How To Trim Your Budget

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With the new year in full swing, people are doing their best to stick to the freshly made New Year’s Resolution’s they mapped out for themselves.  The most common resolution always seems to be losing weight.  Instead of going with the status quo resolution this year, why not try to trim something else?  Your budget perhaps?




How to cut my expenses? Is a question often asked by many in order to free up funds in their daily lives.  Maybe they are living paycheck to paycheck, maybe they are trying to save up money for a special purchase, either way trimming your budget is the best way to go about doing this.

For starters, you need to have a budget.  You can download a free budget template and simply put in your income and expenses.  The best part about budgeting is you get to see where your hard-earned money is going every month.  Perhaps you are spending a large portion on eating out, can you bring your lunch instead of going out to eat?  If so, you might be able to not only cut some expenses but trim your waistline also.

The free downloadable budget allows you to choose the expense categories you have for a given month.  Say for example you spend $100 a month on your cellphone bill, can you change service providers and possibly get the monthly expense down to $80 per month?  If so, you have freed up $20 per month or $240 for the entire year.  Can you trim $10 a month off your grocery bill by purchasing generic products versus name brand?  This can be an additional $120 in savings for the year.  Attempting to save as little as $10 to $20 per category for a few of your monthly expenses can add up to some awesome end of the year savings.

Below is a quick easy way to trim your budget:

  • Create a budget: If you don’t already have one, now is the best time to start budgeting. This will determine where you are spending your money every month.
  • Track all of your expenses: See just how much you are spending in the various categories every month. Some may surprise you.
  • Pick 2-4 categories: By selecting a few categories where you think you can cut some expenses you will maximize your yearly savings.
  • See how much you can cut: It can be $5, $10, $20 or maybe even more per category per month. Living on a little less each month won’t change your quality of life for the worse.  Instead, you can use the money saved to enhance it by saving up for a vacation or a future purchase.
  • Don’t incur new expenses: While trimming your budget to save up money is the ultimate goal, don’t incur new expenses during the process. A car payment or a gym membership will quickly eat away at the money you are trying to save.

Stick to it: Trimming your budget will only be beneficial to your wallet if you stick to it.  Developing discipline for sticking to a budget can be tough but also very rewarding.

 

The Benefits of a Budget

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Budgeting is an essential part to taking control of one’s financial life.  You would be surprised to know that nearly two out of every three Americans do not budget their income.

With today’s technology, it is now easier than ever to track your income and spending.  Personally, I use Google Sheets to budget.  I have the ability to access my budget on any computer with internet access along with my smartphone.  Another great way to budget is through Mint.com.  Signing up is free, and they have an app so you can update your budget on the go.

Now that you can see just how easy it is to start your budget, I will quickly lay out why you want to budget and the benefits.

  1. You know how much you make:  Ask someone how much take home income they have in a given month, you would be surprised the number of people who can’t give you a specific dollar amount.  Knowing how much you make is vital to determining how much you can save and spend.
  2. Plan Purchases:  Saving up for a vacation?  By budgeting you will be able to determine how much you need to set aside each month so you and your family can enjoy a getaway.
  3. Eliminating Debt:  This can have a two fold benefit.  Firstly, if you know how much you make, then you know how much you are able to spend, thus you can avoid spending more than you make.  Secondly, budgeting can help you set aside income every month to tackle debt, be it student loans, a car note, etc.
  4. Enjoying your money:  Budgeting allows you to feel confident about your spending habits.  It allows you to plan for purchases and should limit financial stress on your life by worry about how you are going to pay for something.

This is not a comprehensive list of the benefits, but a few of the major ones.  If you are curious of the benefits you can receive from budgeting then give it a shot if you haven’t already.

 

Budget Smart, Invest Wise

Gobbling Up with Thanksgiving Savings

Tis’ the season!

Of deals that is.

Now is the time where we are bombarded with fantastic deals for the holiday season.  Black Friday, Cyber Monday, we have already been getting emails about these fantastic prices to be for over a month now. Amazon, Wal-Mart, and Best Buy are just a few of the companies vying for your holiday shopping business.

