How to Budget for Spontaneity

Budgeting is one of the best ways to save money, and it’s so simple — create categories, set aside a certain amount of money for each category, and then only spend what has been designated for that account.

But what do you do when your best friend asks if you’re free for dinner, and you open your budgeting app and realize that your “dining” budget only has a few dollars left in it? You don’t want to cancel plans with your best friend, so you make the decision to transfer money for dinner from your savings account. Just like that, you’ve blown your budget.

There will always be last minute dinners with friends, drinks with colleagues, or unexpected celebrations. Unfortunately, spontaneity can often derail your budget. Luckily, there’s a simple fix: preparing for spontaneity.

It might sound counterintuitive, but here’s how it works.

Cash-back websites

Did you know you can earn money from shopping online? It’s true. Websites like Ebates and Topcashback will give you cash back on your online purchases when you shop from their website.

Here’s how it works. The websites earn money through affiliate links from the stores that customers use to shop. To encourage customers to use the link, the cash-back websites share a percentage of their profits with the customer (that’s you!).

The best way to earn cash back is to pick one cash-back website, install the cash-back button (a reminder to use the website that appears at check-out), and always use it when you shop.

Cash-back credit card rewards

If you’ve never used cash-back credit cards, you’re missing out. The premise is simple: use your credit card to earn points that you can redeem for cash or other perks.

Most credit card rewards range from 1% to 2% of your purchase, and some cards offer rotating categories. But there is a catch. In order to take advantage of the rewards, it’s important to pay your card on time and in full every month. If you don’t, you’ll end up paying more in fees and interest than you could earn in cash-back rewards.

Cold, hard cash

Budgeting for spontaneity doesn’t have to be difficult. In fact, it could be as simple as going to the ATM and getting out cash at the beginning of the month.

This money is designated as your “fun” money: It can only be used for an unexpected movie date with friends, celebratory beers, or Sunday brunch. It’s spontaneity with a limit, because when the cash is gone, so is that month’s fun budget.

Give yourself a tip

You tip for a good haircut and a cocktail from the bar, so why not tip yourself? That’s the premise of the app TipYourself. Every time you accomplish a task or goal, you can use the app to send yourself a tip. The goal can be as simple as drinking eight glasses of water per day or as complex as repainting your bedroom wall, and tips can be as small as $1.

The secret to using an app like TipYourself? Setting aside your “tips” for fun. Here’s how it works: set your goals, accomplish them and enjoy a spontaneous adventure with someone you love (and yes, that includes yourself).


This article originally appeared on Policygenius.
Image: Youngoldman

 

5 Ways to Teach Your Kids Good Money Manners

As a parent, you’re responsible for teaching your children many important life-long lessons.

One of the most valuable lessons is this: how to use money responsibly. But, before you dive in, consider first that money is a taboo topic for many families. In fact, discussing money is often awkward.

At the same time, it’s imperative to put your apprehension aside and talk about money with your kids. Why? The sooner your kids understand the inner workings of your family’s finances, the sooner they’ll appreciate the value of money. In turn, you will be teaching them that’s it ok to talk about their own finances – and ask for help – as they grow up.

To help you successfully discuss money with your kids, take a page from our book with the following 5 suggestions:

Teach them about debt

Despite its ubiquitous place in modern American society, debt has an extremely negative connotation. People who carry debt are sometimes viewed as irresponsible with their money, even if they manage their debt payments comfortably.

To explain the role of debt in your overall financial picture, start by explaining some of the debts you’ve had or still have. For example, you can talk about the fact that you owe money on the car you drive to take your kids to school. Or, you can explain that your home is still technically owned by a bank.

As your kids approach the tween years, you can also talk to them about other forms of consumer debt, like credit cards and high-interest personal loans. Once they understand that using a plastic card is not akin to free money, they’ll have a better idea of why it’s important to spend responsibly. They’ll also understand that, if used right, debt can help improve your financial footing.

To put these principles into practice, consider lending your kids money to pay for something they want instead of simply buying it for them. When I was 14, for example, my dad loaned me $750 to help me buy a computer. It was my responsibility to pay him back, interest-free. I learned quickly that this debt meant I was beholden to someone else.

Be wise about giving allowances

Giving your kids allowances can help them learn the importance of work and the value of money. On the flipside, allowances can also cause problems down the road – especially if your kids grow up to expect free money.

Instead, help your kids understand why they are receiving an allowance in the amount you deem fair. Then, consider giving them household tasks to earn their allowance money. Lastly, talk to them about jobs you’ve held and how much you were paid. This way, your kids will appreciate the value of working hard to earn money.

And, here’s another pro tip: encourage your kids to save some of their allowance money. Not only does this teach them to use money prudently, but it can also prevent them from attempting to make frequent withdrawals from the Bank of Mom and Dad.

