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How to Budget for Your Dream Vacation

If you have a dream vacation, then you should know that you can make that dream a reality with the basic planning and budgeting tools you probably already use in your daily life. Whatever your dream vacation is, given enough time and with a high enough motor, you can pull it off without resorting to secured loans and other borrowing options.

Get Your Household and Savings Budget in Order

Personal or household budgets are an essential money management tool, and the chances of pulling off a vacation budget are far less if you don’t already manage a household budget. If you don’t how, learn to budget. It isn’t hard. It doesn’t require advanced math skills, and while it can be a little intimidating at first, it will give you greater control and understanding over what you take in and what you send out. Better yet, this is the foundation upon which your dream vacation will be realized.

Starting Planning Early

Many people begin planning in January for vacations they’ll take that summer, and while it’s great if you have those means, it isn’t the best way to save for a dream vacation. Dream vacation suggests something bigger and better than normal. Let’s say your dream vacation will cost $5,000. If you start planning a year out, you’ll have to figure out how to save or earn about $13.70 a day. If you start planning three years out, then the amount shrinks to about $4.57.

Setting Money Aside: Reduce Spending

Whether you need $4.57 or $13.70, you need to figure out how to set that money aside. One of the most practical ways to do that is to lower your expenses so you have a greater surplus. Let’s say you give yourself $150 in spending cash each week. If you cut that down to $125, then you’ve just gained about $3.57 a day toward your goal. Little things like making your own coffee or packing your own lunch can make a huge difference over the course of a year or longer.

Setting Money Aside: Increase Income

The other way to increase your surplus is to increase your income. Perhaps a promotion in your career is still some ways off, but that’s OK since there are other ways to earn more, and you don’t necessarily have to take on a second job. Something as simple as a yard sale can add a nice junk of money toward your goal. Seasonal work is a good option too. A few hours a week during summer or the holiday season can really reduce what you need on a per-day basis to meet your goal.

How to Save Your Money

The means you choose through which to save your money can be an important factor, and your saving strategies should change based on your goals and the circumstances. Some people can save their vacation dollars in a sock drawer. Other people will spend it. If you’re a spender, consider opening a savings account at someplace other than where you bank normally. Make it a hassle to access the money, and if you’re a year or more out, there are savings accounts available that offer better rates in return for restricted access, such as not allowing or penalizing you for early withdrawal.

Stretch Your Vacation Dollars

Affording your dream vacation isn’t just about saving more money but also doing more with the money you will have. Just as you’ll look for ways to spend less at home, look for ways to spend less on your vacation. Don’t cut corners in areas that will diminish your experience, but prioritize your activities, identify aspects that matter less and find ways to spend less on those items. Traveling during the off-season, fixing your own lunches or opting for public transportation are all choices that can significantly reduce the cost of your dream vacation.

Budgeting for a Healthier Life

Investing in your health has numerous benefits – increased levels of happiness, lower stress, a longer life and ultimately a better financial situation are all reasons to take your health at least as seriously as your finances.

We all budget for the normal expenses – rent, utilities, food and savings – but there’s a lot of value to be found in optimising your budget for better health. From getting in better shape to having higher quality healthcare, there are plenty of reasons to set a personal budget for your health.

Food Budget

If you don’t track how much you spend on food every week, you may be surprised by the figures. Most families will have one major supermarket trip a week and will know roughly how much they spend, but it’s the little trips throughout the week that can really add up.

Track your spending over a couple of weeks to see what the average is, then look to see where you can make improvements to save money. While choosing healthy food can be more expensive, effective planning can actually reduce your overall grocery bill.

Planning your meals in advance, preparing a shopping list and ensuring you don’t deviate from it are great ways of sticking to your budget. Bulking up meals with cheap vegetables can save money, as can saving your leftovers and using them for lunches. There are some great tips here on reducing your food bill while keeping things healthy.

Fitness Budget

The cornerstone of the commercial gym industry is people signing up for a membership, turning up for 2 months and then continuing to pay their member fees without actually using the facilities. We’ve all been that person or know a couple of friends or family members doing this right now, and it’s a huge waste of money!

If you use your gym membership regularly by all means stick with it, but there’s usually a few ways to save money. Is there a more affordable gym in your area? Is there one closer to your home or your office which would help reduce travelling expenses? Would it be cheaper to buy a weight set and train at home?

