Tag: Mindful Money

 

Should You Move Back in With Your Parents?

When you’re a young adult, there’s nothing quite like living on your own to give you a taste of freedom. No more living under mom and dad’s roof or obeying their rules.

It can be exhilarating, but let’s face it — it’s also expensive. Rent is likely your biggest expense and you may realize it’s taking too big of a bite out of your paycheck and affecting your financial life. At this point, you may be thinking: “Should I move back home with my parents?”

Your decision is personal and something that you should carefully consider. Yet, know this: You are not alone. According to the U.S. Census Bureau, as of 2015, one in three young adults ages 18 to 34 lived at home with their parents.

Here are some things to consider before flying back to the nest.

Review your situation

Sometimes life throws you a curveball that can affect your finances. You might lose your job and feel unprepared to pay for rent. In this case, moving home makes sense. Or, maybe you have a job but you want to make more headway on paying off your six-figure student loan and save up for a down payment on a house. This is another instance where moving back into your parents’ house can help you save money.

The bottom line: Review your financial situation and the reasons behind wanting to move back home.

Know the numbers

Moving back home with your parents when you’re an adult can mean going back to the typical parent-child roles. Even if you’re technically a grown-up, you’re under their roof. That lack of freedom comes at a cost, so make sure the move is financially lucrative for you.

Look at the numbers. How much will you be saving each month? Will you be able to live at your parents’ house rent-free or will they charge a discounted rate?

Have a financial goal in mind and this way you’ll have an exit plan. So for example, maybe you have $40,000 in student loan debt that you want to pay off quickly. If you free up your $1,500 rent payment and live with your parents, you could pay off your debt in a little over two years.

Review the pros and cons

There’s no doubt that moving back home can have an immediate benefit on your financial life. But there are other things you’ll want to consider. Take a look at the pros and cons of moving back home.

Pros:

  • You can live rent-free or pay much lower rent
  • You can save money on utilities
  • You may be able to save money on food if you share meals with your parents
  • You can reach goals like paying off debt or saving for a down payment faster
  • You can spend more quality time with your family

Cons:

  • You will have less personal space
  • Living under someone else’s roof means you typically live by their rules
  • This may have an impact on your personal life, such as romantic relationships or having friends over
  • There may be more conflict between you and your parents
  • You’ll have a lack of privacy
  • You may lose motivation

Before making the move, carefully consider all sides. When I was paying off $81,000 in student loan debt, my parents said I could move back home and save money on rent. On the surface, it seemed like a good idea. But for me, it would have affected my job opportunities. I would have also needed to buy a car or borrow a vehicle from my parents. Lastly, I would have had to pay to move out-of-state.

Also, I knew that moving back home ultimately wouldn’t be good for my motivation, career, or relationship with my family. At the time, I was splitting a studio and paying around $450 in rent, so for me the gain was not worth it.

Beyond the financials, make sure you consider how moving back home will affect your personal relationship with your family, as well as your mental health. If you and your parents have good boundaries and agree on rules, it could work out in your favor. Here are some questions to ask your parents:

  • Will I pay rent? If so, how much?
  • What is my responsibility when it comes to utilities?
  • What chores are expected of me?
  • Will there be a curfew?
  • What is the policy for having people over?
  • Is there a timeline or cut off to this new living arrangement? For example, after one or two years, do you have to move out?
  • Are there any expectations? (such as having dinner with the family once a week)
  • What are the communication expectations? For example, if you’re out late, do your parents expect a text or call?
  • How much notice do you need if I plan to move out? For example, two weeks? One month?

Asking these questions can help get you all on the same page.

Other options to consider

Before moving back home to save money on rent, you may be able to consider other options to cut down on your costs before giving up your freedom.

Can you find cheaper rent somewhere else? Can you rent out your apartment on AirBnB? Can you rent out a parking space? Can you negotiate a raise so that your rent takes up less of your take-home pay?

If you do ultimately decide to move back in with your parents to save money, communication is key and having a financial plan in place is required.

 

How to Manage Your Money in your 20s and 30s Like a Boss

When I moved out of my mom’s house when I was 23, my greatest fear was having to move back home – again.

In turn, I did everything I could to stretch my $1,800 a month take-home pay. By being frugal, taking on side hustles, and saving as much as possible, I was able to both squeak by and sock away a bit of cash each month. It was no easy feat, but it was doable. Remember: You don’t have to live in a van to save. Even small steps can help, like switching to a bank that doesn’t charge fees and negotiating for a lower Internet bill.

Fast forward to the present. Now that I’m in my 30s, I know that my frugality and hard-core money-saving ways paid off. Yet, there are quite a few things I wish I told my 20-something self about money.

To up your money game, here are a few pointers on how to manage your finances during your 20s versus your 30s.

In your 20s: Focus on career potential

You might not be raking in as much as you would like right out of college. But salary isn’t the only thing you should consider when evaluating job offers.

Take a look at the entire compensation package. This includes insurance benefits, employee perks, and whether your employer offers a match on a 401(k). Plus, consider this: Will there be opportunities to learn skills, work with a mentor, or move up the ladder?

I considered learning on the job as an added benefit. For instance, when I worked in the communications department for an entertainment labor union, my boss subsidized courses I took in graphic design and copyediting. That’s because those were useful skills for my current role.

And, while I was fortunate to have steady jobs that offered robust benefits, I worked in niche industries without much room for growth. Looking back, I wish I had spent more time focused on a host of job opportunities, both monetary and non-monetary.

In your 20s: Automate, automate, automate

In your 20s, it’s not surprising that you may be stressed out about your money situation. That’s why one of my favorite money-saving hacks is to automate your finances.

You can automate your savings for an emergency fund, for a car, or invest in your retirement fund. If you’re a Chime Member, consider opting into the Save When I Get Paid feature.

