So you have a family budget. There's only one problem - you haven't stuck with it! Maybe your budget is nicely outlined and detailed, but sits unused on your computer or in your desk drawer.
Formulating a budget is a challenge, but once you have it done, it doesn't do any good unless you stick with it. Of course, sometimes you do need to compromise, and your budget does need to be somewhat flexible. But you can periodically tweak and adjust your budget and still stick to it. Here are some creative and even fun tips for sticking with your budget.
Have a Look-See
Maybe your budget didn't work out because it didn't fit your needs. Take a fresh look at your budget and ask some of the following questions:
* Is it too detailed? You might find it exhausting trying to keep a budget that has dozens of categories.
* Is it too simple? If your budget is too general, you may have let it slide because there just weren't enough details to get a true grasp on your finances.
* Does your budget include alternatives? If your family is not the creative type, you may have had trouble coming up with alternatives to the budget cutbacks. For instance, if your budget revealed that you needed to cut back on eating out, and you didn't have an alternative plan for what you were going to do instead of eating out, you might have slipped up and deviated from your budget. For some people, this is natural; others need to write in alternatives.
* Are you realistic about your income? A budget may fail if your income section is more about goals and ideals than actuals.
* Are there rewards? A budget should have some rewards worked into it - a vacation, a movie out, or a new pair of shoes.
Include Fun Alternatives
As noted above, having alternatives to fill the void created by cutbacks is helpful to keeping your budget. Having creative and fun alternatives may be even more helpful. Here are some ideas.
* Instead of eating lunch out, pack a fun lunch Bento-style.
* Lunch-in can be a fun picnic, indoor or outdoor.
* Staying home for dinner can be fun if it involves a cookout or, if you're really in the mood to be creative, experimenting with a homemade solar oven.
* Cutting back by getting rid of cable need not be too painful - high-speed internet access is generally a whole lot cheaper than cable, and the family can have fun gathering around the computer for movie night online.
* Instead of going to the movies, make your own. Have a family make-a-movie night and put on plays, puppet shows, or what-have-you. Capture the fun using your digital camera or webcam.
* Look up how to make your own skin cleansers, household cleaners, and even shampoo online. Learn how you can make these things for pennies, saving by shunning store-bought versions and having fun in the process.
Sometimes, just getting creative and customizing your budget to fit your family can go a long way toward encouraging everyone to stick with it.
Friday, September 26, 2014
Friday, September 19, 2014
Do You Need an Emergency Fund?
Some may question the necessity of an emergency fund. After all, is it really necessary? How do you go about it? Does it need to be a huge amount? Here are some ideas and suggestions that should help answer these questions.
Is an Emergency Fund Necessary?
Generally speaking, yes, an emergency fund is necessary. What form it takes can vary, but it is a good idea to have an emergency fund. Such a fund can help you avoid high-interest debt, and it helps reduce stress. After all, life is full of changes - many of them sudden and not good - and having that "cushion" can help you feel ready and calm.
How Do You Go about Creating an Emergency Fund?
First, determine your expenses. Look at three to six months' worth of living costs and count on saving that much in a fund. This can help you keep your standard of living for a time if you lose your job, or it can cover a large expense such as vehicle repair.
Then determine how long it will take you to save that much and how much you have to take out of your paycheck each month to reach that goal.
Once you've determined how much you need to save and how long it will take to save it, it's a good idea to change your mentality to put payments into the emergency fund before you pay for anything else. If you can do it by automatic deduction, go for it - see if you can have a portion of your paycheck taken out and put into a savings account. Otherwise, make it a habit to put money in your savings first and foremost, and then take care of your other expenses after.
What If You Have Low Income?
Even if you have low income, you can set aside something each month. Try saving a percentage of your income, such as 5 or 10 percent. It may take you longer, but it will accumulate.
Does It Have to Be Huge?
In short, no. An emergency fund does not have to be massive - but it certainly should cover unexpected expenses. To determine the size of your fund, consider what sorts of emergencies you'd want covered by the fund. Remember that buying insurance may be a more cost-effective way to guard against emergencies, too - evaluate the scope, likelihood, and potential cost of possible emergencies and this should give you a clearer picture of how large your fund needs to be.
Is an Emergency Fund Necessary?