Include them in budget discussions

Your kids may not be pleased with all of your financial decisions. When I was in middle school, my dad hyped up a mysterious family vacation for months before it happened. We all thought it would be a blast to go to Disneyland or spend a week at the beach.

But, when the day arrived, my dad pulled into our driveway in an RV and told us we were going on a road trip through Wyoming and South Dakota. We all felt let down, and some of us, regrettably, complained about how lame the trip was going to be. Fortunately, we did end up having a great time.

Perhaps if we grumbled less and had been part of the planning process, we would not have had such high expectations. Clearly, my parents couldn’t afford the exotic or theme park-centric trips we all wanted.

Keep in mind, however, that involving your kids in the vacation planning experience doesn’t mean you have to show them your monthly budget. But, if you’re taking a vacation or considering a large purchase for the family, perhaps you can sit down all together and talk about how you plan to budget and save up for the purchase or trip.

Explain why

Kids typically ask the question “Why?” when they don’t get exactly what they want. In fact, you may hear them repeat this one word question over and over again in the same conversation. Responding with something like “Because I said so,” or “We can’t afford it” may shut down the conversation, but it isn’t the best way to address the issue.

Instead, try explaining the real reason why you’re not going to buy something they want. This can also be a good time to teach your children about budgeting and saving money.

Avoid net worth comparisons

It’s hard for kids to avoid comparing their house to their classmate’s. Likewise, older kids get caught up in comparing clothes or even cars.

But, you can help your kids avoid the comparison trap by steering clear of this yourself. If your kids catch you trying to keep up with the Joneses, they may start to equate financial success with social status.

Instead, teach your children why it’s important not to play this game. The earlier they understand that a person’s value extends far beyond their net worth, the more self-assured they will be later on in life.

 

I Tracked My Spending for a Week. Here’s What Happened

I’m not great at tracking my spending. As someone who rebels against rules and hates feeling confined by regulations, being told to track my spending felt unpleasant. It seemed like yet another task to add to my to-do list: Brush my teeth, work out, drink water, sleep enough, look at my phone less and track my money.

But I kept hearing about the magic of tracking. There were so many stories of people saving money and finding spending leaks that I decided to try. I wanted to know if it could help my finances.

Over the course of one week, I tracked everything from the coffee I drank to the books I ordered on Amazon. I’m surprised by what I learned.

Groceries don’t always save money

In one week, I spent $120 on groceries. Considering I rarely eat out, that might not sound too bad. After all, cooking at home is supposed to save money. But the truth about my grocery bill is that it was the result of impulse purchases and haphazard planning. As I passed the produce section in Costco, I grabbed a bag of fresh snap peas on a whim and scooped up a package of pomegranate seeds seconds later. On my way to the checkout line, I stopped for a 24-pack of protein bars “just in case” and got a bag of tortilla chips for good measure. The problem? None of these items were on my list, and at a place like Costco, each additional item can add $10 to $15 to your total.

The fix: As I reviewed my grocery spending for the week, it became clear I viewed my grocery list as as a set of guidelines. After seeing the numbers on paper and facing the reality of my impulse grabs, I’ve begun to think of my grocery list as a set of rules. If it’s not on the list, it doesn’t enter my cart. It’s as simple (and difficult) as that.

Hanging with friends adds up

Over the course of one week, I went for lunch with former colleagues, grabbed coffee with three different friends, bought frozen yogurt with my wife and ate sushi with my sister. The total? $35. It might not seem like a lot, but for one week, it’s a big chunk of change. Grabbing coffee always seemed like an inexpensive way to see my friends and catch up, but after realizing I spent $10 on coffee in one week, it became clear I underestimated the financial impact. Over the course of one month, I’m on track to spend $40 on coffee. That’s nearly half the price of massage, which is a luxury I’ve told myself I can’t afford. Looking at the numbers in black and white, it’s clear I could afford a massage every other month if I simply stopped spending money on coffee.

The fix: Never hanging out with friends isn’t an option. Neither is cutting out lunch dates with friends and family. But $35 per week on coffee and lunch doesn’t align with my priorities. I knew something needed to change. Instead of using the coffee shop as the default place to meet, I’ve gotten creative. This past week, I had my sister over for homemade banana bread and invited a friend on a walk to catch up. The cost? Less than $2. They may seem like small changes, but it wasn’t until I actually looked at the numbers that I realized these “small” expenses equaled $140 per month.

Online shopping is convenient. Too convenient

Overall, I’m happy with my shopping budget and the $38 I spent on “extra” items during the week. I bought replacement fairy lights for the living room for $10 and two books from Amazon from $28. All my purchases were intentional and mindful. The lights are replacing an item that broke. The books are ones I’ve already borrowed from the library and know I want to own so I can read them again and again. But as I looked over my purchases, I realized how easy it is to shop online without paying attention.