The same applies to any sports or other fitness hobbies – always shop around to see if there’s a better deal on things like equipment or clothing. It’s easier than ever to find a good deal online, so invest the time and you’ll start to see the financial benefits.
Healthcare Budget

Budgeting for your healthcare is a lot like budgeting for anything else in your life. There will be a few regular costs like health insurance, and several one-off costs like a new pair of glasses or physical therapy.

Setting aside the right amount for these one-off expenses can be tricky, as you never know if (or when) you’ll need them and how much it will cost. The best approach is to use a ‘rainy day fund’ type approach and commit to saving a certain amount every month, ensuring you have money available if it’s needed.

When it comes to budgeting for health insurance it all depends on your existing health, your risk factors and the type of policy you want. If you can reduce your risk factors for the conditions most commonly claimed for on insurance policies, the likelihood is that you’ll be offered a more affordable premium. Quitting smoking, cutting down on the amount of alcohol you drink, and eating less fatty and processed food are all simple ways to reduce your premium.

Choosing a more comprehensive policy will obviously be more expensive, but you need to weigh up the pros and cons of picking better coverage. If you have a family or are self employed, you may decide that better coverage is worth the additional investment. It’s a very personal decision, and the monthly cost isn’t always the deciding factor.

Budgeting Tips to Help You Buy a New Car

For new car buyers, it’s a common mistake to get caught up in the asking price while forgetting about the overall cost of car ownership. If you’re in the market for a new vehicle, start thinking about running costs in addition to the sticker price as you work out a feasible budget. You may see a great deal on a convertible sports car that seems impossible to resist, but will you really be able to afford the cost of fuel and maintenance? It’s important to take the following factors into consideration as you create your initial car-buying budget.

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Starting Price

Naturally, the first thing you’ll need to do is narrow down your options to a range of starting prices that you can afford. Seemingly similar cars can vary in price, as you can see in this article comparing the Audi A3 Sedan to more expensive competition. Think about whether or not you’ll be taking out a loan to pay for this car. If so, look at what monthly payments might look like. How much can you really afford to put aside each month to repay a car loan? Don’t stray from that figure at the dealership.

Fuel

Fuel is one of the most significant running costs that will impact your finances on a daily basis. Rugged SUVs can be surprisingly affordable, but oftentimes they make up for it with less than perfect fuel economy. New cars come with an official MPG figure, but it’s better to use these for comparison purposes rather than as a realistic figure. The only way to see what type of fuel economy you can really expect is to take the car for a test drive. Take a look at the CO2 emission rating as well, as this will impact road tax.

Insurance

Car insurance is another necessary running expense that should be added to your budget. Insurance will vary widely depending on the make and model of car, your driving record, and even your occupation. To work this into your budget, try running the details of the car you’re interested into an insurance price comparison website (or several).

Repairs and Maintenance

If you’re purchasing a brand new car, it should be covered for at least a year under a manufacturer’s warranty. This will take care of any repairs for the first few years. If you’re buying used, you can expect to pay repairs and maintenance out of pocket. Factor in the cost of annual servicing, which should include a thorough check-up and oil change. The cost of servicing is another factor that can vary, so it’s worth shopping around to find a reliable garage with fair prices. Independent garages may offer better deals than dealer garages, for example.

Depreciation

It’s often overlooked, but one of the biggest costs of car ownership is actually depreciation in value. When you buy a new car, it starts losing value the minute you drive it off the lot. As a result, many models have lost half of their starting value only three years after the initial purchase. If you’re planning to buy a car that will last you for the next decade, this won’t be too much of a worry. However, if you plan to trade your car in only three years down the line, this is a very important budgeting factor.

These are all ongoing costs that should be added to your budget before you start shopping around. This allows you to see the big picture and avoid any costly mistakes.

3 Steps to Set up a Budget

We’ve talked about this many times in the past and, simply put, the big difference between financially secure people and those who are not usually boils down to one specific thing; a budget. People who create and, of course, use a budget are usually more secure financially, have less debt and have higher credit scores then people who don’t.

If you still don’t have a budget and really don’t have a clue as to how you should start, the tips below will get you there and allow you to begin taking better control of your finances right now, today. Enjoy.

