Does Your Spending Reflect Your Priorities?

When most of your money goes toward providing what’s most important to you, you tend to live a more fulfilled life and feel more satisfied with the way you spend your money. It’s also easier to stick to your personal finance plan when its objectives are to get you what you really want out of life.

Because life priorities can differ drastically from person to person, it’s important to be aware of your own personal values.

What do you really want from life? What kind of lifestyle do you seek? What are your life goals? Does your spending reflect those things?

Follow these steps to help determine if your finances are in alignment with your priorities:

    1. List your priorities. You might notice different levels of priorities as you write yours down. Things like having a place to live and plenty of food to eat are your basic priorities.
        • However, you’ll most likely include some “necessary” priorities to ensure a strong future for yourself and your family members, like maintaining good health or providing your kids with a good education.
        • Also, list things you love to do that seem more like “luxury” priorities, like reading, traveling or playing golf. These might be on a lower level of priority than your basic priorities, but, nevertheless, they’re still important to you, so include these as well.

    2. Now, write down how you spend most of your money. Where does it go? Although you may get annoyed that much of your money goes toward the mortgage or paying rent, the fact is that we all require a roof over our heads.
        • You might consider the type, size and expense of your home and whether you’ve gone too far in terms of house expenses. If so, where you live and the mortgage/rent payments might require re-evaluation on your part.
        • Maybe a good portion of your dollars goes to other necessary expenses like groceries and paying your utilities. But what else do you spend your money on?
        • Do you play slot machines on Saturday for fun and end up losing money? Maybe you love to shop and use shopping as a pastime that ends up costing quite a bit. Perhaps you spend $20 a week on coffee and snacks or $30 a week having drinks with your friends.
        • Thoughtfully consider where your money goes from week to week and write it down.

    3. Finally, compare your lists. Take a look at your first list, the one with your priorities. Ponder each item; does every item accurately reflect what’s important to you? Now examine your second list, the one showing where your money goes. Do the lists appear connected?

Does your money go mostly toward your priorities?

    • You might be shocked to learn that, even though you listed certain priorities like providing a good education for your children or having a comfortable home, you’re spending $100 plus a week on eating out instead of starting an education fund.

    • What if you listed reading as one of your priorities, yet you spend nearly $100 a month on cable television you don’t watch much? Or if you do, it’s the same 3 channels that you’d actually get on a basic cable plan costing less than $40 a month.

    • In either case, you’ve got to ask yourself, “What are my true and real priorities” and “Why aren’t I putting my money toward the things that matter most to me?”

Having great clarity in knowing your priorities and being conscious of how you spend your money will help you routinely place money toward what’s most important to you. Then, you’ll like the way you feel about your finances as funds become available for your favorite things.

8 Money Tips for Young Adults

Personal finance still isn’t required in high school or college. This results in many young adults not having a good foundational knowledge of how to manage their personal finances. Fortunately, this subject isn’t complicated. A willingness to learn and do a little reading is all that’s required.

With a small investment of time and energy, anyone can become fluent and knowledgeable on the topic of money. The payback on this small amount of time and energy is priceless. Money challenges are a major source of stress for most adults. You can avoid these challenges.

Add these 8 simple tips to your financial knowledge:

    1. Be responsible for your finances. While there are many great money experts that can help you with your finances, the personal finance field is also full of unscrupulous people.
        • Take the time to read topics that pertain to your finances. Pay your own bills. Stay on top of your money. Avoid leaving the responsibility to someone else.

    2. Be aware of how you’re spending your money. Setting up a simple budget is the first step. Then track how you’re spending every cent, at least for the first couple of months. Everyone is surprised by how their money is being spent when they take the time to really examine the issue.

    3. Learn the differences between ‘needs’ and ‘wants.’ It’s not always easy to deprive ourselves of the things we desire. But if you can to say ‘no’ when it’s appropriate, you’ll eventually be able to purchase essentially anything you could ever want.
        • Many financial challenges are created by poor impulse control. This includes purchasing things you can’t afford and things you don’t really need.

    4. Keep track of your credit score. Credit scores become more important every year. It’s common for credit reports to have errors, so be sure to review your credit report every year. Take the time to learn about credit and how to build a strong credit profile.