And yes, while you have decades before you retire, the earlier you begin to save for this goal, the better. Why is that? Two things: time in the market and the magic of compound interest. Let’s say you begin socking away $250 a month starting at the age of 25. You keep it up for 40 years until you’re 65. According to Investor.gov, if you earn an average of seven percent interest, you’ll have earned just shy of $600,000.

While I opened an IRA in my early 20s, I put in $100 and then stopped. Imagine how much I would have if I had continued putting money into it! And during one of my jobs, I failed to opt into the matching 401(k) plan until a year after I started. That’s money I left on the table.

In your 20s: Develop the discipline to cut back on spending

My friend Dave Fried, who is 39 and lives in Chicago, would tell me he treats his money as a business: You should always have more coming in than out. Fried kept this general rule of thumb in mind when he was earning minimum wage working at a screen printing shop, and when he was raking in cash selling pay-per-demand videos online.

The takeaway: It doesn’t matter how much you earn, you can always get into the habit of saving. To start, try cutting back. Try a no-spend Sunday. Or use a money management app to track your spending to see what your vices are. After having a few spend-happy months this year, I’m focusing on two major problem areas for a month: food and clothes.

When it comes to food, instead of overstocking my fridge, I’m checking my pantry before I head to the market. This helps me plan out my meals, stick to a weekly food budget, and cook in batches. As for clothes, I’ll wait 30 days before purchasing something I have my eye on.

In your 20s: Manage your debt

Sure, you wish your debt could just disappear yesterday. And while it’s tempting to conveniently forget you’re carrying a debt load, you’re going to have to pay it off eventually. Whether it’s credit card debt, student loans, or a car loan, know exactly how much you owe, and what the interest rates are.

Next, come up with a repayment plan. Figure out how much you can reasonably afford to pay off each month. It’s important to stay on top of your debt payments. Otherwise, your credit can get dinged.

In your 30s: Focus on earning potential

While your 20s is all about focusing on stepping-stones that lead to career opportunities, your 30s is prime time to make more money.

Although you can only cut so much of your living expenses, you can increase your earning potential. For example, it wasn’t until I job-hopped that I boosted my savings significantly. Another major wealth-building move for me was when I turned my side hustle of freelance writing and copyediting into a full-time gig.

In your 30s: Pay off your student loans and credit card debt

“Good debt” is loosely defined as debt for valuable assets that can grow over time. Traditional examples of good debt include a mortgage on a home or a business loan. “Bad debt” is anything that loses value over time, or has a high-interest rate, which can eat into your savings. “Bad debt” is normally thought of as credit card debt, student loans, and personal loans.

However, there are a lot of gray areas. Credit card debt can be a good thing. If you have a balance, but pay it off in full each pay cycle, this can boost your credit.

In your 30s: Continue to build your wealth

While in your 20s, you were laying the groundwork to save and invest. In your 30s, however, you’ll want to start thinking about growing your money.

There’s no single way to approach this. It depends on your personal situation, existing resources, and lifestyle preferences. For example, perhaps you want to buy your first home, or get serious about investing in the stock market. This is your time to make decisions to grow your money.

Live the life you want

As my friend Kristin Wong, author of “Get Money” likes to say, there’s a difference between living the life you can afford, and living the life you want.

And the perks of financial wellness are many — freedom from money stress, the resources and knowledge to grow your money, and the ability to live your best life.

 

How to Plan for Your Car Maintenance on a Budget

If you’ve ever owned a car, chances are you’re pretty familiar with the sickening feeling in the pit of your stomach when your car starts acting funny.

Since most of us aren’t auto mechanics, that weird sound or odd behavior could mean a fix that costs anywhere from just a few dollars to a few thousand dollars. Sometimes it even seems like you’re taking one step forward with your bank account only to take two steps back when a car repair derails your budget.

Thus, it’s no wonder car maintenance is especially stressful. But, there’s also good news: You can save up for these events. You don’t need to let them catch you by surprise. Read on to learn more.

How much should you budget for car maintenance?

Here’s the thing. You know car maintenance and repair expenses are going to happen. So, why not save up for them in advance?

First, though, it’s a good idea to know how much to save. Aside from all of the other expenses of owning a car (insurance, registration, etc.), you’ll need to plan for two big things: regular car maintenance and car repairs.

Regular car maintenance includes getting things done like oil changes, new tires, batteries, brake pads, etc. Car repairs include replacing things as your car ages, such as CV joints and head gaskets. This also includes the unexpected repairs that can result from things like your transmission kicking the bucket.

According to the Bureau of Labor Statistics, the average single person spent $794 on car maintenance and repairs in 2017. This means that it’s a good idea to save up at least $66 per month — ideally more, so that you’re prepared in case a big repair is needed, such as rebuilding your car’s engine or transmission.

Of course, it’s a good idea to consider other factors as well. If you have an older car, for example, you might want to consider saving more. If you live in a snowy area that requires you to put on snow tires in the winter and all-season tires in the spring, summer and fall, that can increase your costs as well.

Another good place to check out is Edmunds’ Cost of Car Ownership, which allows you to look up average estimated yearly costs for repairs and maintenance for your specific vehicle.

How to Save for Car Maintenance

Now that you understand how much you need to save, how do you actually do it? Here are two top tips.

  • Set Up Chime’s Automatic Savings

Did you know that you can set up your savings automatically with Chime? You can round up each of your purchases to the nearest dollar and deposit the difference into your Savings Account.

But for our purposes here, Chime’s automatic savings payday feature is probably the best. Each time you get paid, you can set up an automatic deposit for a specific amount. You can even set up a separate savings account just for car maintenance and repair costs, and withdraw money as you need it.

