Tag: Money Saving Tips

 

7 Crazy Things College Students Have Done to Save Money

Being a broke college student is a rite of passage. But that doesn’t mean having no money is any fun. 

When you don’t have a lot of cash to spend, you have to get creative with your funds. And, finding outside-the-box ways to save money can help you stretch every dollar.

If you’re looking for inspiration to help pad your savings account, check out these 7 extreme money-saving stories from some formerly broke students.

1. Recycle for profit

When he was in college LaRon Hayes, marketing manager for Premier International Transportation, discovered that one man’s trash is another’s treasure – literally. 

It started when he came across a Craigslist ad from someone giving away free books. He snagged the lot, then resold them on eBay to make his first $100. From there, he started regularly picking up free items he could resell for a few extra bucks. He was able to use the money he set aside from upcycling to pay down his student loan debt after graduation. 

If you’re interested in reselling, take advantage of all the different ways you can do this to make money. For example, you can sell free or found items on:

  • eBay
  • Amazon
  • Craigslist
  • Local Facebook bargain groups

In addition, don’t count out yard sales, flea markets, thrift stores, consignment shops and used bookstores. These can be great resources for finding and reselling your wares. 

2. Take Extra Credits to Graduate Early

Cutting down what you pay for tuition is one way to save money as a student. Marc Andre, founder of VitalDollar.com, was able to trim a big chunk off his college budget by fast-tracking his way through school. 

“The base tuition was the same for 12-18 credits per semester, so I took 18 credits most semesters because it didn’t cost anything extra,” Andre says. 

He graduated a semester early and saved around $8,000 on tuition and fees to boot. 

If you’re still in school, consider whether graduating ahead of schedule is doable. Check with your registrar and financial office to find out how many hours you can take each semester and run the numbers to see if you’d save anything by getting your diploma a semester or two early.

3. Stock up on freebies

Steffa Mantilla, owner of Plantsonify, saved money in college by building a personal stockpile of free samples.

“My dentist’s office would often let me take multiple toothpastes, toothbrushes and floss,” Mantilla says. 

“Some companies will even send you samples if you email them. Combining this with using hotel shampoos, soaps and conditioners, I rarely had to purchase any toiletry items during college.” 

Assuming you spend $50 a month on toiletries in college, that could add up to $600 a year you could stash in savings. Some other ways to grab money-saving freebies include:

  • Hitting the makeup counter at your favorite department store for free samples.
  • Signing up for birthday freebies at your favorite restaurants and retailers. 
  • Take surveys or watch videos online to earn free gift cards.
  • Join a freebie website like FreeFlys.

Just remember to read the fine print on freebie websites to make sure they’re legit. 

4. Live Harry Potter-style

Communal living can be a great way to save money in college and Megan Robinson, personal finance expert at Dollarsprout, took it to the extreme.

“I lived in a one-bedroom house with two other girls, three dogs and three cats,” Robinson says.

Splitting the rent three ways allowed Robinson and her roommates to each save about $200 per month.

“I’m 90% sure my bedroom used to be a pantry or a laundry room, but the rent was cheaper than anything else in the area.” 

You don’t necessarily have to live in a pantry or broom cupboard, but if rent payments are straining your budget, consider whether taking on a roommate or two might help. Or, think about downsizing altogether and renting a single room in someone else’s home. You can get your own space at a fraction of what it might cost to rent an apartment. 

5. Skip buying textbooks

Buying textbooks can be a financial drain. Becky Beach, founder of MomBeach.com, came up with a creative solution. 

“I read all my textbooks in the campus bookstore so I didn’t have to buy them,” Beach says. 

Now, if you don’t have time to hang in your college bookstore all day, there are a few other ways you can save money on textbooks. For example, you could try:

  • Checking out a copy from the campus library.
  • Buying used textbooks online. 
  • Using digital versions instead of print versions to save money.
  • Renting textbooks on Amazon or another textbook rental site instead of buying. 
  • Sharing textbooks with a classmate.

And once you’re done with your textbooks for the semester, get some of your money back by reselling them. Get a quote on a price from the campus bookstore, then compare that to what you might be able to make by selling your books online or through a student reselling group on Facebook. 

6. Sell real estate in your spare time

Starting a side hustle in college can help bring in some extra cash. Morgan Riddle, interactive media manager at LoveYourMelon.com, took things just a bit further. 

“I was looking for a way to make money and ended up getting my New York real estate license as a junior in college,” Riddle says. 

“I sold and rented apartments on days I didn’t have class or between my classes junior and senior year.” 

When it was all said and done, Riddle ended up making over $15,000 to add to her savings account

Pro tip: If you’re considering starting a side hustle or business, think about whether you’ll need any money up front to get started. In Riddle’s case, it cost $350 to obtain a real estate license but that investment proved well worth it in the end. 

7. Lock up your savings

If you struggle to hold onto your savings, it may be best to make it untouchable. Chane Steiner, CEO of Crediful, says he knew a grad student who had a system for this.

She opened a second account at a bank that had no branches nearby and cut up her ATM card for that account. Then when she got paid, she’d write a check to the second account and deposit it using the bank’s mobile app. 

“Her savings were safe there because getting the money out was just too much of a hassle,” Steiner says. 

You could try something similar by setting up a separate account for savings if you don’t have one yet. 

Do you have a crazy savings story?

Saving money can sometimes be a struggle, especially in college. 

Do you have a wild savings story in your past? Or, are you doing something extreme right now to save and earn more money?

Whatever it is you’re doing, keep making saving money a priority. Setting aside money consistently is the best way to end up wealthy long after you leave college behind!

