Wine, Women & Wealth Book

Budget

TOP 10 WAYS TO SAVE MORE THAN LAST YEAR

If you’re starting the new year resolving to save a little more money than last year – great idea!

 

A healthy savings habit is foundational to good financial health. But maybe you’re looking at your budget (you have a budget, right?) and wondering how you’re going to come up with that extra money to put away.

Maybe your budget is already pretty tight with very little wiggle room. Don’t despair! Read on for ten ways even the most financially strict households can save a little more this year.

 

Automatic savings from your paycheck
One of the easiest ways to stash some extra cash is to have it directly deposited into a separate savings account. Update your direct deposit to include a percentage or a dollar amount from your paycheck that will go directly into a savings account every time you get paid.

Cashback offers
If you use credit cards for household expenditures such as groceries or gas, find a card that gives you money back on the purchases you make. When it comes time to redeem the rewards, opt to deposit the extra cash right into your savings account.

Cut the grocery bill
Food for your household can often be one of the biggest monthly expenses. You can help cut your food costs by meal planning, buying what’s on sale, using coupons strategically, and shopping at farmers markets. Try to steer clear from pre-made foods and convenience frozen items. The least expensive way to buy food is often to purchase whole food items in bulk.

Make sure that if and when you fall under budget for groceries, you’re saving that leftover money. If this becomes a trend, try cutting your grocery budget by the average amount you’re falling under each month and officially allocating the surplus to your savings.

Shop the sales
Using coupons or buying items that are only on sale is a great way to save extra money. The challenge here is to avoid buying something just because it’s been marked down. Simply put, if you do need a new item, like a pair of glasses, try not to pay full price. It’s worth it to shop around for the best deal.

Eat at home
Whether you’re single or have a family, cooking and eating at home is probably going to be better for your wallet. No one could deny that eating out can be expensive, and the cost can quickly add up. Prep meals ahead of time and pack your lunches and snacks.

Make sense of your cents
What do you do with your pocket change? Most of us find a little of it everywhere – in our car, on the dresser, in the washing machine, and at the bottom of our purses. Pocket change is money, and it adds up. Treat your pocket change with the same attention you give to paper money.

Start by keeping it in one place, like a change jar or dish. Then, periodically deposit it into your bank account.

Take advantage of free entertainment
Learn where to look, and you’ll find free entertainment abounds. Instead of paying to see a local band, look for a free show. Craving a little café culture? Save the cost of a designer coffee and bring your homebrew to the city park.

Create an emergency fund
Creating an emergency fund doesn’t sound like a money-saving strategy, but it is. Why? Because when an emergency comes up, you’ll have money at hand to deal with it. An emergency fund keeps you from putting surprise expenses on a credit card and potentially incurring interest.

Stash the windfalls
Found money can boost your savings this year. Found money may include bonuses, gifts or inheritance. Any income that is not accounted for in your regular budget is found money. Stash found money and your savings account will grow. If you can’t bear not to treat yourself to something, go for it but commit to saving half.

Curb impulse buys
Impulse purchases may wreck even the most conscientious savings plan. If you want to save successfully, you’ve got to curb your impulse buys. Try using the 24-hour rule. For any non-essential purchase, wait 24 hours. This will give the impulse a chance to fade, and you might realize you don’t really need or want the item.

Reward yourself
Saving money isn’t easy, but with the right strategy, you can make your savings goals a reality. Good luck and here’s to a prosperous year!

HOW TO HAVE YOUR DREAM WEDDING WITHOUT NIGHTMARE SPENDING

Planning a wedding is both exciting and stressful. There are many moving parts to coordinate – guest lists, venues, menus.

 

Not to mention the fact that you’re making some major financial decisions – maybe your first as a couple. Needless to say, your wedding is a huge milestone. It’s easy to get caught up in the wave of excitement. But it’s also easy to go overboard with spending. One day you get engaged and the next thing you know, you’re looking at your wedding album (along with some potentially major credit card bills).

To keep your wedding costs as reasonable as possible, consider a fresh perspective. Read on for a few pointers to keep in mind as you embark on this new adventure.

Take the time to get your mind in the game
When you first commit to walk down the aisle together, it may be tempting to rush right out and buy your fantasy dress, secure the location where you’ll exchange your vows, and get your order in for your dream wedding cake. But slowing down a little and thinking about what would really make your day special can help corral your wedding costs (so you’ll have that much more for a down payment on your first home, for example).

