Tag Archive for Money Management

Do?s and Don?ts for the First Time Budgeter

Do?s and Don?ts for the First Time Budgeter

Do?s and Don?ts for the First Time BudgeterMaking the decision to start budgeting is one of the first steps to getting your finances in order and keeping them there. But sometimes it?s easier said than done.

After all, there are several steps to the budgeting process. In addition, you can find financial advice from many different sources, some of which contradict one another.

To help sort everything out and keep you from referencing multiple documents at once, here is a list of do?s and don?ts for the first time budgeter.

Do?s for the First Time Budgeter

1. Do give yourself a little wiggle room in your budget.

Build in some flexibility, such as allowing a little bit of your money to go toward entertainment. You can choose later if that entertainment is going out to eat or to a movie or some other fun activity. Creating wiggle room can keep you on budget.

2. Do search for low cost or free options to replace some of the things you are currently paying for.

For example, try DirecTV Now for watching television instead of cable and save money.

3. Do use apps.

Apps make it easier to budget and manage your finances. One to try is Personal Capital. It’s free to use and pulls in all of your accounts so you can see everything in the same place at the same time.

4. Do plan ahead for bills that fluctuate.

Heating, water and other bills may change from month to month or season to season. Make sure you set aside enough to cover what you owe during higher usage months.

5. Do set financial goals.

Some of your financial goals might be things such as saving for a new car or saving for retirement.

6. Do create priorities for using your money wisely.

For instance, you may need to pay debt down before you are able to set aside money for a newer car. It’s not wise to continue paying interest on debt when you could be paying it off faster.

7. Do pay more than the minimum on debt you owe.

Paying extra is the only way you will ever get ahead, especially if you have high interest debt, like credit cards.

8. Do automate paying bills whenever you can.

This way you ensure you don?t miss a payment so you can avoid being charged late fees. It also takes a few more things off your never-ending to-do list.

9. Do re-evaluate your budget.

You should re-evaluate your budget every six months to a year to account for any major life changes. For example, if you got married, your bills probably changed drastically. So, you need to budget for the changes.

Don?ts?for the First Time Budgeter

1. Don?t be inflexible when it comes to what you want.

You may have to give a little to create a workable budget. For example, you might have to cut back on salon visits or exercise at home instead of paying a gym membership.

2. Don?t forget to set aside money for emergencies.

There is no way to plan for some things that happen in life. If you plan ahead for financial emergencies by saving money in a rainy day fund you will be able to cover them when they happen.

3. Don?t overlook annual or irregular bills.

Some include taxes, doctor bills, dentist visits, eye doctor appointments, car repair bills and more. Set aside money for these expenses each month in a saving account. Then, when you have bills come up periodically for these bills, you will be able to pay them.

4. Don?t neglect to take into account deductions that are taken on your pay.

Calculate your budget based on your net income and not your gross income. You should at least have taxes that are coming out of each paycheck and possibly retirement contributions and health insurance too, among others. What?s left is your net income.

5. Don?t stop budgeting if you get off track one month.

Instead of giving up, look at where you went wrong and why. Try to prevent it from happening again, and get back on track.

6. Don?t use someone else?s budget for your own.

Your own needs will be different and your bills will likely be different too. You need your own budget tailored to your needs and expenses.

7. Don?t procrastinate when it comes to paying your bills.

Paying them on time can save you money in late fees. Instead, use that money to pay down debt.

8. Don?t try to keep up with the Joneses.

It doesn?t matter what your co-worker, neighbor or family member has or does. Trying to keep up with others makes you spend more and puts you in debt.

Budgeting is an important part of financial well-being. If you are a first time budgeter, use these dos and don?ts to help you create a budget that works.

 

What other do?s and don?ts would you include in this list?

 

Photo courtesy of: kaboompics

5 Sneaky Ways Websites Convince Us to Overspend

4 Sneaky Ways Websites Convince Us to Overspend

4 Sneaky Ways Websites Convince Us to OverspendThe Internet is ever-changing. These days, you can buy anything on the Internet from food, to furniture, to services.

Since Amazon rolled out its Prime subscription, most items you buy are delivered within two business days. Anything you want at the click of a button.

While the convenience of online shopping makes it easy to spend money, online retailers’ websites make it even easier to overspend.

Here are a few sneaky ways websites convince us to overspend.

Free Shipping Offers

Spend this much and get free shipping. We?ve all seen it.

Free shipping for orders over $50 and your basket is at $45. For just $5 more you can get free shipping.

This sneaky trick totally works too. Who doesn?t love free shipping? ?But, did you need that little knick-knack for $5? Probably not. But, they got you to overspend.

Suggested Items

This one is very tempting for me. When you’ve added a few things to your cart, websites suggest other things you might like.

They are usually spot on with this, and it totally plays to your impulse buying.

Be ready for this and don?t give in. You don?t really need those cute add-on items.