The fix: I’m normally pretty good at controlling my urge to shop, but there are times I find myself scrolling through the Amazon app or browsing ASOS with no intent to buy. To avoid the temptation, I’ve deleted the apps from my phone and no longer store credit card information on my laptop. One-click shopping makes spending a little too convenient. Creating barriers is an easy way to make it less enticing.

For the first day or two, it was annoying to track my spending. But once I got into the habit, it became second nature to make a note of my spending. Even though I don’t plan to track my spending all the time, I do plan to use it as a financial tune-up every few months. It’s easy for spending to become mindless. Tracking is a simple way to ensure the reality of your finances falls in line with your goals and ideals.


This article originally appeared on Policygenius.
Image: PeopleImages

 

8 Timeless Money Tips to Put to Work in 2018

If you’re hoping 2018 is the year you (finally!) get your money on point, it’s smart to look back on last year’s successes and failures, while focusing on new, doable goals. That means foregoing, say, a quest to find the next cryptocurrency or better time the stock market. Instead, try focusing on some tried and true financial rules. Call them cliche, if you want, but they’re certainly effective. Here are 8 timeless financial tips to follow in the new year.

1. Live below your means

If you’re struggling with bills or debt, chances are, there’s a disconnect between how much you earn and how much you spend. Drafting a new budget — we’ve got a good template here — can resolve that disconnect, but here’s a big trick if you’re trying to build wealth: Aim to live below your means, not simply within them. That might mean sacrificing a few luxuries or downgrading to, say, a different cable subscription, but it’s a surefire way to maintain long-term financial health.

2. A penny saved is a penny earned

In 2017, it was all about the side hustle. Everyone was driving for Uber, teaching kids English online with VIPKID or delivering groceries with Instacart. But more money can’t solve your financial problems if you don’t put those dollars to work. And if you’re working more and more, but still in debt or barely paying the bills, something’s gone awry. In lieu of looking for more income, think about spending less and saving more. We know, easier said than done — which brings us to our next adage.

3. Pay yourself first

It’s easy to work all month, gather your paychecks and pay the bills only to realize there’s nothing left to save. That’s why many financial experts suggest “paying yourself first,” a method of budgeting where saving is essentially your primary expense. We’ve got a full explainer on how paying yourself first works, but it’s pretty much exactly how it sounds. You budget a set amount of your paycheck that’ll go into a savings account each month and deposit those funds before paying for your other wants and needs. Viola! — savings problem solved.

4. Be fearful when others are greedy & greedy when others are fearful

This advice comes from investment oracle (of Omaha) Warren Buffet — and it’s particularly worth following in 2018. In a world where speculation can drive the price of Bitcoin up from a few hundred bucks to nearly $19,000 in a matter of months, it’s smart to know a bubble when you see one – and to strive to do things differently.

In Buffet’s world, you wouldn’t buy Bitcoin at the top, but at the bottom when most investors are spooked and ready to cut their losses. Of course, this advice doesn’t just apply to Bitcoin. It applies to real estate, the stock market and anything else we invest in, but you catch the drift.

5. Avoid credit card debt like the plague

With the average credit card carrying an annual percentage rate over 15%, 2018 is a great year to break the cycle. Consider taking advantage of 0% APR balance-transfer offers — they’re pretty popular this time of year — to eradicate high-interest credit card debt. Then curb any impulses to run balances back up again.

6. Buy less home than you can afford

In a world where housing prices seem to rise at an endless pace, it’s hard to buck trends and borrow less than you can afford. But it’s more important than ever if you want to keep your financial house in order. By spending less on housing than the bank will lend you, you’re freeing up cash to save and invest.

7. Don’t keep your eggs in one basket

When it comes to investing, your best bet is diversifying your portfolio as much as you can. Make sure you have an appropriate balance of stocks, bonds, real estate and other investments. And if you want to take the easy way out, invest in low-cost index funds that diversify on your behalf.

8. Be prepared

Your future depends on the financial decisions you make today, so think beyond your basic checking and savings account. Be sure to build a proper emergency fund, bank money for retirement in a 401(k) or IRA, think about a college savings plan for the kids and cover your family for a worst-case scenario with life insurance.


This article originally appeared on Policygenius.
Image: Aleksander Nakic

 

7 Bloggers Share How They Stick To New Year’s Health And Wealth Resolutions

Lose weight. Lift weights. Stop drinking soda. Start making more money.

The end of the year is an exciting but conflicting time. For many, this is the time to make a New Year’s resolution and hopefully reinvent yourself for the better. In fact, according to the Statistic Brain Research Institute, over 40% of Americans make a habit of creating a New Year’s resolution each year.

