Emergency funds are a necessity for anyone who desires financial security. Not only can it provide you with financial resources that you can resort to and depend on in times of need, it is a big weight off of your shoulders when it comes to wondering what you'll do if Jimmy's teeth don't come in right or Sarah falls and hurts her leg. What if your car breaks down? Will you just rack up more debt? Debt might take years to pay off, and it will only cost more in the long run due to high interest rates.
However, all of that unnecessary stress can be avoided by depositing an extra $30-$50 a month into an individual emergency savings account. When doing this, it's best to think of the emergency account as an additional monthly bill, to ensure that you're actually depositing money regularly. The emergency savings fund would ideally be at least three months of your regular living costs, in case you lose your job or have to take time off due to any number of factors.
But what's most important about your emergency fund is that you steadily add to it, and only take money out in case of actual emergencies. Unlike investments, the success of your long-term savings fund doesn't count on return or interest, but rather on placing a fixed amount away steadily and consistently so as to have immediate access to it whenever the need arises.
Despite what your financial status may be, the first step to the construction of an emergency fund is knowing where your money is currently being spent. Once you've set out and analyzed your budget, it's easier to consider cutbacks or excess savings and trim down expenses.
Emergency funds can be stored in checking or savings accounts, money market accounts, or certificates of deposit for quick access, but you should be sure that you aren't combining your emergency funds with any other savings you may have, so the two don't blur together. You don't want to risk forgetting which funds should be set aside and accidentally spend them!
Saturday, March 27, 2010
Budgeting Tools That Actually Work
Getting the greatest return on your income and putting aside some money into your savings can seem a daunting task for some. But I have a secret for you: budgeting doesn't have to be hard.
There are hundreds of budgeting programs available on the market today for every day use. These money-managing programs will provide you with the basic functions of entering your cash inflow and outflow, and categories of money-spending. Good programs will even present you with an analysis of your spending behaviors. Getting even more technological, some can track when your bills are due and if you've paid them and, if you really got a good program, offer you a tax draft that will ensure that you wont miss out on any dues or deductibles when it gets down to crunch time.
Computer software isn't the only budgeting tools you can utilize, however. Coupons are an amazing money-saving tool that too many people overlook. Almost every store and magazine in the country have coupons available to you to earn you discounts on products that you were probably going to buy anyway. Generally, people don't get too excited about saving $1, but look at it this way: the average American family of 4 spends roughly $600 a month on groceries. Assuming they go shopping once a week and use 2 $1-off coupons per trip, that's a savings of over $100. It may not seem like much, but $100 can get you that haircut you've been putting off. Heck, you could even through in a few highlights!
Lists are another important budgeting tool. Whether you keep it on a piece of paper, your computer, or your PDA, lists will help you keep focused on what you set out to buy and keep you from drifting off to other unnecessary purchases. Prior to making your regular grocery trip, write down the weeks menu and figure out from there what groceries you need to make that happen. Next, add on various other household items that you need or will need before the week is through. Armed with these lists, you are now able to go to the grocery store to get exactly what you wanted, without getting distracted by all the fancy aisle displays.
A filing system is one of the best budgeting tools your home can have. With simple file folders, you can track your bills, receipts, bank documents, and whatever other financial documents you might need with barely a thought. By ordering these by type and date, it makes tax time that much easier.
The most effective budgeting tools are those that address your specific needs. Sometimes that means you shouldn't settle for just one, and sometimes that means you should shop around. Don't stop looking for the best budgeting tool until you find one that does exactly what you want it to do and more.
There are hundreds of budgeting programs available on the market today for every day use. These money-managing programs will provide you with the basic functions of entering your cash inflow and outflow, and categories of money-spending. Good programs will even present you with an analysis of your spending behaviors. Getting even more technological, some can track when your bills are due and if you've paid them and, if you really got a good program, offer you a tax draft that will ensure that you wont miss out on any dues or deductibles when it gets down to crunch time.
Computer software isn't the only budgeting tools you can utilize, however. Coupons are an amazing money-saving tool that too many people overlook. Almost every store and magazine in the country have coupons available to you to earn you discounts on products that you were probably going to buy anyway. Generally, people don't get too excited about saving $1, but look at it this way: the average American family of 4 spends roughly $600 a month on groceries. Assuming they go shopping once a week and use 2 $1-off coupons per trip, that's a savings of over $100. It may not seem like much, but $100 can get you that haircut you've been putting off. Heck, you could even through in a few highlights!
