Creating, and then maintaining, a solid budget is one of the best things you can do for your financial life. It can be difficult to keep track of all of your expenses during the week while life is busy, so set aside some time on the weekends (or whenever you have spare time) to work on a budget and make adjustments as necessary.
If you can set a budget and stick to it for the long-run, your bank account will reflect your discipline.
Unfortunately, many budgets spring ?leaks? from time to time, and those leaks need to be plugged up as quickly as possible. Take a look in your own budget for any of the four leaks below, and take corrective action as necessary if you find that these points are costing you money.
How Much Food Do You Buy?
You can?t eliminate your food budget, obviously, but there is a good chance that you could trim it back while still getting everything you need to eat. There are two common ways in which money gets wasted within a food budget ? going out to eat too frequently, and buying food at the store that never gets consumed.
If you can do a better job of shopping smart and avoiding waste, your food dollar will go a lot further.
Movies are Expensive
One of the sneakiest ways to blow through your budget is to go to too many movies during the course of a month. With all of the entertainment options available at home these days, you are spending more money than necessary to be entertained when you buy a seat at a movie theater. Sure, there is nothing wrong with going to the occasional movie, but limit this activity to keep your budget in check.
Excessive Monthly Charges
There are a number of other bills in your life, like food, that simply can?t be eliminated. For example, you need car insurance (if you own a car), health insurance and more. Even though you can?t wipe these away, you may be able to optimize them in order to save money each month without losing the coverage you need.
Work through all of your options on each monthly bill that you pay in order to make sure you aren?t sending more money out the door than is absolutely necessary. A great way to stay on top of these charges is to track your expenses with a free tool like Personal Capital. Not only does it allow you to track your expenses, but it also helps you monitor all your financial accounts in one location.
The Daily Coffee
Coffee used to be something that was cheap and a great way to start the morning. That has changed, however, and many coffee drinks are now a serious investment. With drinks from popular chains regularly costing $5 or more, you can do major damage to your monthly budget simply by stopping in for a coffee each morning of your work week.
If you can break this habit, you may be able to save as much as $1,000 or more in a single year! You don?t have to give up coffee totally, either ? consider brewing some at home before you go for pennies on the dollar as compared to purchasing it from a coffee shop.
Does your budget suffer from any of these leaks? What other budget leaks do you suffer from? What are you going to do to plug them?
This month has been a tough one for my budget. I got a little too carried away with going out to eat and spending money on things I don?t really need.
After a little self-reflection, I realized that the reasons I tend to over-spend my budget are probably the same as the reasons other people do as well. Next time you overspend your budget, spend some time reflecting to see why it happened. After all, knowing is half the battle.
If you aren?t quite sure why you continue to blow?your budget, check out these four common reasons to see if they fit your situation.
Shopping Out of Habit
Part of the reason I overspent my budget this month is because I was shopping out of habit. Whenever my best friend and I spend the weekend together, we tend to do at least a little shopping. The last few times I?ve done a pretty good job at keeping my purchases to a minimum, at least compared to what I used to spend when we were together. Nevertheless, I still spend money on things I don?t really need when I go shopping out of habit.
Confusing Wants and Needs
This brings me to my next point. Sometimes it can be easy to confuse wants and needs. For example, do I really need new pajama pants when I see cute ones at the store? In my case, the answer is no. I already have a drawer full of pajama pants at home so I don?t really need new ones.
Another place people tend to confuse wants and needs is at the grocery store. We all need to eat and buying groceries is a lot cheaper than eating out, but that doesn?t mean we need everything we buy at the grocery store. We don?t need soda and chips to survive. A great way to monitor your spending, especially when at your wants vs. your needs is by tracking your spending. You can use a free tool, such as Personal Capital, to track all your spending so you can know exactly where you’re at spending wise during the month.
Shopping When You?re Bored
When I was in college I worked part-time at an office during school semesters and then I transitioned to full-time at my job during the summer. Even with working at my job full-time during the summer break, I couldn?t always find enough to keep me busy since I was used to having classes and work during the day and homework at night.
Often this would lead to me going shopping at the mall after work. I didn?t really need anything and I was only shopping to kill time.
Have you ever caught yourself thinking ?I deserve this? when looking at something you can?t truly afford? It?s happened to me more than once. Often I fall prey to this line of thinking when I feel tired and overworked.
I?ve been putting a large chunk of my monthly income toward debt for a couple of years now and it?s hard to see that money leave my bank account with nothing to show for it. Deep down I know that I already have the ?stuff? to show for that money, which is how I racked up credit card debt. But it?s still a tough feeling to shake sometimes. This is usually when I feel like ?I deserve? something since I?ve been working really hard without buying anything new for myself. But the truth is that I already bought myself a bunch of stuff and now I?m paying for those purchases by putting my money toward my debt.
The common denominator for most of these common reasons you continue to spend beyond your budget is emotional.
Next time you find yourself about to buy something that will put you over your budget, take a minute to think about how this purchase will affect your life. Do you truly need it? Are you willing to put off something else you need or want in order to have this item? Sometimes the answer will be yes and you?ll still buy it, and that?s ok. The key is just to take the time to realize how your spending affects your life and budget before you buy things for emotional reasons.
