Money Rewind: Are You Sticking to a Budget Yet?

Do you have more bills then money at the end of the month?  Having trouble paying down the mortgage, rent or groceries?  You are one of millions of people who have reached the end of their rope and need help.

Due to financial crisis from a job loss, unexpected expenditures or simple over spending, setting a realistic budget can create a sense of calm in what may otherwise be an urgent and out of control situation.

What is a Budget?

The online wikitionary.org describes budget as “an itemized summary of intended expenditure…”  The word is derived from the Old French bougette, literally meaning leather bag or wallet, the nature of its meaning has changed little since its first use in 1432.

The first step in creating your own budget is to track your spending.  To get a handle of your spending, gather all your bills. Be sure to include the big ticket items such as:

• Mortgage
• Electrical bill
• Water
• Groceries
• Insurance
• Credit card.

Do not forget about the smaller incidentals such as entertainment, movies or the early morning coffee.

Record each bill on a separate line in a simple lined school note book.  Fancier accountant books are available but are unnecessary.  For example, on the first line write 1) mortgage, or rent, and record the amount to be paid each month for your mortgage.  On the second line record, 2) electrical bill and continue until all the expenses are recorded.  Tally the amounts and you now have a simple estimate of how much is being spent every month.

The act of simply recording the amounts that are spent highlights where the money is going. 

Record Your Income

After documenting all of your expenses, record the income.  Below the list of expenses, register your income for the month.  Income will include your weekly pay checks and any commissions. 

Having more income than expenses results in a savings and any ‘extra’ money should be applied to the expense with the highest interest rate.

Paying Off the Bills

Finding more bills than income at the end of the month can be a shock.  Having a budget and recording all expenses can identify where you can trim your budget.  If your expenses exceed your income, start pruning with the incidentals.  Stopping for a cappuccino and a muffin can add up throughout the month and if you can apply this money toward an outstanding credit card bill then you will be further ahead in the long run.

3 Tried & True Ways to Eliminate Debt

Staying out of debt is a lot easier than digging yourself out of a mountain of financial liability.  With the state of the current economy it is easy for people to fall into owing money.  Unemployment, job loss and interest hikes all lead to an increase in past due accounts.  Follow these handy common sense tips to help avoid the fall into financial ruin.

1. Track Your Spending

Hand in hand with tracking your spending is keeping a financial tally of the household income.  At the end of each month add the money that comes into the household.  This income includes regular pay checks, tips and commissions. 

The next step is to make a list of all monthly expenses.  Include big ticket items such as mortgage and loans, electrical bill, groceries and insurance for example.  Do not forget the incidentals such as the early morning coffee or the evening foray to the pub with the gang.   Do not forget about the bills that are paid semi-annually like home insurance or taxes. 

Having everything written down allows you to see exactly how and where the money is being spent.  Spending more each month than what you earn should raise a red flag and encourage you to stop spending.
 
2. Get Rid of your Credit Cards

Credit cards are easy to get and easy to ‘run up’.  The convenience is matched by their ability to make the card holder overspend.  Keeping track of each transaction will help prevent overspending. If you are unable to control your credit card spending habits, get rid of your cards and pay by cash. 

Using a credit card can be helpful to defer spending money until a later date.  However, if this is done, it is best to pay off the entire balance at the end of each month.  This avoids being saddled with hefty interest payments. Be warned however. You can stop using your credit cards but don’t rush out to close the accounts. Doing so can hurt your credit score.

3. Eat at Home

Eating at restaurants can be a strain on the monthly expenses.  Stay at home and put the money that would be spent on a meal out into the grocery store fund.  In addition to creating meals at home, read the local sales flyers and buy groceries on sale.  Cut costs and buy non-perishable items in bulk when they are on sale.  Toilet paper, tissues, and canned goods can be bought in bulk at decent prices.

Track your spending and living within your means will help keep you from overspending and help you to stay out of debt.

New Year New Budget

Budgeting is not a once-and-done duty. In order for a budget to be successful, it needs to remain ever-revolving. As December quickly heads into a new year, it is the perfect time to review your budget and your savings goals. Getting passive about your budgeting system can also lead you to getting passive about your spending habits. Since January is a time of resolutions, make sure you resolve to review your financial status and begin improving it even more.

Remember the Golden Rule
One of the most golden rules in personal finance success is to spend less than you earn. In the past twelve months, there is a good possibility that your income has changed for the better or for the worse but you may not have adjusted your budget or your savings goals accordingly. Review your income and your expenses. Your regular financial obligations may have also changed in the course of a year. Sit down with a fresh notebook and refigure your finances.

Get Committed to Saving More
If you went through the past year but didn’t bank your work bonus or meet your previous savings goals, it is time to step up and make a bigger commitment. If you’ve been working on a budget, you are likely used to the guideline. Start analyzing the amount you have saved then make a list of the other things you should be saving for in your life. As a year passes, you are one step closer to retirement age or kids going to college. Re-evaluate goals based on the what happened in the past and what you are expecting in the future.