 

The Ultimate Back-to-School Budgeting Guide

Back to school season is right around the corner. That happened fast! 

While kids are probably not ready to give up on summer fun, it’s important that parents start planning for back-to-school expenses and consider creating a budget. Indeed, as it gets closer to crunch time, every paycheck counts. 

According to a recent survey, families plan to spend around $685 per child during the back-to-school season. In order to help you figure out how to manage these costs, we came up with the ultimate back-to-school budgeting guide.

Get started by prioritizing your expenses and planning out your spending. Take a look:

Narrow Down Your Back-to-School List

If back-to-school shopping is overwhelming, you’re not alone. You probably have tons of school supplies and more on your list and if you’re not organized, you can easily overspend or forget something. 

So, before you head to the store or start shopping online, narrow down which expenses are your priorities. Some of the most popular categories are:

  • School supplies
  • Clothes
  • Shoes
  • Backpacks and lunch boxes
  • Books
  • Technology

For starters, set a recommended spending amount for each category and notate this in your budget. This way you have something to shoot for. For example, if you only want to spend $120 on clothes, include this in your budget to help you plan your spending strategy more effectively.

Factor in Any Hidden Costs

Don’t forget about hidden back-to-school costs, like after-school activity fees, band equipment fees, setting up a school lunch account and the likes. Identify these costs early so they don’t bust your budget. 

Take Inventory Around the House

Before you start doing any shopping whatsoever, take a look around your house to see what you already have. I do this each year and it saves me a ton of money

When my son comes home on his last day of school, I unload his backpack, remove all of his leftover school supplies, and store them away. I often find unused pencils, packaged notebook paper, markers, crayons, and folders that are in pretty good shape. 

When August rolls around, I take the stash of school supplies I saved and use that to determine what items I actually need to buy. 

You can do this with clothes as well. Go through your child’s closet before shopping and start to piece together existing outfits that still fit and are in good condition. 

Determine Your Savings Timeline

Once you know how much you have to spend and what you need to buy, start developing a timeline for your shopping so you can save up in advance.

For example, if you find that you’ll need to spend $400 on back-to school items this year, break out that amount over your next few paychecks and start saving. You can make it even easier by setting up automatic transfers every time you get paid. 

Also, see if you can spread out any purchases. For example, school starts a week later for us this year so I plan to use the extra time to spread out my spending. I’ll buy school supplies first, and then take my time purchasing clothes and anything else.  

Follow the Deals

When shopping, make sure you take advantage of deals and coupons to save money. Stores like Target and Walmart, and office supply outlets tend to have competitive back-to-school offers. 

One year, we took advantage of Office Depot’s penny sale and scored several items for a single penny. 

You can also shop in spurts as some stores may give you a coupon to use when you come back. In this case, it makes sense to do one round of back-to-school shopping and then return a few days later with the coupon. 

Thanks to the Internet, you can also save money shopping from your living room. Sites like Rakuten are great for earning cash back on your purchases without having to use a credit card. You can also use sites like Flipp and Hollar to scan for deals from your phone. 

Shop Used or Find Free Items

Another great way to help you stick to your back- to-school budget is to shop for used items. Clothes can be expensive and sometimes I wait around for the Labor Day sales, but I also like to mix in some used clothing.

Thrift stores like Goodwill and local resale shops allow you to get more bang for your buck and you can often find great name brand items. 

If you need specific supplies, you can also ask around to see if family or friends can help. For example, an older child may need a special calculator for math. Before you run out and buy one, see if anyone you know has that calculator and will let you borrow it for the year. Perhaps they’ll even give it to you if they no longer need it! 

Avoid Overspending 

Try to use some of these savings strategies to help you stick to your budget and avoid overspending. Odds are, you have other expenses to consider during the fall and winter months so remember not to drain your finances with back-to-school shopping.  

A good tip is to set realistic expectations with your kids and plan to mix in used items. With the proper planning and budgeting strategy, you can still get everything you need for the school year! 

 

6 Things You Should Know About Financial Freedom: A Proven Path to all the Money You’ll Ever Need

When you think of financial independence, you probably think about people who got rich starting a business, or saved every dime and never had any fun.

Truth be told: There is a way to enjoy your pumpkin spice latte and avocado toast – and still retire early. Take Grant Sabatier. A practicing Buddhist and millennial, Sabatier had a paltry $2.26 in his bank account (plus $20,000 in credit card debt) when he was 24. Yet, in only five years, he grew his pennies to more than $1.25 million. Through his website, Millennial Money, and recent book, Financial Freedom: A Proven Path to All the Money You’ll Ever Need, he now shares his wisdom with the universe. 

While Sabatier’s book is primarily focused on how to achieve FIRE (Financial Independence, Retire Early), he also offers up tips for growing your money. 

Whether you’re aspiring to be part of the work optional set, or want to bulk up your savings account, here are 6 ways you can build your wealth:  

It’s about your daily habits

Your daily habits are key to building wealth. The average person spends 2,000 hours a year working and earning money. Yet, all it takes, according to Sabatier, is about five minutes a day to manage your money. 

And, when this becomes a part of your daily routine, it’s much easier to control your emotions and get comfortable with risk. This, in turn, will help you make better money decisions.

“While it might take some time to build a new habit, the lifetime impact of small daily decisions and habits can be massive,” says Sabatier.

For instance, something as small as checking the balance of your bank account through a bank app each day can help keep your finances in good shape. 

Other quick and easy things you can do each day? You can see how much you spent yesterday and how much you’ve spent this month. You can also keep tabs on how much you’ve earned from all your income streams to determine if you’re on track with your savings goals. You can also check your credit card and bank accounts to make sure you aren’t dinged with fees and there’s no suspicious activity. (If you’re a Chime Bank member, you’ll never be hit with fees. Never ever.) 

