Finance

Five Financial Tips For The New Year

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
financial tips

New Year brings hope. People make New Year resolutions according to their priorities, and the changes they want to bring in their lives. The coming year can also be the start of great financial success for you. Here are five time-tested financial tips to give a new direction to your personal finances in the New Year.

Set Goals

Set realistic, achievable goals. Think about your priorities. Do you need a new car, or are you better of clearing your existing debts which could be higher now because of inflation? Don’t just will to invest more, but think about how much you can afford to invest. If you want to increase your savings, think what you can do without.

  • Evaluate your priorities: What do you want in the new year; is it important? Can it wait?
  • Set your goals: Think of what you want to achieve; what you may have to forego.
  • Assess the time: How long will you be paying for it?

Once you have set measured goals, you can set a monthly budget accordingly. You may have to rework your other priorities, so be clear about the order.

Make a Budget

A budget helps you reduce unnecessary spending, and direct your funds to what’s really important for you and your family. Keep a track of all your expenses, big and small. A record of each dollar spent will show you where your money is really going. It can be an eye-opener – certainly in the age of high gas prices.

Understand your spending patterns, which can fall into a couple of broad categories:

  • Fixed Expenses: Recurring expenses like rent, EMIs and subscriptions, etc.
  • Variable Expenses: Expenses that change like food, clothes, gas, recreation                        

Check your recent bank statements to get specific inputs about where your money goes. This can show you the difference between how much you make and spend. You can allocate the difference towards achieving your goals.

Manage Debt

Loans can be a good way to acquire things you may not be able to buy upfront, like a house. But EMIs can hold you back from achieving your other objectives. The interest amount can really affect your finances. With that said, repaying your debt should be a top priority. There are two ways, in which you can better manage your debts.

  • Consolidating: This involves combining all your loans into one. You may become eligible for a lower interest rate. It certainly makes it easy to remember just one EMI per month.
  • Listing: You can list your debts by balance and interest. When you list by interest, pay the minimum on all but the highest interest loan; try and pay something extra each month. When you list by balance, try and make extra payments on the smallest loan.

Making a plan to manage your debt help you better understand your financial situation, and how the debt affects your life.

Savings vs. Investment

It doesn’t always have to be one or the other. With savings, your money grows with interest, but nothing else. You have something in the bank for a rainy day. Investments can make your money grow faster, but can also make you lose money.

Time is money if you invest in 401K or Roth IRA. Your money earns interest, and after some time, the interest earns interest. This is called compounding interest. Over many years a small fund can grow into a substantial amount.

In accumulation of this, you must always have an emergency fund in the bank. This is may consist of three to six months’ living expenses. This can help you tide over crises without putting you into deeper debt. You may also want to put something away for upcoming events.

Be Flexible

Change is the only constant in our lives. Your circumstances may change; you may get a better job, or get laid off; you may win a lottery; or lose money in the stock market. This means you may need to postpone some goals, or the situation may put you on a new track to achieving the goals faster.

If things are better, you can even add to your current financial wish list for the forthcoming year. Be prepared to monitor your financial plan regularly, and tweak or redo it, if needed. You may not be able to strictly as per your plan. You may stick to your budget in some months, or exceed it. That’s ok as long you stay on course with your New Year financial resolutions for the whole year and beyond.

Finance, Money

5 Things You Must Know to Take Control of Your Budget

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Control of Your Budget

Managing your finances can be extremely rewarding, but also challenging. If you’ve never tried to budget before, then it can be hard to figure out how to make it work for you. That’s because many factors affect your budget, which can seem quite complicated. But once you break out of old habits and learn to focus on the things that matter most, it’s possible to have fun with your money and save up at the same time. Below are some tips for mastering the budget game.

Know Your Numbers

The first step in budgeting is figuring out where your money is going now — and what you can cut back on. You can’t control your money if you don’t know where your money is going. Start by tracking your spending for a month or two so you have an accurate picture of your income and expenses. You can do this manually, like write everything down in a notebook or use free apps to help keep track of your spending and see what areas of your budget need tweaking.

If you get paid weekly, write down each paycheck every time you get one — don’t wait until the end of the month to do it all at once. This is especially important if you have an irregular income. If you only get paid once per month, once per quarter, or something similar, then write down each payment along with any other transactions. You’ll also want to ensure you’re getting the most out of any credit cards or rewards programs.

Set a Goal for Yourself

Once you know how much money is coming in and going out each month, set a realistic monthly savings goal. For example, if you want to save $500 per month, then plan to spend $500 less than what comes in each month, assuming there are no unexpected expenses.

If possible, try to set aside extra monthly money, say $100, which goes straight into savings without being touched until the next month rolls around. This will help build up your savings account quickly without taking away from other priorities like paying off debt or contributing toward retirement accounts.

