy Living has compiled a concise list of financial resources on the following topics:

• Personal finance
• Retirement planning
• College planning
• Teaching teens/kids finance
• Budgeting
• Investing
• Business
• Entrepreneurship
• Leadership/Management

5 money saving tips for planning your next vacation

beach2

Going on vacation can be a nice escape from reality. Visiting somewhere new and exciting with your loved ones is also a great opportunity to create lasting memories. However, all of the costs associated with taking a vacation can really add up. Because things can get a little pricey, here are some tips to help you get the best deals, no matter what your destination is:

1) Take your vacation during the off-season.

  • Taking a beach vacation in May or late August can save a lot of money. Typically, June, July, and early August are the peak season for tourists headed to the beach because those are the hottest times, also when most schools are out for summer vacation. Going just before or slightly after the busy season, can save you hundreds of dollars and, many times, the beaches are less crowded.
  • Save at Disney in September and October. Taking a vacation to Disney during Autumn will save you hundreds (maybe thousands!) of dollars, depending on how long you stay. While you won’t really save on tickets to the part itself, you can save BIG on accommodations. During this time, you can save 50% or more on hotel rooms that are $400-500/night during peak season. The parks are less crowded during this time as well. Undercover Tourist is an app that also gives you an idea of events going on at each park, and based on historical data, it estimates how crowded the park will be on the days that you are looking to visit.

2) Know the cancellation policies.

Whether it be your airline or hotel, make sure you know the cancellation policies. If someone were to get sick or some other reason arise that your family cannot go on vacation, you certainly don’t want to be stuck paying for it. Many times, hotels allow guests to cancel within 24-48hours without any penalty. For airline tickets, it is well worth the small fee per ticket to be able to get a refund. It can literally save you thousands of dollars if your entire family is planning on flying.

3) Avoid holiday travel.

Vacationing during almost any holiday, whether it’s Labor Day or Christmas, can cost you extra. More people are off work during these times and kids are off school, so more people are travelling, which means paying a premium.

4) Visit the Chamber of Commerce or other visitors website of your chosen destination.

Many times, you can find out about free festivals, children’s activities, or local tourist attractions that are inexpensive. Here is one example of such a website for Myrtle Beach, SC. You can also do a search for local restaurants on Restaurants.com to find money-saving coupons on dining. Doing a little research ahead of time can save you a lot of money once on vacation.

5) Don’t buy “necessities” on vacation. Most of us remember to pack toiletries when going on a trip, like toothpaste and deodorant, however, it is also important to remember to take the less essential necessities:

  • Beach/warm weather destination—take sand and water toys for the kids with you. Yes, this is just more stuff to pack, but once you get to the water, your kids will love playing in the sand with their buckets and shovels. Don’t forget arm floaties, sunscreen, sunglasses, water shoes, or goggles for the pool either. These items may not seem significant, but if you end up having to buy them once you get to your destination, it will cost a lot more than getting them at Walmart or the dollar store.
  • Skiing/cold weather destination—don’t forget gloves, hand-warmers, long underwear, wool socks, and even sunglasses for the slopes. If you have to buy these items at a specialty shop, you will end up paying a huge premium.

This article was originally published on my Personal Finance Examiner page.

Higher food prices on the way, due to persistent drought in California

Not just California is experiencing a prolonged drought, but several surrounding states have been declared natural disaster areas because of the extremely dry conditions. If you think that this doesn’t affect you because you don’t live in any of the affected states, think again. Food prices could be increasing nationwide– and so could your grocery bill!– due to the fact that, we as a country, are very dependent on the agricultural products from that area.

To read more about how the drought in California will affect the economy of the entire country, click here.

Simple Ways To Make a Little Cash

Here are some great Money Savvy tips from guest blogger, Heather, creator of Simply Save:

piggy bank

It’s that time of year again where the weather has me stuck inside and I just constantly feel the need to clean and go through my possessions! So that inspired this post on how to make a little bit of cash on the side. There are a lot of simple, effortless ways to make some extra money!

Sell Clothes: After you clean out your closet, sell the clothes you don’t want to a thrift store or consignment shop! I’ve used Plato’s Closet and Clothes Mentor; Plato’s Closet takes Juniors clothing while Clothes Mentor takes Women’s clothing. Make sure the clothes are clean and in good condition and you can make a bit of money! What they will accept varies by location and which salesperson is assessing your clothes.

Sell Media Items: Places like Half Price Books will purchase your used books, magazines, movies, and CDs! Even if you don’t make a ton of money, it’s better than nothing!

Amazon/eBay: I’ve sold old cameras and cell phones on eBay and made a good profit. I bought all of my textbooks used and then sold them all on Amazon and broke even!

Craigslist: I’ve had a lot of success purchasing tools and things on Craigslist and I’ve sold a lot on there too, including a nice bike. You can sell pretty much anything on there! Just be safe when you meet up with the purchaser.

Garage Sale: What to do with all the things the bookstore and thrift stores wouldn’t purchase? Hold a garage sale! It is time-consuming but can be well worth it!

Piggy Bank: Use a piggy bank or a coin jar to dump all your pocket change and take it to the bank every few months. I don’t use cash much, but I still end up with about $25 in there every few months!

Credit Card Rewards: If you’re able to consistently pay your credit card balance in full, I’d check into one with a good rewards program. I redeem my credit card rewards for Amazon gift cards and probably earn about $20 a month.

These are just a few simple ways to effortlessly put a little extra money in your pocket! Although it may not seem like much, it can really add up over time…and something is always better than nothing!

1 2 3 4