So, for example, if you want to save $100 per month for car maintenance and repairs and you get paid bi-weekly, you can set it up so that you deposit $50 into your savings account each time you get paid. This way, you don’t even need to think about it — it just happens automatically.

  • Set Up a Sinking Fund Line Item in Your Budget

Another option is to keep a separate line item in your budget as a sinking fund. In this case you set aside however much you want to save per month ($100 for example) on paper, in your budget.

The actual money can stay in your checking account if you wish, or you can move it over to your savings account. Either way, the idea is to have a certain dollar amount in your bank account reserved just for car maintenance and repairs.

Don’t Let Car Maintenance Catch You By Surprise

You’re already familiar with the scary feeling when your car breaks down.

Now, picture this: You can set aside money each month so that the next time your car needs maintenance or repairs, you have plenty of money just ready and waiting to be spent for that exact purpose. It’s like an extra layer of security. It’s an amazing feeling to feel ready and prepared to spend money, rather than be stressed out about it.

So, are you ready to start saving money for car maintenance and working toward that happier feeling? We’ll help you get there!

 

6 Habits That Could Help You Get Wealthy, According to Psychologists

Research has shown that 40% of our daily behaviors are habitual. In other words, if you control your habits, you’ll have more control of your life.

When it comes to our finances, however, it’s easier said than done: Saving money requires overcoming millions of years of evolution.

“Our human brain is not wired for good long-term financial decisions,” explains Dan Pallesen, a clinical psychologist and financial advisor who is chief of investor behavior at Keystone Wealth Partners.

“We are wired to seek pleasure and avoid pain in the present,” says Pallesen.

Translation? If you want to build wealth — and stem the tide of Amazon Prime boxes arriving on your doorstep — you’ll need to combat your inner human.

Here are six psychology-based wealthy habits that work with (and around) your complex brain.

1. Determine Your “Why”

Before you can create wealth, you need to figure out why it matters to you.

Do you yearn to be debt-free so you’ll never get another collection call? Do you want to earn enough to go on a tropical vacation each year? Do you hope to retire early to spend more time with family?

“People whose financial goals align with their vision for their lives are so much more successful in achieving those goals than people who just try to build wealth for the sake of building wealth,” says Pallesen.

Before going any further, take out a piece of paper and write down your goals, dreams, and vision for the future. If you live with a partner, include that person in this exercise, too. By naming your “why” — and giving your money a positive purpose — Pallesen says you’ll be less likely to experience burnout on your path to financial prosperity.

2. Picture Your Goals

Remember posting photos in your locker of places you hoped to go, celebrities you wanted to date, and clothes you wish you owned? It turns out your high-school self was onto something: Literally picturing your goals can be extremely motivational.

So think back to the previous step, and surround yourself with visual aides that depict your goals and vision. We’re talking magazine clippings, inspirational quotes, postcards, and maybe even a Statue of Liberty snow globe that serves as a physical reminder of your dream of moving to NYC.

“It may sound gimmicky but you are actually training your brain to consider the big picture rather than focusing on the moment,” says Pallesen.

If you’d like to take a Caribbean cruise, for example, he recommends “taping a picture of a beautiful cruise ship in bright blue water on your bathroom mirror.” That, he says, “will be a continual reminder of what you are working towards.”

3. Prioritize the Future

Buying a flashy new watch. Upgrading your car when your old one still runs. Going out for lunch every single day. While these activities may feel good in the moment, they’re not doing you any favors in the long run.

Which is why psychologist Tamar Blank says that, before making any purchase, you should get in the habit of asking yourself if it aligns with your long-term goals.

“Every dollar spent should be an investment in yourself. One must make a conscious decision to prioritize long-term goals over instant gratification,” says Blank.

She calls this conscientiousness a “core characteristic” of people who build wealth.

Or, as Jennifer Thomas, a psychologist and co-author of “When Sorry Isn’t Enough,” puts it: “Wealthy families don’t go to Disney World now — short-term goal — and hope to start saving later. They live according to their long-term priorities and save a little bit all along the way.”

4. Pay Yourself First

Although consciously prioritizing long-term goals is important, this is difficult to put into action.

So, to sidestep your brain’s natural proclivity toward the present moment, experts say you should “pay yourself first.” This well-known financial concept involves automatically funneling money into your investment and savings accounts before giving yourself the chance to spend it.

Thomas suggests automatically transferring money from your checking account – each week, paycheck, or month – into your retirement and 529 plans. Wealthy families, she explains, “automate the process so it’s painless and they can’t mess it up.”

Pallesen, who supports this approach, also suggests automating when you get a raise.

“If you are suddenly making $200 more per paycheck, it is such a good practice to automatically have that $200 go into your retirement account and keep your lifestyle the same,” he says.

Otherwise, he warns, you’ll end up spending that money, and, ultimately, reverting “to the same level of satisfaction you had in your life” before what he calls “the hedonic treadmill.”

5. Name Your Savings Accounts

To make it a little easier to direct money toward your savings accounts, Pallesen suggests giving them aspirational names, like “Our Dream Beach House” or “Little Claire’s Education.”

“We are not naturally wired to save for the long run,” he says.

“Our brain loves immediate pleasure. But when you name an account, you are placing an emotional value on it and you are more likely to follow through in funding it.”

If your 529 account is named after your child, for example, Pallesen says putting money in it will feel good, because you’re “activating your feeling of love for your child through saving.”

Blank agrees. She says that thinking of who you’re supporting with your money can help you overcome your desire for instant gratification.

“Parental instincts and protective instincts are very strong, and can lead an individual to put their desires and even needs before those of others,” says Blank.

6. Create Accountability

Everything is easier with a buddy — so don’t be afraid to share your financial goals with the people around you.

“We are so much more likely to achieve our goals when we know that other people are aware of them. The thought of someone knowing whether or not you are achieving your goals is incredibly motivating,” says Pallesen.