At the same time, almost 60% of people in their twenties don’t stick to their New Year’s resolutions.

So, how can you stay committed to your resolution? We asked seven bloggers for their best tips on how to stick to your New Year’s Resolution. Read on to see what they have to say.

Commit to a short-term resolution

A New Year’s resolution can seem overwhelming. That’s why Joseph Hogue from Peer Finance 101 recommends setting a short-term goal. “It’s a lot easier to make it a couple of months than to aim for an undefined period.”

Jason Vitug from Phroogal agrees. Instead of committing to something for an entire year (ugh!), he instead does short-term challenges that often end up becoming permanent habits.

“I’ve done a few challenges, like a no spend weekend that turned into a no spend week. I’ve also done a no spend [challenge] on clothing for the entire month of March 2017. And to this day, I haven’t bought any new clothes.”

Set SMART goals

You may have heard of SMART goals—specific, measurable, achievable, realistic, and timely. Yet, somehow we still forget to make New Year’s resolutions that stick to these guidelines.

“If you haven’t been to the gym in 412 consecutive months, you’re probably putting a lot of undue pressure on yourself to say you’re going to go every single day,” says Mindy Jensen, Community Manager at Bigger Pockets.

Instead, Jensen recommends baby steps and then working your way up. “If you eat lunch out every day, and want to save money, start by bringing lunch once a week, then bump that up to twice a week.”

Find an accountability buddy—no, really!

It’s easy to fall off the rails with your new resolution if you’re the only one who cares. But if you have an accountability buddy, you’re more likely to stick with it since someone else’s success is hinging on yours as well.

Amy Rutherford from Go With Less spends much of her time in early retirement traveling around the globe while housesitting for folks in distant places. Because she’s always on the go, it’s sometimes difficult to rely on a local accountability buddy. But, she’s got a trick up her sleeve that anyone can use.

“When I need an extra boost, I set up a monthly Facebook challenge. There are usually 20-30 participants who opt in to the private groups. I always do better on the months I initiate a group!”

This year, she’s launching a new Facebook group each month where people can join, state their own goals, and receive support from other members.

Schedule your goal into your daily routine

If your goal is officially on your schedule, it becomes a priority and you’re more likely to get it done, according to Amy Savage Blacklock from Life Zemplified.

Blacklock inks in time for a new healthy habit – like walking during her lunch hour – into her daily schedule to stay successful. “I block off 30 minutes every day in my calendar at work so that I can walk during my lunch hour. This prevents others from scheduling meetings during my time and I stick to my walking goal.”

Another related trick that can work wonders is habit stacking. For example, let’s say you want to start incorporating skin care products into your daily routine so that you don’t look like the Cryptkeeper by the time you turn 40. Setting a regular, consistent, and easy time of day to do this—such as right before bed when you brush your teeth—can make the habit stick better.

Use affirmations

Affirmations are more than just crunchy hocus pocus. This is basically an opportunity to say, write, or think positive things about yourself and your goals. To boot, positive affirmations can actually help you stay on track with your resolutions.

“I have changed so many false beliefs, especially when it comes to self-worth and my abilities. Every morning one of my affirmations includes a positive sentence about how I am valuable,” says Nicole Chammas Rule from the blog Greatest Worth.

“From there my mindset begins to shift and I can feel my confidence rising.”

Rule says it’s important to continue practicing affirmations daily as this is the best way to feel the lasting effects.

Track your progress

One of the most effective ways to stick to your New Year’s resolution is to find a fun way to monitor your goal. You can use apps like Beeminder or HealthyWage to track your progress and give you a financial incentive to complete your goal.

If you prefer a more visual and tangible representation, you can even try an old-fashioned spreadsheet, says Jenny Se from Good Life Better.

“I use a simple spreadsheet that I hang someplace where I can see it. At the end of the day, I give myself fun stickers for each success. These may seem childish, but I don’t think you’re ever too old for gold stars!”

Your New Year’s resolution doesn’t have to end up in the dumpster

Sticking to a New Year’s resolution is hard. But, by following these expert tips and staying committed to your goal, you can start a new healthy habit today. With a bit of perseverance, it may become a long-term habit.

 

Positive Morning Habits to Adopt in 2018

Feeling positive makes you feel motivated to take on anything the day brings your way. The beginning of a new year is the perfect time to adopt some positive morning habits. Here are ways to bring positivity to your morning routine so you can conquer your days in 2018:

Stop Checking Social Media a Few Hours Before Bed

Your morning routine starts the night before. Try to cut down on your screen time in the evening. Give yourself time to clear your head before dozing off.