    5. Don’t wait to start funding your retirement. If you get started early, you can save a lot of money quite easily. A little bit grows into a lot over 40+ years. Compound interest works like magic.
        • If your company offers a retirement plan, be sure to take full advantage. The tax savings and convenience are spectacular. Your company might even match your contributions.

    6. Invest in your career. Spending money to further your earning power is money well spent. This can include job-related training, books, and formal education.
        • Hiring someone to mow your lawn isn’t out of the question if it permits you to spend time on more important, career-related activities.

    7. Protect your health. Health insurance is very expensive for most people, but hospital bills are even more. Do everything you can to be as healthy as possible. And find a way to afford health insurance.

    8. Have reasonable expectations. It’s unlikely you’re going to be living like your parents when you first head out on your own. It will take time to accomplish what your parents have spent years building. Patience is critical.

Many older adults wish they could go back in time and handle their finances differently. You’re in an ideal position to get started down the road to a healthy financial future. Take advantage of your unique situation. You can have a life of financial security. It’s much easier to avoid mistakes than it is to fix them.

Give Yourself a Financial Checkup

Just like you go to the doctor and the dentist regularly for a checkup, it’s also a good idea to give yourself a regular financial checkup. While you still might have 15+ years until retirement, you’re not a kid anymore either. It’s probably time to take a hard look at your financial situation and make some adjustments for the future.

In analyzing your finances, consider your answers to these key questions:

    1. Will your retirement savings be adequate? Are you likely to have enough money to live comfortably when the time comes? Are you saving enough each month? There are many online financial calculators that will enable you to determine if you’re on track.
        • A good rule to follow is to plan for 80% of the income you had before retirement. Most people are satisfied and comfortable with this income level during retirement.

    2. How diversified are your investments? Diversification is important, primarily because it limits the amount of money you can lose. It also maximizes your earnings. For example, when your stocks are doing poorly, bond-related investments tend to do well and vice versa. Precious metals tend to do well in periods of high inflation.

    3. Are you maximizing your profits with tax deferred accounts? Certain types of investments create a larger tax burden than others. It makes sense to be sure that the investments that will be taxed at higher rates are in tax-deferred accounts like your 401(k) and IRA
        • As a general rule, stocks held for over a year are taxed at the capital gains rate. Short-term stock trades and bond interest are taxed as income.
        • Studies have shown the allocating your assets into the proper accounts can affect the value of your holdings by 10% over a period of 10 years, creating a significant difference in the value of your retirement savings.

    4. Can you reduce your debt level? Debt can eat away at your ability to retire as well as your sense of well-being. It’s important to know how much you owe and the interest rates you’re paying so you can make a plan for paying off your debt in the shortest amount of time that’s feasible for you.
        • Debt effectively reduces your income; it’s like a long-term pay cut.

    5. Is your estate planning up to date? Do you have a will that takes into account your current situation? Do you have a durable power of attorney or a health proxy set up? Are the beneficiaries for your retirement accounts named properly?
        • These are just a few things you should consider. No one likes to think about this stuff, but these details are critical for you and your loved ones. Speak to your attorney as needed.

    6. Is your insurance sufficient for your current needs? Do you have enough insurance? Are your policies up to date? At a minimum, take a look at your life, health, homeowners, disability, and liability policies to be certain they’re adequate.
        • Contact an insurance professional if you’re uncertain about your coverage.

Give yourself a financial checkup so you can be sure you’re on the right track. It’s the smart and responsible thing to do. Once a year, sit down and look over everything. Simply make the necessary adjustments and create a plan to improve your current financial situation. You’ll be glad you did!

8 Financial Considerations When Starting a New Job

Getting a job offer is always an exciting time. Whether you’re getting your first job, a promotion, or changing careers, there’s a lot to be happy about. But it’s always wise to consider the financial aspect of any decision; starting a new job is no exception.

Before You Accept the Job

    1. Negotiate your pay. It never hurts to ask for a little more money. Keep in mind that any increase in salary you can get now will only compound your future raises. Respectfully asking for more money doesn’t cause any harm.
        • Negotiating is the highest paying activity you’re likely to ever to take part in. Consider that just a minute or two could result in thousands of dollars in additional income for many years. When was the last time you made that much money for a couple of minutes of work?