Showing What Other’s Have Purchased

Similar to showing suggested items you might like, some websites will show you items that were purchased by other shoppers who also bought the same thing as you.

For instance, if you have an air freshener in your shopping cart, they may tell you other shoppers who bought this air freshener also bought the jumbo pack of fragrances. Do you need 27 extra fragrances?

On the other hand, sometimes this is helpful if you are trying to see other accessories for the item you are purchasing. But, keep in mind, this is another tactic websites use to make you buy more.

Reminder Emails

Don?t lie, you?ve put things in your shopping cart and then not purchased that cart. Sometimes this is how I make my wishlist, only to see that there’s no way I can afford everything I want.

Websites know it too, so they may send you a little reminder email to buy the things in your cart.

This can occasionally work in your favor if they give you a coupon code to use for your purchase because you “forgot” to finish checking out.

Flash Sales

?Everything is 75% off if you buy now and get free shipping!?

Flash sales are the be all, end all of online promotions. Buy it now whiles it?s cheap.

There?s no easier way to overspend than what you were intending than to give in to one of these sales. Because you feel like you are getting a good deal, now you feel that it’s ok to buy more than you intended in the first place. How can you pass it up when it’s so cheap?!

Online retailers know their business and they know how to get you to increase your spending. Sometimes this can be a good thing, such as when you get gifts on sale, or are able to save on something you’ve had your eye on for a while.

But most of the time, these visible yet sneaky methods, trigger your impulse buy reflex. Though tough, you can master this impulse and stick to only what you were originally intending to buy. Have fun shopping but be alert so you don?t overspend.

 

What methods have websites used to make you overspend and add more to your online cart?

 

Photo courtesy of: rawpixel

Are You Paying for Insurance You Don?t Need?

Are You Paying for Insurance You Don?t Need?

Are You Paying for Insurance You Don?t Need?Insurance, especially health insurance, has been a buzzword for some time.

You know you need it, especially when it comes to home and auto, because you know, fires and car crashes, and stuff.

These disasters can destroy your property, so you need to be insured to protect your belongings!

But, there is a thing as too much insurance. While it?s better to be safe than sorry, it’s also a good idea to have money to pay your bills, instead of paying for insurance you don’t need.

Here are some places where you might already be paying for insurance that you don?t need.

Life Insurance

I want to start saying that life insurance is good to have. It can help your family in case something would happen to you. That being said, you don?t want to buy so much life insurance that your loved ones would rather have the money from the policy than keep you around. I kid, but the point is, you don’t want to be over-insured.

You really only need to cover funeral expenses and any debt that you may have. If you have adult kids who no longer live with you, or if you are young and single, you probably don?t need much life insurance.

Instead of paying for insurance that you don’t need, put that money in your retirement plan. You?ll see a better return on your money.

Extra Auto Policies

For most people, a car is a necessary tool to help them get to where they need to be in life. For example, your car might be your primary way to get to work so you can make money and pay your bills. But, paying for extra insurance you don?t need, plus all of the other costs of owning a car, can really add up over the vehicle?s lifetime.

For example, do you really need towing insurance? Or, what about the collision insurance? Sometimes the premium is almost as much as it would cost to repair your car.

Instead of buying this extra coverage, maybe you could build some extra money into your emergency fund, or set up a separate fund specifically for car repairs. Essentially you’d be self-insuring and you could always use the money for something else since it’s your money in your savings account instead of being paid out to an insurance company.

Extended warranties

It?s great to have a warranty on your appliances. Most have at least a short warranty when you buy them. But, do you really need to extend the warranty? Some of these extended warranties don?t cover the issues you thought they would. Instead of buying an extended warranty that you probably won’t use anyway, save your money.

High Premium/Low Deductible Plans

Is a low deductible really the way to go when you buy insurance? This is what I was always taught growing up, but now I’m not so sure.

If you look at how much you pay in premiums, it really adds up! If you hardly ever use your insurance anyway, you still may not ever hit that deductible. For instance, health insurance. If you’re relatively healthy, it’s probably a better use of your money to pay lower premiums and have a higher deductible. The money saved from not paying high premiums, can help pay for your medical bills if you ever do end up with a large bill.

When it comes to insurance, you are looking at the forest and not the trees. You want to be covered so you can rebuild your home should it go up in flames, not nickel and dime every little thing that breaks.

If you haven’t been thinking this way, you can probably save a lot of money by reviewing your plans with this new frame of mind.

 

Are you paying for insurance you don’t need? What kind?

 

Photo courtesy of: Hans

4 Reasons You Might Need More Than One Budget

Why You Might Need More Than One Budget

Why You Might Need More Than One BudgetKnowing where your money goes is important. This is where a budget can come in handy!

Budgets are great for helping you see where your money goes and how you spend your money. They can be as complicated or as easy as you make them.