Have you ever given in to emotional spending? What are the reasons you continue to spend beyond your budget?
First of all, the title of this article is probably a little bit misleading. Of course, there is no such thing as ?extra? money. All money is important, and you should value every dollar that you are able to earn.
However, in this context, ?extra? simply means money that you are able to make beyond your usual salary. If you normally earn $50,000 per year working at your regular job, and money that you make on the side beyond that could be considered ?extra.’
Picking up a side hustle is a great way to pad your budget while possibly engaging in an activity that you enjoy anyway. If you can be smart about your second job, you could turn it into something that is both a hobby and a money maker. Following are five ideas that you may want to consider in order to bring in some extra money in the year ahead.
Serve Your Neighbors
Some people love to spend time outside doing yard work and odd jobs rather than sitting on the couch in front of the TV all day. If that sounds like you, consider offering your services to neighbors for a fee.
Even if they only pay you a small amount, you can make a little bit of money while getting exercise and making your neighborhood look great. Not only is this a good way to make money, you might even make some friends in the neighborhood while you are at it.
Drive Your Car
One of the newest ways to make money is by becoming a driver for services like Uber and Lyft. These are on-demand services where customers can request a ride and you simply go pick them up and take them to their destination. This won?t be a viable option for people in all areas, but those who live in or around a big city could make a nice extra income by driving periodically.
Can You Write?
As you know, the Internet is huge, and most of it is filled with words. Someone has to write those words, meaning there is an incredible demand for freelance writing in today?s economy. If you have any writing talent, you might want to pursue a few side writing jobs to bring in additional income.
The best way to get started is to focus on an area of particular expertise that you may have, such as a field of business you have worked in or a hobby that you have mastered. If you don’t want to write, there are many other ways to earn extra income online. You can be a VA, or you can even make a little extra money by using portals like Swagbucks?for your shopping or search needs.
Liquidate Some Possessions
You don?t need to sell off everything you own, but moving out a few pieces of clutter that have no meaning to you can be a good way to bring in extra money and clear space at the same time. EBay is great for this purpose, as are classified ad sites such as Craigslist.
Ask for More Work More at Work
One of the easiest and most obvious places to look for additional income is at the job you already have. Ask about the possibility of a raise or overtime to make more money without having to pick up a second job.
Do you want to earn extra money this year? What are you going to do to earn extra money? Have you tried any of these methods of earning extra money?
I wrote this Personal Capital review after using the service for the past several years. I have various financial accounts with different companies from bank accounts, credit cards, online brokerage accounts and more. You likely deal with the very same thing.
That?s great as you usually can?t take care of all your financial needs at one place but it does cause a problem ? ?staying on top of everything you have going on in each of those accounts. I need something will make my financial life easier to manage. This is where Personal Capital comes into the picture.
If you?ve not heard of Personal Capital before think of them as Mint with investing thrown in. Mint is great for what it?s meant for though falls short with investing and Personal Capital is a great alternative to Mint in that regard. I?ll get into that feature a bit later, but the real difference in Personal Capital vs. Mint is that Personal Capital allows you to streamline your investing and gives you a free portfolio analysis. With that in mind, feel free to check out some of the online broker reviews available on the site:
Before I get any further into my review of Personal Capital, I?ll provide a brief background. Personal Capital was founded by former tech CEO Bill Harris. Most of those within the organization are CFP? (Certified Financial Planner) designated which is a huge plus in my book as that means they?ve gone through fairly rigorous testing and generally can trust they know what they?re talking about. As a result, Personal Capital provides value when you consider using them to manage your investments.
While you can electronically connect a wide variety of financial accounts, it?s the investing spectrum where they stand out. As my wife and I have multiple brokerage accounts, this allows us to have one location to view all of our investments which can be a huge time-saver. The great thing is that it?s all for free! With all that out of the way, let?s move on to the rest of the Personal Capital review.
How Does Personal Capital Make Money?
You might think it?s impossible that Personal Capital is free. I get that, but it really is free. I?ve used it for two years and not spent a dime on it.
That begs the question though of how Personal Capital does make money and that?s a fair question. Personal Capital makes their income through offering full financial advisory services to clients with at least $25,000 in investable assets. If you have at least that amount of investable assets you as a client have the choice of being paired with a financial planner. That financial planner can then help you with any investment needs you have though using that help is not a requirement by any means.
If you do decide to work?with a financial planner through Personal Capital then the income aspect comes into play as they will be compensated for managing those investments for you. The cost of that, based on your investable assets, is as follows:
Less than $1,000,000 is .89%
$1,000,001 – $3,000,000 is .79%
$3,000,001 – $5,000,000 is .69%
$5,000,001 – $10,000,000?is .59%
$10,000,001+ is .49%
The one thing to keep in mind is those fees will be on top of the fees you?d be paying on the investment vehicles themselves, which are usually ETFs. In light of that, you?d be paying roughly 1 percent for Personal Capital to manage your investments for you which is on the competitive end for investment management. The key to remember is you do not have to use this feature and can still use Personal Capital entirely for free.
