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3 Tips to Spend Less Money Each Month

Save Spend

Spending is a struggle for most people. You are not alone if you often spend too much on things you don’t need or if you wonder where all your money went at the end of the month. With online shopping especially, spending is easy. You can buy anything you want and have it shipped to you from anywhere in the world with the click of a button. It can be intoxicating.

If you want to avoid relying on your kids one day (or on payday loans, title loans, etc.) and working until you’re 85, you may need to rethink your spending habits and come up with a plan for spending less money. Saving isn’t as fun as spending, but it’s the only way to ensure that you have a secure future and that you can ultimately spend money on things that will really matter like your kids’ college education or a memory-making family trip. Here are some ideas that will help you spend less:

  • Analyze your necessary expenses.    

 

    1. Some other places you can look to cut back include your cell phone plan, your cable bill, and your food expenses. Get a phone plan with less data. Switch from cable to an online service. Eat out less and shop the grocery store with coupons and loyalty plan savings. These kinds of expenses are a necessary part of your budget, but almost all of them can be trimmed.
    2. Start with your energy use. Buy more efficient lightbulbs. Put your thermostat on a timer so the furnace or air conditioning slows down when you’re not at home. Wash your clothes in cold water instead of hot. Think about how much gas you use in the car. Could you walk or bike more often? Or maybe even carpool?
    3. You have bills you have to pay every month. You can’t avoid paying the rent, paying for utilities, buying groceries, or putting gas in the car. But, what you can do is look for savings in these areas. Just because you need them doesn’t mean you have to overpay for them or that you can’t shop around and find ways to get costs down.
  • Make a monthly budget.    

 

    1. Also include savings in your budget. A portion of every paycheck should go automatically into savings. How much you will apportion for savings depends on your unique situation, but even if it’s only ten dollars, it’s important to do. It will help you develop savings over time, and it automatically removes some of your paycheck that you might otherwise have spent on something you didn’t need.
    2. Create a budget that is in line with your financial goals for the future. Include all of your ordinary and necessary expenses and also include a little bit of incidental cash for spending that you might not be able to plan for. It’s important to set limits, but you don’t want to be too strict or you won’t stick with it.
    3. Once you have done the above and moderated your regular expenses, you can create a monthly budget. A budget is a great way to keep your spending on track because when you don’t pay attention to how much you’re spending, you are likely to let more money fly out of your hands. You indulge more without even realizing it.
  • Convert unnecessary expenses into working hours. 

 

  1. Whenever you want to buy something you don’t need and you are trying to decide if you should, convert the cost of it into working hours. Ask yourself, how many hours will I have to work just to buy this $200 purse or this $50 spa treatment? Knowing just how much effort you have to put into earning your special treats really puts them in perspective. Visualizing expenses as working hours could be enough to make you drop the item and walk on.
  2. When you are faced with buying something you don’t need, you have an important choice to make. Hopefully you have enough wiggle room in your budget to allow yourself the occasional frivolous spend, but if you struggle to cut back on impulse buys or expensive things you don’t need, a new strategy might help.

You have to spend your money, but if you are careful about how you do it, you can spend less without feeling the pain of cutting back. Shop around, use coupons, make a budget that matches your financial goals, and think carefully about what it means in working hours before you spend. Do these things and you will make spending less a new habit.

Save Spend

Financial Freedom Brings Peace of Mind

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It can be difficult not to worry about money. It is often said that money is one of the biggest reasons that marriages struggle. Almost every household worries about finances at one point in time or another. When resources are limited, it can be hard to meet all of the demands a household may experience. Bills can be difficult to handle, but there are options to make these challenges easier. Using financial services can help reduce the strain of operating a household.