Keep a Gratitude Journal

Abundance attracts abundance. Positivity attracts more positivity. We all have things to be thankful for. Our health, family, friends, and a roof over our head are just a few things we should appreciate.

Write down things you’re grateful for in your life and business each evening or in the morning. You can even trade social media time for journal time right before bed.

Add Designated Times to Check Email 

Each morning, I write a to-do list. Usually, I put the tasks that will take me the longest at the very top of the list. I purposely don’t check email first thing in the morning to avoid derailing my day.

When you check email first, you can get lost down the rabbit hole of other people’s request before you get anything done including pressing items. Schedule in a few 20- to 30-minute time slots each day where you check in. 

People will adjust to your response frequency. This will help you be productive and protect your sanity. There’s nothing like getting a “not-so-great” email in the morning to mess up the entire day.

Work to Productivity Music or Listen to Something Uplifting

YouTube has a treasure trove of playlists for productivity. Type in “productivity music” into the YouTube search engine and you’ll find a goldmine of slow and high tempo playlists that you can use when getting work done. 

Another option is putting on a podcast or audiobook that lifts your spirits in the morning. I’m always inspired by the entrepreneur stories on the How I Built This podcast.

Don’t Start Off Your Morning with the News

Avoid starting mornings off with the news if you’re someone who internalizes it and lets it negatively impact your day. Don’t worry about missing out on anything. People will bring up in conversation any emergencies that require your immediate attention. There’s no need to obsess over your social media feed waiting anxiously for the next piece of news to break. Again, I’ve found that if I check social media first thing in the morning, I’m glued to social media throughout the day. 

Instead, be intentional about where you’re spending your time. Try meditating or reading positive and motivational books in the morning. There are even productivity website blockers you can download to your browser to keep you away from certain sites while you’re working. Automate social media for your business to reduce the amount of time you need to spend on each platform. 

Final Word

Starting off your day with positive vibes makes a difference. Come up with a daily schedule that includes mindfulness so you can make the most of your days.

 

Spend Smarter With These Simple Tricks

As with most lifestyle changes, making healthy financial choices can take discipline. However, once you put your mind to it and create a plan, you’ll be on your way to achieving your financial goals.

As you embark on this path, keep in mind that you’re bound to fall off the wagon and go back to your old ways, like overspending. We’re here to help you stick to your goals. So, the next time you find yourself in a tricky situation and need help making healthy financial choices, take a look at the following common scenarios.

Scenario 1: You want to buy all the things at Target

Ever have one of these days? You know, those moments when you have the impulse to spend because you think it’ll make you feel better.

This experience is totally normal. However, overspending comes with long-term implications. You’ll likely experience guilt and may even find yourself in credit card debt if you’re not careful. If you find yourself in this situation, be sure to ask yourself the following questions:

  • Are your emotions in check? Identifying your “triggers” will help you find ways to address your stressors  – before you go on that spending binge. For example, are you hungry, angry, lonely or even tired?
  • Can you do something more productive instead of spending? Perhaps you can run a bath or go workout to relieve stress. Once you’re finished, you may forget about the temptation to blow your budget.
  • When was the last time you treated myself? Confession time: during the first six months of my journey to debt freedom, I became so restrictive that I didn’t allow myself to spend money on anything outside of the necessities. This meant no eating out, no clothes shopping and no Starbucks. After a while, though, I reached a breaking point and ended up going on a major shopping spree. I almost went back into debt.So, make sure you don’t deprive yourself and treat yourself every once in a while. Just remember, you don’t need to spend a huge amount and it’s a good idea to add a line item to your budget that’s earmarked as “fun money”.

Scenario 2: You want to make a big-ticket purchase

For me, the definition of “big ticket” is an item that costs between one to three months of my income. Although what you consider “big ticket” may be different, think of it this way: making a big purchase impacts your finances significantly, so instead of jumping in head first, ask yourself the following questions:

  • Do you really need it? A year ago, my husband and I bought a second car that we don’t use as much as we expected. Had we asked this question before making the purchase, perhaps we would have continued to share one car and put that money toward another goal.
  • Can you hold off on the purchase? If you are fine without the item now, you can probably refrain from buying it – at least for a while longer. By delaying your purchase, you may find a cheaper alternative or perhaps you can take advantage of seasonal discounts.
  • Can you sink before you swim? Using a sinking fund has become a huge game-changer for me. In a nutshell, a sinking fund allows you to anticipate expenses ahead of time and allocate money to these expenses in each paycheck. I’ve got a sinking fund for holiday shopping, vacation and even one for my future kids! For me, these funds remove some of the guesswork from my financial decisions as the money is allocated and available.