Set a budget and stick to it
The average cost of a wedding in the United States is more than $33,000.[i] But don’t panic. You don’t have to spend $33,000 to have an unforgettable day. You’ve probably been to wonderful weddings that cost less than $1,000 as well as huge ballroom style weddings that can approach six figures.

Spend as much or as little as you can afford. The important point is to set a budget and stick to it. So sit down with your partner and create a budget you can live with, not just for the day itself, but for your future together. Decide on your most important elements, set the costs for them, and get started checking items off your list!

Spend only on what’s important to you
One thing to keep in mind is that this is your day. Your wedding doesn’t have to be all things to all people. What is most important to you and your fiancé? Love gourmet food? Maybe you splurge a bit on your menu. Into fashion? Maybe your attire is the big ticket item. Don’t care much for alcohol? Skip it and budget more money toward the DJ.

Call in favors and use your friends’ talents
Enlisting help from your friends not only can save money on wedding costs, but it can also make your wedding feel more personal and special. Gather up your talented friends and ask for their help.

Ask close friends to participate in the wedding prep instead of purchasing gifts. Acquaintances? Ask them if they will share their expertise for a minimal fee.

Hint: If your style is more casual, skip the professional photographer and ask your guests to take pictures with their smartphones. You can save a ton of money and end up with great true-to-life photos of your wedding (instead of professional portraits that might look a bit stuffy).

Stay calm and plan on
If you begin planning without a clear vision for how you want your day to unfold, you can quickly get caught up in the frenzy. Vendors and party planners will be happy to sell you lots of extras you may not want or need. So, think carefully about your plan, know it well, and stick to it as execution gets underway.

In short, the best way to save money on your wedding isn’t about cutting corners and limiting your guest list. Like any financial matter, it’s about knowing what’s important to you, setting a budget, and getting creative. Not only can this help save money on your wedding, but it also ensures a wedding that is uniquely yours. And the best news? Having some money left over for the honeymoon!

 

[i] https://www.theknot.com/content/average-wedding-cost-2017

HOW MUCH HOME CAN YOU AFFORD?

For most households, buying a home means getting a mortgage, which means lenders play a big role in declaring how much house you can “afford”.

 

Many people take that calculation as a guide in choosing which house they want to buy, but after you’ve signed the papers and moved in, the lender might not be much help in working out the details of your family budget or making ends meet.

Let’s take a look behind the curtain. What is it that lenders look at when determining how large of a mortgage payment you can feasibly make?

The 28-36 Rule
Lenders look closely at income and debt when qualifying you for a certain mortgage amount. One of the rules of thumb at play is that housing expenses shouldn’t run more than 28% of your total gross income.[i] You also may hear this referred to as the “housing ratio” or the “front-end ratio”. The 28% rule is a good guideline – even for renters – and has been a common way to budget for household expenses over many generations. Using this rule of thumb, if your monthly income is $4,000, the average person would probably be able to afford up to $1,120 for a mortgage payment.

Lenders also check your total debt, which they call debt-to-income (DTI). Ideally, this should be below 36% of your income. You can calculate this on your own by dividing your monthly debt payments by your monthly income. For example, if your car loans, credit cards, and other debt payments add up to $2,000 per month and your gross income is $4,000 per month, it’s unlikely that you’ll qualify for a loan. Most likely you would need to get your monthly debt payments down to $1,440 (36% of $4,000) or under, or find a way to make more money to try to qualify.

Buying less home than you can afford
While the 28% and 36% rules are there to help provide safeguards for lenders – and for you, by extension – buying a home at the top end of your budget can still be risky business. If you purchase a home with a payment equal to the maximum amount your lender has determined, you may not be leaving much room for error, such as an unexpected job loss or other financial emergency. If something expensive breaks – like your furnace or the central air unit – that one event could be enough to bring down the whole house of cards. Consider buying a home with a mortgage payment below your maximum budget and think about upsizing later or if your income grows.