Create a Budget
The first step in securing financial freedom is to make a budget. This holds true even if there is very little money involved. Listing out the income received and the expenses that have to be covered is essential because it provides a snapshot of the cash that comes into and goes out of the home. A monthly budget is the most ideal option since many utilities and bills are generated on a monthly basis. However, those who are paid weekly may opt for a budget that is categorized based on each paycheck. For example, the first paycheck of the month may be dedicated to paying a specific larger expense, such as rent or a mortgage payment.

Reconsider Expenses
It can also be helpful to evaluate each household expense. If there is too much money being spent each month, then examine each item in the budget. Perhaps a cable company could offer a promotional rate to reduce the cost of their services. Phone companies may be able bundle services and lower the cost of the bill. Credit card companies may be willing to reduce interest rates for accountholders who are in good standing. It is definitely worth the time to make a few phone calls and examine options to reduce expenses.

Try to Save
Once the budget has been made and evaluated, try to save as much as possible. Many people find that this is easier if they immediately deposit part of their paycheck into a savings account. Once the money is in the account, try to avoid withdrawals unless there is an emergency. The savings account could be used for home repairs, car repairs and other unexpected expenses. It can take time to develop a financial plan. Do not become discouraged if it takes several months to stick to a budget and start a savings account. Even the slightest bit of progress towards these goals is an achievement.

Sometimes unexpected situations will occur and will bring extra expenses. It can be helpful to use a financial services company if extra money is needed before the next paycheck will arrive. Ian MacKechnie, founder of Amscot Financial, founded his company when he realized that many of his bakery employees needed financial services. A company that offers financial services can be a valuable resource for those who are faced with extenuating circumstances that are financially damaging. Even the most prepared household cannot be prepared for every situation. In those times, financial services can help a household get back on a path to financial freedom as soon as possible.

Savings Struggles

Accounting

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I’ll admit it, I fall for click bait all the time, especially when it comes to personal finance articles.  My latest trap came from the following article.  The headline about the real reason Americans struggle to save made me curious.  My first reaction was people can’t save because they spend beyond their means.  Was there another underlying factor I hadn’t heard of?  Turns out, no it was exactly what I thought.  There was some other interesting or scary depending upon your perspective, information from the survey conducted by the Federal Reserve.

Savings Struggles

The survey revealed that 47% of those surveyed would not be able to handle a $400 emergency expense.  That really blew my mind, that something as small as $400 would cause people to have to borrow money.  That even isn’t that big of a surprise expense.  Simple car repairs anymore seem to run in the hundreds of dollars.  Most car or homeowners insurance deductibles nowadays are at least $500, if not more.

Me

I have had my share of emergency expenses over the years, the most serious of them being several thousand dollars.  I know firsthand the value of an emergency fund.  I am continuing to add to mine until it is a full six months of expenses.  I have a full 3 months now and I could tap other non-retirement savings for the other 3 months.  It’s no wonder that most people carry credit card debt, they can’t afford any hiccups that life might give them.

In General

The next section did not seem quite as terrifying as the emergency fund section.  Only 20% of the survey respondents said their spending exceeded their income.  Taken at face value, this does not seem too bad.  However, I would wager that there are respondents who don’t know what their spending level is, so they can’t even answer the question correctly.  Another bright note was that 63% of the respondents said they were able to save some money during the past year.  Ideally, that number should be 100%, but I guess almost two-thirds isn’t too bad.  I couldn’t imagine not saving any money in a given year.  My spending would have to be wildly out of control for that to be a problem.  I tackled those problems years ago and don’t plan on every getting back to that situation ever again.

The retirement section is downright depressing.  Almost 1/3 had no retirement savings.  39% had not even given any thought to retirement planning.  I get that I am numbers oriented and that I enjoy working through calculations like retirement planning.  The nearly 40% who haven’t given it any thought, what are they hoping for, the lottery?  One of my favorite quotes is perfect for this point.  The best time to plant an oak tree is 15 years ago; the second best time is today.  Even if you haven’t started at the ideal point, the next best time is right now.