    2. Ask about the benefits. Typically, you’ll be told the general aspects of the company benefits. Don’t be afraid to ask for details. For example, some medical insurance plans are much more expensive than others. A job with a slightly lower salary might be much better when you have all the details.

After You Start Your New Job

    1. Deal with your previous 401(k). Either roll the money into an IRA or move it into your new 401(k). Resist the temptation to withdraw the money; the tax penalties are significant. Ask your new human resources department about your options and then make the smart choice.

    2. Keep your lifestyle in check. Just because you get a raise doesn’t mean you have to buy a more expensive house or car. If you can maintain your spending level for even one year, you can save a lot of money. If you do increase your lifestyle, then be sure to bank at least part of your raise.
        • Getting a raise is a great opportunity to save a lot of money or aggressively pay down your debt.

    3. Start paying yourself first. Set up your bank account with automatic savings of part of your increased income so you start saving money immediately. It will be easier to start saving now than later because you won’t miss money that you’ve never seen.

    4. Ensure you’re withholding enough for taxes. It’s not financially smart to get a huge refund every year. On the other hand, it can be pretty challenging both financially and psychologically to have to pay more at tax time. Be confident your withholding is enough to guarantee a small refund each year.

    5. Make benefit choices wisely. Set up your life, health, and disability insurance and other benefits intelligently for your own unique needs. For example, the most expensive medical plan might not be the option you want if you’re young and in perfect health.
        • Your life insurance needs will vary depending on your family situation.

    6. Have your paycheck deposited into an interest-earning account. Interest rates are so low right now that it might not matter a whole lot, but it makes sense to deposit your paycheck into an account that pays interest. You can always transfer what you need into your checking account later.

Being financially healthy is the result of making smart decisions consistently. A job opportunity is a time for celebration; just ensure you’re making positive financial moves to take your best advantage of this occasion.

7 Ways to Simplify Your Finances

Finances can be complicated! However, the simpler your finances, the easier they are to conquer. A few simplifications can renew your enthusiasm for finally mastering your finances. Many of the simplest actions you can take are the most effective. Making a habit of these simple actions is a sure way to ensure your financial life flourishes.

Simplify your finances and simplify your life:

    1. Simplify your financial accounts. Do you really need three checking accounts, two savings accounts and multiple retirement accounts? Unless you own your own business, it’s unlikely you require more than one of each. Pick the best and ditch the rest.

    2. Pay your bills once a week. Have a scheduled day each week to sit down and pay your bills. Having a scheduled time will ensure that no bills are “forgotten”. Pay everything on time. Leave enough time to ensure that all payments post on schedule.

    3. Use electronic bill paying. Not all electronic bill paying systems are automatic. Most checking accounts will allow you to pay any bill you like online through your checking account. You can set up automatic payments or you can pay manually. Most importantly, you avoid the need for paper checks and stamps.
        • Automatic bill paying works best with bills that have consistent payments, such as mortgage, automobile, and other types of loans.

    4. Consider level-paying your utilities. Budgeting can be enough of a challenge without having to incorporate high electricity bills in the summer or high gas bills in the winter. Using your utility company’s level-pay option can keep your utility bills predictable.

    5. Automate your savings. Save first and save automatically. If you’re still trying to save whatever money remains at the end of the month, there’s a good chance you’re struggling. Expenses tend to expand to meet the availability of funds. Have money taken out of your paycheck before the opportunity to spend it presents itself.
        • Your employer’s human resources department should be able to help you. If necessary, just put the amount you’d like to save into your savings account as soon as you receive your paycheck.

    6. Review your spending once a month. At the end of each month, account for every penny spent. Use a spreadsheet or financial software to chart all of your spending. You’ll find that you’re spending more than you think in certain areas. Those morning coffees, work lunches, and happy hours might be costing more than you realize.
        • Reviewing your bills and other spending is one of the most effective ways to enhance your budgeting activities.