Your 1st  step is to look at the exact amount of money you spent per month over the last three or four months. If you primarily use a credit or debit card for the majority of your purposes, finding out this number is as simple as logging into your bank’s dashboard to see your transaction history. If you’re the kind of person that uses cash for most of your transactions and purchases however, it will be a little bit more involved as you’ll need to look at how much money came in, and how much money you had left at the end of the last two or three months, in order to determine how much you spent.

If that’s not possible, then at the beginning of the next month you should get a paper notebook or app and start keeping track of everything, and every purchase, that you make. (Yes, it might be slightly tedious but it’s vital to your financial future.)

What you’re looking for is where exactly your money has been going.  This is the information you need to figure out if you’ve been spending too much on certain things like entertainment, eating out, clothes and other “non- essential” items. Knowing exactly what you’ve spent is a vital part of putting together your first budget but, frankly, the next step is more important.

That 2nd step is making a plan to address your overspending.

Let’s say, for the sake of example, that you make $2400 after taxes every month. Now let’s say that you spend;

  • $1100 on housing
  • Florida dollars on groceries
  • $300 on entertainment
  • $100 on your phone
  • $750 on other expenses

Guess what bucko, you’re spending $2650 a month or $250 more than you actually make! Looking at those numbers is easy to see that there’s a problem, but the question that’s more important is how to address it, change it and fix it.

Since a budget is basically a spending plan what you’ll need to do is write down how much you’re willing to spend on each of those categories the following month and, more importantly, decide where to eliminate or at least cut back on spending. Will you eat out less, spend less on entertainment or change your phone plan?  What about clothing and $7.00 lattes at Starbucks?

Whatever you need to do to whittle that spending down to $2400 (or less if possible), you’ll need to do it if you want to get your spending and your finances under control and stay in control.

Your 3rd  step is to simply track your spending. Once you’ve categorized your spending (and you can make as many categories as you like) you need a system to track it. That’s about as simple as it gets these days with the plethora of spreadsheet programs or online budgeting apps available. Frankly, without one of these you’ll never be able to stick your budget so do yourself a favor and pick one up ASAP.

Actually, you might find out that keeping a budget is actually a bit of fun, especially when you see how much money you’re actually managing to save.

Every day, or at least once a week, check your spreadsheet and make sure that you’re not over your budget on any one particular category. Did you spend $80 today on groceries? Make sure you noted on your spreadsheet and see how much you have left for the rest of the month. Once you get the hang of it you’ll actually become quite skilled at making your money last longer, something that will inevitably help you to start putting away into a retirement account, paying down your debt or funding an emergency account.

Why a Budget is your Best Friend

For most people the cost of managing how they live their life is more important than managing their investments. The fact is, without any type of savings the returns that you’re going to get aren’t likely to be anywhere near sufficient or close to your goals. The solution: Creating a budget and using it. Frankly, it’s one that most people dread hearing about but if the surest way to control spending, set realistic goals and secure your financial future. Figuring out your average household expenses and thus your average family budget is critical.

Below we have a series of questions from real clients and we’re going to give you our answers to those questions. Hopefully this will help you to realize just how important the budget is and spur you to either create your own or talk to your financial professional to help you get one created. Enjoy.

Q 1: How do I get started with a budget?

Just like with anything else in life, you need to know where you are before you have the information you need to go someplace else. The best way to do this is to start keeping track of all of your expenses. And by all, we really mean ALL of your expenses. Big or small, if you can follow your expenses for at least a month you’ll get a “snapshot” of how much you’re spending every month, information that will give you a basis for your new budget.

Q 2: What is the best way to stick to a budget?

The best way to stick to anything, including a budget, is to intentionally monitor what you’re doing, either on paper or with the help of a computer program or app, and keep doing it until it becomes a way of life. That’s the only way to really change your behavior and to help you “stick to” your budget.

Q 3: What tools are available to help me budget?

There are many websites online including Mint.com and Youneedabudget.com where you can easily set up a membership that will set boundaries for your spending, send you email alerts if you go over them and help you determine what kind of trade-offs you can easily make. There are of course our programs like Microsoft Excel and other budget programs that you can purchase but the most important thing is to find one, no matter what it is, and use it.

Q 4: How do I budget for a large purchase?