Lists are another important budgeting tool. Whether you keep it on a piece of paper, your computer, or your PDA, lists will help you keep focused on what you set out to buy and keep you from drifting off to other unnecessary purchases. Prior to making your regular grocery trip, write down the weeks menu and figure out from there what groceries you need to make that happen. Next, add on various other household items that you need or will need before the week is through. Armed with these lists, you are now able to go to the grocery store to get exactly what you wanted, without getting distracted by all the fancy aisle displays.
A filing system is one of the best budgeting tools your home can have. With simple file folders, you can track your bills, receipts, bank documents, and whatever other financial documents you might need with barely a thought. By ordering these by type and date, it makes tax time that much easier.
The most effective budgeting tools are those that address your specific needs. Sometimes that means you shouldn't settle for just one, and sometimes that means you should shop around. Don't stop looking for the best budgeting tool until you find one that does exactly what you want it to do and more.
Saturday, February 27, 2010
A 17% Return On Your Money: Guaranteed!
Debt is becoming an increasingly large problem in America. More and more people are drowning in the hole that they dug. It's not because they're poor, or have no money, but rather they haven't been properly educated about finances. This is due in large part to a lack of educational material available to our society. Which is exactly why I'm here. I'm here to teach you how you can get a guaranteed 17% return on your money. The best part about this is that it's no great secret. It's not a complicated formula, it's not illegal, it's just one, simple, straight-forward step.
Pay off your credit cards. At time of writing, the average interest rate on a standard credit card is 16.7%. That means that for every $1,000 you spend on credit cards, you're paying an extra $167.
The average American spends $244 a week on groceries. Assuming you put all of that on your card, instead of a $12,688 bill, you're getting a $14,807 tab. That's an excess $2,119, all because you didn't pay cash or debit. How much debt could you burn if you put an extra $2,119 towards your credit cards every year?
I understand that getting out of debt isn't as easy as all of that. Money is tight, especially in today's economy. But I know I can teach you what you need to know to burn away your debt. The strategy is simple: trim the fat.
The first thing you should do in any debt elimination plan is write down all of your debts, in order from highest to lowest. Write down what it is, how much is owed, the minimum monthly payment, and the interest rate.
Once you've established that list, it's time to start writing down your finances: how much you spend and what you spend it on every month. That includes food, insurance, lattes, gas, new shoes, manicures, shampoo, fast food, taxes, and on and on. This list should include the minimum payments you make towards your credit cards and other debts. Get everything you need to start fixing your finances here!
Pay off your credit cards. At time of writing, the average interest rate on a standard credit card is 16.7%. That means that for every $1,000 you spend on credit cards, you're paying an extra $167.
The average American spends $244 a week on groceries. Assuming you put all of that on your card, instead of a $12,688 bill, you're getting a $14,807 tab. That's an excess $2,119, all because you didn't pay cash or debit. How much debt could you burn if you put an extra $2,119 towards your credit cards every year?
I understand that getting out of debt isn't as easy as all of that. Money is tight, especially in today's economy. But I know I can teach you what you need to know to burn away your debt. The strategy is simple: trim the fat.
The first thing you should do in any debt elimination plan is write down all of your debts, in order from highest to lowest. Write down what it is, how much is owed, the minimum monthly payment, and the interest rate.
Once you've established that list, it's time to start writing down your finances: how much you spend and what you spend it on every month. That includes food, insurance, lattes, gas, new shoes, manicures, shampoo, fast food, taxes, and on and on. This list should include the minimum payments you make towards your credit cards and other debts. Get everything you need to start fixing your finances here!
Friday, February 26, 2010
Budgeting Secrets "They" Didn't Want You To Know
Being able to efficiently manage money is the ultimate secret to wealth. It has nothing to do with how much you make. Besides, most money managed is often hard earned, which is why it's so important to have a budget. Why waste all that effort? With the proper budget, you should be able to easily see where your money is going, how to get more bang for your buck in almost every aspect of your costly life, and help you find some excess to save and put away for future use.
The biggest and most well-kept "secret" when it comes to effective budgeting is to set a goal. If you aim for nothing you're sure to hit it. So what do you want to achieve? Do you want to settle your debt once and for all? Do you want to put some money aside for your future? Are you planning on retiring in 5, 10, 20 years? With a goal in mind you can better shape your budget to suit your needs.
Once you've had a goal, you want to be able to make notes as to where your money consistently goes.This includes things like insurance payments, property taxes, grocery costs, gas, and on and on. You should also take note of money you spend on various other non-necessity items. Only once you've mapped out your budget will you be able to identify where your money goes and which expenses you can cut down or do without.