While friends are a great start, you can consider enlisting professional help, too. Just like a personal trainer, a financial planner can provide education, motivation, and accountability for your goals. Or, if you’d prefer a free and tech-forward approach, try an app like StickK or a virtual financial coach like Charlie.

Wealthy Habits Build Wealth

Humans didn’t evolve to care about 401(k)s, compound interest and 45-year investment timelines. We evolved to care about today.

So, rather than getting upset about your lack of self-control or weak willpower, accept the fact that you’re human — and the fact that, to get rich, you’ve got to make your brain do things it doesn’t really want to do.

By sticking to the six tips offered here, you will hopefully build wealth and achieve your financial goals. Are you ready to give it a try?

 

How much should you save for your vacation?

What’s your dream vacation?

Maybe it’s sitting on the beach sipping mai tais and watching the sun go down. Or maybe you’re a bit more adventurous and would prefer renting a van and driving around Iceland’s Ring Road.

No matter what your vacation preferences, one thing is likely the same: Your trip will cost you a pretty penny. Luckily, that’s what savings accounts are for. But how much should you save up for a vacation? And what’s the best way to save?

To answer these questions, we’ll show you how to create your own DIY savings plan so that no matter where your wanderlust takes you, you’ll have enough money in your bank account to get you there and back.

Step 1: Create a Target Savings Goal

Guessing and pulling a random number out of thin air is an easy way you can come up with a target savings goal. But it’s also one that’s likely to leave you disappointed, since you might run out of cash before your vacation ends. There’s nothing worse than being stuck in a gorgeous exotic location but having no money to do anything.

Instead, try this approach:

Tally Up Your Vacation Costs

This will require a bit of research on your part (but honestly, isn’t scoping out all of the opportunities part of the fun?)

In particular, take some time to tally up the total cost of the following things for the duration of your vacation:

  • Round-trip airfare
  • Hotel
  • Food
  • Souvenirs
  • Trips, tours, and admission prices

Step 2: Create a Working Savings Plan

Now that you’ve got a target in mind, great. Now, what do you do? Create a savings plan, of course.

Here’s how to do it:

Tally up the number of months between now and when you’ll be leaving for your vacation. Then, divide your target savings goal by that number of months.

This leaves you with the exact amount of money you need to save each month between now and when you leave.

Curious to see how this works? Let’s look at an example.

Example: Next Year’s Trip to New Zealand

Let’s say you want to go on a two-week tour of New Zealand next year. You do some research and come up with the following numbers:

  • Airfare: $1,100
  • Hotel: $150 (per day)
  • Food: $50 (per day)
  • Souvenirs: $200
  • Trips, tours, and admissions: $100 (per day)

The total cost of this trip is $5,500. If you want to go on this trip in 12 months, you’ll need to save up $458.33 per month to have enough cash for the trip.

Step 3: Re-evaluate Your Plan

So far, we’ve just created a working plan. Chances are, you’re probably shocked by how much you need to save — that’s normal, don’t worry!

There are a few things you can do to revise the plan so it fits your finances:

  • Adjust your monthly budget: Look for expenses you can easily cut out, such as dining out, subscription boxes, etc. This will free up more money each month so that you can divert it to your vacation fund instead.
  • Start side hustling: Side hustling is the easiest way to boost your income. Each extra dollar that comes in is a dollar closer to your travel goals.
  • Change your travel plans: Look over your travel plans. Is there any way you can lower your expenses by perhaps staying at cheaper hotels or eating out less? This will reduce the cost of your vacation as a whole. Alternatively, you could push your vacation further out into the future, so that you have to save less each month.

Example: Final Plan for Next Year’s Trip to New Zealand

Maybe you decide there’s no way in heck you can afford to save $458.33 per month. No worries — you can still go!

After looking at the three options listed above, you can make the following changes:

  • Cut your $25/month box subscription and cut $150/month from your dining out budget. This frees up $175 per month to go towards your New Zealand trip.
  • Start a side hustle and earn an extra $200 per month.
  • Opt for staying in backpackers’ hostels instead, for $50 per night. This frees up $1,400 from your target savings goal.

With these changes, you now only need to save $4,100, or $341.67 per month. You’ve also freed up $175 per month from your budget, and are earning an extra $200 per month for a net amount of $375 extra per month. Now, you’re able to save up enough for your trip!

Step 4: Put Your Savings on Autopilot

Now that you know how much your vacation will cost and how much to save each month, it’s time to put that plan into action.

Sure, you can try to remember to set aside money each month into your savings account. But, we promise you that something will get in the way and you’ll likely forget (just like that time you put your car keys in the fridge and couldn’t find them later).

Instead, put your savings on autopilot. You can use Chime Bank’s automatic savings feature to do this for you. In this case, you can set up your bank account to withdraw the money after each paycheck.

All you have to do is count up the number of paychecks between now and when you leave on your trip, divide your target savings goal by that number, and voila! You can set up your account to withdraw that amount from each paycheck so that it’s entirely on autopilot.

Are you ready to travel?

If you follow this four-step guide, all you’ll have to worry about is remembering your camera and deciding which fun activities you’ll do once you’re on your vacation.

Bon voyage!

 

9 Money Goals You Should Have

Regardless of whether you live paycheck-to-paycheck or have plenty of wiggle room in your budget, it’s important to have money goals in order to pay off debt, increase your income, and save more money.

When it comes to finances, however, it’s confusing to figure out where to start. So, to help you get a jump-start on setting financial benchmarks, take a look at nine money goals to practice for the rest of your life.

1. Get Out of Debt

Getting out of debt seems like an incredibly daunting task, yet this is one of the best things you can do to maximize your money.

To start clawing your way out of debt, it’s best to set specific goals. For example, you can perhaps make double car payments until your car loan is paid off, or put an extra 25% towards your mortgage each month.