Set aside Sinking Funds

A sinking fund is an accounting measure used to allocate funds for an ongoing project. The money is put aside for a specific purpose, such as paying off debt or paying for something in the future. It allows you to set aside money always to have it available for your project. They can be used not just for savings purposes but also for working towards a specific goal, such as saving for college funds because society spends enough on K-12, it just cannot afford to pay for peoples’ college pursuits.

The alternative approach would be to put extra money towards the debt monthly, but in practice, this may not happen because people overspend their normal limits and have nothing left to add to their debt repayment plan. A sinking fund is a way you can pay down your debt and have extra money built up in reserve if you ever fall short on funds which can happen in a high gas costing, inflationary environment.

Anticipate Irregular Expenses

We set budgets for the many things we purchase throughout the year. But one of the most critical areas to budget for is irregular expenses. Inconsistent expenses are just that – not every month or six months, but only once a year, such as saving for festival gifts, vet visits, or medical check-ups.

It is essential to plan for these as they can seriously impact your cash flow and should not be overlooked. Forgetting to add these into your initial budget could make a difference between having money in your account and not.

Automate Money for Savings

Saving money can feel like a challenge. It’s hard to remember to do it every day and don’t even think about saving in between paychecks or on paydays. By automating your savings, you can ensure that you’re saving and setting money aside for emergencies or larger goals like retirement. Saving money on an automatic deposit can seem daunting at first, but once you get into the routine of saving on auto pilot, it becomes second nature. Once you’ve taken the first step of linking accounts and setting up automatic deposits, all that’s left is sticking to it and ensuring that each account has enough money in it so that transactions are completed successfully and without error.

Money

9 Ways to Spend Your Money Wisely

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
spending money

Are you expecting to receive some money? What are your plans for it? You can always splurge these surplus funds on a luxury trip or buy an expensive gadget. But there are smarter ways to spend your money which will give you both peace and happiness. These are a few options for you to consider.

1. Get Rid of that Pesky Debt

One of the best ways to employ money you didn’t expect is to use it to pay off your debts. This can be student loans, regular bills, or credit cards. Debt repayment is really the best return on money. Typical credit cards carry a 15% interest annually. You could save that amount and make your wealth grow by paying off the cards.

2. Spend it On Job Training or Education

You are the greatest asset to invest in. Job training and education are more often than not required for personal and professional growth. You may finally get that promotion you were eyeing by completing that certification. People that love their jobs and are satisfied with their career growth tend to be happier.

3. Build Your Emergency Nest

It can be a true nightmare to have to pay for a major expense when you least expect it. But, there is nothing you can do to prevent emergency situations. If you have a medical bill or a car repair, you will have to pay for them. You can use your additional money to create an emergency fund.

You should also think about making monthly contributions to the emergency fund. Tax refunds are the best way to jump start savings funds. Think about your emergency funds as buffers. You can also earn some interest by parking the rainy-day fund in a savings account.

4. Spend Freely on Hobbies

When was the last time you entertained yourself actively without looking at a screen or doing something where content was shoved down your throat? There are times when you want to Netflix and Chill, but you should consider using the extra money to pick up a hobby.

Think about whatever you like and invest in it. It could be purchasing a new music instrument, enrolling into language class, buying tools to finally build that tree house or new utensils for baking.

5. Plan a Vacation

You should have at least one decent holiday in a year. This is to keep you healthy and happy, both physically and mentally. Holidays are expensive. But, you don’t have to mess up your financial goals. You can utilize a little bit of the surplus fund or use the entire amount to pamper yourself and your loved ones.

6. Make the Money Work

You may consider investing in financial markets. You can create a comfortable retirement fund by starting right away. It is never too late to start planning for the future. Here’s a tip – never place all your money in individual stocks if you are not a diligent investor. Instead, you may want to play around using exchange traded funds and mutual funds to spread the risk a bit because in this violent world with crime going up – we are all already taking enough risk.

7. Buy Those Healthy Meals

Healthy food costs money. If you have the cash, you should consider taking a step in the healthy direction. Go organic. While you are at it, you may want to buy a gym membership as well. You will automatically start feeling better when you eat healthy. Health is something nobody really appreciates until they lose it. Using your money towards taking care of your health is a poignant way to spend it even when food costs are going up.

8. Go Have Fun

Live a little with your windfall. You are allowed to have fun. But, before you think about spending it on stuff, ask yourself whether you really need more stuff. Won’t you rather spend the money on experiences? Maybe take a rollercoaster ride at the local fun park or throw a party for your friends. You could also just use it at a spa to give yourself a memorable experience.

9. Visit Friends and Family

Satisfying relationships and happiness are correlated. But, it is expensive maintaining good relationships with family and friends. We all have family members or friends that moved away and never visited again. You still love them. You are still in touch with them through digital mediums. Why don’t you go visit them?