How much do you spend on your daily caffeine in the morning? Do you really have to have that brand of coffee? Can you cut it out altogether, or at least get a cheaper alternative? How about the newspaper you receive daily? Why not just read it on the internet for free? A $2 coffee every morning is a $730 yearly bill. Cutting coffee out entirely will give you 100% of that; buying coffee for $1 instead of $2 will give you a 50% return on money that isn't really going towards anything productive. You would be surprised at how much more you're spending than you think.
Debt is a vicious cycle in and of itself. Do you want an instant, guaranteed 18% return on your money? Pay off all of your credit card bills. These things have continuous payments and huge interest rates. Whatever excess cash you may have should be added onto the payments of your credit cards until they're absolutely gone. Going through your monthly excesses will burn that debt right off in no time at all.
The biggest and most well-kept "secret" when it comes to effective budgeting is to set a goal. If you aim for nothing you're sure to hit it. So what do you want to achieve? Do you want to settle your debt once and for all? Do you want to put some money aside for your future? Are you planning on retiring in 5, 10, 20 years? With a goal in mind you can better shape your budget to suit your needs.
Once you've had a goal, you want to be able to make notes as to where your money consistently goes.This includes things like insurance payments, property taxes, grocery costs, gas, and on and on. You should also take note of money you spend on various other non-necessity items. Only once you've mapped out your budget will you be able to identify where your money goes and which expenses you can cut down or do without.
How much do you spend on your daily caffeine in the morning? Do you really have to have that brand of coffee? Can you cut it out altogether, or at least get a cheaper alternative? How about the newspaper you receive daily? Why not just read it on the internet for free? A $2 coffee every morning is a $730 yearly bill. Cutting coffee out entirely will give you 100% of that; buying coffee for $1 instead of $2 will give you a 50% return on money that isn't really going towards anything productive. You would be surprised at how much more you're spending than you think.
Debt is a vicious cycle in and of itself. Do you want an instant, guaranteed 18% return on your money? Pay off all of your credit card bills. These things have continuous payments and huge interest rates. Whatever excess cash you may have should be added onto the payments of your credit cards until they're absolutely gone. Going through your monthly excesses will burn that debt right off in no time at all.
Thursday, February 25, 2010
How You Can Teach Your Children to be Smart With Money
How many times have you heard it said that kids these days don't know the value of a dollar? How many times have you said it yourself? "Smart Spending Habits" and "Investing 101" are both not things that are taught in schools. That's right, it's up to you, as parents, to teach your kids how to be smart with their money.
As soon as your children can count, you should begin to educate them on the value of money. When you're unable to afford toys for them, telling children "We can't afford it," can often be detrimental to their mindset. Often they will think the only way to be financially happy is to be rolling in riches. Instead, you should "choose not to" do something. It teaches your children that even though it would be more fun to have that latest gadget or whatever, sometimes intelligent decisions need to be made about finance.
You should always explain any questions they might have. Teach them the value of saving money. Setting up a weekly allowance (in exchange for chores) is a good idea. Tell them that they should put about 10% of their allowance in the bank just in case they get sick and aren't able to earn an allowance for a few weeks. Or maybe they wont do a very good job and wont get paid as much. Once kids have an allowance, they should always be expected to pay for toys that they want. This is assuming they aren't presents or gifts, of course.
Getting your kids started in a business is an effective way of not only teaching them about money and finances, but also instills a good work ethic. Even if you have an allowance system set up, they can earn an extra fifty cents or so for any extra chores they wouldn't normally have to do. Otherwise, you can pay them for different chores on an individual basis.
Teaching your kids to save money is as easy as getting them a piggy bank. Try and pay them in whole amounts and encourage them to put their change into it. Once it gets full, put it in the bank for them and give them a portion of it to spend on whatever they like.
If you're unhappy with how your child is spending their money, you should talk them through each of their purchases. Never try and talk your son or daughter out of buying something, but always educate them about what they're doing. For example, if Lisa wants to buy a teddy bear with $5, which is all she earned, you should let her know. Something like, "That teddy bear is worth $5. That's all the money you have. If you want to buy that, you wont have any money to buy anything else until you get your allowance again. Is that OK with you?" If it is, then buy it. If they want to know what you would do, a good response is to tell them that you'd wait until they got their next allowance, and if they still wanted it, buy it then.
Above all, remember that the value of money isn't something that you can teach your children in one sitting. It must be a consistent and ongoing process.