Generally speaking, yes, an emergency fund is necessary. What form it takes can vary, but it is a good idea to have an emergency fund. Such a fund can help you avoid high-interest debt, and it helps reduce stress. After all, life is full of changes - many of them sudden and not good - and having that "cushion" can help you feel ready and calm.
How Do You Go about Creating an Emergency Fund?
First, determine your expenses. Look at three to six months' worth of living costs and count on saving that much in a fund. This can help you keep your standard of living for a time if you lose your job, or it can cover a large expense such as vehicle repair.
Then determine how long it will take you to save that much and how much you have to take out of your paycheck each month to reach that goal.
Once you've determined how much you need to save and how long it will take to save it, it's a good idea to change your mentality to put payments into the emergency fund before you pay for anything else. If you can do it by automatic deduction, go for it - see if you can have a portion of your paycheck taken out and put into a savings account. Otherwise, make it a habit to put money in your savings first and foremost, and then take care of your other expenses after.
What If You Have Low Income?
Even if you have low income, you can set aside something each month. Try saving a percentage of your income, such as 5 or 10 percent. It may take you longer, but it will accumulate.
Does It Have to Be Huge?
In short, no. An emergency fund does not have to be massive - but it certainly should cover unexpected expenses. To determine the size of your fund, consider what sorts of emergencies you'd want covered by the fund. Remember that buying insurance may be a more cost-effective way to guard against emergencies, too - evaluate the scope, likelihood, and potential cost of possible emergencies and this should give you a clearer picture of how large your fund needs to be.
Monday, September 15, 2014
This is When You Need To Take Control and Budget
Do you really need a budget? Isn't that just a boring list of numbers that means you never get to spend money on what you want?
A budget is really just a way to take control of your finances. It does not necessarily mean you can't ever spend your money on what you want; it just means you spend your money smarter. In fact, if you are always denying yourself and never buying anything you want for fear you can't afford it, a budget could be liberating. Dealing with real numbers tends to be a lot less stressful than dealing with vague impressions of your income and expenses.
So how do you know if you need a family budget? Here are some tips to help you know if you need to form a budget.
1. Your credit cards are never paid off.
If you are paying only the minimum balance on your credit card, and/or using one credit card to pay off another, then it's time to work out a budget to get out of that hole.
2. Money "burns a hole" in your pocket.
Do you feel like you have money for a moment or two, then it's gone? This could mean you have too many expenses, or that you are too quick to spend on wants rather than needs.
3. You don't put any money into your savings, or you are random about how much and when you put money in.
Having a savings plan is an important aspect of financial management. If you don't have any regimented plan for putting money into savings - say the first 10% of your net income always going to savings, or all bonuses from your workplace going straight to savings - then your savings will tend to languish as you keep spending on things you want.
4. You don't have a savings account at all.
If you don't have any savings or emergency fund, it may be a sign that you need a budget. A good family budget can help you make savings a priority.
5. You're always saying, "I can't afford it."
Do friends ask you to go out to lunch, or to an event, and you say you "can't afford it" all the time? This may be true, or it may not be; forming a budget will help you know what you really can and can't afford.
6. You never seem to have enough.
Money can be deceptive - what seems like "plenty" can suddenly be not enough. Forming a budget can help you get a grip on what you really have; you may be pleasantly surprised that you do actually have enough, or that it's feasible for you to make some strategic cuts so that you will have enough.
A budget is really just a way to take control of your finances. It does not necessarily mean you can't ever spend your money on what you want; it just means you spend your money smarter. In fact, if you are always denying yourself and never buying anything you want for fear you can't afford it, a budget could be liberating. Dealing with real numbers tends to be a lot less stressful than dealing with vague impressions of your income and expenses.
So how do you know if you need a family budget? Here are some tips to help you know if you need to form a budget.
1. Your credit cards are never paid off.
If you are paying only the minimum balance on your credit card, and/or using one credit card to pay off another, then it's time to work out a budget to get out of that hole.
2. Money "burns a hole" in your pocket.
Do you feel like you have money for a moment or two, then it's gone? This could mean you have too many expenses, or that you are too quick to spend on wants rather than needs.
