Trouble with money?

Many of us at one point or another have been a bit tight with money. It’s common. Living expenses are high and depending on where we live, living expenses can range even higher. Take NYC for example, the “Capital of the World”. The cost of a meal at an inexpensive restaurant for one person averages $15. A three-course meal at a mid-range restaurant for two people averages $75. A regular cappuccino is $3.95. 1 pair of Levi’s 501 jeans averages $57. Renting a 1-bedroom apartment in the center of the city will cost you approximately $2,839.88 a month. Basic monthly utilities including electricity, heating water and garbage for a small apartment is $150.30 and Internet (6 Mbps, Unlimited Data, Cable/ADSL) is $49.18 .* Add to this the cost of childcare, transportation, preparing meals at home, entertainment, etc and it’s no wonder why we feel cash strapped.

What to do? The only thing we can do. Set up a budget to see where all our monthly expenses are going. On an excel spreadsheet, make a list of all the items you spend on monthly. For example, list your rental or mortgage costs, childcare costs such as babysitting and alimony, child support, clothes, movies, dining out, transportation, utilities, home costs such as curtains, bedspreads, furniture, TVs, kitchen gadgets, etc. Jot down everything you spend money on and by that I mean everything. Don’t leave anything out; otherwise you won’t see the complete picture. On the column next to this one write down your total income, subtract the expenses from your total income. What’s the difference? Do you have any money left or are you in a deficit? If you have some money left, great! Make sure some of this money is going towards saving for your emergency fund, retirement and college savings. If you are just scraping by, you need to whittle down your expenses. If you are spending more then you make, you have a lot more work to do.

That is the great thing about writing down everything you make and what you spend it on, you can see it. Seeing where your money actually goes every month makes you more receptive to your spending habits and much more aware of where your hard earned money is going.

Creating a budget sheet will help you cut down on unnecessary spending habits and help you save more. Of course, you can’t be a scrooge either. You can spend a little here and there on things that make you happy; this will promote your health and overall well-being but do it all moderately while also saving for a rainy day. Go ahead and try it.

*Cost of living expenses data obtained from www.numbeo.com

Where to find great budget forms

If you are looking for a great way to start a budget, you will find thousands of tips and forms on the web, but one of the best tools a fellow daily money manager suggested comes from the Dave Ramsey website.

Ramsey has several forms you can use, either print them out or use the online budget tool he has available.  The printouts he has include the Quick Start Budget and the Monthly Cash form. All the forms are easy to use and give step by step instructions on how to calculate each category. The forms help you budget for food, charity, saving, clothing, transportation, housing, utilities, and even medications and doctor bills. Plus Ramsey gives recommended percentages to keep you from budgeting too much for any particular category. For example, he recommends budgeting 5 to 10 percent for medical and health related expenses such as vitamins and medications and 2 to 7 percent for clothing. This helps the budgeter have a goal in mind and keeps the format nice and clear.

So if you want to check it out, take a look here: http://www.daveramsey.com/tools/budget-forms/

Tracking your funds!

You’ve probably read the wise old advice of “use cash instead of credit, you’ll be able to budget your money better!” While this in part is true because once you run out of cash, that’s it, you’ve reach the amount you have to spend, how do you keep track of where the money went?

One great way is to use your credit card. At the end of the month, you’ll have a detailed history of where you’re money went and how much you spent on each item. Even better is the fact that after a few months, you’ll be able to find a pattern in your spending by sitting down and analyzing your credit card statements from the previous few months.

Another bonus to using this method is that it will help boost up your credit history. However, make sure you pay your credit card bill each month in full to avoid those pesky interest charges. Make a point to spend up to a certain amount on your credit card each month. Give yourself a limit just as you would if you were carrying cash. Once you’ve reached that limit, stop spending. As months pass by, you’ll be tracking your spending habits on your monthly credit statement and can view exactly what goes where. Ultimately, the goal here is to pinpoint what expenses you can minimize and possibly eliminate thus modifying and creating a stronger budget.

Good Luck!

Ramping up on Student Credit Card Offers

When I went to college back in the 90’s, I remember going to class and there would be tables set up in front of the school building. Credit card representatives had set up shop and were offering free T-shirts, water bottles, stuffed animals, bookbags, pens and anything they could in an effort to entice students to sign up for the credit cards they were marketing.

Fast forward to 2013 and fortunately credit card companies are no longer allowed to solicit students in this manner due to regulatory reforms. However, they are allowed to bombard college students with direct mail marketing. This is what is happening today. Companies are sending households with college students credit card offers left and right. Instead of giving out useless freebies like they used to, they promote their cards by offering rewards points, cash back on purchases ,credit cards with low or no annual fees or a waiver of the first late payment.

So, in addition to your heavy duty large student loan that you will inherit once you graduate college (if you weren’t able to get a full scholarship, which would count most of us), you have tons of opportunity to get into even more debt! Isn’t that awesome? The opportunities for starting out your professional life with a negative income is endless!!

Seriously, credit card companies want your money or the money you will make someday so be vigilant, be savvy with your hard earned cash.

The truth is it’s okay to get one of these credit cards, it’s a good way to build credit under your name. You need to do your research however and sign up for a card that has low or no annual fees and a low interest rate. Compare cards at sites like CreditCards.com and Bankrate.com. Keep the limit of the card you choose also low, say $800 to $1000 and don’t use it for everyday purchases that can quickly add up in a sneaky manner, like lunch or coffee. Use your card instead for legitimate purchases such as school supplies, books and maybe gas if you have a car. This way you build a transaction history. But pay diligently and try to pay before you start accruing interest charges so you don’t end up paying more for what you purchased.

Getting a card is a good way to start building an excellent credit history, but don’t go overboard on your borrowing and never pay late. School might not teach you how to handle your finances but there is no denying that this is a skill you will need. It is essential, so start building a solid foundation now for a stronger and more secure financial future for you and your future family.

Valentine’s Day

Happy Valentine’s Day! This is a day of love and friendship. You’ve probably been shopping around for the perfect gift, the card that says just the right words or the place that has a lovely and perfect ambiance. It’s nice to show someone you love that you are thinking of them and that you care. It’s also nice to be on the receiving end and be the one who is wine and dined. Whatever it is you decide to do today, make sure you do it more often than on Valentine’s Day. I’m sure whomever you care for will appreciate these gestures even more if you do them more often, spontaneously and for no particular reason. Make Valentine’s Day an every day event!

One way to save for retirement: Get married!

 

According to an ING U.S. Retirement Research Institute consumer study, those who were married (or living-as-married) had independently saved more for their retirement – a total of $40,000 more on average – compared to those who were single. Despite being an average of five years younger, married individuals in the survey also had greater retirement savings –$11,000 more per person – than those who were divorced. The study also indicated that a greater number of married couples felt better prepared for retirement as compared to single folks. Respondents to this survey were 4,050 adults between the ages of 25 and 69 who are employed full-time with an annual household income of $40,000 or greater. Check out the study here.

In terms of findings for men and women, the ING U.S. study indicated that the average retirement savings balance for married men was 51 percent greater than single men and 8 percent greater than divorced men.

Married women out-saved their single counterparts, although by a smaller amount – 28 percent. Data showed that married women had virtually the same balances as their divorced peers; however they were also seven years younger with more time on their side to save.

Whether or not this is an accurate representation of your household and how much you’ve saved for retirement is a question only you could answer, the truth is that saving for retirement now during your working years is key to how comfortable you will live in your elder years. So whether you are single, married or divorced, crank up you retirement savings sooner rather than later!