Scenario 3: You’re ready to save for future goals but don’t know where to start

You may have already accomplished a major step in financial adulting: moving out of your parents’ house. Now that you’re living on your own, it’s time to consider other goals to create the lifestyle of your dreams. My goal is to become financially independent by age 40 and this includes being able to retire early if I want to.

Whatever your end goal is, the following healthy financial choices will help you get there:

  • Create an emergency fund ASAP. A good rule of thumb is to save three to six months of living expenses in your emergency fund. Your fund should be kept separate from your regular checking and savings accounts.
  • Pay down debt quickly. If you’ve got student loans and/or credit cards, create a plan to free up your income sooner rather than later. With the debt snowball method, as soon as your smallest debt is paid off, you can use the freed up money to tackle your next debt faster. Alternatively, you could choose the debt avalanche approach where you focus on paying off the highest interest bearing debt first. While you pay down your debt, stay focused by envisioning a life with zero payments whatsoever.
  • Bank with an institution that has your back. If you’re fed up with big banks that charge hidden fees, why not consider an online bank account like Chime. Chime offers an innovative approach to banking that actually encourages saving and makes it easier for you to sock money away seamlessly, without fees. If you open a Chime bank account and select Automatic Savings, Chime will automatically transfer 10% of every paycheck directly into your savings account. Another awesome Chime benefit is that you can save every time you spend. Chime actually rounds up each transaction made with your Chime card to the nearest dollar and transfers the round up from your Spending account into your Chime Savings account.

Are you ready to make a healthy financial move?

Remember: with a little discipline, you can stick to your goals and make smart money moves starting right now. And, if you need some help, refer to this resource for inspiration and guidance. Here’s to a financially healthy new year!

 

Health & Wealth: Why Taking Care of Your Finances is Self Care

If you look up the meaning of self-care, you’ll find many different definitions.

For instance, Wikipedia says self-care maintenance behaviors include “illness prevention, illness behaviors, and proper hygiene.” Dictionary.com, on the other hand, offers what is perhaps a more accurate definition of self-care: “Noun. Care of the self without medical or other professional consultation.”

Although some forms of self-care – like getting more sleep and taking a walk during your lunch hour – won’t cost you any money, other forms of wellness require a small financial investment. So, if you really want to commit to self-care and pay for things that will improve your life, it’s time to take care of your finances as well.

Since health and wealth are interconnected, it makes sense to think of financial health as a form of self-care. Not only will this set you on a path toward a more prosperous future, but you’ll free up funds for other forms of wellness at the same time. Read on to learn more about financial self-care.

Live Within Your Means

There is more to living within your means than simply creating a budget. You must also stick to that budget, cut out superfluous expenses you can’t afford, and make sure you’re set up for success by leveraging resources like apps that can save you money.

What you should be looking at is eliminating excessive extras, like dining out at expensive restaurants on the regular or shopping sprees you can’t afford. By trimming your expenses, you’ll be able to afford the things you truly desire. Plus, you’ll likely reduce your stress since you won’t have to worry as much about affording your lifestyle.

Pay Off Debt

Paying off your debt is a key element of financial self-care. No matter if you’re single, married, or somewhere in between, debt complicates things.

There are several ways you can pay off your debt faster. Take a look:

1. Don’t Create More Debt

For starters, try to use your debit card or cash instead of your credit cards. Since a debit card is tied to your checking account, you can really only spend money that you have – unless you consistently go into overdraft. When you use a credit card, on the other hand, you can easily rack up debt if you don’t pay your balance in full every month. Since credit cards can charge hefty interest rates, the amount you owe will continue to grow and you’ll be saddled with – you guessed it – more debt.

The bottom line: if you use your debit card vs. using a credit card, this will help you from adding to your existing debt.

2. Make a Plan

Create a plan to pay off your debt. One option to consider is called the debt snowball method.

With this method, you’ll list your debts in order  – from those with the smallest to largest balances. Then, you’ll pay only the minimum on all your debts except the one with the smallest balance. On this one, you’ll pay as much as you can until it’s completely paid off. Once this debt is gone, turn your focus to the next debt on the list. Continue to work your way down your list until all of your debts are paid off.

To illustrate this, here’s an example. Say you owe $300 for a car repair, $500 on your credit card, and $5,000 for a student loan. Your debt snowball plan would look like this:

Creditor Total Balance Minimum Payment Payment You Make Monthly
Car repair $300 $25 As much as possible!
Credit card $500 $25 $25
Student Loan $5,000 $100 $100

To come up with the max possible to pay for your car repair bill, you can take on a side hustle when you’re not working at your main job. This way perhaps you can afford to pay $100 per month for your car repair. After it’s paid off in about three months, your new plan may look like this (doesn’t include any interest):

Creditor Total Balance Minimum Payment Payment You Make Monthly
Credit card $425 $25 $125
Student Loan $4,700 $100 $100

The payment you make on your credit card in this example is the minimum payment of $25, plus the $100 payment you were making on your car repair, making your monthly payment $125.