Me

I was in this situation about 6 years ago.  At the bottom of my hole, I had virtually nothing saved for retirement.  So, I sat down and made a plan.  I have made some minor adjustments along the way, but I have made sure that I have been continually saving.  Would it have been better to have been saving since I started working at 23?  Sure it would, but I can’t go back and change history.  The other scary number in the retirement section was that 50% were either “not confident” or “slightly confident” that their retirement assets were invested in the right assets.  I don’t claim to be an investment professional; those people are much smarter than I am.  Most retirement plans have target date funds that people can utilize.  If you don’t know what you are doing, this is certainly better than blindly picking a fund.

As usual, with this kind of article, I realize I tend to be in the minority when it comes to personal finance.  I spend less than I earn and I am diligent about saving for retirement.  As I said before, this wasn’t always the case, so there is hope for everyone.  All anyone has to do is take the first step.

Guardian Angels

Angel

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I Must Be Lucky

I am beginning to think I have a guardian angel looking out for me, maybe more than one.  I opened our above-ground pool recently and in what seems to be an annual occurrence, I fell off the pool.  It is not that far down, but it is probably about a four foot fall.

We have been on the house for about four years and I’ve fallen off the pool at least 3 times.  Every time I have managed to escape serious injury.  I was thinking about this the other day during one of my morning runs.  I tend to have random thoughts when I am running for an hour.  I had landed on my right side this time and wasn’t really able to brace myself.  I thought this was lucky because had I used my right arm to brace, I likely would have broken it.  I then thought, even if I did break or if something worse happened, I am prepared for it.

Being Prepared

I have health insurance that would help pay for the medical expenses.  It is a high-deductible plan and my deductible is $7,000.  That is quite a bit of money, but I will have that and more in the HSA account by the end of the year.  I set aside the maximum amount allowable this year into the account, which was $6,650.  Since I had about $1,500 left in it at the end of last year, I will have more than enough to cover the deductible.  Should the medical expenses exceed what I have saved in the HSA, I have an emergency fund that I can tap into to cover the rest.  The medical insurance has an out-of-pocket maximum that I would hit before exhausting my emergency fund.

Work is Covered Too

Now what happens if I can’t work for either a short or long period of time?  My job is pretty flexible, so I could work from home if I needed to for a period of time. If my injuries were severe enough where I was unable to work at all, I would be ok.  I have short-term disability insurance through my employer.  It would cover me for the first 26 weeks of any absence.  After those first 26 weeks, my long-term disability policy through my company would kick in.  That policy would provide 60% of my current salary, which would be enough to cover my essential expenses.

Now, if the leave were to last longer than 52 weeks, that would be when my personal disability policy would begin to pay benefits.  I figured any disabilities that were to last that long would be severe and likely to last a significant time.  Thus, the personal disability policy is in place to provide additional money that I could save for retirement.

If the injuries proved to be fatal, I am not worrying about anything anymore.  My wife also will not have to worry about money.  I have enough life insurance to make sure she is comfortable.  My Social Security survivor benefits will provide nearly all of the income my wife would need.  I have the life insurance to cover the slight shortfall and to help fund retirement for my wife.  As my wife is raising our children, we have not been contributing to a retirement account for her.  Our retirement plan has been predicated on my income.  Therefore, no income from me and that likely creates a bleak retirement picture for my wife.  My life insurance makes that picture a whole lot rosier.

So, if my guardian angel or angels happen to be on a break the next time I am walking around the edge of my pool, I know I have the outcomes covered.  How prepared are you if your guardian angels are on a break?

Should You Hire An Accountant?

Accounting

The question probably comes up in your household every year when April rolls around. Should you hire an accountant to help with your taxes? This is a good question and the options are worth exploring.

The first thing to understand is that there’s a difference between a CPA (Certified Public Accountant), an accountant and a tax preparer. CPAs are repeatedly tested and regulated by the federal government, which may provide you with more peace of mind, but may also cost you more to hire. An accountant will have similar skills and knowledge, but not every accountant is a CPA, and you’ll want to research that person before putting your important financial needs in their hands. Likewise, a tax preparer is not necessarily a CPA either. They specialize primarily in personal tax preparation, which can be helpful come tax season, but won’t provide you with other financial services.