A home as an investment?
A lot of people will always think of their home as an investment in an asset – and in many cases it is – but it’s also an investment in your family’s comfort, safety, and well-being. In reality, homes usually don’t appreciate much more than the rate of inflation and – as the past decade has shown – they can even go down in value. Your home, as a financial tool, isn’t likely to make you rich. In fact, it may do the opposite, if your mortgage payment takes up so great a percentage of your monthly budget that there’s nothing left over to invest, pay down debt, save for a rainy day, or enjoy.

Homes are one of those areas where many discover that less can be more. Whether it’s your first home or you’re trading in the old house for a new one, you might be better served by looking at how big of a mortgage payment you can afford within your current budget, rather than setting your sights on the house your lender says you can afford.

 

[i] https://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx

BUDGET LIKE A ROCK STAR WITH YOUR FIRST JOB!

Congratulations! Landing your first full-time job is exciting, especially if you’ve been dreaming of that moment throughout college.

 

Now you can loosen your belt a little and not spend so much brain power on creative ways to make ramen noodles. But before you go and start spending on the things you’ve had to skimp on in school, it’ll be worth it to take a breath, do some self-examination, and create a budget first.

This is probably the absolute best time in your life to start a habit of budgeting that will last you a lifetime – before life gets more complicated with a family, mortgage, etc. If you become a whiz at your personal financial strategy, tackling all the things that life will bring your way may (hopefully) go a lot smoother.

So here are a few tips on setting up your budget with your first job:

1. Think about why you want a budget
It may sound silly, but knowing why you’re putting yourself on a budget will help you stick to it when temptations to overspend flare up. Beginning a budget early in life when you start your first job will help lay the foundation for responsible financial management.

Think about your goals here. Having a budget will help you (when the time is right) to acquire things like a home, new car, or a family vacation to the islands. Budgeting can also help you enjoy more immediate wants, like a designer handbag or new flat screen TV.

2. Get familiar with your spending
You can’t create a budget without knowing your expenses. Take a good, hard look at not just your income but also your “outgo”. Include all your major expenses of course – rent, insurance, retirement savings, emergency funds. But don’t forget about miscellaneous expenses – even the small ones. That coffee on the way to work – it counts. So does the $3.99 booster pack in your favorite phone game.

Track your expenses over the course of a couple of weeks to a month. This will give you insight into your spending, so your budget is accurate.

3. Count your riches
Now that you have your first job, add up your income. This means the money you take home in your paycheck – not your salary before taxes. Income can also include earnings from side jobs, regular bonuses, or income investment. Whatever money you have coming in counts as income.

4. Set your budget goals
Give yourself permission to dream big here and own it! Set some financial goals for yourself – and make them specific and personal. For example, don’t make “save up for a house” your goal because it’s not specific or personal. Think about the details. What type of house do you want, and where? When do you see yourself purchasing it?

For example, your budget goal may look something like this: “Save $20,000 by the time I’m 27 for a down payment on an industrial loft downtown.“ A good budget goal includes an amount, a deadline, and a specific and detailed outcome.

5. Use a tracker
A budget tracker is simply a tool to create your budget and help you maintain it. It can be as simple as a pen and paper. A budget tracker can also be an elaborate spreadsheet, or you can use an online tool or application.

The best budget tracker is the one you’ll stick to, so don’t be afraid to try a few different methods. It may take some trial and error to find the one that’s right for you.

6. Put it to the test
Test your budget and tracking system to see if it’s working for you. Try to recognize where your pitfalls are and adjust to overcome them, but don’t give up! It’s something your future self will thank you for.

7. Stick to it
Creating a budget that works is a process. Take your time and think it through. You’re probably going to need to tweak it along the way. It’s ok!

The best way to think about a budget is as an ongoing part of your life. Make it your own so that it works for your needs. And as you change – like when you get that promotion – your budget can change with you.

PERSONAL FINANCE: HIRE A PROFESSIONAL OR DIY?

Contrary to popular belief, professional financial planning can potentially benefit people of all income levels.

 

So the question you may want to ask is not if you make enough money to need professional help, but rather, is your money working to create the life you want?

If your answer is “I don’t know” – no worries. There’s help!

A professional financial planner is, well, a professional
It’s true that personal finance is personal, but for many of us, it can be complicated too. Plus, it’s not something we usually learn about in school. So for many – even for those on the lower end of the income scale – a financial planner may have a lot to offer.