Whether it’s a good deal on a new TV or the latest gadget, companies want you to think that it is now or never when it comes to getting the best deal on a product for the gift-giving season.  While this may or may not be true, creating a budget for these seasonal expenses is critical to keeping credit card debt to a minimum.

It isn’t only the season for savings, but people feel the need to spend more than they can afford and charge it to their credit cards.  This equates to not being able to afford the full payment when your cycle comes around, thus leading to the high interest rates that credit cards charge.  Avoid the high interest rate and keep your holiday spending in check with these 3 tips.

  1. Pay Cash: Don’t be so quick to put every purchase on a credit card.  If you can pay in cash then do it.  This will prevent you from mindless spending.
  2. Create Gift Allowances: Put a limit on the amount you will spend on someone for the holiday season.  This will allow you to appropriately budget out your funds for all of the individuals you need to buy for.
  3. Time Over Money: Remember that the holiday season isn’t truly about who gets the best gifts, it is about spending time with the people you care most about.  Objects and money can be easily replaced, but moments spent with loved ones will have a greater lifetime value.

Budget Smart, Invest Wise

 

Student Loans: Grace Period, Waste Period

I spoke with my sister who just recently graduated with student loan debt.  She asked me, “How do I start paying back my loans?”  I told her, I don’t know.

If you have recently graduated from college then chance are you have student loans to pay back.  There is student loan exiting counselling you must go through and then it seems like you’re all finished.

This is exactly what I did.  After I graduated I went through loan counselling sometime during the late summer of 2012.  And then… Nothing.  I don’t even believe I received an email until almost six months later when it was time to start paying back my loans.  My grace period was coming to an end.

If you take out a student loan through your college or university you will most likely have a grace period of six months.  This is so you can have time to “Get your finances in order”.  I assume these loan company figure if you were this easy to get into debt it was the least they could do.

The bad part about this “Grace Period” is that interest is accruing during the six months you aren’t paying back your loans.  The loan companies try their best to hide this from you and make it as difficult as possible to figure out how to pay back your loans before the period is over.

Step 1: Log on to https://studentaid.ed.gov/sa/?login=true and find out who your student loan provider is.

Step 2: Create an online account with your provider(s) and set up your account information.

Step 3: Begin paying back your loans before the grace period ends to limit the amount of interest you will pay over the life of the loan.

 

Budget Smart, Invest Wise

Video: Step by Step Guide to Creating a Monthly Budget

I have discussed the importance of creating a monthly budget on many previous posts.  This post is for all of you visual learners out there who have not yet created your own personal monthly budget.  Rachel’s video illustrates just how easy it is to create your very own budget.

http://www.youtube.com/watch?v=Rs8P0Eh7Zbc

Budget Smart, Invest Wise

Having a Portable Budget

A number of months ago I made a switch.  I used to keep track of my budget using a Microsoft Excel spreadsheet that was saved to my computer.  It was easy for all intensive purposes except that I could only do updates on the computer I saved my budget on.  So I made a switch.

Now I use Google’s Spreadsheet for all of my budget updating.  Here are 3 reasons why.

  1. I can update my budget from any computer where internet is available.  No need to ever save it as it is done automatically.  Whether it is my work computer or personal computer it doesn’t matter.
  2. You can make budget updates with your PHONE!  This is probably the best part about using the Google platform for your budget.  Just simply download the app, login to your Google account and you are ready to make budget updates on the go.
  3. Your budget will never crash.  Computer’s can crash, but having a budget on Google Spreadsheets makes it virtually uncrashable.  As long as you have access to internet you can have access to your budget and unless you decide to wipe it out (which again can still be undone) it is always accessible.

There are numerous advantages to having a portable budget.  The first key is to have a budget, but if you are going to have one do it right the first time and use Google Spreadsheets.

Budget Smart, Invest Wise

Mid Year Budget Analyisis

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We are approaching month 8 of our 12 month calendar.  How does your budget look so far this year?  Are you keeping track of all of your spending?