As soon as your children can count, you should begin to educate them on the value of money. When you're unable to afford toys for them, telling children "We can't afford it," can often be detrimental to their mindset. Often they will think the only way to be financially happy is to be rolling in riches. Instead, you should "choose not to" do something. It teaches your children that even though it would be more fun to have that latest gadget or whatever, sometimes intelligent decisions need to be made about finance.
You should always explain any questions they might have. Teach them the value of saving money. Setting up a weekly allowance (in exchange for chores) is a good idea. Tell them that they should put about 10% of their allowance in the bank just in case they get sick and aren't able to earn an allowance for a few weeks. Or maybe they wont do a very good job and wont get paid as much. Once kids have an allowance, they should always be expected to pay for toys that they want. This is assuming they aren't presents or gifts, of course.
Getting your kids started in a business is an effective way of not only teaching them about money and finances, but also instills a good work ethic. Even if you have an allowance system set up, they can earn an extra fifty cents or so for any extra chores they wouldn't normally have to do. Otherwise, you can pay them for different chores on an individual basis.
Teaching your kids to save money is as easy as getting them a piggy bank. Try and pay them in whole amounts and encourage them to put their change into it. Once it gets full, put it in the bank for them and give them a portion of it to spend on whatever they like.
If you're unhappy with how your child is spending their money, you should talk them through each of their purchases. Never try and talk your son or daughter out of buying something, but always educate them about what they're doing. For example, if Lisa wants to buy a teddy bear with $5, which is all she earned, you should let her know. Something like, "That teddy bear is worth $5. That's all the money you have. If you want to buy that, you wont have any money to buy anything else until you get your allowance again. Is that OK with you?" If it is, then buy it. If they want to know what you would do, a good response is to tell them that you'd wait until they got their next allowance, and if they still wanted it, buy it then.
Above all, remember that the value of money isn't something that you can teach your children in one sitting. It must be a consistent and ongoing process.
4 Money Saving Methods
Whether you're saving for a college education, a new home, a new car, or for that dream vacation you've always wanted, there are many different methods that you can utilize to save enough to obtain whatever it is you want.
1. Get a Savings Account
When you're saving for a short period of time or for emergency planning, savings accounts are a great asset. With this method, you have easy access to your funds. With longer-term savings plans, savings account are a bit riskier because of the temptation to withdraw a few dollars here and there from them.
If you have the self-discipline, savings accounts can be used long-term as well. They accrue a steady interest based on your average daily balance. Keep in mind that a minimum balance is often required to be maintained, and should you fail to maintain it you can be charged a penalty or have your account terminated.
2. Grab a Checking Account With Interest
Checking accounts often have higher interest than savings accounts as it's expected that the average monthly balance will be lower since money is constantly flowing in and out. These accounts are often associated with privileges such as unlimited withdrawals, free checks, and access to ATM and bill payments that can be done online. However, like savings accounts, checking accounts are even more privy to you taking money out.
3. Money Market Insured Accounts
For long-term goals, money market accounts are ideal. It offers a much higher rate of interest as compared to regular savings or checking accounts. The interest rate is generally dependent upon the amount of money in the account. The higher the balance the higher the interest.
4. Certificates of Deposit
Certificates of Deposit, also know as "CD"s is a saving method that requires you to loan your money to a finance agency for a set time frame. This time frame generally ranges from 30 days to as much as 5 years. The longer the time span, the higher interest you will earn.
Insurance companies often offer better deals on interest as compared to banks. Before settling on what to do and where you'll do it, compare rates!
1. Get a Savings Account
When you're saving for a short period of time or for emergency planning, savings accounts are a great asset. With this method, you have easy access to your funds. With longer-term savings plans, savings account are a bit riskier because of the temptation to withdraw a few dollars here and there from them.
If you have the self-discipline, savings accounts can be used long-term as well. They accrue a steady interest based on your average daily balance. Keep in mind that a minimum balance is often required to be maintained, and should you fail to maintain it you can be charged a penalty or have your account terminated.
2. Grab a Checking Account With Interest
Checking accounts often have higher interest than savings accounts as it's expected that the average monthly balance will be lower since money is constantly flowing in and out. These accounts are often associated with privileges such as unlimited withdrawals, free checks, and access to ATM and bill payments that can be done online. However, like savings accounts, checking accounts are even more privy to you taking money out.
3. Money Market Insured Accounts
For long-term goals, money market accounts are ideal. It offers a much higher rate of interest as compared to regular savings or checking accounts. The interest rate is generally dependent upon the amount of money in the account. The higher the balance the higher the interest.
