plan ahead

Stop Waiting for Payday: Plan Your Budget Ahead

June 19, 2017 By Brice Matheson Leave a Comment

Many people are caught in the perennial cycle of living between paychecks. At the beginning of the cycle, they will spend heavily; but at the end of the cycle, they are forced to be more cautious. Despite that this is a common behavior, I think there is a better way forward.

Choose Three Budget Categories

Interestingly, most people do not overspend in every category. For example, most people do not overspend on gasoline or paying their debtors. They will overspend on food (dining out), clothing, books, or entertainment. If the prospect of tracking every time that you spend seems daunting, then identify three of your problem areas and track those.

Mindful Spending

Most people do not even think about it when they waste money. They just see a restaurant that they want to try and will spend $15 on lunch without even thinking about it. A good approach is to internalize your spending habits. Look at your receipts after dining out and say, “Interesting.” That does not mean that you have to beat yourself up. Just acknowledge it.

Cash Vs Card

Budgeting experts seem a little conflicted about whether cash or credit cards are ideal. Some think that cash might be better because people might be more conscience of the fact that they are spending their money. On the other hand, using a card will make it easier to track everything that you spend. Both approaches seem to have a few benefits.

Give Yourself Another Bill

Another bill might seem counterintuitive. But I do not literally mean that you should find another expense. Open a savings account and start a regular payment plan, treating it like a bill. Since most people spend heavily in the beginning of the pay period, ensure that the deposit comes early in the cycle. Save early and spend later.

Elizabeth Warren’s 50/20/30

Many people can actually live on significantly less than their income. Elizabeth Warren suggests that you designate 50% of your income for your bills and necessities. 20% should be designated for your savings account, and 30% should be designated for your entertainment, clothing, home decor, and anything else that you want (this is the fun money).

Allot Time for Budgeting

It actually is not that time consuming once you establish a pattern and a formula. If you divide your budget into categories and subcategories, you will have a simple way of tracking what you spend and what you can afford.

Use Budgeting Resources

You do not actually have to exercise all of the intellectual muscle. There are plenty of tools online that you can link with your bank accounts. They will depict how much money you are spending on a regular basis. Some will even divide your budget into categories for you. The only potential fudge factor would be cash purchases. But if you limit the cash that you spend, you should be able to track that effectively as well. Also, cash withdrawn from an ATM will still show up on your budgeting report.

Household Investments

Many consumers are becoming increasingly concerned with the environment and wasting the earth’s limited resources. But by using green appliances, you can play a role in conserving energy. This project will also reduce your monthly expenses. They may initially be more expensive, but they come with a return on investment (savings).

Turn Everything Off

You might not think that it is a big deal to leave the light on when you leave your house, but it can actually cost more money than you would expect. Some think an illuminated light bulb costs 75 cents for an hour of use. Similarly, leaving the television on and letting the water run while you are doing the dishes or brushing your teeth can all contribute to a higher energy bill.

A New Mattress

If you are somebody who suffers from back pains throughout the day, the culprit might be your mattress. This could result in high medical bills and payments to your health insurer. While purchasing a new mattress might create an initial expense, it could potentially save money in the future. It is another purchase that comes with a return on investment.

Spend Extra Money Wisely

If a deceased relative left you an inheritance or you received a financial aid refund, there might be a temptation to use that money to have a good time. But it will not last forever, and you will learn that quickly if you spend recklessly. Use any extra money that you get to pay your overdue bills. Pay off your mortgage for the next few months and designate what would usually go to mortgage for your savings account.

Budgeting can be a challenge. But with a little bit of self-control, wisdom and management, you can reach your financial goals.

Author bio:Brice Matheson is a Financial Advisor, constantly informed about credit opportunities and new business and banking software on the market. He is also a Contributing Editor for Money Plate, which is a place he and the rest of the team can lend a hand on teaching young people more about how they should handle their personal finance.

Photo: Tax Credits

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Use Predictability To Your Advantage: Planning Ahead Saves Money

June 1, 2009 By Jennifer Derrick 3 Comments

One of the biggest things you can do to save money is simply to plan ahead. I’m not talking about planning far ahead like planning for retirement or for starting a family, although those are good plans to make. I’m talking about planning hours, days or, at most, a few months ahead. There’s nothing wrong with being spontaneous and doing some things on the spur of the moment, but when it comes to saving money planning ahead is your friend.