Maximize the potential of income, savings, and expenses 

If you want to grow your money quickly, you should consider maximizing your three “levers:” income, savings, and expenses. 

For example, if you cut back on your living expenses and earn more at the same time, you’ll have more money to save and invest. 

Skip the budget

Most people find budgeting to be tedious, time-consuming, and hard to maintain. To this end, Sabatier says budgets that make you feel deprived and guilty about your spending habits can backfire. Instead, he recommends focusing on lowering your top three major expenses instead — housing, food, and transportation. 

You can reasonably boost your savings rate by 25% (savings rate equals the percentage of your income you’re saving) by finding a cheaper place to live, getting roommates, or saving on transportation by buying a used car. You can also save money on food by growing your own veggies, bartering with your neighbors, or bulking grocery staples in bulk.  

Focus on the future value of a purchase 

That $20,000 you spent on a new car will cost you more than just $20,000. As Sabatier explains, if your hourly wage at your day job breaks down to $20 an hour, that car not only costs you 1,000 hours of your time, but also the future value of that money should you invest it. Using this calculator, if you earn an average of a seven percent return (compounded daily) on that $20,000, in 10 years you’ll have $40,272.35. In 20 years you’ll have a cool $81,093.11. 

Combine and maximize ways to make money

Sabatier lists four major ways to earn a buck: working for someone else at a full-time job; side hustling; entrepreneurship; and investing. And, if you combine different ways to make money, you’ll earn money faster while you have a fall-back income stream. 

For instance, if you have a day job and also a side hustle, and you get laid off, you still can depend on your side hustle. If you have a day job, you can also  “hack the 9 to 5” by making the most of your benefits, such as getting the full employer match on your 401(k) or asking for what you are truly worth. 

Here’s another example: If own your own business but also invest in real estate, you’ll have your investments to fall back on if your business has a few slow months. 

Automation is just the beginning

While “setting it and forgetting it” doesn’t take a lot of effort, automating your savings is just the beginning. Sabatier points out that in order to boost the amount you save to fast-track your wealth, you’ll need to put in the work to bump that savings amount from five percent to 10 percent, or from $100 to $200 a month. This takes serious work and dedication. 

If you don’t have a ton to start with, start small and go from there. It’s helpful to break up your savings goals to see how much you’ll need to save monthly, weekly, or daily. For instance, if you want to save $5,000 in six months, you’ll need to save about $834 a month, $195 per week, or $28 a day. 

Make the most of your time

As you learned from Sabatier’s tips here, we all have the potential to make more money. And, by adopting an enterprise mindset, you can build wealth even faster than you thought possible. Ready to jump in? 

 

Here’s How to Build $5,000 in Net Worth — While in Debt

Did you know that you can grow your money even if you don’t have a robust savings account? And, you don’t have to wait until all your debt is paid off before you start stacking the dollar bills in your bank account

In fact, you can rack up $5,000 in savings within six months — all while carrying debt. To get started, check out these pointers from Aristotle Hren-Boulis, a 25-year-old financial coach in Los Angeles.  

Figure out how much money you have to save and spend 

As Hren-Boulis says, “what gets tracked gets done.”  

Yet, instead of tracking every single transaction, which is as tedious as counting calories, focus on just your variable expenses. To start, figure out what your monthly income is. 

Next, pull out your fixed living expenses. These are those bills and expenses that you pay every month in about the same amounts. This typically includes rent, the minimum payments on your debt, utilities, and insurance. 

Pro tip: If you have a bill that you only pay a few times a year, like your auto insurance premium, you can divide that by the number of months and fold that into your monthly expenses.

Once that’s all done, you’re left with a number. Let’s say it’s $2,000. Divide that figure by the number of weeks in a month, which — if you want to be exact — is 4.28. If you have $2,000 beans after your fixed expenses, that’s about $467 a week. That’s how much you have to “play with,” and either put into your savings or spend on your other living expenses. If you have $1,500 after you subtract your fixed living expenses, that number is about $350 a week. 

Pay yourself first

After you pinpoint that number, divvy it up into savings and spending. How much should you save? Well, there’s no set number, as it depends on your lifestyle and preferences, says Hren-Boulis. 

“Everyone’s budget is different, so you’ll have to customize it,” he says.

So, if your weekly number is $467 after your fixed expenses are accounted for, try saving $200. The rest you can spend on your variable expenses, such as groceries, eating out, concert tickets, personal items, and clothes. Here’s the sweet part: If you save $200 a week, after six months you’ll have $5,000 in the bank!

Pro tip: To save time and brain space, automate your savings. If you’re a Chime member, you can choose to save a percentage of each paycheck with Chime’s Save as You Get Paid feature.

Budget weekly

Instead of budgeting for the entire month, break down your variable spending in weeklong chunks. 

When you’re starting out, Hren-Boulis recommends giving yourself more than you think you’ll need. To gauge this, you can go through your transaction history on a mobile banking app. Not sure where to start? Try $250 or $300 a week, and adjust your weekly savings accordingly. 

Start your budget on the weekend

Rather than beginning your budget on a Monday, Hren-Boulis recommends kick-starting your spending plan on the weekend. 

This way you’ll be in the flush and can enjoy yourself over the weekend. 

“Nobody wants to get to the weekend and run out of money. So if you start on the weekend, and spent $100, then you’ll have $150 Monday to Friday,” says Hren-Boluis. 

Of course, you’ll have to figure out what works best for you. For example, if you’re concerned with having enough money for groceries, you might start your budget on your weekly grocery shopping day. 

