Tag Archives: Budgeting

6 Easy to Forget Expenses to Include in Your Budget

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Creating a budget is never easy, it can take months or even years to perfect the process. Plus, life is always changing so a budget that worked a few months ago might not necessarily work now. One of the most common reasons people find budgeting so hard is because there are so many different expenses to keep track of. The big ones, like housing and food, are pretty obvious. However, often there are little things we forget about that can derail a budget from the start.

The next time you evaluate your budget, consider these six expenses that people often forget to plan ahead on:

1. Celebrations

It seems like every week, we’re always celebrating something. From birthdays to weddings to holidays, our schedules are jam packed with social events. However, we often forget that these celebrations come with hefty price tags. Gifts, travel costs, and party attire can add up quickly. Not accounting for these items can really throw your budget off. For example, if you know you have a few weddings coming up in the next year, be sure to set aside funds to cover any associated costs. Also be sure to increase your budget during the holiday season to account for gifts and travel.

2. Pet Care

We love our pets, but there’s no denying that caring for them can get expensive. We tend to only think of pet care expenses in terms of things they use everyday, like food – but any pet owner knows that there are many other major costs associated with our furry friends. Healthcare, including regular veterinary visits, is a big one. Grooming and pet sitting is another. These are expenses for your pet that may not happen every month, but they’re regular enough that you should include them in your annual budget.

3. Coffee

Any good budget will include a category for food and dining, but don’t forget to include coffee in there as well. We all know how much a cup of coffee can cost – anywhere from $2 for a regular cup to $6 for a latte. Whether you make your own or go to your local Starbucks, make sure you understand how much you’re really spending on your coffee addiction every month.

4. Home Maintenance

Many first time homeowners are unpleasantly surprised by the cost of home maintenance. Aside from utilities and minor repairs, there are several recurring expenses, such as lawn maintenance, landscaping and weather proofing that homeowners often forget. Expenses like these can drive up the cost of owning a home considerably.

5. Me Fund

When we’re trying to stick to a tight budget, we often forget about ourselves. If you’re trying to cut your budget, spending on things you enjoy is likely the first expense to go. Don’t underestimate the value of having a me fund, though. It can be anything, from a night out to a pedicure – but doing even something small from time to time can drastically improve your mood and increase your productivity.

6. Emergency Fund

The one thing people most often forget to account for is an emergency fund. This is also the most important.  In life, you never really know what can happen, and you need an emergency fund to protect you from whatever life throws your way. Your budget should include a portion set aside for emergencies. Many recommend that you have 3 months of expenses on hand at any given moment. You can decide the amount you’re comfortable with and then start to save up for it. Just remember to make this a priority.

Need help setting up a budget? Check out our easy Budgeting Guidebook and Worksheet.

Article Source: Connie Mei for Moneyning.com

4 Simple Categories to Create Your Budget

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It’s the new year – do you have a budget plan in place? If not, here are some great places to start!

1. Housing

Having a place for all of your stuff and somewhere to lay your head should probably be your biggest priority, so as you can imagine this category will be a large portion of your budget. Along with the mortgage, insurance and property taxes, make sure you include repairs and necessary utilities like gas and electric.

2. Transportation

Remember that when it comes to transportation, it’s more than just your car payment. Gas, insurance, repairs, and preventative maintenance like oil changes should all be included. Planning ahead will help keep your car on the road, which will keep money in your pocket.

3. Life

This category is huge. Several categories could be made out of this one, but if you want to keep it all together, it should include the following:

  • Cell phone
  • Food (at home or at a restaurant)
  • Health insurance
  • Medicine
  • Clothing
  • Entertainment
  • Tuition
  • Childcare

All of these things will add up to a large percentage of your budget, so if separating them into their own categories will help you, definitely do that.

4. Savings/Debt

This final category is one of the most important. Saving money for your future is something you want to make sure you’re doing every month. The earlier you start, the better. You’ll be surprised at how a little bit each month can really add up. Also make sure you’re steadily paying down your debt, whether it’s credit cards or student loans. Focus on paying them off and enjoy the freedom you’ll feel when that’s all accomplished.

Learn to create your own budget with our handy budgeting worksheet!