    7. Re-evaluate your financial recordkeeping system. Most of us keep more paperwork than necessary. Speak with an accountant and determine how long to keep each type of record.
        • Most importantly, be organized. You can set up your filing system by the month or the bill.
        • Most items necessary for tax purposes can be kept for a maximum of seven years. Most other records are safe to discard at the end of the month. Remember that many records are available online.
        • Do you really need to know how much you charged on your credit card 3 years ago? Does your cable bill from last April need saving? Probably not.
        • Place current bills in one location to avoid loss. Keep your shredder handy and use it when the time comes.

A few simple adjustments to your personal finances can make life much easier. Develop systems and habits that ensure the most important financial activities take place each month in a timely manner. Habits and consistency are a key component to a simple and productive financial life.

Moving Your Financial Life Forward: Four Tips for Success

Does financial freedom seem like an unreachable goal for you? For some, the only goal in sight is getting that next paycheck so you can pay the bills before services get disconnected.

Even if your current situation seems dire, there are things you can do to achieve financial success. Options that can improve your financial situation are all around you.

When you want to move your financial life forward, the first step is deciding on a worthwhile goal. What do you want to see happen? When? As soon as you’ve made that determination, you can begin marching toward your success in a step-by-step fashion. A worthwhile goal ensures you know where you’re going before you set out on your journey.

Long-Term and Short-Term Goals Are Both Critical

You might have a short-term goal to pay off a credit card and a long-term goal to pay off your mortgage. Those are both reachable, but one will take longer than the other. Makes sense, right?

Well, that’s why it’s so important to set a realistic timeframe for your goals! Stay encouraged by tracking your progress along your planned timeline. When you see a goal getting closer to achievement, you’ll become more excited and motivated to keep moving forward.

If you only set long-term goals, the payoff is too far away to provide any real motivation. These goals take a while to achieve and the lack of immediate progress may make you want to quit without shorter-term goals to look forward to.

The goal is to set long-term goals and couple them with short-term goals that excite you. Or, break your long-term objectives into short-term milestones that provide encouraging feedback on your progress. That way, you remain interested in pursuing your financial success.

You Can Get There From Here!

Too many people get discouraged and stop working for their goals. Don’t let this happen to you! Avoid allowing yourself to end up financially stuck and struggling because you let setbacks derail your train to financial success and prosperity.

Instead of giving up on your success and stopping yourself from living the good life you deserve, use these strategies to move forward:

  1. Reap your rewards along the way. Set realistic goals and reward yourself when you meet them. Divide your large goals into small steps and celebrate completing each step.

  2. Be flexible. Be willing to move your completion dates if you see they’re too soon. If you experience a setback, learn from it, adjust your goal’s completion date, and continue moving forward.

  3. Stay focused on what matters to you instead of getting sidetracked. Remember the reasons why your success is important to you when the going gets rough.

  4. Make the work toward your dreams more enjoyable. Moving forward doesn’t have to be all tedious work. Include goals in your life for things you enjoy, too.

    • Turn your hobby or other enjoyable activities into a profitable venture.
    • Ask yourself how you can make tasks you dread more fun.
    • Include a friend.
    • Make it a game with yourself.
    • Whatever you do, keep a spirit of playfulness in your work and success is sure to follow!

Your hopes and dreams are what fuel your happiness. You deserve a life that’s filled with rich experiences, meaningful relationships and inner peace. With a positive mindset and a determination to succeed, you can achieve all of this and more. Financial independence and the dream life you seek are within your reach.

When you reach your goals – even the small ones – you set yourself apart from most people, who dream big dreams but stay on the sidelines of life.

Get in the game!

Brainstorm the short-term and long-term financial objectives that matter to you. Pick the most important ones, sketch out a plan, and take the first steps toward your financial success today.

Enjoy Greater Financial Power with a Better Budget

The 2014 Financial Literacy Survey, conducted by the Harris Poll, indicates that 61% of Americans don’t use a budget! Are you one of these 61%? If so, you’ll be glad to discover that it’s fairly easy to create a budget that will help you gain control of your finances!

Creating an effective budget has a number of benefits. By adopting a budget, you can make solid plans to achieve your financial goals and live the good life you deserve.

The best budgets are simple to follow, promote sound financial habits, and leave some room for a bit of fun and spontaneity.