How many times have you thought to yourself, “I knew this birthday was coming up and I could have saved money if I’d just thought about it.” Or, “I know I should have packed snacks for this trip to the mall, but I forgot. Again.” Or, “I had the chance to buy this on sale last year/week and now I have to pay full price.” While you can’t plan for everything life throws your way, there are many aspects of our lives that are predictable from day to day, week to week, and year to year. Taking advantage of that predictability allows you to save money. Here are some examples of how simply looking down the road a little way can result in money in your pocket.

Carry drinks and snacks when you go out shopping or to the kid’s sporting events to prevent having to buy them on the go.
Engage in once a month (or week) cooking and make meals ahead of time to combat the, “I don’t have anything/time to cook, so let’s go out,” mentality.
Keep a calendar of holidays, birthdays and other gift giving events and buy gifts, cards, wrapping, decorations, etc. ahead of time and on sale to avoid pricey last minute purchases.
Plan vacations ahead to give you time to hunt for deals and to join any organizations that might net you discounts.
Carry your coupon folder with you when you go out so you avoid saying, “I have a coupon for that. At home,” while you’re out running errands.
Plan your grocery shopping. Make a list, get your coupons ready before you go, and know what sale items you want to get. You’ll spend less with a list, shopping will take less time, and you’ll be sure to use all your coupons if you plan your trip beforehand.
Know your bill pay dates and deadlines to make sure you get payments in on time and avoid late fees. They’re often the same month to month, so it’s easy to plan for this.
You know Christmas is coming, so save a little each month to avoid a big money hit in December.
Plan your errands in advance so you don’t waste gas and time driving back and forth all over the place.
Plan summer and weekend activities/entertainment for the kids so you have time to buy supplies on sale, enroll them in programs (at early registration discounts), pre-purchase tickets at a discount, and get up to speed on specials like free summer movies at the theater or kid’s days at local attractions.
Toward the end of a clothing season, take inventory of what is wearing out so you can buy replacements at the clearance sales rather than buying at full price at the beginning of next year’s season. Do the same for yard care and outdoor products and buy what you’ll need for next summer at the end of season sales.
Plan back to school shopping and buy as much as you can on end of season sales the year before and on tax-free holidays if possible. Paper, pencils, crayons and glue will last into the following year.
You have a general idea of when you need to buy things. Maybe you buy pet food once a month, laundry detergent twice a month, cleaning supplies every two months, etc. You know when it’s time to start thinking about buying more, so watch the sale flyers and plan your purchases to take advantage of sales. It beats running out to buy pet food at the highest price because you waited too long and now Fido is out of chow.
Similarly, you know when big things start to look like they need replacing or repair. The warning signs are usually clear. You can tell the car is on it’s last legs, you know you need a new computer because yours is too slow, you know the couch is developing an uncomfortable sag, and you can tell when the oven just isn’t heating right any more. Use those early warning signals and start looking for the best deal on repair or replacement, rather than waiting until the item is totally dead and you have to buy a new one at full price immediately.
You know that things like insurance payments, vet visits, and taxes occur at certain times of the year, so look ahead and save a little for them each month to avoid being shocked when the bill comes due.
If you’re a crafter, think about the projects you’d like to tackle and look for materials on clearance.
You know that if you live in a storm prone area you’ll likely need emergency supplies, so get them early in the season when you can buy on sale (and you can find what you need).
If you know you don’t watch much TV or many movies in the summer, see if you can put your TV service or movie rental service on hold until fall, saving you the monthly fee. Avoid getting to the end of summer and saying, “We sure didn’t get our money out of that for thee months.”
If you’re a book, movie, or gaming junkie, keep abreast of new releases and when they’re coming out so you can take advantage of any discounts for pre-ordering rather than paying full price after the release date.
When you do eat out, choose your restaurant ahead of time and go where you have a coupon or gift card, where kid’s eat free, or where they have early bird specials. Don’t just pop into the first place you pass.
Know the expiration/redeem by/cash by dates on coupons, gift cards, checks from rebates, credit card rewards, etc. These things are just as valuable as cash, but often we let them expire because we fail to realize that they have expiration dates and plan accordingly. It stinks to get excited about having $100 in credit card rewards but then realize you can’t use them because they expired two weeks ago.

Everyone’s life is different, but I bet that if you look at your lifestyle you can identify many expenses that you can plan for and even avoid if you just give some thought to what you’ll be doing and needing in the near future. What other ways have you found that planning ahead saves you money?

10 Ways to Survive Vacationing With People of Different Means

February 11, 2009 By Jennifer Derrick 1 Comment

If you ever vacation with friends or family, chances are that one of your journeys will eventually find you traveling with people whose financial means are different from yours. They may have more money than you (or be more willing to incur debt on vacation) or less than you. Whatever the case, vacationing with people of different financial means can be stressful.