First off, having a budget in place will help you to do this much more easily. Secondly, whether it’s an automobile, new home or college fund, you need to first determine what’s realistic. If, for example, you want to put aside $10,000 as a deposit on a new home, you need to determine how much you can put away per month in order to reach that goal and then, of course, get started. In other words, you need a plan and your budget will help you to put that plan into action.

Q 5: What can I do to keep from being overwhelmed by my budget?

The truth is that many people feel “handcuffed” by their budget, especially if it’s too strict. If someone isn’t happy with their budget they will easily stray from it or trash it completely. With that in mind, budgeting a little “splurge money” every month is a great idea to allow you to have a little fun and not destroy your budget in the process.

Q 6: Is there one specific key to successful budgeting?

Since everyone is different, everyone will have a different “key” to being successful with their budget. Most professionals will say that you need at least 2 months to really get on track but, in some cases, it may take longer. Working with a financial planner is a good idea because they will hold you accountable to your plans and goals and keep you committed to what you set your mind to.

In the end, the goal of budgeting is simply to capture wealth and usually money to make more money. In order to do that you need to closer look at how your living as well as what your plans are for living in the future. The only way to do that, as we said, is to have a budget. If you do, you’ll find that setting, and keeping, financial goals is much easier.

Tips on how to Prioritize Your Budget

When you consider that 2 of the basic financial rules that all people should follow are tracking their expenses and placing limits on their spending it’s quite surprising that many Americans still don’t have a budget and use it regularly. The fact is, a budget will force you to prioritize your decisions, make better decisions and keep you on financial track. Another fact is that there isn’t one size or type of monthly budget that fits all families. With that in mind it’s important to know exactly which expenses are most important and to base your budget and your priorities on this information. The tips that we’ve provided in our blog today should help you to do just that. Enjoy.

One of the first steps to creating a budget is to determine which of your expenses are non-negotiable. These are expenses like your rent or mortgage and the utility bills that come with them as well as car loans and so forth. They are non-negotiable because they definitely need to be paid every month no matter what. Determining these expenses will help you to determine exactly what you have left over for other, negotiable expenses like your gym membership, dining out, purchasing new clothes and so forth.

One of the biggest problems in the United States today is habitual overspending. Indeed, when you consider that $82 billion worth of new credit was racked up by American consumers in the last two years alone, you can see how gigantic a problem this actually is. Eliminating this debt on  an individual basis is best done by paying off the credit card or loan with the most expensive balance and highest interest rate first, repeating this down the line as you pay them off. It’s also vitally important to make at least the minimum payment (and make it on time) and when you can, pay more than the minimum.

Of course one of the most important (and simple) things that you can do is to simply stop accruing more debt. Unless a new credit card or loan is going to somehow help you  pay down your debt, there’s really no reason to  take them out. Simply put, debt reduction is a process that takes a good bit of time, diligence and even a little bit of sacrifice. (Sometimes a lot of sacrifice.) Adding to your debt continuously is going to get you nowhere fast.

One vital task that needs to be accomplished when you’re starting a budget is to identify your savings goals and incorporate them into your budget plans. Do you need an emergency fund? How about a fund to pay for your child’s education? Do you want to purchase a house in the next five years? All of these questions need to be answered and, if you can figure out approximately what the amount of money is that you’re going to need, you can figure out how much you’ll need to save every month in order to reach a goal.   For example, if you would like to save $30,000 to use as a down payment on a new home and you would like to do it in 10 years, you’ll need to save $250 a month.

One last bit of advice is simply this; expect to make mistakes. We’re all human and we all make mistakes once in a while, especially when it comes to money. Knowing this, give yourself a little bit of extra ‘wiggle room’ in your budget when you’re creating it so that, if you eventually do go over budget, it’s not going to ruin all of your plans. If you put an extra 5% aside every month in your budget to cover those times when you either make a mistake or make an impromptu purchase you won’t end up paying for it for months down the road.

As we said before, many people don’t have any type of budget set up that they use to control and keep track of their finances and expenses. If that’s you, we strongly urge that you use the advice and tips that we’ve given you here today and also go back and take a look at some of our other many blogs about budgets and budgeting. Best of luck and we’ll see you back here real soon.