Follow these steps to begin creating a budget that works for you:

  1. Identify your income. You need to know the amount of your total income before you can decide how to save and spend your money.
      • Get started by making a list all of your sources of income, the amounts, and how frequently you’re paid.
      • Common sources of income include the paycheck from your regular job, as well as additional revenue streams. Additional income could come from a hobby or in the form of an irregular source, such as money earned from a yard sale.

  2. List and categorize all of your expenses. When creating your budget, carefully categorize and consider what portion of your income you’re using on various types of expenses.
      • Many budgeting templates advise you to classify your expenses into two categories: fixed and variable.
      • If you have difficulty setting aside portions of your income for emergency savings and other financial goals, it can be really helpful to further categorize your expenses in terms of wants and needs.
      • Fixed expenses are those expenses that regularly occur for a set amount. Rent or mortgage payments, car payments, and insurance premiums are often different types of fixed payments.
      • Variable expenses occur at irregular times or for irregular amounts. When creating a budget, it’s important to have the means to accurately forecast the amount and timing of your variable expenses.
      • One sure fire way to save more of your income is to consider whether an expense is a true want or need, and reduce spending on the items that you merely want. This is a bit trickier than it sounds. For example, most of us would agree that food is a necessity, but the type of food that you choose to buy may reflect a want versus an actual need.
  3. Leave room in your budget for a bit of freedom and excitement. Achieving a proper balance between spending and saving allows you to do things you enjoy while increasing your control over your finances.

  4. Consider both sides of the equation. Just as you’re tracking your expenses and setting goals to reduce spending, look for ways to increase your income.
      • Taking on a second job during your spare time or selling off items that you infrequently use are two common ways to increase your income.
  5. Eliminate tedious or boring budgeting tasks. You can maintain your enthusiasm to stick with your budget by using budgeting tools that automatically record and track your financial transactions.

  6. Keep your budget relevant. Review and adjust your budget on a regular basis to account for revised goals, fluctuating costs, and other changes.

A budget is an indispensable tool that can give you greater control over your finances. These tips make it easy to create a realistic budget that will work for you.

Are the Store Credit Card and Accompanying Discount Worth It?

If you do any shopping at all, you’ve certainly been offered a store credit card along with a great discount. Some of these deals sound pretty good. You might get a discount and free shipping. Some cards allow you to earn cash back.

But are these deals really worth it? As with many things, the answer is, “It depends.” It’s important to read the fine print and consider all the savings and costs involved. It’s also important to be honest with yourself about your shopping habits.

Keep these tips in mind when reviewing a store credit card offer:

  1. How much are you really saving? There are different ways that a card provides benefits.
      • A card might offer 5% off all purchases. That’s great, but how much do you actually purchase in a year from that store? Calculate what your savings would probably be considering the items you usually purchase at that store.
      • Free shipping for purchases at the online store. Many stores, like Target and Wal-Mart, have online stores and will ship to your home. Some cards offer free shipping. But is all shipping free? Is it just smaller items? Read the fine print.
      • Cash back on purchases. Are all purchases included? Based on your usual shopping habits, how much would you really get back?

  2. What are the limits? Is there a limit to the cash back reward? Does the discount only apply for the first 6 months you have the card? Many perks have caps on them. Ensure you know the limits.

  3. What is the interest rate? If the card has a low interest rate, how long is that interest rate in effect? Are you good about paying your balance in full each month? How much are you likely to pay in interest each year?
      • The credit card is banking on the fact that many people will end up paying 20% in interest fees, which more than makes up for a 3% store discount.

  4. What is the annual fee? You might think there is no fee, only to find that the fee kicks in after the first year. How does the annual fee alter your expected savings? If you don’t use the card a lot, you might find that the annual fee is greater than the amount you’re saving.

  5. What is the credit limit? Most stores have low limits. One reason for a low limit is the hope that you will go over it. What is the penalty for exceeding your credit limit?

Based on this information, you can simply do the math and decide for yourself if the card is really worth it for you. There is no blanket answer. The correct answer depends on the details of the offer, your needs, and your shopping tendencies.

In general, if you will use the card frequently, the annual fee is low, and you pay off your balance in full each month, the card can be a good idea.