Article Source: John Pettit for CUinsight.com

 

How to Recover from a Blown Budget

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Went a little crazy on holiday shopping and now your budget is completely off track? Get back on the path to financial freedom and kick off the new year with the following tips:

  1. Stop dwelling. Going over your budget isn’t fun, but it’s not the end of the world. Life happens and you can’t be perfect all the time. Acknowledge that you messed up, then move on. Obsessing about it isn’t going to bring your money back.
  2. Get back into your old routine. Play a little bit of catch up: pay your bills, balance your checkbook, and schedule transfers to pay off some debt if possible. Sometimes when you fall off track, it makes you want to stay off track. It takes more effort to jump back on the bandwagon than it does to remain on the same path. That’s why it’s important to get back into your old routine as soon as you have the chance. Get everything caught up, map out a plan for the remainder of the month, and immediately return to your former routine.
  3. Temporarily cut expenses. If you need to cut back, consider the following tactics:
  • Eat at home until you’ve cleaned your shelves/refrigerator/freezer out.
  • Have “no-spend” days, when you don’t spend a single penny.
  • Skip paid entertainment and opt for board game nights or movies at home.

If you’re still facing a budget discrepancy, you may have to look for extra ways to earn money for the month. Consider selling clothes, furniture, and appliances that are in good condition but that you no longer use. Or can you pick up extra hours at work, or get a part-time job?

If you’ve blown your budget, the important thing is to pick up where you left off and get back to your budget as soon as possible.

Need help creating an organized household budget? Check out our budgeting guide and budgeting fillable PDF worksheet.

Article Source: Alexa Mason for Moneyning.com

A Few Things You Can Cut From Your New Year’s Budget

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When it comes to finances, what would you like to do differently in the new year? When looking at your money and the way you spent it last year, what needs to change?

Here are a few things you should remove from your budget in the new year:

Unnecessary daily expenses: We all like coffee every day. But do you really need Starbucks every morning? It’s gets very expensive if you spend at least $5 a day buying coffee. That’s $25 each work week and $100 or more a month!  This will eventually add up to well over $1,000 at the end of the year. Instead, stock up coffee to brew at home and use the price difference to beef up your emergency fund.

Phone apps: The vast majority of phone apps are free, but for a lot of people – spending 99 cents on one here and there doesn’t seem like a big deal. If you’re one of those people who spends a lot of time on your smartphone throughout the day, then it might be time to think about which apps are costing you money (whether it’s up front or from in-app purchases).

Spending with coupons: You’re probably thinking, “this sounds like saving money!” While coupons can be helpful tools, they’re only helpful if the coupon is something you were already planning on buying. Don’t be swayed by a deal or discount if it’s not something you need. Buying things you want (and don’t need), is an easy way to throw money away. Make smart or necessary purchases, and use coupons to make those buys even better.

Kick the new year off right – think savings instead of spending!

 

5 Easy Ways to Cut Your Spending Dramatically

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Trying to trim expenses can seem like a never ending task, as new expenses always pop out of nowhere. With already tight budgets, the task of reducing spending can seem impossible. You’ve already cut out your morning latte and canceled your gym membership – what more can you do?

Lowering your expenses is definitely a daunting task. While you’ll have to make sacrifices and get a little creative, it definitely can be done without cramping your lifestyle too dramatically.

Cut Up Your Credit Cards

Take a close look at your credit card collection if you have multiple cards, and decide which ones you should keep using and which ones you can cut up. First, note the interest rate for each card, and don’t use the ones that charge the higher rates. Obviously, it is ideal to be able to pay off your bill every month – but that isn’t always realistic depending on your situation. Second, take a close look at the rewards programs for each card. Such programs are becoming more and more competitive and can be a determining factor when deciding what your go-to card should be. Also, canceling credit cards can negatively affect your credit score as it lowers your credit to debt ratio. Consider literally cutting them up and forgetting about them instead of really canceling them.

Be Your Own Chef

Food is one of the biggest expenses we face and most people are guilty of spending too much on dining out. Don’t ignore this habit because the expenses can really add up. Cooking more at home can easily and drastically lower your spending.

But what if you hate cooking? Don’t worry, because you can still save. To mitigate this, cook once a week by meal prepping. Make a big batch of whatever you want and portion it out into multiple meals a week. When it’s time to eat, all you have to do is heat it up – even easier than going out.