All are worth considering when it comes to doing your taxes every year because their knowledge and experience can be to your benefit. They know what can be written off and what can’t, as well as other things that you probably wouldn’t know on your own or find in tax preparation software.

Now, when it comes to overcoming tax debt or preparing for an audit, you’ll definitely want to consider professional help or options like Community Tax Resolution Services. This is where someone’s expertise and specialized knowledge can make a huge difference.

Let’s look at some advantages of hiring an accountant to handle your tax needs:

Saving Money

This is where many people get hung up because it will certainly cost you more out of pocket to hire a professional for their services. However, they may ultimately be able to help you save more money because of their expertise.

Experience & Knowledge

The reason you might hire an accountant to help with your taxes is the same reason you would hire a doctor to perform your surgery or a real estate agent to sell your house. This is their job and it’s what they are trained in. Odds are they’ll know a lot more about finances and tax preparation than you do, so you can put their expertise to work in your favor.

Saving Time

Preparing your own taxes—and preparing them properly—can take up a lot of your time and energy. Hiring someone else to do the job is certainly more convenient.

Objective Insight

It can be hard to manage your own finances because you are so closely tied to your money—how you earned, where you spend it and how much Uncle Sam is taking from you every year. An accountant can approach your finances from a more objective viewpoint and give you professional advice without any personal biases.

On the other hand, if you are knowledgeable and diligent in your preparation, there are advantages to doing your own taxes:

Saving Money

If you do your taxes right and are able to save the same amount of money as an accountant/tax preparer, then obviously you will not have to pay out of pocket for their services. If your tax situation is simple (single, no home ownership and no significant write-offs), then there may be no need for professional assistance.

Better Financial Understanding

The more you understand about your taxes and your own financial situation, the better equipped you will be to handle things on your own. If challenges arise, then you’ll be ready for them. Or even better, you can take a proactive approach to make sure those challenges never come up. Start a separate savings account to prepare for expenses like taxes to help you be more prepared.

Saving Time

Again, if your situation is simple and you know what you are doing, then preparing your taxes should be a simple endeavor and won’t take you much time at all. Download some sort of budgeting software to track of everything dollar you’ve made. This will help you, should you decide to do your own taxes.

So, we circle back to the original question. Should you hire an accountant to help with your taxes? Ultimately, it’s up to you. The more complex your situation is, especially if facing an audit or dealing with significant tax debt, the more likely professional services will be able to save you money and simplify your life. The more basic your needs, the more likely you can do things on your own to avoid those extra expenditures that come with hiring a professional.

The important thing to remember is to not procrastinate when tax season is upon you. Whether you take the reins on your own or put your finances in the hands of a trained professional, it’s important to be proactive and have a plan in place to make sure your tax needs are covered long before April 15 rolls around.

 

Planning for Retirement Care Can’t Begin Too Soon

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None of us like to think about the day when we’ll no longer be able to look after ourselves – not only because it’s a scary thought, but we have enough things to worry about in the present day, without thinking about the future.

But, with life expectancy soaring into the late 80s by 2030, the majority of us will to have to live with old age for longer. Which means the cost of retirement healthcare increases with every year you live and your pension will need to go further than ever – so planning for retirement care can’t begin too soon.

Depending on others no longer works

The average Brit is expected to enjoy roughly 65 years of good health, which leaves around 20 years where some kind of healthcare will be needed. Sadly, the NHS is at breaking point and the spiralling cost of elderly care means responsibility often falls on family members. However, an IPPR study says 2 million over-65s in the UK will have nobody to care for them by 2030.