Tips for Setting Your Financial Priorities and to Help you Budget

Welcome back for more excellent financial info that you can use in your daily life. Today were presenting a blog chock full of tips for setting your financial priorities and to help you with your budget, be it a family budget or a single mom budget. (You do have the budget, don’t you?) Over the next few days were going to have several more blogs about similar subjects so of course make sure to come back but for right now sit back, open your mind to new ideas and take some notes if you’re so inclined. Enjoy

Frankly, you probably won’t be able to achieve every single financial goal that you dream of. If you can get past this relatively negative bit of information without it scarring your psyche too badly what you will realize is that you have to narrow down your search for the best investments that you can make. If you concentrate your efforts on these investments you will more than likely financially achieve more than sufficient for your needs.

If you have ever heard the old adage ‘he’s penny wise and dollar foolish’ then you will know what we’re talking about when we say that you need to focus on the goals that matter the most. Yes it’s great to have a goal of going to Cancun next year and saving for that but it is far more important to have a goal for your retirement or to pay for your children’s college.

Speaking of goals, a number of them to clash or conflict so be prepared to deal with that. Simply put, when a conflict arises between two goals you will need to decide which the better of the two is. Choose that one, dump the other and move on.

If you’re keen on putting together a list of goals and prioritizing them we highly recommend. In our opinion what you need to focus on are the goals that will help you feel financially secure, fulfilled in some way and, dare we say it, happy. Some of these things could include being able to pay for your child’s college tuition, getting out of debt completely by the time you are 55 or building an emergency fund.

I’ve heard it said at church that ‘the family that prays together, stays together’.  This truism could just as easily be used in your financial planning and means that you should involve your family members in the financial planning process. Without question if you are married you should be making financial plans with your spouse by your side. If you are single talking to your parents or other family members about what you’re planning to do (and asking their advice) is an excellent idea. For moms and dads letting the kids get involved is a great way to teach them about handling money.

Once you have a list of goals it’s time to start making decisions based on said goals. If for example purchasing a new car every five years fits into your financial planning and your goals then by all means purchase a new car every four or five years. On the other hand, is purchasing a new car every 10 years better suits your situation and your goals and so be it. The great thing about having goals is that you can use it as your ‘crutch’. If you are faced with a financial decision all you need to do is juxtapose that decision with your financial goal. If it fits then you know which decision to make, as well as if it doesn’t fit.

Lastly (for today at least) be prepared to see changes in your financial situation and thus the necessity to make changes to your goals. Hopefully as you gain experience in the workplace your skills become more valuable and you begin to earn more money. If that’s the case you’ll need to make changes to your goals based on your new income level. (You could blow it all on that trip to Cancun but we don’t recommend it.)

We hope that was educational. Our goal is to bring you financial information that you may not have heard before or that, even if you have heard before, is presented in a way that makes you think about it in a different light. In any case will be back soon with more and we hope you’ll be here to join us.

How to Create a Workable Budget – Part 1

If you don’t have a budget it’s extremely difficult to know where you stand financially, to say the least.  There are some people however who have set up budgets, which is excellent, but don’t use them as well as they could, which is less excellent.  With that in mind we’ve put together a 2 Part series on creating a budget that you can work with.

By the way, the first part of working with any budget is to remember that it’s simply a tool to make you aware of where you spend your money and a guide that helps you to spend only on the things that matter most to you.  Treat it as a tool, like a hammer or screwdriver, and use it to keep your financial house in tip-top shape.

Step 1) Categorize!  Everyone spends differently.  Categorizing your spending helps you to make a budget that works for you.  With categories you’ll be able to see what you’re spending and track it much better, something that you need to be able to do easily so that you continue to use your budget rather than let it fall to the wayside.

Categories like car payment, mortgage and energy bills are obvious. Next is to set up some categories that reflect your spending.  Do you eat out every day, or bag your lunch?  ‘Lunch/Work’ is a necessary category if you eat out 4 or 5 days a week.  Do you have a hobby like train collecting?  ‘Hobby’ needs to be one of your categories.  The same goes for sports, clothing and anything else that reflects your typical spending habits.  The goal with this is to become hyper-aware of where your money is being spent so that you can easily track it, curb it or increase it whenever necessary.