Re-Evaluate Your Expenses
At some point you may have had to cut back on certain expenses to make your budget work. Now that you have survived a year without some luxuries, you can likely try again to cut out some things you don’t need in order to save money you do need. Take a look at how expenses have changed. Note which services (cable, phone, etc) have gotten higher and start looking for better deals. Ditch memberships and other activities that charge a monthly fee if you haven’t used them throughout the past year.

Review Your Services
There are a lot of changes in many industries so there is good reason to review some of the services you are using like your bank, who may have raised or added fees to services that were once free. You may also want to consider refinancing loans, including your mortgage, if your credit has improved in the last twelve months. Many individuals just take for granted that they are using the same people for years at a time but never take advantage of the growing deals stemming from stiffer competition.

Get Everyone Back on Board
A new year means the family is a little older. Kids may be more understanding of their role in the family budget. Hold a little family meeting and go over the finances with everyone involved on a level at which they can grasp. Discuss family members savings wishes (vacations, new television, etc…) and involved everyone in the importance of sticking to a budget as a family.

3 Key Steps To Make An Easy Household Budget

If you don’t yet have a household budget in place, there is no better time than the present to get started. Over the past two years, many consumers have discovered that a lifestyle of consumerism without attention to saving and investing can lead to financial disaster. One of the easiest ways to regain control over your finances and set your family on the right path toward financial independence is by creating and sticking to a household budget. Here we will offer three key steps in making an easy household budget.

1. Find out where you stand- In order to create a household budget you must first gather all of your financial obligations and income to evaluate what you are working with in terms of finances. Start by making a list of all of your expenses from reoccurring monthly bills to annual insurance premiums. It is very important to include all of your financial obligations to get an accurate picture of how and where to allocate your funds. Your list should include what expenses you have, the date they are due and the balance owed. Next you must determine how much money you have available (and when) to begin building your budget. By writing down what you make and what you owe you lay the foundation for a budget that will work for your family.

2. Track your spending- Once you determine what financial obligations you pay each month (quarter, year) you should get a realistic idea of how much money you need for day-to-day living expenses. Do this by tracking your spending for a minimum of one week, preferably one month. In doing this you may be surprised how much money is actually wasted on unnecessary or frivolous purchases each month. Pinpoint where you can save money and what costs can be eliminated or at least reduced to free up more money for bills and other financial goals.

3. Be honest with yourself- Many people make a budget with grand illusions of achieving all of their financial goals in a few short months. If you set yourself up with a budget that is not true to your earning capacity and standard of living, you will more than likely go over budget and eventually abandon all thoughts of sticking to your budget. For example if you regularly spend $150 each week on groceries for your family, allocating $50 for groceries in your budget might be a bit of a stretch even with money saving strategies in place. It is also a good idea to have a plan for each dollar you make. Once your financial obligations are covered, you should allocate money for savings and fun to avoid having “leftover” money floating around which will surely get absorbed in daily spending.

In addition to the key steps outlined above, you should also remember that each family and financial situation is unique. Make your budget based on your circumstances and goals in order to have a budget that works for you and your family.

How To Earn Money For College

Students planning for their future may be stunned to learn how much life costs outside the protective shell of their family. With tightening family budgets and parents who are struggling to get by, let alone pay for college, more students are being forced to seek out innovative ways to earn their own money before heading off to school and during their years in higher education.

Here are some ideas to help college bound students earn money to help with the costs of tuition, books, living expenses, and entertainment:

On-Campus Employment
There are many positions necessary in order for a college of any size to function properly. From the bookstore to the on-campus dining hall to the recreational facilities, universities need student workers to keep the place running. The best part of an on-campus job is that the employers will be understanding of your role and responsibilities as a student. Check with the administrative offices and the other departments to see who hires during the school year.

Restaurant Help
There are probably many restaurants located around a college town. Good money can be made waiting tables on weekends and in the evenings and many places offer cash tips that can really put money in your pocket. A job at a restaurant is also a great way to save up before going to college. Good references and experience at a restaurant close to home can translate to more opportunity when away at school.

Tutoring Help
If you have a specialty area where your excel in school, offer your tutoring services for an hourly rate. You can start tutoring in high school and continue on into your college years. A good hourly rate and some word of mouth advertising can open a lot of doors and build up a nice nest egg for school.

Retail
A background in retail at an early age can put you ahead of others vying for a job at the mall near campus. Working retail offers many learning experiences and a paycheck. There is also added incentive   of employee discounts on store merchandise. Pick a retail store you really have an interest in (music, clothing, or department stores). Many places are always looking for reliable employees that are willing to work nights and weekends.

Entreprenuerialism
If you are prone to creating opportunity for yourself, start thinking about what you can do to earn good money doing something you love. Develop a hobby into a money-making business. Many of the most successful entrepreneurs today started out during their high school years in an effort to earn extra cash. Start a landscaping business, mowing service, snow plow business, or any number of odd jobs that can lead to a real money-making business venture.

What You Don’t Know About Health Insurance Can Cost You

Health insurance premiums can seem overwhelmingly expensive and the choice in coverage plans can seem at best confusing but the reality is – if you do not have health insurance when you need it, you will lose more money and face more financial crisis than had you been paying the most expensive premiums should tragedy strike.