Even though there are some people who do just fine with financial planning on their own, many of us need help to connect the dots. Having a solid financial strategy often isn’t just coming up with a monthly budget and sticking to it. Many Americans don’t seem to have a grip on how personal finance intersects with their lives. In fact, about half of Americans don’t have a financial plan at all. (Are you one of them?)

Maybe you know exactly what you want – let’s say to retire by 60. But you don’t know how to get there. This is where a financial planner may help.

Maybe you don’t know what you want, even though you’re already a disciplined budgeter. You may still need a good financial planner who can help you imagine and create a strategy for the future of your dreams.

A financial planner can foster accountability
One of the most difficult things about creating and living by a financial strategy is accountability. Let’s be real. It can be difficult to find the discipline to consistently stick to a budget, save for retirement, and live within our means.

If you’re coming up short in the discipline department, hiring a financial planner may help create some accountability for you. This isn’t to say they’re going to wag their finger if you splurge on a spontaneous girls’ weekend in Cozumel, but they may help create a sense of accountability by checking in with you regularly to see if you’re on the right track. You might decide that girls’ weekend could be planned a little closer to home instead…

A financial planner offers expertise at every life stage
A financial strategy isn’t something you create and then forget about. A wise financial strategy changes as your life changes, so it must be revisited. A good time to take a fresh look at your financial strategy is during life events such as:

  • Getting a new job
  • Making a major purchase, such as a home
  • Starting a business
  • Getting married
  • Having a child

Every one of these milestones signals a time to revisit your finances. A professional financial advisor can help ease these transitions by taking the pulse of your financial health at every life change.

What a financial planner can’t do
If you’re not ready to deal with your personal finances, a financial planner won’t be much help to you. In other words, they can’t make you take initiative when it comes to your financial life. But if you’re ready to explore the world of personal finance, they may help make the difference between a dream and a reality!

 

 

TAKE YOUR DREAM VACATION, WITHOUT CAUSING A RETIREMENT NIGHTMARE

Now that the kids are out of the house, maybe you and your spouse want to take that once-in-a-lifetime island-hopping cruise.

 

Or maybe your friends are planning a super-exciting cross-country road trip to see all the sites you learned about in school. It can be tempting to skim a little off the top of your retirement savings to fund that dream vacation and make it happen. But whatever your vacation dream is, you shouldn’t sacrifice your retirement savings to live it.

This isn’t to say you shouldn’t take that trip. Vacation is important to health and wellbeing. If anything, studies show that Americans aren’t taking enough vacation during the year.

But, for those that do take a break, many are going into debt to do it, sadly enough. A survey by the financial planning platform LearnVest asked 1,000 adults how they finance their vacations. The answer? They go into debt.

The study found:¹

  • On average Americans will accrue $1,108 of debt for a vacation.
  • 32 percent said saving money for a vacation was their top financial priority – above saving for a home or retirement!

So, what to do if you’re hungry for travel and need a getaway? Here are some simple strategies to help you save for that vacation, all while protecting your funds for retirement.

1) Follow the $5 a day rule:  The $5 a day rule simply means you put a fiver away each day toward your vacation. Most of us could probably scrape together $5 a day just by making coffee at home and bringing a sandwich or two to work each week. If you muster up the discipline to stick to it for a year, you’ll end up with $1,825 – a pretty decent vacation fund.

2) Use a rebate app:  Rebates can put cash in your pocket. Try an app like Ibotta.² Just sign up and select the rebates for items you purchase at the stores you frequent. Shop and scan your receipt. The app will put the rebate into an account. You can withdraw the cash through Paypal or Venmo.

3) Cancel the gym:  Working out is critical to staying healthy! But ask yourself if you really need that gym membership. Gym memberships can cost anywhere from $35 to more than $100 a month. Consider saving that money for a vacation and start working out at home.

4) Cut down on your food budget:  Of course, you got to eat. But we could all probably tighten up our food budget a bit. Try meal planning and batch cooking. Plan your meals around what’s on sale and in season.

5) Find free entertainment:  Can’t live without getting some weekly entertainment? You don’t have to – just look for the free events going on in your community. Consult your local newspaper or town’s website for info on community festivals, outdoor concerts, and art shows.

Keep Calm and Save On
Saving for anything has its challenges. But with a little effort and perseverance, you can have your dream vacation and your retirement, too!