3. You don't put any money into your savings, or you are random about how much and when you put money in.
Having a savings plan is an important aspect of financial management. If you don't have any regimented plan for putting money into savings - say the first 10% of your net income always going to savings, or all bonuses from your workplace going straight to savings - then your savings will tend to languish as you keep spending on things you want.
4. You don't have a savings account at all.
If you don't have any savings or emergency fund, it may be a sign that you need a budget. A good family budget can help you make savings a priority.
5. You're always saying, "I can't afford it."
Do friends ask you to go out to lunch, or to an event, and you say you "can't afford it" all the time? This may be true, or it may not be; forming a budget will help you know what you really can and can't afford.
6. You never seem to have enough.
Money can be deceptive - what seems like "plenty" can suddenly be not enough. Forming a budget can help you get a grip on what you really have; you may be pleasantly surprised that you do actually have enough, or that it's feasible for you to make some strategic cuts so that you will have enough.
Thursday, September 11, 2014
Some Budget Tips for Debt Control
Have you been talking about a family budget, but aren't sure where to start? Sometimes it's good to start with the basics, such as the basic outline for a budget and the categories you want to include. Here are some tips to help you formulate a simple family budget.
Income
The first place to start in the outline of your budget is with your income. There will be some estimating here, no doubt; but make sure it's estimation, not dreaming, say experts. The income area of your budget is not the place to write down ideals. Simply take a look at your net income over the last three months and estimate an average monthly income. Or you might have income that changes very little month-to-month; it should therefore be pretty easy to figure out your monthly income.
Expenses
Your next category should be expenses. It's good to include enough detail that you have a grasp on things, but splitting your expenses into dozens of little categories will probably only frustrate you. Try to make your categories fairy general - "entertainment," for example, is a more general category than "computer games, movies, cable, and DVDs" listed as separate categories. There will probably be more estimation here than in the income category.
As you break down your expenses into understandable categories and numbers, remember that charitable giving or any giving away of money should be also listed as an expenditure.
Actual Expenses
Estimation gives way to "real" numbers when you write down your actual expenses during the month. This is the last section of your budget plan. Keep a running tally of your expenses for several months, and then look at where you are.
Some Basic Principles
In budgeting, there are some principles that are considered basic. Here are some of them.
* Distinguish between wants and needs. This can be a hard one, but it's vital for a budget to function properly. Beware of convincing yourself that a want is a need when it isn't - you may just be trying to find an excuse to buy the item. Real needs are things like clothes, food, and shelter; but designer clothes, gourmet food, and a palatial dwelling are more like wants!
* Expenses should not exceed income. You may find yourself surprised the first time you do a budget and discover that you actually don't make enough money to cover your expenses. If you discover this, you need to look carefully at your income section and see where you can increase it, and look just as carefully at the expenses and see where you can make cuts.
Income
The first place to start in the outline of your budget is with your income. There will be some estimating here, no doubt; but make sure it's estimation, not dreaming, say experts. The income area of your budget is not the place to write down ideals. Simply take a look at your net income over the last three months and estimate an average monthly income. Or you might have income that changes very little month-to-month; it should therefore be pretty easy to figure out your monthly income.
Expenses
Your next category should be expenses. It's good to include enough detail that you have a grasp on things, but splitting your expenses into dozens of little categories will probably only frustrate you. Try to make your categories fairy general - "entertainment," for example, is a more general category than "computer games, movies, cable, and DVDs" listed as separate categories. There will probably be more estimation here than in the income category.
As you break down your expenses into understandable categories and numbers, remember that charitable giving or any giving away of money should be also listed as an expenditure.
Actual Expenses
Estimation gives way to "real" numbers when you write down your actual expenses during the month. This is the last section of your budget plan. Keep a running tally of your expenses for several months, and then look at where you are.
Some Basic Principles
In budgeting, there are some principles that are considered basic. Here are some of them.
* Distinguish between wants and needs. This can be a hard one, but it's vital for a budget to function properly. Beware of convincing yourself that a want is a need when it isn't - you may just be trying to find an excuse to buy the item. Real needs are things like clothes, food, and shelter; but designer clothes, gourmet food, and a palatial dwelling are more like wants!
* Expenses should not exceed income. You may find yourself surprised the first time you do a budget and discover that you actually don't make enough money to cover your expenses. If you discover this, you need to look carefully at your income section and see where you can increase it, and look just as carefully at the expenses and see where you can make cuts.