2. Save for an Emergency

Of course, you never want to deal with an emergency, such as losing a source of income or paying for an unexpected medical expense. But, unfortunately, emergencies happen, and you should make sure you’re prepared.

To do this, set up a specific bank account for your emergency fund. How much you save for emergencies is dependent on your current income and expenses. In general, it’s a good idea to have at least three to six months worth of normal expenses saved up for unexpected expenses. If you can stash away even more, then do it!

3. Invest for Retirement

This may sound like a broken record, but seriously, it is never too early to start saving for retirement. It’s estimated that millennials will need to save more than one million dollars to have a comfortable retirement.

If you haven’t started saving for retirement yet, start now. If you work for a company that offers an employer-sponsored retirement plan, get on board. Some companies even match your contribution, up to a certain percent.

If a company retirement plan isn’t an option for you, start an individual retirement account (IRA) and make regular contributions.

4. Spend Less

Everyone can use more money. And the easiest way to stash away more cash is to spend less. To do this, it’s important to be conscious of what you spend your money on. This way you can cut out unnecessary expenditures.

For example, you can pack a lunch the night before work so that you aren’t tempted to eat out the next day. Or, you can quit buying your morning coffee at expensive coffee houses and make coffee at home. You can also take advantage of sales, coupons, rewards, and promo codes so that you can avoid paying full price for your everyday items.

5. Increase Your Income

This one can be a bit scary for many people. Increasing your income generally means you’ve got to be bold and go for something bigger. Even the slightest pay raise or a new side hustle can give you some flexibility financially.

If you can do this, you’ll have more money to use on your goals like paying off debt, giving to charities, and breaking the paycheck-to-paycheck cycle.

So, consider looking for a new higher-paying job, asking for a raise, or launching that side hustle you’ve been dreaming about! If you’re still not sure how to earn extra money, there are endless, easy ways. The most common way is to get a part-time gig like driving for Uber or Lyft. This way you can set your own hours. To earn some side cash for smaller goals, try cashback credit cards or apps like Ibotta to earn extra money on everyday purchases.

6. Increase Your Insurance

Increasing coverage on your insurance can save you loads of money later on. The key is to make sure you have enough insurance in the event that you have to use it.

Bottom line, you don’t want to be left with a huge financial burden because you don’t have enough insurance, so work with an insurance agent to make sure you have the proper coverage.

7. Save for your Dreams

I don’t know about you, but I have lots of dreams that just so happen to be expensive. Specifically: I want to travel the world and own my dream home.

Although saving for your dreams may not seem like a top priority compared to other money goals, it is still important. So, even if you have to start small, start saving for your dreams right now. You owe it to yourself.

8. Break the Paycheck-to-Paycheck Cycle

Living paycheck-to-paycheck makes it harder to dig yourself out of financial emergencies.

To break this cycle, try living below your means and essentially pretending you make less money than you do. Save what is leftover each month and stash it away. It’s a good idea to be strict about your budget and even use a financial planning app to help you track what you spend. This way you’ll be more apt to stay on track and not overspend.

9. Plan to Give Back

Giving back is a wise idea as you can help other people achieve their dreams. Plus, giving to charities can provide a financial benefit to you – come tax season.

If you don’t have extra cash to donate, no worries. Donate your time and resources. For example, you can volunteer at an animal shelter, donate unwanted items to homeless shelters, or tutor underserved children.

Start Today!

Committing to these nine money goals can be an important part of your financial life, helping you form healthy habits, earn and save more money, and even give back to your community. So, what do you say? Are you ready to stop making excuses and start smashing those money goals?

 

8 Ways to Get One Month Ahead On Your Expenses

As you can probably imagine, most Americans live paycheck to paycheck. This means they spend money as they earn it.

In fact, more than one-third of American millennials (34%) say they could not come up with $2,000 in the next month to handle an unexpected expense.

But, what if you could cover all your expenses at the start of the month – before you even get paid? Then, when you get paid, imagine how much more organized and financially prepared you’d feel. You wouldn’t actually need that money for another 30 days and it could sit in your bank account.

Getting one month ahead on your expenses is a cool concept. Here are 8 things you can do to make this happen.

1. Add Up All Your Monthly Expenses

First, you’ll want to get a good idea of how much your monthly expenses are. So, go through your budget and track your spending to make sure you don’t miss anything.

Be realistic about how much you comfortably spend in a given month. Sometimes, what you actually spend doesn’t match the amount you budgeted for. Make sure you go back to your budget and enter in how much things really cost. For example, once you know you’re spending a set amount per month, you’ll know how much you need to have in order to get one month ahead and save for the following month.

2. Use Lump Sum Payments and Windfalls

If you get windfalls like a tax refund, inheritance or a bonus at your job, you can use this money to cover your expenses for the month.

Then, you can save whatever you earn during this time for the following month. Before you know it, you’re one month ahead and no longer living paycheck to paycheck.

3. Give Up a Vacation

The average vacation can cost a family more than $1,000. It may be no fun to forego a trip, but doing so will allow you to save up the money you need – fast.

But you don’t have to sit home and do nothing. Consider taking a staycation and planning low-cost or free activities during your week home from work. Then, take all that money you would have spent traveling and sock it away into your bank account.

4. Eat Through Your Pantry

If you spend hundreds of dollars on groceries each month, see if you can challenge yourself to cut that amount in half.

This may be difficult, but you can do it by getting creative and encouraging your family to use up food in your pantry and freezer. You can also shop the sales at your local supermarket and buy generic brands. Then, eat at home for 30 days and see how much money you can save.

5. Cancel Subscriptions

Try cutting out subscriptions in order to temporarily save money. This can include things like your gym membership, cable, streaming services, subscription boxes and so on.

