Home Finance Tip

This weeks home finance tip deals with saving. For more than 25% of Americans, a savings account is non-existent in their lives. Although saving for a rainy day isn’t something we like to do, it is one of the most essential financial activities to safeguard our future.

Financial advisors differ on how much money we need in our emergency funds but they seem to agree on a 6 to 10 month range. How do you calculate that? First you have to know how much you spend each month. You will always estimate low so get your bank and credit card statements out and add it all up. Take that number and multiply it by 8 months (or somewhere in that 6 to 10 range) and that’s your goal. Once you’re there, keep it in a savings account. It can’t be tied up in a CD and you can’t risk losing it in the stock market. (By the way, I strongly suggest that you add disability insurance to your monthly expenses. It’s cheap and if you became sick or hurt, the monthly bills will be out of your mind)

Now that we know how much you should save, you brain might be in overdrive thinking about how you will fund your savings account. It’s going to take discipline but here’s a fun way that will put some big money in your savings account over time. You can think of it as my Chick-fil-a method. I love Chick fil a in part because the food is good (hey chick fil a, are you reading?) but also because they give out coupons all the time. I would have gone to Chick Fil a and paid full price without the coupon but with it, I saved $4. That $4 goes in to my savings account. Because I put everything on my credit card and pay it off at the end of the month, I get rewards points. I always buy $50 gift certificates with those points. Guess where that $50 goes? Let’s take it a little further. Rather than going to Chick Fil a and getting a chicken sandwich and waffle fries and a diet coke for $9, I go to the grocery store and pick up a pack of chicken breasts and a couple of potatoes and drink water. First, I’m saving calories but I also saved $5 by not eating out. I ironed my own shirt rather than taking it to the dry cleaner, $2. So let’s see; in this article alone I saved $70 and have a sizeable amount for my savings account.

Keep a 1 week journal and see what you can do to pay yourself. It’s fun, it’s a challenge, and you will feel better about getting closer to your financial goal. We are not in an economy where we can count on having a job tomorrow. Economists predict that 1 out of every 10 working Americans will not be working before this recession is over. Don’t forget about this week’s home finance tip. If you need it, you will be grateful that you have it.

Personal Finance Tips

Being financially free can sound like a far-fetched idea for most single women. The average American today spends more than they earn and can barely keep up financially. Becoming financially free is not impossible, no matter what you might think today! Keep reading to find some personal finance tips that every single woman should know.

Start with a budget. Whether you make a lot of money or a little money, you need a budget to know where you are going. Think of your budget as your financial road map for your future. If you were going some where you have never been, you wouldn’t start out just driving, would you? It’s unlikely. It would be a waste of time and gas to do that. The same goes for your finances. Why would you continue to work week after week without taking some time to plan how you are going to use your money you worked so hard for? Budgeting can help you do just that. Make a budget a priority so you are not wasting time working and the money you earn. Even if you are single and don’t think you make enough money, you need a budget to know where your money is being spent.

Save early and often, even if it seems impossible. Saving money each month is important on so many levels. Not only does it give us something to fall back on when times are tough, it helps us remain disciplined with our money. Think of saving your money sort of like the gas you would put in the car for the trip in example one. Without saving money, how will you have anything for the future? If you have nothing in savings, your first goal should be to have $1,000 in an emergency fund you can fall back on. The emergency fund allows you to rely on your own cash rather than credit cards when something unexpected comes up. Once you get your emergency fund built up, start contributing to your retirement but investing in your company’s 401k plan or start your own fund. It’s never too early or too late to start saving for the future! This is especially important for single women. If you wait until you have a better job, more money or more of something else, you might just never get started.

Debt can be crippling to personal finances. In order to be financially free, debt needs to be eliminated so the income coming in can go towards savings, rather than paying off debt. Begin small by paying off the cards with the smallest balance first. After that card is paid off, start applying that money towards the card with the next smallest balance and so on. If you receive a raise or a tax return, apply this money towards debt instead of spending it. This “snowball” effect is an excellent way to pay off debt quickly. This can be done on just one income! When you see debt being eliminated, it is rewarding and motivating!

The little things can have the biggest impact. While it may not seem like it, the little things can add up the most when it comes to your money. Spending just $5 extra a day can add up to $150 in unplanned expenses for the month. But this can also work in the opposite way. Adding $5 a day to pay off debt can equate to an extra $150 paid off in debt each month!

It can seem next to impossible for a single woman to start to get her personal finances under control. The most important thing to remember is personal finance is nearly always about behavior. If you can change some of the habits you are accustomed too, you can start to see huge a huge impact on your financial situation.

