Category Archives: Budgeting Know-How

Lump sum or monthly payments?

Many insurance providers give you the option of paying off a policy term all at once, or in installments.  Paying off all at once is called a lump sum payment.  The case can be made for both making lump-sum payments, and for paying in monthly installments.

For example, let’s say that a homeowner’s insurance policy is $600 for the year.  The insurer would typically give the homeowner one of the following options:

  • Pay $600 in full, or pay $50 twelve times, with a $4 check processing fee each time.  In this case, the monthly payment plan would result in an extra $48 worth of fees.
  • Pay $50 twelve times, or get a 5% discount for paying in full.  Paying in full would save the homeowner $30 (5% of $600).

In each case, paying over time is more expensive than paying up front.

However, let’s say that the homeowner is trying to build an emergency fund.  Paying over time, even though it’s more expensive, would alleviate a cash flow crunch at the beginning.  Rather than drain $600 all at once, only $54 would be drained the first month.  This would allow the homeowner to build up an emergency fund faster.

Lump sum vs. monthly payments involves a cost-benefit analysis.  Do you need the money now, or can you wait until later?  Are you willing to do without money now in order to save more money later?  Whether this is a good deal or not depends on the amount of the lump sum, and how much it costs to pay over time.  $48 may be an acceptable cost, but $150 wouldn’t be.  $4 might be a no-brainer.

Posted in Budgeting Know-How.

A hack to keeping track of expenses

One of the first tasks to successful budgeting and money management is to keep track of expenses.  You may be able to guess where money is going, but until the numbers are in front of you, that’s all it will be: a guess.  Only the very rich can afford to guess with their finances; everyone else needs to be keeping track of expenses.

I’ve been trying (unsuccessfully) for years to track my expenses.  To me, tracking my expenses involves a careful enough categorization that I can target the hot spots.  I always get so far behind that I do just what it takes to get my taxes in order, but little beyond that.  After the receipts have piled up too high, it’s just demoralizing to look at.

Some receipts are easy!

I’ve been using Quicken as my expense tracker.  There is a lot of capability in Quicken to download transactions automatically from my banks, credit card providers, etc.  This saves a lot of fat-fingering.  However, all I get are the total amounts of each transaction.  So, if I go to Walmart, for example, and buy groceries and clothing, all of that will show up on one receipt when I check out.

Each transaction in Quicken allows for a split categorization; this is the place where I can divide a single transaction into, say, food, clothing, home and garden, etc.  Of course, that involves fat-fingering in the amounts from the receipts, which sometimes have cryptic descriptions on them.  Further, you need the receipt, of course.

Yesterday I went to Sweet Frog with my family.  When the cashier asked my wife if she wanted a receipt, she said no.  I told her that I would have liked the receipt so that I could keep track of the expense.

What she told me next was the hack.  She told me, “Well, it will show up as a charge to Sweet Frog.”  Sweet Frog is a frozen yogurt shop, and that’s all we buy there.  So I know how to categorize that entire transaction, even if I don’t have the receipt.

For some receipts, it’s easy to categorize the whole amount.  That makes it easier to keep track of expenses.

Posted in Budgeting Know-How.

The toughest part about tracking your spending

The standard procedure for getting a handle on your spending is to track it for a month — track where every penny goes, and categorize the expenditures.

Getting past a month is the toughest part.  It’s not too bad for the first few days of the month, but after a week, remembering to go through the freakin’ receipts is a drag.

I know this.  I’ve run across this psychological barrier many times and it’s tough to crack.

Fortunately, if you use a credit card for most of your purchases, you already have a record of what you buy — or, at least, the stores that you bought at.  This record, coupled with your receipts — which you can just shove in a box, honestly — are enough to give a decent picture of where your money went for the month.

Once you’get this 80% – 90% picture of where your money has gone, then you can tackle the last little bit — the cash purchases at the vending machine, paying out an allowance, yard sale purchases, etc.  But that becomes much easier to do if it’s only a small part of what you buy.

Posted in Budgeting Know-How, Financial Success.

Budgeting for a Brilliant Life: How a Budget Adds Value to Your Money …

… Without Having to Increase Your Income

Why Budget? For one simple reason: we all deserve a quality life.

What does budgeting have to do with a quality life? More than you would initially think. Consider this typical scenerio:

You work hard everyday but you never have enough money for extravagant things like vacations, cars, etc. So, you spend your money on little things here and there as a little pick-me-up. Every morning you buy a donut and coffee, it’s not much but your feel a little better for a moment. You eat out a lot because maybe you can’t afford that vacation in Hawaii, but you can afford to get a cheeseburger when you want one. On the weekends you go to the movies and out to the pub for some beer.