Consider cheaper alternatives or do without for a few weeks – or more. For example, you can likely exercise outside or at home without having a gym membership.

Once you get a month ahead on your expenses and you’re into a good rhythm of saving money, you can consider adding back in your favorite subscriptions.

6. Sell Stuff From Your Home

You may have a lot of unused items lying around your house. Stop telling yourself that you’re going to fix them or use them again someday. You know that’s probably not true.

So, sell these items on eBay, or local sites like OfferUp and the Facebook Marketplace. Go all in with decluttering your home and you can earn extra cash.

7. Try Saving Half of Your Partner’s Income

If you have a two-income household, consider saving half of one of your incomes. This may sound like a stretch, especially if you’ve struggled with saving money in the past.

However, you can achieve this with dedication and the right plan. Start by committing to save half of the lower income in the family. For example, if your partner brings home $2,000 and you bring home $3,500 a month, commit to saving half of his income which would be $1,000/month.

You may have to make several cuts, like not dining out as much, finding free and cheap entertainment, reducing your utility use, driving less to save on gas, getting new quotes for lower insurance rates, and finding a cheaper phone company. Remember: All of these changes can be temporary.

8. Hustle Like Crazy

This is an option you can consider once you’d made a solid effort to reduce your expenses. Making extra money can help you meet your goals faster without sacrificing your lifestyle for an extended time.

For example, see if you can pick up more hours at work, get a part-time job or start a flexible side hustle. You can donate plasma, apply for focus groups and panel studies, walk dogs, babysit, edit resumes, clean cars, or offer your services as a graphic designer. The sky’s the limit.

Anything extra you can do to earn more money will get you closer to your savings goal.

Focus On Big Wins

Getting one month ahead on your expenses can be intimidating. So, try to focus on big wins and make sacrifices for a short period of time.

For instance, if you need to save up $4,000 to cover one months’ worth of expenses, setting aside only $50 per month will drag out the process and you can lose motivation before you reach your goal.

Instead, go after big wins that will allow you to save larger chunks of money in a shorter period of time. For example, cutting out four subscriptions, curbing your dining out habit, and not taking a summer vacation can result in thousands of freed up dollars over just a couple of months. From there, you’ll quickly get one month ahead, which will improve your cash flow and allow you to pay for surprise expenses.

 

How to Break the Habit of Impulse Spending

While forming good financial habits will help keep your spending in check, there are still forces at large that will foil your best money-saving intentions.

To make things even harder for you to hold onto your money, retailers want you to cave in and make impulse purchases. They even employ clever marketing tactics to entice you to spend money.

Here 8 ways retailers try to get you to buy things — and how you can break the overwhelming urge to overspend.

1. Loss Leaders

Loss leaders are the “too good to be true” items sold at below market price.

The goal with these items is to entice you into the store so you spend money. These are the doorbusters and blue light specials that feel like a steal. So, while you may save on say, ground turkey that’s half off, you may also end up spending $50 on regular-priced products.

How to beat it: Have you ever trekked to the local grocer for some butter, only to find a few untouched sticks hidden in the back of your fridge? To help you figure out what you truly need, shop in your pantry or closet before heading out to the store. This will prevent you from doubling up on supplies you already have. Once you’ve done this, you can write a shopping list. Just make sure you stick to it.

2. The Visceral Experience

 Imagine that you arrive at your local supermarket. You smell the aroma of savory ham and cheese croissants wafting through the bakery that’s near the front entrance. When you enter the store, you listen to upbeat pop music playing in the background. And the thoughtfully designed lighting makes every product on the neatly lined shelves look fabulous.

Like an alluring enchantress, the tactile, visceral experience of shopping is so enjoyable that it makes you want to hang out in the store for longer periods of time — and, of course, you end up spending more money.

How to beat it: It’s hard not to be engrossed in a miasma of touch, smell, and sounds. The experience of shopping can provide a form of escape.

It’s also hard not to go grocery shopping, especially when you need food items. So, try picturing products on a messy shelf. If placed in a less-than-picturesque setting, do you still want to linger and shop?

3. Items Placed Next to Each Other

Curated product placement is a clever consumer psychology ploy to get you to spend more money. That’s why when you head to the chips aisle, you’ll find jars of salsa and nacho cheese stacked beside them.

How to beat it: Spend only if you really want the items, and if you can afford them. You can also track your expenses with a money saving app to see how much you have left in your monthly budget for food, clothing, or personal items.

4. Retail Therapy Is Alive and Well

There’s good reason why we enjoy shopping. Whether you’re bored, stressed, anxious, or depressed, it turns out that shopping can help you feel in control of your environment, and thus reduce residual sadness, according to the Journal of Consumer Psychology.

How to beat it: I’m guilty of shopping when I’m feeling bored or stressed. But I also know that it’s better to find other ways to alleviate stress. For instance, take a walk around your neighborhood. Or meditate. Even losing yourself in some binge watching is a better panacea than leisurely shopping, which can be dangerous to your pocketbook.

5. Anchoring

You’ve probably seen “original price” marked next to the discounted price at chain stores. This is a widely-used tactic called anchoring.

As Emily Guy Birken, a personal finance writer and author of How to End Financial Stress explains, anchoring is a term used in behavioral economics that gives you a price for how much something should cost.

Because you see the suggested retail price of $50, which is the “anchor,” the $30 on the price-tag makes it appear like a good deal. But is it really a deal?

How to break the impulse: Spend some time comparison shopping. Use a handy app to compare prices. Make sure you know whether the reduced price is truly a deal — or if the retailer is merely trying to make you believe it’s a bargain.

6. Removing Friction

Friction refers to barriers that make it more difficult or unpleasant to buy things.