It does take discipline to make a budget?work, but once they do work the possibilities are endless. A good budget doesn’t make you feel restricted!

When looking at different types of budgets,?there are tons to choose from. Most people utilize a single household budget. There are others who use more than one budget for a single household. You may think this could be overkill, but here are some reasons why you might need more than one budget.

You’re Working Toward a Goal

Your regular budget marking how much money you have going in and how much you have going out is perfect to seeing how you spend your money. But, if you are working towards a larger financial goal such as saving for a house, buying a house, saving for a car, a vacation, etc., having a second budget strictly for that goal will help you stay on track to see how much you should be saving.

For example, say you are wanting to buy a car, but you don’t know how much to save. You could create a budget specifically for that car. Make a line item for the cost of the car, add insurance, gas and maintenance costs. This budget then will help you save for it, as well as helping you see if you can afford the car in the first place.

Budgets for a Specific Event or Holiday

Event and holiday spending add up quickly. A separate budget shows how much you spent and how much more you can spend without going over budget.

For example, if you are getting married, a separate wedding budget will greatly reduce spending on unnecessary items. Do you really need 100 doves to fly overhead as you exit the ceremony or will bubbles suffice? 😉

The same goes for a birthday party, or vacation. Setting up a small budget for events you know are coming up will take the strain off of overspending and allow you to be smarter with your purchases.

Budget for Christmas

If you have a large family, or love to buy gifts for everyone you know, Christmas spending adds up fast. A lot of people take on credit card debt at Christmastime, which can derail their other financial goals.

To help watch your spending and make sure you have the money, create a budget for Christmas. Write down who you need to get gifts for and the amount you want to spend. You can set this up in January, and save for it throughout the year. By saving early, you can start shopping early to buy gifts on sale throughout the year.

For Projects and Hobbies

Not all hobbies require a budget, nor do all household projects. But some expensive hobbies or large household projects may require a budget of their own. Don’t go blindly into a big project like a re-model without a separate budget.

Setting up a second or third budget shouldn?t be scary. Large corporations and businesses work off of more than one budget to turn a profit. Of course, yours doesn?t have to be that involved. Keep it simple so you can save for the things you want most in life.

Do you have more than one budget? What are your extra budgets used for?

 

Photo courtesy of: kschneider2991

4 Ways to Make Saving Money Easy

4 Ways to Make Saving Money Easy

4 Ways to Make Saving Money Easy?Saving for a rainy day? is a phrase you?ll often hear when people refer?to the importance of saving money.

Though saving for a rainy day sounds easy, saving money can be a challenge.

With high consumer and student loan debt plaguing many in the United States, saving those extra cents becomes an all too rare event.

But, the truth is, saving money doesn?t have to be dramatic or difficult. It can even become automatic.

Here are a few ways to make saving money?easy, or at least easier than you think.

Set up an Automatic Transfer to Savings

Pay yourself first and you?ll thank yourself later. By setting up an automatic transfer you won?t notice that the money’s not there. Create your budget based off the amount of money you have after the automatic savings transfer.

The same goes for your retirement?contributions. Set those up automatically so you even see the money coming into, or coming out of, your account.

Move Your Savings Account to a Different Bank

Having two banks may seem a tad complicated, but it does help if you find yourself often tempted to dip into your savings.

With your savings account being held?at another bank it makes it harder for you to float by moving savings to checking and spending it.

You can still set up an automatic deposit to savings and not mess with physically going to two separate banks to make deposits. You may also be able to switch to a bank with a higher interest rate on savings, like Discover Bank, or at least move away from a bank that charges high fees.

Start a Retirement Savings Account

The numbers are staggering for how many Americans don?t have a savings account, let alone savings for retirement. If you are self-employed, a Roth IRA is a good option for a retirement account. Setting up an automatic deposit to your retirement account makes it easy to save for the future.

Set up a Savings Transfer on all Purchases

Does your bank offer an automatic savings program that puts your “spare change” into your savings account? Mine does! It means every time I swipe my debit card, the change is put into my saving account.

For example, if I spend $3.01 on coffee, $0.99 is automatically put into my savings account.

It?s like putting your spare change in a jar. It’s only a few cents here and there. But, over time, that amount adds up.

Cash Back Rewards on Credit Cards

Now don?t get it into your mind that a credit card can solve your money problems. Cash back rewards only work if you don?t carry a balance on your card and pay your bill in full every month.

But, if you use cash back credit cards responsibly, they can be a good way to save money. Instead of putting your rewards toward your monthly bill, have it transferred directly into your saving account.

Saving your money is easy, especially with the ease of online banking and automation. Whether you are saving a little, or a lot, it all adds up over time.

You don’t have to start big. Set small goals and work your up from there.?You can make saving money easy and hassle free with these tips.

 

What easy methods do you use to save money? How do you make saving money easy?

 

Photo courtesy of: Ramberto Cumagun