Ride a Bike

Car maintenance and gym memberships can cost an arm and a leg. Why not kill two birds with one stone by riding a bike? Depending on where you work, riding a bike to your office could be a great option to get a workout in and save money on gas. Many big cities also now have bike sharing programs, which makes it even more convenient to ride wherever you need to go.

Reinvent Your Social Life

Socializing with friends takes time and money. Just having a single drink could cost up to $15 with tax and tip, which can really add up as the night goes on. However, there are plenty of inexpensive or free activities you can do instead. If you’re going out for drinks, consider meeting up during happy hour. While timing might not be ideal, it can cut your bill in half. Also, every city, big or small, has free events, especially during warm weather. So take advantage of them as the weather is warming up for the season.

Analyze Your Bills

Getting a bill is never a fun moment, but be sure to take a thorough look instead of quickly glancing through it. Many of us end up paying fees we don’t realize every month that could easily be avoided. Also, look carefully at your usage every month, particularly when it comes to your cell phone and utilities. Perhaps you could lower your texting plan if you’re not close to using your maximum for the month, while others can easily trim their data plans. Small details like these seem insignificant when you look at them individually, but everything can collectively make a huge difference in the long run.

Article Source: Connie Mei for Moneyning.com

The 50/20/30 Budgeting Rule and Downloadable Worksheet

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There are dozens of choices when it comes to budget plans. If you’re still looking, or are completely new to the concept of budgeting, let’s introduce you to an age-old budgeting guideline: the 50/20/30 rule. Even though it’s a classic, it bears a fresh look, especially through the lens of the modern American’s financial viewpoint.

Three Categories and What They Contain

The 50/20/30 rule splits up take-home pay into three large spending categories — fixed costs, financial goals, and flexible spending. Here’s a list of what each contains.

  • Fixed Costs (50%) – These are the expenses most vital to your survival, which don’t vary from month to month: mortgage or rent, vehicle payments, and utilities.
  • Financial Goals (20%) – This category includes any monthly payments and contributions toward improved financial health: 401K and other retirement accounts (from post-taxed income), extra payments on credit card debt or student loans, building an emergency fund, and savings goals such as a down payment for a home or funding an education.
  • Flexible Spending (30%) – This category includes expenses that vary from month to month: groceries, gas, eating out, shopping, hobbies, and entertainment.

One of the best traits of the 50/20/30 guideline is its simplicity. There aren’t dozens of categories to micromanage, but it will still get the job done. This is a great starting point for everyone, especially if you’ve never stopped to look at the bigger picture of your spending balance.

Reduce Your Fixed Costs.

Financial experts recommend your fixed living costs not exceed 50% of your income, but — thanks to huge mortgages, multiple vehicles, and skyrocketing rent — many Americans will find themselves over this amount. Know what percentage of your income is consumed by fixed expenses, then identify ways to reduce them: refinance your home, negotiate lower interest rates, or choose not to buy new vehicles every few years.

Look for Ways to Spend More on Your Financial Goals.

Reducing your fixed costs will allow you to designate more income toward your savings and other financial goals. Maybe you’re barely saving 5% right now, but even small changes can make a difference. In our debt-burdened society, it can also be difficult to choose between paying off debt and saving for retirement, especially when you’re young and retirement is still far away. Remember that the more you contribute to retirement accounts when you’re young (both pre and post-tax), the more it will compound (that also goes for high-yield savings accounts). Even if your current focus is debt, continue to contribute as much as you can to retirement and savings. When you eliminate bad debt, use former payment funds to increase your retirement and savings contributions.

Be More Controlling with Flexible Spending.

You may never be able to completely predict all the categories under flex spending, but the more you can control, the closer you’ll get to flip-flopping that 30% with 20% and save more for future goals by spending less on immediate wants. Try limiting how much you eat out or go to the movies, and take advantage of rewards cards, fuel points, coupons, and rebates to reduce your grocery and gas bill on a regular basis.

It may be basic, but if you follow these tips, the 50/20/30 rule might just be the tool that helps you get out of debt and improve your financial outlook for good!

If you need a good starting point for setting your budget, check out our budgeting guide and fillable PDF worksheet.

Article Source: Jessica Sommerfield for Moneyning.com