The important thing is to have enough money to spend so you don’t feel deprived or stressed out. 

Track your spending

You’ll only need to track your spending on your variable expenses. You can do this by way of jotting down notes on your phone or on a pad of paper, creating a simple spreadsheet, or using a money-saving app. 

“When you start tracking how much you’re spending each week, you start to mentally make trade-offs,” says Hren-Boulis. 

For instance, let’s say you have $30 left this week. You can think to yourself, “If I eat in tonight, I’ll have money to go out tomorrow night.”  

Spend what remains 

So what happens if you end up spending less in a week than the amount you had set aside? Hren-Boulis says it’s important to feel motivated and good about your money. 

For instance, if you end up having $100 left for that week, you could spend $60 on a massage and put the rest toward savings. And if you don’t feel deprived, then by all means save whatever is left over each week. 

He also doesn’t think it’s a good idea to “roll over” money into the next week.

“That’s when you start to get ideas,” says Hren-Boulis. 

Letting “extra” money spill over into subsequent weeks operates on the same principle of rollover minutes for cell carrier plans. If there are weeks where you have larger chunks of money to spend, you might get used to spending more than you can really afford. 

Track your net worth

Net worth isn’t your income, but rather your assets minus your liabilities. And, tracking your net worth is something you should get into the habit of, explains Hren-Boulis. 

Your assets include the value of your car, and how much you have sitting in your savings and retirement accounts. Your liabilities include all your debt — such as credit card balances, student loans, car loans, and personal loans. 

Try to check in on your net worth at least once a month. When you see that number growing, it’ll keep you motivated! 

Save those beans before paying off debt 

So, should the money you’re saving go toward debt or your emergency fund? 

Ideally, you should have some savings tucked away in an emergency fund before aggressively paying off your debt. Why? Well, if you don’t have much of a financial cushion, and the unexpected should occur, you might resort to using your credit cards, which could tailspin you into deeper debt. 

You do you

Following these tips is just one way you can go about saving $5,000 within six months. But, no matter how you slice and dice things, the important thing is to consistently save the same amount each week. Are you ready to give it a try?

 

What To Do With a Three Paycheck Month & How You Can Save Two Extra Checks Per Year

Are you paid on a bi-weekly pay schedule? If so, did you know that there are two months every year when you’ll receive three paychecks instead of two?

While it may be fun to go out and spend the third paycheck you receive during these two months, there are better ways to use this extra money. For starters: You can create a monthly budget based on two paychecks a month and then make smart money decisions with the extra funds. 

Learn more about bi-weekly and bi-monthly pay schedules, and see how you can maximize your money during your three paycheck months. 

Bi-weekly Pay vs. Bi-Monthly Pay  

Before we dive in, it’s important that you know the difference between bi-weekly and bi-monthly pay schedules.

A bi-weekly pay schedule is the most common type of pay period used by employers. If you are paid this way, you’ll generally get paid on a certain day, every other week (such as every  other Friday). This means you’ll receive 26 paychecks a year and 27 during a leap year. It also means you’ll get three paychecks a month twice a year. 

A bi-monthly pay schedule, also called semi-monthly pay, means you get paid twice a month. Pay dates are typically 15 days apart and occur perhaps on the first of the month and 15th or 16th. You may also get paid on another random set of dates that are 15 to 16 days apart. With this type of pay schedule, there are 24 pay periods in a year – with no three paycheck months. 

In this story, we get into the nitty-gritty of bi-weekly pay periods, as this is what gives you an extra two paychecks a year. Read on to learn seven ways you can use your extra paycheck money wisely by planning ahead and responsibly spending and saving your hard-earned cash. 

1. Pay Off or Reduce Your Debt

When you get a third paycheck in a month, instead of going out and spending that cash, try using it to pay off your debt. For example, you may be able to pay down credit card balances, chip away at your medical bills or even make extra payments toward your student loans or other debts.  

2. Start an Emergency Fund 

Do you have an emergency fund, or money set aside in a specific account to pay for unexpected expenses, like medical bills or car repairs?

If you don’t have an emergency fund, you’re not alone. According to Bankrate’s latest Financial Security Index, about 28% of Americans have no emergency savings

At a minimum, many financial experts recommend you have at least three months of living expenses saved up into an emergency account. But, don’t fret. Whether you’re starting from scratch or trying to build your emergency fund, your extra two paychecks can help you meet this goal. 

Pro tip: Pretend you never saw those paychecks and auto-transfer them immediately into your emergency fund as soon as you get paid. If you’re a Chime member, this is super easy with Chime’s Automatic Savings feature. 

3. Invest in Your Retirement Savings

You probably know about the importance of saving for retirement, right?

Whether you have an employer-sponsored 401(k) plan or an individual retirement account (IRA), you can always add extra money to your account – helping you build up your fund even faster. So, perhaps consider putting your two extra yearly paychecks right into your retirement account. 

4. Catch up on Home Maintenance & Car Repairs 

Have you been putting off home repairs or car maintenance because you’re low on cash?

Think of your three paycheck month as a great way to get these repairs taken care of, paying for them in one fell swoop. 

5. Start a Vacation Fund 

It’s summertime and we know you’d probably like to take a vacation. But, even if you travel on a budget, you know this means you’ll be spending money that you wouldn’t ordinarily spend.

With this in mind, wouldn’t it be nice if you had a vacation savings account, with money sitting there and ready for you to use on your next vacay? Why not open that savings account right now and deposit your extra third paycheck directly into the bank?

Without even thinking about it, you’ll be able to go on vacation without stressing about how you’ll pay for it. 