There are ways to save money on health insurance coverage but not having insurance is certainly not one of the ways. Consider any individual you may know that has been injured in a car accident, been diagnosed with cancer, or stricken by one of the many illness that still plague the human race. While health insurance is only really missed when it is needed, it should still be a very important priority in your financial planning.

 Here are some tips and insight into health insurance coverage:

If You Are Employed, Take the Benefits
Even if you have to pay partial amounts for group coverage, it is still a much better and more financially manageable way to maintain health benefits. Even if you think you are invisible because you are young, single, and no one in your family has succumbed to a dreaded illness or accident, there is nothing definite about the near or distant future. Employer-sponsored insurance will likely be the most affordable you can find.

If You Are Self-Employed/Not Working, Shop Far and Wide
With so many plans and insurers on the market, it may seem impossible to find insurance coverage that meets your needs and one that you can afford but you have an obligation to yourself to get the best coverage possible by shopping smart. With so many plans, prices, and companies to look at, it will take time and effort to comparison shop but the end result will likely prove beneficial.

Likely A Loophole
Even the best insurance plans have loopholes you need to consider. It is important that while shopping you look for those issues that are most important including regular doctor visits, prescription medications, dental, vision, hospital stays, and specialists. It can be hard to find one plan to covers everything but pay close attention to what is not covered on any coverage you are interested in.

You Can’t Afford Cheap
While many have budgetary concerns to consider, the cheapest plan and the lowest premium are not the always the best idea. What your insurance covers is very important and if it is not covering the right things for you, you are wasting your money regardless.

Flexibility Will Cost You More
The plans that do not restrict you to a network of specified doctors, hospitals, and other providers will cost you more than the plans that do. You will either pay more in premiums or in your co-pays to the provider.

Job Loss Does Not Mean Insurance Loss
If you happen to lose your job, you can breathe a little easier knowing you can keep your insurance. While a lower premium can not be guaranteed, you can still maintain coverage until you sort though your other options.

How to Develop Budgeting for the Family Vacation

While many families have chosen to forego the annual family vacation this year due to the economy and the need to remain on track with debt, a vacation doesn’t necessarily have to be removed from the agenda – it just needs to be planned more carefully. One element of this plan should be a vacation budget.

So how do you go about setting up a family vacation?

Start Early

Since you likely will have to save up each week to afford your vacation, it is suggested that you start planning far in advance to give yourself the most amount of time to save the most amount of money.

Figure Out What’s Affordable

Your first step is to fully understand how much vacation you can afford. You need to make sure that you can put away enough to afford a vacation during a set amount of time. You’ll need a ballpark figure first so you know where you and your family will be able to go. A travel agent may help your find some reasonable suggestions based on the amount you think you can afford.

Categorize Expenses

Beyond the ballpark figure, you need to section out how much spending you will have to do. Is is an all-inclusive resort or a pay-as-you-go type of vacation? Whatever it is, you’ll need to create a realistic list for food expenses, entertainment, supplies, transportation, accommodations, etc. Don’t forget to multiple the number by them members of your family.

Set Up an Account

There are several options for setting up an account to save up for a family vacation. First, there is the traditional piggy bank where you and your family can toss all loose change to be converted into spending money before your trip. You will also need a bigger venue, such as a traditional savings account through your bank or through an online savings account that typically will earn you a higher interest rate than your bank. There are other goal oriented sites such as Smartypig, where you can sign up for free, set your travel money goals and start saving. These types of sites will help you calculate how much you need to deposit and how often to reach your goal.

Go Direct

Once you have established an account, speak with your payroll department about setting up a direct deposit that will be automatically deposited into your vacation account from each paycheck. The out-of-sight, out-of-mind theory can be an effective savings tools because there is no additional effort. You’ll need to add up all of your spending categorizes for the total cost of your vacation and then divide by the number of weeks/months you have until your vacation. This will tell you how much money you need to sock away on each pay day

The most important reason as to why you need a vacation budget is because essentially you want to make sure you can still meet your financial obligations when you get home. If you budget and save beforehand, your budget should remain on track even after you return. Plus, learning to save now will allow you even more exciting and expensive vacations in the future.

5 Things We Spend Too Much Money On Instead of Paying Off Debts

As we strive to get out of debt and track our spending, we will still find it hard to let old habits die easily. While we may understand there are cuts we need to make in our budgets, it may be hard to let go of something that bring us comfort or at least the things we don’t think we can live without. It is these little things that we purchase that can really add up and prevent us from using our money to pay down debts.

Here are 5 things you really pay too much for and would be better off not buying:

Bottled Water
Of course we must drink water each day to keep our health in check but there are much more savings-conscious ways to stay hydrating than picking up 3 or 4 pricey bottles of water from the convenience store each day. At more than $2 a pop for a bottle of H20, you can easily end up paying $40 a week or more during your average work week. A better investment? Invest in a filtration pitcher for your tap water and recycle those used plastic bottles for a quick refill.

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