Meanwhile, the rise of the ‘sandwich generation’ sees more middle aged people in the UK looking after elderly relatives, as well as their own children – 2.4 million, according to Aviva (PDF). So when state healthcare and families are both pushed to their limit, the only option left is for us to take responsibility for our own retirement care.

Planning for retirement care

The trouble is care for the elderly is incredibly expensive. In Norfolk the average cost of a care home is £522.69 per week, while £161.95 is the weekly rate for care provided at your own home (find your local averages here).

You can use a retirement budget calculator, for a more accurate idea of how much money you’ll need later on in life and an income calculator to work out your pension contributions or seek financial advice to help you reach your target figure – the important point is you start planning early and look at all your options.

Avoiding the care crisis

While the overall cost of retirement care may come as a shock, it’s a wake-up call that gives you the best chance of generating the funds without selling your home. Regular financial advice will also keep you up to date with all of your entitlements and the options you have available to fund your own retirement care – all of which can change over time.

The government has made changes designed to make care more affordable, but the truth is they don’t even come close to solving the problem. In fact, they are quite misleading and many could find themselves coming up short, only to realise when it’s too late.

All this means the only guaranteed way to avoid the care crisis yourself is to take control of your own retirement funds and find a way to generate the money you’ll need to make it through retirement.

Image credit.

On Top of It

Accounting

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I know I tend to be a little overzealous when it comes to keeping track of my money.  However, I witnessed two events recently with two different coworkers that made me think that being overzealous is a good thing.  In both cases, there was a change to their paychecks that they did not monitor and the changes resulted in headaches for both of them.

Case #1

My first coworker received a promotion mid-year in 2014.  She went from an hourly employee to a salaried employee.  Along with that change, she also received a raise.  When she received her first post-raise check, it was higher than her normal check, so she thought everything was ok.  It turns out, everything was not ok.  You see, she had been paid before on a bi-weekly schedule as on hourly employee.  Salaried employees are paid bi-monthly.

So, even without a raise, her paycheck would have gone up, 26 paychecks to 24 paychecks.  She did not do the math to make sure that her gross paycheck was correct.  She did not notice there was a problem until the annual salary discussion occurred in 2015.  Only then did it come up that her paycheck never reflected the raise she was supposed to get with her promotion.  She will receive the back pay that she was owed, but I bet it would have been nicer to have that money in her pocket all along.

Case #2

My second coworker made an adjustment to her HSA contribution late in the year last year.  Her paycheck was ok, but the HSA account received too much funding from the company.  Part of her last contribution at the end of December was rejected because it would have put her over the IRS limit for the year.  She did not find out about this until February when she received a credit back in her paycheck.  It turns out the company had put an additional contribution in her account for her.  Her taxes were complex this year because she had to request a corrected W-2, as the numbers that were initially reported were incorrect.

It Pays to Pay Attention

In both cases, had they checked the numbers when a change occurred, they might have caught the mistakes sooner and been in a position to correct them before they caused any more problems.  Whenever I have a change to anything in my process, be it a salary change, 401k contribution change, anything like that,  I am always sure to check that first post-change check to ensure that everything was processed correctly.  I was able to catch a problem with my first paycheck this year.

Case #3

The benefits that I selected for 2015 did not make me eligible for a company contribution to my HSA.  I instead opted for a larger deductible and lower premiums.  Naturally with my first paycheck in 2015, I looked at not only my paystub, but also my HSA account to make sure everything was alright.  What I found was that the company had given me the contribution anyway.

Normally, I try not to look a gift horse in the mouth, but I needed to know what they were planning on doing with the erroneous contribution.  If they were going to leave it in the account, I needed to adjust my contributions, otherwise I would be over the limit for the year.  When I called HR about the problem, they were aware of it.  The same mistake had happened to over 2,000 other employees.  It was a literally a million dollar mistake by someone.  I still haven’t found out if they are going to take the money back yet or not.  My current plan is to wait until November to adjust my contributions.

Ever had a mistake with your paycheck?

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