6. Save for Christmas Presents 

We know the holidays may seem way off in the distance. But, before you know it, Christmas will be here and you may be whipping out your credit card to pay for those presents. 

But, what if you used your extra third paychecks toward these gifts? All you have to do is deposit these paychecks into a holiday savings account or perhaps your regular savings account (just don’t spend it!) The money will be ready for you when Christmas rolls around and you can enjoy holiday shopping – without the stress! 

7. Treat Yourself (But Only a Little)

If you’ve been diligent in sticking to your budget, there’s nothing wrong with using a small percentage of your extra third paycheck to splurge on something you want. The operative word here is “percentage.” So, sock those two checks away and then maybe take 10-25% of this cash and treat yo’self to something you want, like dinner with friends, a manicure or a fitness workshop. You get the point. 

Use Your Third Paycheck as a Financial Clean Slate

As you can see by the seven options here, you’ve got many ways to use your three paycheck months to make financial improvements in your life: from paying down debt, to starting an emergency fund, to leveling up your savings account, and more. 

Instead of spending those checks recklessly, you can use these three paycheck months to get closer to your financial goals. Are you ready to give it a try?

 

Recommended Budget Category Percentages

We all know how beneficial a budget can be. 

For starters: A budget outlines your spending plan so you know exactly how much money goes toward each expense. Budgets are also extremely helpful when trying to decide how much you have available to save and how much money you can put toward paying off your debt. 

At the same time, there are many different ways to budget. One of the most common budgeting strategies I recommend is to set up budget category percentages. For example, a common rule of thumb is that housing costs shouldn’t exceed 30% of your income. What about the rest of your budget categories? Luckily, they can be broken down by percentages as well. 

Read on to learn more about creating percentage categories for your budget. 

Start with the Basics

If you’re new to budgeting, using the 50/30/20 approach is a great starting point. 

With the 50/30/20 budget, you allocate 50% of your income toward living expenses and necessities, 30% toward wants, and 20% toward debt and savings. 

Here’s how this would look. Say you bring home $3,000 each month. Under the 50/30/20 budgeting method, you’d put $1,500 toward living expenses and necessities, $900 to wants and variable expenses, and $600 toward debt and savings. 

While this method is super easy to use, it may not fit in with your particular goals. For example, you may want more wiggle room for your savings account

Get a Little More Specific

If you want to venture beyond the 50/30/20 budgeting method, you can get more specific and add additional percentages while breaking up your spending into more categories. 

Think about your goals and lifestyle. What do you value spending money on? How much are your core necessities? Do you have debt? What are your savings goals? 

Start tracking your spending to see what your current budget categories are. It can be eye-opening to see the percentage of your income that you spend on things like dining out, transportation, and even bills and insurance. 

So, think about setting your own budget percentages based on your preferred spending patterns and goals. With that in mind, here are our recommended budget category percentages that can help you get ahead. 

Basic Recommended Budget Category Percentages

Housing (mortgage and rent costs): 25% 

Utilities: 5%

Food: 10%

Transportation: 5%

Insurance (includes medical, auto, renter’s etc.): 15%

Personal (+ household expenses): 5%

Entertainment/Recreation: 10%

Charitable Giving: 10%

Savings/Debt: 15%

Here’s how this budget would break down if you bring home $3,000 each month:

Housing (mortgage and rent costs): $750

Utilities: $150

Food: $300

Transportation: $150

Insurance (includes medical, auto, renter’s etc.): $450

Personal (+ household expenses): $150

Entertainment/Recreation: $300

Charitable Giving: $300

Savings/Debt: $450

Keep in mind that these are pretty standard budget percentages if you want to have enough money to afford your needs and wants. As you can see from the example above, you still can’t afford to splurge on housing costs, but you’ll have plenty of money for groceries, dining out, giving, savings, and debt payments. 

Once you have your ideal budget in place, you can start allocating money to different expenses when you get paid

Aggressive Recommended Budget Category Percentages

While the basic recommended budget category percentages may work well, you may want to take it up a notch if you have some aggressive savings goals and are willing to live frugally. 

If you are looking to pay off debt quickly or save to meet an important goal, here are some budget category percentages you can try.

Housing (mortgage and rent costs): 20% 

Utilities: 5%

Food: 7%

Transportation: 3%

Insurance (includes medical, auto, renter’s etc.): 10%

Personal (+ household expenses): 5%

Entertainment/Recreation: 5%

Charitable Giving: 5-10%

Savings/Debt: 40%

Here’s how this budget would break down if you bring home $3,000 each month:

Housing: $600

For this amount, you’d likely have a roommate or rent a smaller apartment to keep housing costs low. If you own a home, you may also rent out a few rooms to offset your mortgage costs. 

Utilities: $150

If you have roommates, you can split the cost of utilities to save money. Perhaps you can use Chime’s Pay Friends to send fee-free mobile payments if you’re splitting bills. You can also limit your use of electricity during the day by turning off lights as well as reducing heating and cooling costs by using a programmable thermostat.

Food: $210

Although the amount is quite low, this may be enough for one or two people. If you cook most meals at home, take advantage of sales, and buy ingredients and whole foods instead of packaged food, you can make this budget work. 

Transportation: $90

While this amount is also low, perhaps you work close to home and can keep your fuel costs down. Or, maybe you can use alternative transportation like walking or cycling. 

Insurance: $300

For this amount, you likely shop around for the best insurance rates and drive an older car that doesn’t cost much to insure. You also receive benefits from your job which helps keep this category low.

Personal (+ household expenses): $150

This amount is just enough to buy basic needs and supplies for the house as well as some affordable personal care once or twice a month. 