By the end of of your pay period, you are nearly broke. If you just make it a few more days until payday, you will be fine. But you need gas, or you need an oil change. Perhaps you get sick and you need to get some over-the-counter medicine. You rarely go grocery shopping so you need food to last until you get paid. So, you pull out the credit card and promise yourself you will not use it again and that you will pay off the purchases once you get paid. But when you do get paid, you feel empty and want to enjoy the money you work so hard for. So, you eat out, go to the pub, buy a new toy, etc. And the cycle continues.

This above scenerio is how a lot of people live. There is not much quality to this kind of lifestyle.

When You Don’t Budget:

  • You feel overwhelmed by money
  • You believe that your main goal is too make sure everyone else gets paid first (bills, debt, etc)
  • You have a very limited control over how your life is spent
  • You feel stuck
  • You fear the future because you can’t financially afford emergencies
  • You are blinded to the fact that you have an enormous amount of power over your own life
  • You become resentful of other people who have created a healthy relationship with money and use it to truly enhance their lives (not through cheeseburgers, beers, toys, etc)

Budgeting is Life Changing. When You stick to a budget you:

  • Take responsibility for your life–the best self esteem builder available!
  • Realize your own importance and include yourself by paying yourself
  • Value yourself enough to value your money–therefore only spending money on items truly worthy of you
  • Become the Captain of your life’s course
  • Allow your money to work for you and enhance your state of being
  • Regularly succeed in accomplishing goals

Do not underestimate the power of budgeting! There are many ways to budget and they are all simple. Budgeting is a way of life, but it is not time consuming. Budgeting is not about sacrifice or lack, it is 100% about you living a fabulous life.

Budgeting is an adventure. You will constantly discover money you never thought you had. Your frivilous days will be over and you will learn to be pro-active in your own life. No more waiting for the lottery or just resigning to life of unfullfilled dreams. If you want to go to Hawaii, you will budget for it. If you want a new car, you will budget for it. All you have to do is take action. It is literally as simple as writing numbers on a piece of paper as a routine. This is action. Reading this is taking action.

Read through our Budgeting Articles to find tips and tools on how to budget.

Remember: It is not how much you make but how much you value the money you do make.

Posted in Budgeting Know-How. Tagged with .

Home Budget Software | Put Real Value in Your Money

Ready to realize you have more than enough money for a satisfying life? Well, the way to do that is to make a budget and live by it.

What is the Secret to Living On a Budget? Perspective. Lets say you have $20. Now, supply and demand places a value on money, but so do you. If you see an item you would like to purchase–an item that doesn’t enhance your life–and you purchase it because “it is only $20”,  you are not placing value on your money. In a short time that product will be used up, discarded, or forgotten about.

So, what is your perspective on money? That is is not important and does nothing for you . . . you can throw it away on items that don’t matter.

There’s plenty of online resources out there when it comes to financial planning as well as home budget software and, here at Financial Planning & Budgeting, we want to help you save time by doing the research for you.  Here are some great websites that are going to help you educate yourself on how to use home budget software and where to find the best home budget software products.

YouNeedABudget.com

This is a great website that you will want to bookmark.  Register for free to YNAB for live online classes such as Beginner Budget Workshop, Account Management, and more. Watch informative videos and learn how home budget software will help you achieve your goals.  The 4 rules of budgeting given at YNAB will change how you manage your money forever.  Also, if you are not sure if you want to purchase the home budget software offered, just try it for free with the free trial.  Be sure to take some time to watch the video tutorials and read the blog.  Some great reads include A New Lease on Life with a Tweak to your Cash Flow and How to Manage your Money Wisely: Better Software Makes it Worse

Mint.com

Use Mint.com as your home budget software (and so much more) for free! Mint gives you a complete picture of your finances–both a sobering and empowering action to take for your financial life.  See exactly where every penny goes and become aware of how and where you misuse your money. Mint.com will even send you a text or email when you have gone over your budget.  This home budget software website also wants you to be in control of your credit cards and will help you find ones that will save you money.  Here, you will set financial goals and stick to them.  Just enter your data–your account is kept anonymous.  Are you interested in learning more about investing?  Well, Mint wants to teach you. Educate yourself by reading the blog (topics include savings, trends, retirement, housing, and more). One great post is 9 Ways to Reduce Your Monthly Grocery Bill . Check out any articles featured in the Frugal Living and Becoming Wealthy sections of the blog if you are interested in reading more informative posts. Also, keep all your finances in one place with the home budget software, let Mint create a personal budget for you, get your taxes in order,  and use the free online management tool (check out calculators as well as video tutorials).