After your credit card is paid off, you’ll add the $125 payment to the $100 minimum payment for your student loan and pay it off faster with a monthly payment of $225. Get it?

Save for Emergencies

Sometimes your daily routine is interrupted when the unexpected happens. For example, your car breaks down and you have to pay a large repair bill. Or, you have to go to the hospital, leaving you with a large medical bill – sometimes even after your insurance company has paid up.

The point is: you can’t predict every expense you’ll have. Therefore, you can’t budget for all of them either. What you can do is start an emergency fund and this way you’ll be prepared to pay for unexpected expenses.

Invest for the Future

Taking care of yourself isn’t only about spending money on things that will help you today. Self-care is also a way to ensure that you’re financially secure in the future.

One way to do this is to start investing in a retirement fund. If you have a 401(k) at work, it’s a good idea to put the maximum allowable amount into this employer-sponsored retirement plan. In 2017, the max contribution is $18,000 and in 2018, it goes up to $18,500. Many employers will also match your contributions dollar-for-dollar, up to 6%. This equals free money for you. To learn more about whether your workplace offers a 401(k) and a match, check with your human resources department.

If your employer does not offer a 401(k), you can still set up an IRA on your own. The contribution limit for an IRA is $5,500 in 2017 and 2018. This doesn’t allow you to save as much as you can with a 401(k), but it’s still a good way to save for your future.

How You Practice Self-Care is Up to You!

Remember that self-care means taking care of your whole self. This includes your finances, as well as your physical and mental health.

Here’s a final tip for you (and it’s free!) The next time someone criticizes you for foregoing buying a fancy new outfit and getting a massage instead, just smile and let it go. Deep down inside you know that you’re taking care of yourself and this is what’s most important.

 

How to Start Paying Yourself First in 5 Easy Steps

You probably already know that the best way to get ahead financially is to save money. Although this can seem daunting, there is an easy way to do this: pay yourself first. This means you pay yourself each time you get a paycheck—yep, before you pay your bills.

If you’re in debt or living paycheck to paycheck. you may now be thinking: there’s no way I can do this. But, fear not! It can be done, no matter what your finances look like right now. Here’s a foolproof 5-step plan to show you how to pay yourself first.

Step 1: Create a budget

A budget is important for many things, like figuring out how to cut costs and create a spending plan you can stick to. But, let’s simplify things. Think of a budget as a tool to find out just how much money you can afford to save.

The best-case scenario is that, after all your bills and living expenses are paid for, you’ll have money leftover to save. Yet, it’s also possible that you’re spending every last penny of your paycheck and don’t have any wiggle room to save.

Even worse, maybe you’re already spending more money than you earn each month. If this is the case, don’t panic—there are ways to fix this! To start, focus on cutting your expenses while also earning more money.

Step 2: Define your savings goals

You wouldn’t set out on a road trip without a map, so don’t start saving money without a mapped out plan! If you know exactly what you’re trying to save up for and develop a savings plan to get there, you’re far more likely to reach your goals.

Having two sets of savings goals—long-term and short-term—can also help you parse out how much you need to save.

Long-term goals can include things like saving for retirement. You don’t necessarily need to know exactly how much you’ll need since it’s so far in the future. But, you know it’ll be a lot, so it’s a good idea to set aside a certain percentage of your paycheck.

Short-term goals can include saving up for a vacation or Christmas gifts. You probably have a good idea of how much you need and how much time it will take you to save for these goals. Pro tip: For each short-term goal, divide your savings target by the number of months you have to save. This will tell you how much you should be saving each month.

For example, my family wants to spend $500 each Christmas. So, we set aside $45 per month starting in January so that when November comes, all we have to worry about is spending the money!

Step 3: Automate your savings

It’s easy to put off making a bank transfer each month from your checking account into your savings account. There are always excuses you can come up. Trust me; I am the excuse master.

Instead, take the control out of your hands. Schedule a recurring transfer each month into your savings account. If you schedule the transfer right after you get paid, you won’t even miss the money.

Consider an app that saves money automatically like Chime. Chime’s automatic savings deposits 10% of your paycheck every time you get paid. This 10% will be deposited right in your Chime savings account.

No more excuses. It’s time to do this!

Step 4: Watch your bank account

It’s a good idea to keep an eye on your bank account, especially as the end of the month nears. This is when funds are often running low. You may not be used to cutting back on your spending and sticking to a budget, and besides, unexpected expenses always pop up.