Entertainment/Recreation: $150

Your dollars can be stretched with free local activities and experiences along with using coupons and deal sites to dine out. 

Charitable Giving: $150-$300

Although you’re determined to save and/or pay off more debt, this budget still allows for you give back to others in need. 

Savings/Debt: $1,200

Accelerated debt payments and savings contributions will allow you to hit your financial goals faster, even if you don’t have a large income. 

The Power of Budgeting

It’s quite possible to save more than $14,000 annually on a $40,000 salary with the aggressive recommended budget percentages above. 

Yet, regardless of whether you prefer an aggressive, basic or other type of budget, breaking up your spending categories by percentages is powerful. It shows you exactly where your money is going and how much of your income is used for certain expenses.  

Feel free to use this new perspective and play around with your own budget category percentages. This will help you determine where you spend and how much you can save. Are you ready to give it a try?

 

Overspending Because of Social Media? Here’s How to Stop.

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It’s hard to scroll through Instagram or any other social media platform and not be inundated with post after post showing you everything you’re missing. And it’s not just the ads that pop up in your feed, it’s the people you know — or the influencers you think you know — that may be causing you to spend. 

Charles Schwab’s 2019 Modern Wealth Survey found that more than a third of Americans admit that their spending has been influenced by what their friends are sharing on social media. And they also say that this FOMO is causing them to overspend. In fact, nearly half of millennials spend money they can’t afford on experiences with their friends. With stats like this, it’s not hard to see that social media can be a barrier between you and your savings account. 

So, what can you do to stop overspending due to social media FOMO? Here are four tips to help you curb the urge to spend. 

1. Curate your feed

It’s time to find balance with who you follow. While it’s fun to follow celebrities or friends who live it up, get in some other #goals. 

Find accounts that make you feel good, without necessarily making you feel the need to spend more. If you’re a runner, following running accounts can help inspire you to run, a low-cost activity. Love baking? There are plenty of social media accounts that will help you indulge in that hobby. I love hiking, so following accounts that show people getting outdoors inspires me to do the same.

If you want to balance some of the flashier accounts that grace your feed with others that will bring you back to reality, try finding money savvy accounts to follow. You’ll find some inspiration by searching hashtags like #debtfreecommunity and #moneymotivation. With these hashtags, you’ll find accounts of real people sharing the things they’re doing to reach their money goals

And remember, if you’re searching for new accounts to follow and Instagram keeps suggesting accounts that will only fuel the need to spend, you can request that they stop showing you those type of posts.

2. Remind yourself it’s a highlight reel

You know your friend who is always posting about a new trip, a new bag, or an epic brunch? That’s a small piece of her life. Of course she’s not going to post about her morning commute or the sad salad she had for lunch.

This an important thing to remind yourself as you start to feel envy over her life: It’s not her entire reality. 

And if you ever find yourself stopping mid-scroll and wondering how someone can afford everything you see, think about this: Maybe he can’t. He may have massive credit card bills, be dealing with debt, or have nothing saved at all. It’s very easy to see someone’s spending, but it’s very difficult to see his savings

3. Remember what you value

With social media, you’re constantly taking in images and information. Sometimes, without realizing it, you can get so caught up in what other people are doing and sharing that you forget what makes you happiest. 

Next time you start feeling pangs of jealousy seeing someone wearing a new outfit, driving an amazing car, or living the life on vacation, take a step back. Think of what you value and what makes you truly happy. Maybe it was the potluck dinner you hosted, or the night you spent on your couch with a friend eating popcorn and bingeing on Netflix. Or, perhaps it was a great walk in the park you took Saturday morning. Maybe none of those things would look so fabulous on social media, but they sure felt great. 

4. Take a break from your apps

How much time are you spending on social media apps? Maybe more than you think. People spend an average of two hours and 22 minutes per day on social media. How does your usage stack up? Your phone can easily tell you. On the iPhone, you’ll find your data by checking the Screen Time section of your settings. On the Google Pixel, you can find it under Digital Wellbeing. 

If you’re spending a lot of time on these apps and they’re hurting your wallet, it might be time to take a break or cut back on your use. 

Or, to avoid mindlessly opening them, try taking them off your home screen or using an app that blocks social media, like Offtime, or an app that helps you curb your usage, like Moment. If that doesn’t help, try scheduling your social media usage during one specific time of the day, like on your evening bus ride home. If you find yourself reaching for your phone mindlessly, download a good book and make a habit of reading a few pages.

If all else fails, delete your apps. You can always reinstall them, but you may find that a few days of space gives you the perspective that you need. 

Final word

Social media can be a great way to stay up to date with friends. But don’t let the lifestyle you see on social media influence you to spend more and save less. And remember: Your happiness is much more important than a social media feed.

 

How to Stop Spending Based on Your Financial Triggers

Financial triggers: We all have them, and just like any issue having to do with money and emotions, they typically won’t go away forever. 

If not addressed proactively, financial triggers can become serious obstacles to making progress on your money goals. For starters, these triggers often result in bad habits like credit card binge spending or overspending in general, which can rack up hundreds (or thousands) of dollars in debt.

Studies show that almost half of Americans (49%) cite emotions as the reasons they spend more than they can afford. Stress, excitement, and sadness are the most common emotions arising out of overspending. When you’re in need of retail therapy, nothing feels better than splurging on new scented candles or a pair of shoes. However, the emotional high fades once you realize you’ve accrued more debt or depleted your savings

Here’s the good news: You can identify your personal financial triggers and manage them so that they don’t derail your future goals. Take a look at how you can more effectively handle your financial triggers and thus stop overspending.  