Personal Finance Tips on How to Manage

Personal management of finances is not always easy. In fact, many people are having a hard time taking charge over money-matters and some even end up spending more than what they earn despite having a budget plan. What can you do to manage your finances more effectively? The right strategies are essential in order to make things work. Consider the following finance tips from the experts:

Set a definite goal. What would you like to achieve within the next 3 or 6 months or year? Setting a definite goal is important in order to create a suitable plan. For example, if you currently have unpaid debts with multiple creditors, then debt repayment should be your top priority. On the other hand, if you don’t have outstanding debts to pay, perhaps you want to work on building up your savings account. Other goals to consider is saving up money to improve the house, buy a home or car, start a small business, etc. The type of financial plan you need will depend on what you want to achieve.

Be ready to give up some things. In an effort to cut down your expenses, you should be prepared to give up some things that you may want, but not really need. Self-discipline is always necessary to make a budget plan work. For instance, if you have been used to going out to the movies or partying with your friends every weekends, perhaps you may consider doing it only once or twice a month to save money. Little sacrifices will go a long way and you just have to recognize the more important things from the not so important ones.

Monitor your spending for the next 2 months. Creating a suitable budget plan is a challenge in itself because financial situations and capabilities vary from one person to another. You might need to observe your own spending habits for the next month or two. Be sure to write down all your expenses, from big purchases down to the smallest cents. Making a list of your expenditures is the best way to see where your money goes. You might be surprised to discover later on that many items on your list are not really that important in your life, but eating up a large portion of your earnings. Based on your list, you will be able to make some adjustments and changes where needed.

Collaborate with your family members. If you are living with your family, it’s important to discuss your budgeting plan with everyone, especially with your children, so that everyone can do his/her own share to make the plan a success. Talking money-matters with the family is healthy because the children will be able to see the importance of following a budget plan and the why it’s important to save money.

Eliminate extra fees from your bills. If you can avoid the interest rate charges from your credit cards as well as late penalty fees on all your bills, you will be able to save a significant amount of money in a year. You can eliminate unnecessary fees by paying your monthly credit card balance in full and paying all your creditors on or before your due date. This might sound like an obvious strategy but many consumers are prone to paying late fees and interest rates which is a complete waste of money.

Personal Finance Tip

Most personal finance gurus continually stress the importance of budgeting for monitoring and modifying poor spending habits. However, I have noticed that most people who attempt to implement a family budget eventually give up on the activity, mainly because it takes the fun out of spending money. You know what, I agree! An impulse purchase here and there feels good! And as it turns out, an impulse purchase made on occasion won’t necessarily create a big problem for most us. The problems arise when we decide to make them on credit. Here’s an excellent personal finance tip for all you budget-haters out there – pay cash for all non-investment expenditures and eliminate your need to budget.

What is a Non-Investment Expenditure Anyway?

First off, let’s define investment expenditure. By my own definition, an investment expenditure is a transaction that involves the purchase of an asset that appreciates in value. On the flip side, a non-investment expenditure represents all other transactions. One quick check you can make before whipping out your credit card to buy something is to ask yourself, “Is there a high likelihood that I will be able to sell this item in the future for more than I am paying now?” If the answer is “no,” pay cash. If you don’t have the money, you can’t make the purchase. It’s that simple.

Examples of Non-Investment Expenditures

Unfortunately, the vast majority of our everyday spending is classified as non-investment expenditures. Groceries, fuel for the vehicles, dining out, your cell phone bill, a new pair of designer jeans – these are all non-investment expenditures. Some of these items may be extremely important, even life sustaining. But purchasing on credit, even for life sustaining expenditures, encourages excess. Let’s take food, for instance. To purchase enough food for the family to survive really does not cost much money. What costs us a pile of money are the rib-eye steaks, junk food, alcoholic beverages, and sodas we routinely buy. Moreover, these foods are bad for our health! Grocery shopping with cash forces us to reconsider the food choices we make, in terms of both health and money. And that’s a good thing.

What Else is There?

You may be asking yourself, “Would any of my spending be classified as investment expenditures?” For me, two things come to mind – your home and your education. A home is rather obvious because, over time, houses have always increased in value. A college education would also be considered an investment because it provides one the opportunity to earn more money than he would otherwise make. Because these two items are considered investments, taking out a loan to pay for them can be justified. In addition, home mortgages and college loans offer some of the lowest interest rates of any form of credit, making them even more attractive expenditures.

One Caveat to Consider

Although following the above advice can eliminate the need for a budget, one other choice must be made to assure financial success in the future. An automatic investment plan must be initiated to make certain your investment accounts are funded before all the money is spent. If you work for a company that offers a 401k plan, this is done automatically. If you have outside accounts, you will have to notify the firm to initiate automatic transfers from your checking account. With most firms, you can set up the automatic transfers yourself from your online account interface.

Summary

Although a budget is a fantastic tool for monitoring and modifying our spending habits, the cold hard truth is that many of us will never stick to one. Should these folks be doomed to financial hell for the rest of their lives for this so-called lack of discipline? Of course, not! Just follow our simple personal finance tip to pay cash for all non-investment expenditures and you, too, will reach financial success in the future.