Personal Capital Features
There are many features to Personal Capital that I?ve used and have come to appreciate. I?ve listed some of them below:
Portfolio analysis: This is really where the value of Personal Capital comes into play. After you connect your accounts, Personal Capital goes through all of your investments to see how they compare to their benchmarks and locate any lower cost alternatives or ones that have performed better. It?s up to you whether or not you make any changes but is great information to have. I?m a big believer in lowering costs when it comes to investing so I love this feature and it points to their investing principals. You can also use FeeX?to do something very similar though they only look at your 401(k) plan.
Asset allocation manager: Your asset allocation is vital to stay on top of. Personal Capital offers a free tool that shows how you?re allocated so you can see exactly how your portfolio as a whole is invested. If you have multiple investment accounts this is a great feature.
Fee analyzer: This is a takeoff on the portfolio analysis but the Personal Capital platform will go through all of your investments to show you what lower cost alternatives are available to you as a way to make sure more of your money is actually working for you. You can include things like your 401(k) accounts to online brokerage?accounts in this.
Tax Analysis: No, Personal Capital does not do your taxes for you. However, they do offer various tools to help manage taxes from an investing standpoint. This includes items like tax loss harvesting in order to lower your tax liability.
Net worth tracker: This is a feature I really like about Personal Capital. Since the interface allows you to connect things like mortgages and credit cards it has an easy to read page which shows your net worth. You can also set it up to email you this information on a weekly or monthly basis.
Reminders: I?ve not used this feature of Personal Capital much but really like the idea. You can use the platform to set up everything from bill payment reminders to the net worth feature I mentioned.
Free investment education: Many online brokerages offer this feature and Personal Capital doesn?t fall short in this area. I?ve not used the education features myself, but having looked at them, I can see that they have some solid offerings to help get you started investing.
Very easy to use: I know this really isn?t a feature, but it is something I definitely wanted to point out. It took me maybe a total of 10 minutes connecting the accounts I wanted to connect and has been a seamless process using the platform. You can also access your Personal Capital account via your computer, smart phone or tablet which makes it easy to access regardless of your situation.
Personal Capital And Security
I know that many are concerned about security, especially when it comes to turning over access of your financial accounts to others. I was somewhat concerned about doing so before opening my Personal Capital account.
That being said, I?ve experienced no issues since joining Personal Capital. Personal Capital utilizes a two-factor authentication system from the beginning. Not only do they make you verify your password and identify the computer you?re accessing the system from, but they send you a notification if your account information is accessed from another phone or computer. I went through this myself when I bought my new [easyazon_link asin=”B00G2MB7KW” locale=”US” new_window=”default” nofollow=”default” tag=”wisedollar-20″ add_to_cart=”yes” cloaking=”default” localization=”default” popups=”yes”]MacBook Pro[/easyazon_link]?last year. Personal Capital saw I was using a new computer and sent me a code to access the system. If the security of your information is a concern to you, and it should, consider this – the encryption level used by Personal Capital is military grade 256-bit AES. Suffice it to say, Personal Capital takes your security very seriously.
In addition to all that, you can also set up your Personal Capital interface to send you a daily rundown of all your account activity. I’ve done this myself to provide me with a brief snapshot view of my finances each day.
In terms of the connection process, it took about 10-15 minutes to connect the accounts I wanted to connect. I did virtually all of my accounts, save for my credit cards and mortgage account. Personal Capital will then attempt to connect to those accounts and verify each of those with you prior to moving forward.
Personal Capital Review ? My Take
I believe if you?re looking for a way to manage your finances all in one spot, especially investments, Personal Capital is a great option to consider. My wife and I are so busy I look for ways to save time and Personal Capital has helped me do that . That alone makes them worth it in my book as I can use the time savings on something else more pressing in life.
My one criticism of Personal Capital is they do not offer a budgeting component. There are many options out there if you?re looking for help with budgeting from Mint to You Need A Budget to a plain old Excel set up you do yourself. I don?t believe you can?t or shouldn?t use Personal Capital if you want budgeting help as it can be used in conjunction with those other platforms. That?s also not to mention the fact that with the ability to track your spending and income with Personal Capital you get many of the budgeting aspects you?d need anyway and thus mitigates the lack of a budgeting feature.?(6/30/15 update Personal Capital has recently added an expense tracking/budgeting component that allows you to do the same thing you can with Mint. This helps tip the scales towards Personal Capital overall, in my opinion.)
I believe for many individuals Personal Capital is a great option. As I mentioned earlier, you can?t argue with free. You can use their financial advisor team if you fit in that realm, though it?s certainly not a requirement. Towards that end, if you do sign up for Personal Capital, they will have an advisor reach out to you to see how they can help when you first sign up. I didn?t choose to take the help as I?m fairly comfortable managing our investments and didn?t want to waste either of our time.
However, if you?re looking for a free and simple way to manage your investments and get an ongoing portfolio analysis then Personal Capital is worth checking out.
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