Be Aware of Your Triggers

The first step to manage financial triggers is to admit they even exist. It’s easy to write off

overspending as something that everybody does. Still, if you notice a pattern in how you spend money when you feel a certain way, you should be mindful of this.

Most financial missteps happen when we unknowingly slip into everyday habits. You might be

bored over the weekend and decide to go “browse” at your favorite store. And while this may seem innocent enough, you may soon realize that you just walked out with bags full of merchandise you never planned on buying.

Or, perhaps your trigger is the result of peer pressure. How many times have you gone out for drinks with friends to celebrate a birthday or promotion, or maybe simply to blow off some steam after work? Maybe you promised yourself you’d only get one or two cocktails, but you ended up with a $100 bar tab. 

Unplanned spending happens to the best of us. If it happens regularly, however, it’s a problem that can quickly spin out of control.

So, don’t feel ashamed about your financial triggers. Once you’re aware of them, you can take steps to manage them. This way they won’t throw your bank account off track.

Find Ways to “Trick” Yourself

The thought of tricking yourself to avoid overspending sounds silly at first, but it actually makes sense due to the emotional nature of financial triggers. It takes time to unlearn old behaviors, and a few personalized techniques can help as you build self-discipline.

For example, maybe you’re prone to splurge on going out to eat after a long day. To help resist the urge, you can instead create a meal plan or stock up on prepared dinners. If weekend boredom is your Achilles heel, make room in your budget for “fun money.” (It’s best to use cash so you’re not tempted to swipe a credit card.) Once you run out of cash, keep a notebook or whiteboard handy, with a list of free things to do when you’re bored.

You might even have to resort to extreme measures to curb your financial triggers. This could

include literally freezing your credit cards or moving money to a bank account that you don’t allow yourself to use. It won’t be fun when the impulse to spend arises, but the bright side is that you’re making a smart financial choice for your future self.

Find an Accountability Partner

Working to change old habits is a daunting task, but you don’t have to do it alone. Talk to a

family member, friend, or partner about your financial triggers. You might not be comfortable

sharing all the details about your finances, and that’s okay. It can be as simple as asking someone to join you in free activities or check in weekly about your spending.

There are other options if you don’t have anyone close to talk to or feel ashamed of sharing

such personal information with loved ones. If this sounds like you, you might want to consider joining an online group with like-minded individuals. There are tons of online personal finance communities available to answer any questions you might have and include you in challenges to help you meet your money goals.

Final Takeaway

Financial triggers can be tricky and frustrating to navigate, but they don’t have to take over your life. Once you’re aware of them and have tools in place to better manage your money, you’ll know what you need to do to spend less on stuff and keep your hard-earned money in your bank account.

 

What is a 401(k) Plan?

When planning for your future, it’s important to determine when you think you’ll retire. More importantly, how will you be able to afford retirement?

In order to retire, you need to save enough money to fund your lifestyle without needing to work. Experts say your retirement income should be 80% of your pre-retirement income. This means that if you’re earning $50,000 per year, you’ll likely need to live on around $40,000 per year during your retirement.

One of the best ways to save for retirement and build wealth over time is with a 401(k) plan. Read on to learn more about this type of retirement account.

What is a 401(k) Plan?

You might have heard the term 401(k) before, especially if you landed a job and your new employer offers this as part of the benefits package.

Backing up a bit, a 401(k) is basically a retirement savings plan sponsored by an employer. It allows you to save and invest a portion of your income before taxes are deducted from your paycheck.

This option can only be offered by your employer and it’s not a savings account. The money you put into your 401(k) is not easily accessible as it’s set up to grow over time.

Since 401(k) contributions are tax-deferred, you can deduct the amount you contribute from your income each year, thus lowering your taxable income. However, you will have to pay taxes on the money once you retire and start withdrawing it.

How Does a 401(k) Plan Work?

Contributing to a 401(k) plan is easy. You simply opt-in if your employer offers a 401(k) option. This may involve filling out some initial paperwork.

From there, you can choose how much of your paycheck you want to contribute. Some employers even offer to match your contributions and this is great because it’s just like getting free money.

For example, your employer may offer to match every dollar you contribute to your 401(k) up to five percent of your gross pay for the year. If your salary is $60,000, this means your employer can contribute up to $3,000 to your 401(k).

How Much Can You Contribute To a 401(k)?

This year, the maximum 401(k) contribution limit for anyone under 50 is $19,000. This is subject to change in any given year.

Be sure to research each year’s contribution limits at the beginning of the calendar year to see if there are any changes. This will help you plan your contributions.

What Are Roth 401(k)s and IRAs?

A 401(k) plan isn’t the only type of retirement plan available to you. A Roth 401(k) is similar to a 401(k) – except that your account is funded with after-tax dollars.

This means that you pay taxes on your income before you contribute to your retirement plan, yet you make tax-free withdrawals during your retirement years.

An IRA, on the other hand, is an individual retirement account. There are two main types: traditional IRA and Roth IRA. A traditional IRA is funded with pre-tax dollars while a Roth IRA is funded with taxed dollars. The main difference is whether you’ll pay taxes when you contribute (Roth IRA) or when you retire (traditional IRA).

Regardless of which option you choose, an IRA can be used as a separate, alternative retirement savings tool or it can be used in addition to your 401(k) plan.

The annual contribution limit for an IRA is $6,000 if you’re under 50 and $7,000 if you’re over 50. There are also income limits to be eligible to contribute to an IRA.

How Much Should You Contribute To Your 401(k)?

After recognizing the importance of 401(k) plan, your next question may be: How much should I contribute year after year.

The amount you put into your account depends on your retirement goals. So, think about when you want to retire and how much you’ll need to live on each year.