One thing you don’t want to have happen is an overdrawn account. So, watch your bank account. You can even make it easy on yourself by setting a reminder to check your account each day, or download an app such as Mint that’ll give you quick snapshots of your bank account and budget.

Step 5: Stay one month ahead on expenses

The easiest way to avoid overdrawing on your account is to get one month ahead on your expenses. I know – it’s easier said than done. But, you can do this.

To start, treat this like a sort of savings goal on its own and start saving more than you have to for your expenses. You can even factor this into your budget.

Getting one month ahead on your expenses is an all-around good idea as you won’t fret about overdrawing your account at the end of the month. It also protects you financially in case there’s a sudden interruption in your income—say, if you lose your job or get into an accident.

Bottom line

We know following a money-saving plan isn’t easy. But, if you follow these 5 steps, you won’t just have an automated plan to pay yourself first. You’ll have a holistic plan that will help you reach your savings goals. In the long-run, this will make your life easier. And, you can consider this free advice.

 

6 Healthy Habits That Can Help Your Finances

Who isn’t swayed by the promises of a diet? By making a temporary, albeit uncomfortable change perhaps you can hit the reset button on your weight and start to feel better about yourself.

The hidden side of this is that for most people, it’s not sustainable. In fact, about 80% of people who diet end up regaining all of the lost weight back within a year.

The same thing holds true for your money. No-spend challenges are popular, but unless you can find a way to make them stick, they are just temporary band-aids. Instead, you need to look at something else entirely—your habits.

By developing healthy financial habits, you can aim for success in the long run—not just tomorrow or next month. These 6 healthy habits will help you achieve your long-term goals.

Check Your Finances First Thing Each Morning

The things you do first thing in the morning help set the tone for the rest of the day. So, why not take a peek at your finances each morning to orient yourself? You can look at your budget numbers, or just your bank account balance if you don’t currently have a budget (though creating a budget isn’t rocket science, we promise). This way, your money will be on your mind as you make spending decisions throughout the day.

The key to maintaining this habit is to find something that works for you. Maybe you prefer to scope out your money using an app on your phone, a software program, a DIY spreadsheet, or even just old-school pen and paper. Find what works for you and keep at it.

Set Up Automatic Savings

Remembering to save money can be such a hassle. You have to log into your account, set up the transfer to your savings account, and then wait.

Instead, why not try setting up a recurring draft into your savings account? Or better yet, use your Chime debit card to pay for a purchase and save without even thinking about it. Your debit charge will automatically be rounded up to the nearest dollar, and the difference will automatically be deposited into your savings account.

Calculate the Cost of Purchases in a Different Way

How do you decide whether to make a purchase or not? You probably try to figure out whether you can afford it by looking at how much money you have in your bank account, right?

Instead, challenge yourself to think in a different way each time you make an optional purchase. My favorite way to do this is to calculate how many hours I had to work to buy something.

For example, if your hourly wage works out to $10/hour and something costs $100, would you be OK with trading 10 hours of your life for that purchase?

Do One Thing Every Day That Scares You

This good habit is more than just a great quote. Fear is often one of the constant drivers of our behavior, and generally not for the better.

By committing to stepping outside your comfort zone, you can gradually become less fearful. I like to think of it as desensitization therapy, as if you had arachnophobia, for example. By gradually exposing yourself to the scary thing, you start to realize that it’s not that scary after all.

Losing your fear and gaining courage helps you with every aspect of your life, including financial matters. Maybe you’ll be braver when asking for a raise, or sticking up for yourself when an institution is charging you outrageous fees.

Have Regular Money Dates With Your Significant Other

No one likes talking about money with their SO. Instead, why not try to make it a fun event that you both look forward to? Pick your beverage of choice—wine, beer, etc.—and set a date to check in on your financial progress.

Have you set any shared financial goals? If not, this is a great time to think about the future, or check in on your plans if you’ve already made goals. What can you be doing to move forward? What have you been doing well lately?

Setting regular money dates—say, once a month—can reduce your stress by keeping you both on the same financial page.

Set SMART Savings Goals—and Come up With a Plan to Reach Them

You’ve probably heard of SMART goals—specific, measurable, achievable, realistic, and timely. But have you actually done that with your own financial goals? If not, they’re not really goals. They’re just wishful thinking.

Instead, make a habit of setting SMART goals. Then, come up with a plan to meet them. If you want to save 10% of your income towards retirement each month, what can you do to get there? Can you analyze your budget to make sure you have that kind of cash to save up? Can you automate your savings so you don’t even have to think about it?

Setting SMART goals with plans to achieve them is the best way to hit your financial goals.

The Bottom Line

How many times have you petered out just a few months into the year after making a New Year’s resolution?

Instead, try committing to these healthy financial habits. Your wallet, your health, and your family will thank you for it.