OpenOffice.org

Use Openoffice spreadsheets to build your own home budget software. You will save money here because OpenOffice is free! Yes, totally free in all aspects of the word. Download OpenOffice now to use for education establishments, businesses, government establishments, not for profits, IT businesses,  personal use, and so much more.  Your new free software includes word processing, spreadsheets, presentations, graphics, databases, and more–just take a look.  OpenOffice.org is the perfect free place to build your own home budget software.  Now get to it!

Quicken.intuit.com

This website has loads to offer.  Learn basic money management and watch how-to videos.  This place has lots of great tips and tons of great reads too. Check out Personal Budgeting: Build Your Budget and inform yourself with straight to the point definitions of terms like in Forecasting vs Budgeting. With Quicken, you can set goals and save, invest and track growth, and get support.  Browse products to find which home budget software is best for you.  From personal finance to home business and rental property to health care management and more, you will find yourself well-informed on software options after a visit to this site.

ThreeJars.com

Money will always be apart of everyone’s life.  Finance is an unavoidable factor, so the sooner a person learns about finances and how to budget with products like home budget software, the better! ThreeJars is committed to teaching the youth how to be responsible with money.  Here they learn how to save and spend money wisely.  Take advantage of the free trial to make sure ThreeJars is the money-teaching tool for you and your kids.  This website is not an actual bank, but acts like an online bank for children. With the use of this software, young people can see the value of saving money and watch their interest grow.  With parental approval, kids also learn how to spend money, give money, and earn money.

Now that you have plenty of resources at your fingertips, finding and correctly using home budget software will be a breeze.

Posted in Budgeting Know-How. Tagged with .

Budgeting Worksheets | Respect Yourself Enough to Respect Your Money

Is it finally time to take a good look at what is really going on? Good! You’re in for a treat. What you were trying to avoid isn’t real because the act of avoiding is what made it all so unbearable and hard. Now that you are willing to look at the truth of your finances, you can give yourself a good life. Using budgeting worksheets will give you information and that is exactly what you need. You need to see your life on paper and calmly change it through healthy thoughts and informed actions. Take a look and see if you are being wasteful. If you are, you are not valuing yourself. Begin to treat yourself well and respect yourself enough to respect your money. Respect is shown. Prove to yourself that you are of value and save you money as well as invest it only in things worthy of you. Budgeting worksheets will allow you to see your money grow, and that is a fantastic feeling!

Here are some fabulous websites that not only provide free, printable budgeting worksheets, but also offer invaluable financial news, advice, tips and more. Enjoy …

  • Mint.com – Mint.com is an invaluable resource, and its free! Mint gives you a complete picture of your finances–both a sobering and empowering action to take for your financial life.  See exactly where every penny goes and become aware of how and where you misuse your money. Mint.com will even send you a text or email when you have gone over your budget.  Use this software as your budgeting worksheets. This website wants you to be in control of your credit cards and will help you find ones that will save you money.  Here, you will set financial goals and stick to them.  Just enter your data–your account is kept anonymous.  Are you interested in learning more about investing?  Well, Mint wants to teach you. Educate yourself by reading the blog (topics include savings, trends, retirement, housing, and more). One informative and valuable post is 9 Ways to Reduce Your Monthly Grocery Bill. Check out any articles featured in the Frugal Living and Becoming Wealthy sections of the blog if you are interested in reading more informative posts. Also, keep all your finances in one place with budgeting worksheets, let Mint create a personal budget for you, get your taxes in order,  and use the free online management tool (check out calculators as well as video tutorials).
  • SmartMoney.com – This website offers way more than just budgeting worksheets. . .and they offer all different types of those too.  From the net interest calculator budgeting worksheet to the asset allocation system for retirees to short-term investing and everything in between, you are sure to find what you need to calculate your current financial situation as well as your future finances. Also, while you’re visiting SmartMoney, read informative budgeting articles like 10 Things Cellphone Services Won’t Say and A Happier Happy Hour for Your Wallet. And with constant updates, you will be a financial wizard in no time. Bookmark this site. And remember to put those budgeting worksheets to use!
  • MyMoney.gov – The Federal Government’s website dedicated to helping Americans learn more about their money-how to save it, invest it, and manage it to meet their personal goals. Find out here how to budget your money according to life events such as losing a job, getting married, or planning for retirement. Be sure to read informative articles like New Employee Saving Tips-Time is on Your Side. Check out resources for youth, military members, teachers, women, and more. Use tools like calculators and checklists.  Find budgeting worksheets that will work perfectly for you here too. Print out all the available resources for free and share it with those in your life.

Now that you have some great resources and know how to fully utilize budgeting worksheets, apply this great new knowledge to you life. You will enjoy the improvement.

Posted in Budgeting Know-How. Tagged with .