Fidelity recommends saving ten times your income by the time you hit 67. To do this, you’ll need to save around 25% of your income each year starting in your mid-20s. This 25% savings rate may sound high, but it includes 401(k) contributions, an employer match, cash savings, and debt repayment. Remember: You can always adjust your 401(k) contributions depending on your age and current situation.

If you can’t afford to max out your retirement account each year, you can still aim to contribute enough to get your employer match if it’s offered. This is (practically) free money that you don’t want to leave on the table. So, assess your situation every six to 12 months to see if you can increase your contributions over time.

The great thing about a 401(k) plan is that you don’t see the money you contribute so you won’t miss it much.

What Does It Mean to Be Vested in Your 401(k) Retirement Plan?

The term ‘vesting’ means ownership.

Being 100% vested means that you own your entire 401(k) balance and it can’t be forfeited or taken back by your employer for any reason.

Some employers, however, don’t give you full ownership of your 401(k) match dollars right away. For example, your employer may require you to be on the job for at least three years before you can be 100% vested in your 401(k) balance.

This means that if you leave your employer before that three year mark, you could lose some of the match contributions.

When Can You Get Your Retirement Money?

Generally, you’ll want to wait until you’re 59 ½ to start withdrawing money from your 401(k). Why? Because if you withdraw money before that age, you may face a 10% early withdrawal penalty from the IRS. This means you may have to pay taxes on any amounts you cash out (since you contributed pre-tax dollars).

However, there are some cases where you can avoid the penalty fee. Here are some of these situations:

  • Withdrawing funds as a down payment on your first home purchase
  • Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income
  • Education expenses that fall under a ‘hardship withdrawal

If possible, it’s best to avoid early withdrawals to avoid any chance of receiving a penalty.

The Wrap-Up

A 401(k) plan is a great retirement tool that can help you save money to retire comfortably.

When it comes to deciding how much to contribute, look at your budget and determine how much money you can save. If you can get an employer match, try to contribute enough to get the full match and be mindful of vesting rules.

And remember: It’s important to start somewhere and set goals to contribute more over time.

 

How to Throw an Epic Fourth of July Party for $100

There is nothing more ubiquitous in American culture than a big July 4th party.

In fact, 86% of Americans plan to celebrate Independence Day this year. They also plan to spend a total of $6.7 billion on food items, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics. The most popular July 4th activity for 61% of those surveyed? Cookouts, barbecues and picnics. And, according to the NRF, the average cost per person for a July 4th BBQ is expected to hit $73.33 in 2019.

What does this mean for you? It means that a typical July 4th celebration can quickly bust your budget if you’re not careful. Fortunately, there are several ways to keep your quintessential red, white and blue celebration affordable. In fact, you can actually save money and throw an awesome bash for $100. Take a look at 6 ways to do this.

1. Be Selective with Your Guest List

Keep your holiday cookout cozy by inviting a small number of people. This immediately lowers the overall expenses for your event.

Here’s a tip to help keep your party guest list from getting out of hand: Send out same day invitations to some extra folks. Many of your friends may have already said “yes” to another party invitation so if they say “no” to yours, they’ll never know that your goal is to keep your number of attendees low.

2. Host a Potluck

Hold a potluck and ask your party guests to pitch in and bring a dish. This keeps your food expenses low while allowing your friends to do their part.

A couple of tips to make your next holiday potluck fabulous:

·      Create a Google doc and have attendees share what they’re bringing. This way you won’t end up with duplicate dishes.

·      Run a contest to see who brings the most tasty dish. The winner gets bragging rights for the next year.

·      Be clear with your guests about what you’re providing as the host. If you’re providing all of the alcoholic drinks, for example, you can ask your guests to bring seltzer water or lemonade instead.

If you’re still a little nervous about hosting your first potluck party, check out Apartment Guide’s tips.

3. Use a Savings App

Couponing sometimes feels like a hassle. Instead, strategize your savings with your favorite savings apps such as Ibotta or Checkout 51. Then, double up with savings from your favorite grocer’s discounts.

Here’s how this works:

·      Create a list of items that you will provide for your July 4th holiday event.

·      Quickly check each app to see if you can save on that item.

If you’ve earned cash back from your savings app, use that cash towards your party expenses.

4. Borrow a Grill and Other Supplies

No grill? No blender? No worries. Fight the urge to buy new appliances in order to make your event happen.

Instead, ask your neighbors or friends if you can borrow a grill, a blender or BBQ supplies. If you think you’ll continue using these appliances or items, perhaps you can compare costs and purchase them on sale. This way you’ll also have them on hand for future parties.

5. Grocery Shop Your Pantry

Before heading to the grocery store, shop your pantry. Spend some time looking at the ingredients that are already in your home. Make simple dishes with those ingredients. If you’re short on inspiration head over to Pinterest to search for ideas.

6. Watch Fireworks as a Group

According to the American Pyrotechnics Association, Americans spent $885 Billion on fireworks in 2017.

Instead of purchasing fireworks, you can instead spend nothing on pyrotechnics and instead head out as a group to see a local fireworks show. Check the following places for more information on fireworks displays in your area.

·      Your city’s website

·      Professional sports teams websites. An example of this is the Colorado Rockies in Denver, Colorado. The Colorado Rockies typically have a fireworks show if they’re playing in town July 3rd or July 4th. The great thing about this display is that you don’t have to attend the game in order to enjoy it.

Start Saving Now for Next July 4th!

Now that you’re set for this year, it’s time to start saving up for your next July 4th party.

By following the tips above, you now know that you can host a fabulous party on an affordable budget – year after year. Happy 4th of July!

 

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