Retailers want it to be as easy and painless for you to spend, either online or in the store. That’s why items you put in your online cart are left in your cart, even after you close the web page and return to it at a later date. This is also why it’s super easy to grab items on the checkout stand.

How to break the impulse: Add friction. Delete saved items in your cart, and before you head to the checkout lines, do a quick inventory of items in your basket to gauge what you really need. The more trouble it takes to buy something, the less inclined you are to make a purchase.

7. The Illusion of a Deal

From BOGOs (buy one, get one free) to bulk discounts, supposed deals actually get you to spend more. Take it from a former deal addict. I used to dump random sundry items into my cart — tubes of toothpaste, trinkets from clearance bins, sheets of stationery and stickers — merely for the thrill of scoring a bargain.

While it didn’t put me in the poorhouse, it didn’t help my financial situation, either. That money I wasted on “bargains” could’ve been put toward a higher-value item that I actually wanted.

How to break the impulse: For non-essentials, keep a 30-day list of things you want that aren’t urgent necessities. You could even challenge yourself to keep your discretionary spending to a minimum at the beginning of the month. This way, by month’s end, you might have more to spend on something you’ve had your eye on.

Also, consider auto-saving for any larger-ticket items. Even $20 a week adds up to $80 a month, or $1,040 a year.

8. Confusing Floor Plans

If you’ve ever stepped foot inside an IKEA or home improvement store, you know how the layout forces to you meander throughout the store. What’s more, it’s often hard to locate what you’re looking for. This forces you to explore and “discover” items you hadn’t even thought of purchasing.

How to break the impulse: While it may be unavoidable, try to stay focused on what you intend to buy, and ignore other products that might catch your eye.

Save More Money

While retailers employ clever tactics so that you’ll spend on impulse, you do have the power to avoid this. By understanding these 8 tactics, you’ll be more apt to keep your hard-earned cash in your bank account.

Are you ready to break the urge to impulse shop?

 

7 Financial Literacy Rules That Are Okay to Break

As if you weren’t in enough of a frenzy over filing your taxes this month, April is Financial Literacy Month. You know, the time of year when you’re reminded of all the things you should do with your money. Things like setting up automatic savings deposits, lowering bank fees, and planning for the future.

For the most part, following money rules will help you achieve your financial goals. But, not all of the time. There are exceptions.

Here are seven financial rules you might consider breaking.

1. “There’s only one way to budget”

When you boil it down, having a budget just means adding up your expenses and subtracting them from your income to see what’s left. If you’re short on money, that’s a sign you’re spending too much. If you have money leftover, then you’re living within your means. But one rule you shouldn’t necessarily adhere to: Having the same type of budget as everyone else.

“There’s no one-size-fits-all approach to budgeting,” says Brian Brandow, founder of personal finance site Debt Discipline.

“Everyone’s situation is different, from their income and expenses to their wants and needs.”

Brandow says it’s important to create a budget that fits your values and gives you some flexibility with spending. This way you won’t feel guilty if you splurge on the occasional latte or a vacation with friends.

“The key remains to spend less than you make or balance the budget each month, but with values-based budgeting, you can cheat and make what’s most important to you the priority without going into debt.”

2. “You have to max out your 401(k)”

Your employer’s retirement plan can be a great way to plan for the future, but do you really need to max it out?

“At the end of every year, advisors tell you to put as much money as you can into your 401(k),” says Kurt Hemry, president of Ironwood Wealth Consultants in Portland, Oregon.

“My advice: Don’t do it.”

Instead, Hemry says to focus on contributing enough of your income to get the maximum matching contribution if your employer offers one.

“Beyond that, put the money into an individual retirement account or a non-IRA investment account, which allows many more investment options than a 401(k),” he says.

3. “Don’t use credit; only pay cash”

Credit cards often get a bad rap.

“The number one financial literacy rule that people are always told to follow is not to use credit cards because of the (usually high interest rates),” says Jacqueline Gilchrist, founder of Mom Money Map.

But, “this rule is worth breaking if you pay your credit card bills on time.”

Gilchrist says that in addition to convenience, credit cards can be a good tool for saving money if you’re earning cash back or points that can be converted to cash. Just be sure to watch out for annual fees and be aware of the card’s annual percentage rate if there’s any chance you’ll carry a balance. And when it comes to rewards, pick a card that offers rewards that match your spending style.

4. “You have to save at least 10% of your paycheck”

You’ve probably heard at some point that you should save at least 10% of your paycheck. But there are two reasons to break this rule.

“For one, 10% may be too much for you at this point in your life,” says Kevin Panitch, founder of personal finance site Just Start Investing.

“If you have a lot of student loan debt, for example, that may take priority over saving.”

On the other hand, Panitch says, you might be able to save more than 10%, in which case you shouldn’t limit your savings horizons.

“It could be worth taking advantage of saving more to get yourself to financial freedom sooner, rather than just spending money to spend money,” he says.

5. “Buy a home and stop wasting money on rent”

One of the most often-repeated financial rules is to buy a home because it’s the best investment you can make. But owning a house doesn’t always make sense for everyone.

“Owning a home is expensive,” says Michael Kern, a certified public accountant and founder of Talent Financial.

Kern says that when you add up the mortgage, repairs, closing costs and insurance, it could end up being more than what you pay in rent. His advice?

“Rather than locking up hundreds of thousands of dollars into a house that will probably appreciate at the rate of inflation, you could rent and invest your extra cash into the stock market.”

6. “Paying off debt should be your only financial priority”

Paying off debt can free up more money in your budget to save, but it could cost you opportunities to get ahead in other ways.

“People are always told to pay off their debts first, which is vitally important, but what’s more important is investing in themselves and using their skill set and talents to increase their ability to earn,” says finance and business strategist LaKeisha Mallett.

“Nearly a third of self-made millionaires have at least five sources of income. It’s easier to not be stressed about money when you have multiple ways of earning it.”