It is always a good idea to look at your budget a few times a year and see how it is going.  As always you should ensure that you are spending less than you make, and have a portion of your income that you can invest.

Why do you need to analyze your budget throughout the year?  Costs change, income can also possibly change.  My rent just increased for my apartment.  I had to make extra funds available.  If you get a raise or a promotion, your income can increase.  If you have a sales role or job in the oil and gas industry, then your income has most likely decreased.  There are a lot of scenarios.

Spending habits change.  Say when you started the year you assumed you would spend $200 a month in eating out; however, you now realize that the amount is closer to $300 a month.  You need to find out where else you can cut $100 worth of expenses from another category.

Follow these 3 points for your mid-year budget review:

1) Make sure you are making more than you spend and aren’t incurring a deficit every month

2) Analyze each category and make sure that your allotted amount is close to your actual spend amount

3) See if there are any new categories you need to add, or one that you might need to delete.  I paid off my student loans, so that category isn’t needed for the remainder of the year.

Follow these steps and find budgeting success.

Budget Smart, Invest Wise

 

Video Series: How to Invest

We’ve heard it time and time again from arguably the best investor of all time.  Warren Buffett has simple advice on how Americans should invest.  You can try to beat the market, and some of your investments might do just that.  Most, probably not.  Heed Warren’s advice.

From one king (of investing) to another king (of the court) the way to build wealth is simple.  Own America, invest in a low-cost index fund, invest regularly, and give it time.

Budget Smart, Invest Wise

Video Series: Budgeting

Throughout the month of March, I will be highlighting a video series.  I will be including videos from YouTube that highlight different aspects of the financial journey.  As I have discussed in previous posts.  The financial journey to wealth is a long one with various pieces.  Today’s video highlights budgeting.  These videos will be short and to the point.  I hope they provide an alternative method to providing information on the financial journey process.

Enjoy!

Budget Smart, Invest Wise

How to Save a Quick $250 in Your Yearly Budget

How to Save a Quick $250 in Your Yearly Budget

In theory, budgeting should be pretty simple.  You make money, you spend money.  Sometimes you make more than you spend (Good budgeting!), and other times you spend more than you make (Digging yourself into debt).  Once you have downloaded the free budget spreadsheet: Monthly budget example.




For some budgeting income is pretty simple, it used to be for me.  I was a full-time salaried employee who made the same amount each month.  For others budgeting income is not all that simple.  If you are in a commissioned sales role, your money could fluctuate every month.  Not having a guaranteed income every month means that you have a further responsibility to budget your income correctly.

Budgeting expenses can be tricky in certain instances as well.  Some expenses will stay the same every month: rent, mortgage, cellphone.  While others will fluctuate depending on the time of year: utilities, gas, travel.  Although these “fluctuating” expenses can be hard to determine, in the big picture of things your monthly expenditures SHOULD (and for your financial sake NEED) to be less than your monthly income generated.

So how did I save a quick $250 a year in the expense portion of my budget?

All I did was… Shop around for automobile insurance.  This doesn’t sound fancy at all, but having an extra $20 a month freed up in my budget was something to get excited about.  Say you’ve been with the same car insurer since you first started driving; chances are you have a discount for that.  However, calling other insurance companies to get free quotes is not only easy, but it is a simple way to cut your expenses.  I was with the same car insurer since I turned 16.  I thought I was getting a great deal all along.  However, when I called a few other insurers, I found a much cheaper rate.  So cheap in fact, that it allowed me to save over $250 a year just on my car insurance (FYI, USAA has the best insurance rates and customer service).  That savings freed up an additional $20 a month in my budgeted expenses.  I could use that extra $20 any way I like.

You can save with almost every expense you have.  Whether it is renegotiating your cable bill, or shopping around for car insurance.  Find one expense category in your budget where you can chop out a little change.  The extra money can be used to pay off debt, go into savings, or fund a weekend getaway.  When it comes to budgeting, your expenses are half of the battle.  Lowering your monthly expenses is a great way to make your income go further.

Budget Smart, Invest Wise

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