4. Certificates of Deposit
Certificates of Deposit, also know as "CD"s is a saving method that requires you to loan your money to a finance agency for a set time frame. This time frame generally ranges from 30 days to as much as 5 years. The longer the time span, the higher interest you will earn.
Insurance companies often offer better deals on interest as compared to banks. Before settling on what to do and where you'll do it, compare rates!
5 Steps to an Air-Tight Budget
If you aim for nothing you'll hit it. Creating a plan and outlining your financial goals is crucial to tracking and sticking to a budget. Without one, you have no way of establishing and regulating funds. You have no way to track any financial objectives you've set, nor do you have the ability to see when you'll be able to meet said objectives. The basic idea behind creating a budget is to put aside fixed amounts of money for both expected and unexpected results.
When creating a budget, there is an order in which one must go about establishing finances. When you've sat down to plan out your week, month, year, or whatever, I have found the following steps to be most efficient:
1. Establish Your Income
The first thing to do is figure out how much money you bring home after taxes. That means whatever number is on your check and actually ends up in your bank account is how much you have to spend. It's better to establish this based on how often you're paid. If you're paid once a month, you should write your monthly salary, but if you're paid bi-weekly you should write what you take home bi-weekly.
If you're paid bi-weekly and you're planning for the entire month, write down how much you make bi-weekly. Then, in another set space, take your biweekly check and multiply it by 2.16 to adjust for the entire month.
2. Define Fixed Expenses
Your first deductions of your income should be your fixed expenses. This means things like car payments, mortgage payments, insurance, groceries, and etc. Include anything you pay regularly, even if it's bi-monthly. Don't forget to include things that are paid once every 6 months or once a year.
3. Set Aside Money For Rainy Days
An effective plan for accidents is to have 6 months of income set aside in case you lose your job. However, in this economy it's not always realistic to have half a years worth of money sitting in the bank. Still, every month you should give an estimation as to something that may go wrong. Have your breaks been acting up? Is that chip in your windshield looking better? Have you had any tootheaches lately? Better safe than sorry.
4. Give Yourself Some Spending Money!
Never forget to give yourself some money to play with. Even if it's as small as 5% of your pay check, that extra $20 could go to eating out one night, or catching a movie with some friends. Everyone deserves a bit of fun every now and then, and it's still important to track that money is being spent -- even if it's not on necessities.
5. Write Down Your Savings
Now take what you have leftover and write down how much you'd like to save. If you have $512 leftover, you might as well just put the $500 away and put the $12 towards paying of debt or doing something fun. Same goes if you have $78 or $13. Take away an increment and put the rest towards something else. It will make budgeting that much easier.
When creating a budget, there is an order in which one must go about establishing finances. When you've sat down to plan out your week, month, year, or whatever, I have found the following steps to be most efficient:
1. Establish Your Income
The first thing to do is figure out how much money you bring home after taxes. That means whatever number is on your check and actually ends up in your bank account is how much you have to spend. It's better to establish this based on how often you're paid. If you're paid once a month, you should write your monthly salary, but if you're paid bi-weekly you should write what you take home bi-weekly.
If you're paid bi-weekly and you're planning for the entire month, write down how much you make bi-weekly. Then, in another set space, take your biweekly check and multiply it by 2.16 to adjust for the entire month.
2. Define Fixed Expenses
Your first deductions of your income should be your fixed expenses. This means things like car payments, mortgage payments, insurance, groceries, and etc. Include anything you pay regularly, even if it's bi-monthly. Don't forget to include things that are paid once every 6 months or once a year.
3. Set Aside Money For Rainy Days
An effective plan for accidents is to have 6 months of income set aside in case you lose your job. However, in this economy it's not always realistic to have half a years worth of money sitting in the bank. Still, every month you should give an estimation as to something that may go wrong. Have your breaks been acting up? Is that chip in your windshield looking better? Have you had any tootheaches lately? Better safe than sorry.
4. Give Yourself Some Spending Money!
Never forget to give yourself some money to play with. Even if it's as small as 5% of your pay check, that extra $20 could go to eating out one night, or catching a movie with some friends. Everyone deserves a bit of fun every now and then, and it's still important to track that money is being spent -- even if it's not on necessities.
5. Write Down Your Savings
Now take what you have leftover and write down how much you'd like to save. If you have $512 leftover, you might as well just put the $500 away and put the $12 towards paying of debt or doing something fun. Same goes if you have $78 or $13. Take away an increment and put the rest towards something else. It will make budgeting that much easier.
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