The takeaway? If you’ve only got one income stream, find a way to diversify so you can pay off debt and save. If you need ideas, try freelancing, starting a side hustle or working a part-time job.

7. “You need at least six months’ of savings for emergencies”

Having an emergency fund is important because it can keep you from going into debt if you have an unexpected expense. But saving six to 12 month’s worth of income just for emergencies? Think again, says Brian Davis, co-founder of SparkRental.

“For most people, that amount of cash just represents too high of an opportunity cost,” he says.

“The money would be better utilized earning a return, invested in stocks or bonds or some other easily liquidated investment.”

Davis says there are exceptions. If you’re quitting your full-time job so you can build your side hustle into a business, for example, you may need a bigger cushion to fall back on due to irregular income.

But, “for the average person with a stable income and expenses, one to three months’ expenses in cash is adequate,” Davis says.

Which financial literacy rule will you break?

Toeing the line financially has its benefits, but sometimes, you’ve just got to go against the grain. According to these experts, being a financial rule-breaker can help you get ahead.

And here’s a parting tip: If your savings is growing as a result of bending the rules, make sure you have the right bank account to stash your cash.

 

Monthly Expenses Got You Down? Zero in on Unnecessary Spending

Is turbocharging your savings your main goal this year?

If so, it’s time to get real about your spending. Perhaps you’re funneling dough to items you don’t really need.

But, did you know that most of the expenses listed out in your budget may not be actual needs? Yup, those Hulu and Amazon Prime accounts are not exactly necessary expenses.

To start creating a budget that works and reach your financial goals, you’ll first have to define your necessary and unnecessary spending. Read on to learn more.

Necessary Costs

Necessary costs are items you can’t live without. These are not items you think you can’t live without, like organic coffee beans and three streaming services. Here are a few needs that belong at the top of your budget:

  • Housing
  • Transportation
  • Insurance
  • Food and water
  • Gas and electricity
  • Medicines or medical needs
  • Non-negotiable debts, such as student loans

Unnecessary Costs

Unnecessary costs, or wants, are items that you do not need to survive. You may not want to part with your daily latte or Spotify, but you aren’t going to keel over if you cut them from your budget. Here are some examples of unnecessary costs:

  • Cable or alternative cable services, such as Hulu or Netflix
  • Monthly subscriptions like meal kits or beauty boxes
  • Gym memberships
  • Eating out
  • Travel
  • Entertainment

Fixed Costs

Now that you’ve taken a closer look at your necessary and unnecessary expenses, it’s time to look at your fixed costs. These are your monthly expenses that do not change. They are predictable costs with regular due dates. Here are some common fixed monthly expenses:

  • Rent or Mortgage: Whether you rent or own, your shelter costs will be the same each month. Since this is usually your biggest expense, prioritize it.
  • Health insurance: Health insurance premiums can increase yearly, but you won’t see an uptick in price until your renewal time. You can also opt-in to your employer’s health insurance plan to have this monthly cost taken out of your paycheck pre-tax. This allows you to declare a smaller taxable income. For example, if you make $65,000 and pay $4,000 yearly for health insurance, you are only accountable for $61,000 of earnings at tax time.
  • Car insurance: As long as you maintain a clean driving record, your rates should remain steady. My car insurance is about $1,000, split into four payments per year. I transfer $84 into a savings account each month so that I am ready for the $250 quarterly charge.
  • Internet and cable: Your Internet and cable are not necessary expenses, but they do cost the same each month. Minimize these costs by taking advantage of promotions or downsizing your package.
  • Car payments: If you didn’t pay for your car in full, then your monthly payment was locked in at the origination of the loan. If you are leasing your vehicle, be sure to follow the strict guidelines so you can turn in the car at the end of the lease term with no additional fees.

Six Actions to Cut Down Unnecessary Monthly Spending

Now that you understand your fixed expenses, it’s time to look elsewhere to save money. The natural place to cut the fat is with your unnecessary costs.

Here are six ways to trim these expenses down:

1. Pick one streaming service and ditch the rest

Do you really need Hulu, Netflix, Sling and Prime? Definitely not, especially if you also have cable. Speaking of cable, if you haven’t cut the cord, now is a good time to do it. Not only will you save money, but you might also decrease your binge-watching habit.

2. Dump your carrier’s unlimited plan

Paying a premium for unlimited data plans is pointless when you are surrounded by WiFi. Entertain the idea of joining a family plan (even with friends) to save even more on your cell phone costs.

3. Rethink your car

Is your car payment like a dead weight? Maybe it’s time to get rid of your car and take public transportation to get around. Alternatively, you can sell your wheels and buy a more affordable used car.

4. Skip brand names

This rule applies to almost everything you buy. If a brand is pouring millions into packaging and celebrity endorsements, then you can be sure that this is reflected in the cost. Mic calculates that shoppers can save up to $1,500 annually when they switch to generic brands.

5. Put an end to subscription boxes

We all love happy mail, but are your subscription boxes truly worth the cost? Initially, when you break down the cost of the items in the box, it may seem like a bargain. Yet, if you weren’t planning to purchase these items in the first place, they are a waste of money.

6. Ditch expensive gym memberships

Exercise is a necessity for a healthy lifestyle. Yet, you may be paying for an expensive gym that you never use. Instead, cancel that membership and take up running or biking. You can even connect with a friend and go for a hike once a week. Get creative and make use of the great outdoors.

Time to Take Charge of Your Budget

Stop thinking of your budget like a cage that keeps you locked up from enjoying your life. By simply cutting out unnecessary spending, you’ll have more money to devote towards your savings goals.

Just think: That freed up cash can help you go on that Tahiti vacation or afford a down payment on your first home sooner rather than later. Are you ready to zero in on your unnecessary spending and save more money?

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