Problems arise on both ends of the spectrum. If your traveling companions have more money than you, you may feel pressured to spend more than you’re comfortable with so that you won’t be left out of the fun. Whether it’s lavish dinners, fancy hotels, or pricey tours, you may feel that you have to spend in order to have a good time and spend time with your companions. If your companions have less than you, you may feel that you should tone down your fun so that they don’t feel left out. You may find yourself giving up things you really wanted to see and do so that you don’t leave your companions behind. Either way, a vacation with people of different means is a breeding ground for resentment and frustration.

So how do you survive a vacation if your traveling companions have more or less money than you do? Here are some suggestions.

Choose a destination with a lot to offer: This sounds like a “duh” moment, but make sure that your vacation destination offers something that everyone can afford. You don’t want to choose a city that is so pricey that only the very wealthy can afford it, or a destination that is nothing but a campground and “Bubba’s BBQ Palace.” Choose a city or destination that offers a variety of activities, lodging, and restaurants at different price points.

Compromise is the key: As with so many things in life, compromise is the key to surviving a vacation with people of differing means. Be willing to compromise on some of your wants while sticking to the things that are most important to you. Be willing to consider different types of lodging or food to compensate for the income gap. The more open you are to different activities and styles of vacationing, the more successful the trip will be. Try to find the middle ground between luxury and cheap. There is a lot of middle ground available in terms of lodging, food, and activities.

Be willing to separate: Even in groups where everyone has the same amount of money, a vacation can go wrong if the group sticks together all of the time. You will get on each other’s nerves. Everyone has different tastes and desires on vacation, so be willing to go your own ways at times. When you have a group with big money differences, this is even more important. Everyone can pursue their own activities without pressure to spend or resentment coming from the other side.

Offer to “treat” on one thing that you really want to do: If you are the one with more money, offer to treat the group to the one thing that you really don’t want to miss. If you have your heart set on a fancy restaurant or a luxury tour but you know you’re companions likely can’t afford it, offer to pay for the whole group. That way, you’ll get to do your special thing and everyone can join you. You don’t have to offer to treat at every venue, only the one that is most important to you. Your companions will probably appreciate the gesture.

Be honest: Whether you have more or less money than your companions, don’t try to hide it. You don’t have to discuss every aspect of your finances, but it is fine to say, “I don’t think we can afford that,” if you’re not comfortable paying that much. On the flip side, if there is something you really want to do and your companions can’t afford it, there is nothing wrong with saying, “We really want to do this, so we’ll catch up with you at 6:00.” Don’t feel like you have to hide and apologize for your means (whatever they are) and, conversely, don’t make your companions feel like they have to hide and apologize for theirs.

Make plans ahead of time: You can avoid a lot of squabbling at the destination if you make some plans ahead of time so that everyone knows what to expect. Sit down over lunch one day with a bunch of guidebooks and talk about what you’d like to see and do. That way, everyone in the group can get a feel for the costs and the expectations of other group members. Agree in advance on some “middle-ground” things to do together so that everyone feels included.

Save up for something really special: If you know from your advance planning that a pricey meal or tour is on the plan and you really want to join in, save up for it. With some advance notice you can up your savings goal to cover something special. That way you can join your companions at the special venue and pay your own way.

Don’t offer to pay for everything: While it is fine, if you have the means, to offer to pay for one special thing, don’t offer to pay for everything. No matter how much you may want to travel with your companions, they are likely to be offended by your offer. They will know that you feel they can’t afford it and that you are only carrying them out of pity. They might accept because they don’t want to make waves, but may also resent you in the process. Instead, try to compromise your way to a vacation that all can enjoy.

Don’t expect your companions to carry you: Conversely, if you have the reduced means in the group, don’t be a mooch. Asking or expecting your companions to pick up your tab is just plain rude. Pay your own way and if you can’t afford something, say so.

Rather than travel together, offer to meet at your vacation destination: Maybe you want to drive because it’s affordable and you can see more, but your companions want to fly (first class, to boot) and you can’t afford it. Offer to simply meet at the destination rather than traveling together. That way, everyone can travel in their preferred manner and not be angry before the vacation has even begun.

It is possible to survive a vacation with people who have more or less money than you. With a spirit of compromise and some advance planning, you can have a good time and still remain friends. The key is to remember that you have different means, but not make that the focus of the trip. If you get hung up worrying about who has more or less, you’ll only end up angry and resentful. Respect the means of your companions, but don’t make them feel badly about it. Plan some things to do together, but be willing to do your own thing, too. Put the focus of the trip on your time together and having fun and the issue of money will fade into the background.