Monday, September 1, 2014
The "Do It Yourself" Debt Snowball Method
The debt snowball method is one of the most effective methods for paying off personal debt, period. Instead of taking a purely logical approach, the debt snowball approach actually makes the whole process of paying off debts much more psychologically easy and satisfying.
Here's how the debt snowball works.
==> An Overview of the Process
Take out an Excel spreadsheet and list out all your debts. Make sure to include the name of the creditor, the amount you owe, the annual percentage rate, the monthly minimum payment and the payment date for each debt.
Sort your list by the total owed. The smallest debt is the debt you'll work on first. Unlike other systems which advocate paying off the highest interest debt first, the debt snowball method works by paying off the smallest debt first.
This works because paying off that small debt gives a real sense of achievement. That momentum and enthusiasm can be channeled towards paying off the next largest debt, then the next and so on and so forth.
But that's not all.
You start by paying off the smallest debt. You do so by paying as much extra towards the debt as you possibly can, while still making the minimum payment on every other debt you owe.
Let's say the minimum payment for your smallest debt is $100 a month. You decide you can put an extra $200 a month towards that debt as well to get it paid down as quickly as possible.
Once the debt is paid off, however, you now have that $200 a month plus the $100 a month minimum payment that you can now put towards your second smallest debt. Let's say that debt's minimum payment was $150.
Once that's paid off, you now have that $150, plus the $300 from earlier that you can now put towards your third largest debt.
In this manner, the payoff process effectively "snowballs" until you have an incredible amount of momentum and financial power that goes towards paying off your debts.
==> A Few Things to Note
There are a couple things to keep in mind with the debt snowball method.
First of all, some lenders will try to apply any extra amount you pay to your next month's payment instead of applying it towards your principal. Make sure you talk to your lenders to make sure your extra payments are paying off the principal.
Second, the debt snowball method is much more of a psychological approach than mathematical. However, debt repayment is often much more about keeping your spirits up than strict math. Try the system for a few months to make sure that it's really, truly working for you. If it is, then commit to sticking it through until completion.
Finally, and this might go without saying, as soon as you start this process you absolutely must put away all your credit cards. There is no sense in starting this process if you're going to rack up debt along the way.
Here's how the debt snowball works.
==> An Overview of the Process
Take out an Excel spreadsheet and list out all your debts. Make sure to include the name of the creditor, the amount you owe, the annual percentage rate, the monthly minimum payment and the payment date for each debt.
Sort your list by the total owed. The smallest debt is the debt you'll work on first. Unlike other systems which advocate paying off the highest interest debt first, the debt snowball method works by paying off the smallest debt first.
This works because paying off that small debt gives a real sense of achievement. That momentum and enthusiasm can be channeled towards paying off the next largest debt, then the next and so on and so forth.
But that's not all.
You start by paying off the smallest debt. You do so by paying as much extra towards the debt as you possibly can, while still making the minimum payment on every other debt you owe.
Let's say the minimum payment for your smallest debt is $100 a month. You decide you can put an extra $200 a month towards that debt as well to get it paid down as quickly as possible.
Once the debt is paid off, however, you now have that $200 a month plus the $100 a month minimum payment that you can now put towards your second smallest debt. Let's say that debt's minimum payment was $150.
Once that's paid off, you now have that $150, plus the $300 from earlier that you can now put towards your third largest debt.
In this manner, the payoff process effectively "snowballs" until you have an incredible amount of momentum and financial power that goes towards paying off your debts.
==> A Few Things to Note
There are a couple things to keep in mind with the debt snowball method.
First of all, some lenders will try to apply any extra amount you pay to your next month's payment instead of applying it towards your principal. Make sure you talk to your lenders to make sure your extra payments are paying off the principal.
Second, the debt snowball method is much more of a psychological approach than mathematical. However, debt repayment is often much more about keeping your spirits up than strict math. Try the system for a few months to make sure that it's really, truly working for you. If it is, then commit to sticking it through until completion.
Finally, and this might go without saying, as soon as you start this process you absolutely must put away all your credit cards. There is no sense in starting this process if you're going to rack up debt along the way.
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