Step 2) Calculating the budget amount for each category. The first task here is to either already know, within 10%, what you make every month in gross income or if you don’t know that amount then you need to collect as many pay stubs as you can and figure it out from those.  If your pay changes substantially from week to week or month to month you’ll have the added task of figuring out a close monthly income approximation. Remember to add in all of your income, including dividends, bonuses, interest income or any other type of income that you have like a side job.

You should already have a budget worksheet (if you don’t they are all over the net) so now you can start listing your monthly expenses on it.  Go back at least 3 months to be thorough and make your new categories as you go.  Don’t get too detailed because you want this to be something relatively easy to work with and if it’s too detailed it will become a chore to use long term.

The goal here is to find the numbers that work for you between what you really need to spend every month and what you’d like to spend, and then set a number that’s between the 2 so that you have the money you need to pay bills and make some incidental purchases but also have money left to save and / or invest at the end of the month.

Surprisingly even ‘fixed; costs like housing costs or utilities can sometimes be lowered.  Start the process by reviewing the last few month’s bills for now and, when you have a better grasp on everything down the road, you’ll be able to look for, spot and take advantage of more ways to save.

That should get you started.  We’ll see you back here soon for Part 2!

 

Saving Money on Clothes

Clothing can eat up a very large chunk of your paycheck, especially if you need specialized clothes for work or need to ‘dress to impress’ every day for work.  If you have kids then all bets are off as they need new clothes seemingly every other week.

If you’re in the position that you need to buy clothes on a regular basis then this article is for you.  It is chock full of great tips and tricks that will help lower your monthly clothing bills and keep some of your hard earned cash where it belongs; in your wallet.

Make a list of all the clothing sizes of all your family members so that, when you’re out shopping, you won’t buy something that will be too big or too small and won’t be used.

Consider making a monthly clothing budget for your clothing. Having a clear amount set will keep you from splurging and will show other family members that you’re serious about your spending.

Shopping at thrift stores, especially if you have little children that won’t make a fuss about having to wear ‘used’ clothes.  The simple fact is, most children’s clothes get tossed before they’re barely even used and are perfectly fine to use (if sometimes a little stained).

Speaking of thrift, Goodwill usually has an amazingly well stocked clothing area where you can find some incredible deals on many items that are practically brand new.

Purchasing clothing out of season is an excellent way to save money on new clothes.  Buying jackets in the spring and summer clothes after summer has ended for example is a great way to get new clothes ate a fraction of their original retail price.

When you’re buying used always make sure that the size, color and style are something that you or the family member you’re buying for are going to like.  If you buy clothes at a great price that are never used you’re still wasting money.

Wherever you like to shop always check out the clearance racks for some extra special deals. Make sure that you check the items your buying thoroughly to make sure that they’re not stained, ripped or otherwise damaged.

Check back soon for part 2 of this 2 part series about saving money on clothes and good luck in your search for good, cheap clothing.

 

Budget Beauty Tips

If you’re really on a tight budget even going to the pharmacy for beauty products might be out of the picture.  If so don’t panic because there are actually quite a few ways to turn normal kitchen leftovers into all the tools you need to look great.  As an extra bonus they’re all natural and biodegradable!

Baking soda, for example, is very versatile and can be used as a facial scrub if you mix a half teaspoon in with your favorite cleanser, a shoe and foot powder that absorbs stinky foot smell and even a toothpaste that you can use every day. (Dip your toothbrush lightly and voila!)

If you’re in need of some hydrotherapy to revitalize you and give you a healthy glow, the next time you take a hot shower turn on the cold for the last 15 to 20 seconds. If you can take it, go back and forth from hot to cold 4 or 5 times for 15 seconds each.  When you get out you’re going to look and feel awesome, but watch out for high water bills and don’t do this every day.

Using witch hazel as a toner or astringentis easy and cheap and there’s no need to dilute it. Better yet, use apple cider vinegar which will make you look great by balancing the ph. of your skin.

This is a big one; use less product that the manufacturer recommends.  Hey, they want to sell you more product when the fact is that you can easily get by with 50% (or more) less shampoo, conditioner, toothpaste and so forth than they say you need.

See that!  A bunch of great beauty tips that will stretch your budget while still keeping you gorgeous and ready to take on the world!  Use them and start saving big on beauty today!

 

 

 

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