It’s important to remember that credit cards are notorious for offering a great deal for new customers, only to reduce the rewards, increase the interest rate, and increase the annual fee. Be sure to read the small print before signing up.

Store credit cards can offer impressive perks and an excellent opportunity to improve your credit. But these cards usually have very high interest rates. Be sure you’re getting a card that will improve your financial situation, rather than cause financial challenges.

Budgeting For The Holiday Season

The holiday season is one of the most stressful times of the year due to the financial pressures. Between the gift giving, holiday entertaining, and the regular monthly expenses, it all adds up to an expensive time of year!

When you budget for the holidays early, you’ll have a handle on your holiday shopping and spending throughout the season.

Benefits of a Holiday Budget

Keeping a budget during the holiday season will benefit you in many ways. First, you’ll avoid overspending, which will keep you from playing “catch up” when the season ends. Second, you’ll reduce financial stress throughout the holiday season, which will make the experience more enjoyable for you.

A couple of simple budgeting practices during the next few months will have a positive impact on your holiday spending, which can help to prevent you from going overboard or becoming overwhelmed.

Try these holiday spending budget strategies to ease financial tension during this hectic season:

  1. Create a budget. Determine how much money is available for you to spend based on your current financial situation. Be realistic with your holiday spending budget, regardless of how much or little you can play with. This is your spending limit, and your goal is to stay within it.
      • Remember that your expenses must be less than your income. There’s no need to get into extensive debt because of the holidays.

  2. Make a list. List everyone that you need to furnish a gift for so you can create a realistic plan to accommodate your gift-giving needs. Keep everyone in mind, including family members, friends, and anyone else you want to give a gift to, such as neighbors or other acquaintances.

  3. Create a budget worksheet. Create a basic budget worksheet on paper or on your computer. List every gift recipient in one column. Create a column to brainstorm ideas, a column for your planned budget for each recipient and a column for how much you actually spent on each person. Track overall budget and actual spending as well to see how you do at the end.

  4. Tweak as necessary. Make changes to your budget whenever you overspend on one person so you stay within your budget overall.
      • Try to set realistic budget amounts for each of the recipients on your worksheet in order to minimize the need for edits to your worksheet, but do not be afraid to make edits as necessary.

  5. Trim as necessary. Giving gifts to your neighbors, your children’s teachers, and service providers like the mailman is a nice sentiment, but not necessary. If your budget cannot support your list of recipients, trim the list!
      • Consider giving stocking stuffer type gifts to these recipients if you insist on giving them something for the holidays. Small gifts, inexpensive homemade gifts, or simple greeting cards are just as sentimental and memorable but will not break your budget.

  6. Start early. When working on a budget, starting early offers a definite advantage. The more time you have to get your shopping done, the more time you have to comparison shop, shop sales and look for deals. Avoid leaving your shopping until the last moment; otherwise you’ll likely pay higher prices and spend more time feeling aggravated in the lineups.

Get a Handle on Your Spending

It only takes a few simple changes in your spending and budgeting habits to improve your holiday shopping experience. By starting early and following a plan, you can overcome the obstacles of holiday shopping, budgeting, and spending with ease. Enjoy your holidays!

Protect Yourself While Shopping Online

The convenience of shopping online can also place your identity, credit cards, and checking account information into the hands of the unscrupulous. The good news is that there are some effective strategies to follow to protect yourself while shopping online. Put these tips to work for you the next time you’re shopping online:

Avoid opening hotlinks and attachments, even if they appear to be coming from a business you trust. Hackers can mail virus-filled links using spyware or by phishing from websites they’ve constructed to look like the website of your bank or favorite boutique.

Be smart about your smartphone. Use your phone’s pass code system. It’s one more way to discourage a hacker from obtaining your personal information. The hacker will move on to the next person who isn’t using a pass code.

Pay close attention to monthly statements. Go through each statement line by line. Be sure you recognize each charge . If you’re unable to identify it, contact the credit card company right away to inquire.

Refrain from online shopping while in your favorite coffee shop or diner. Such public wifi networks are a hacker’s dream. The hacker just might be having coffee at the table right next to you.

Change passwords often. This one is tough, but worth the effort. Use capital and lower case letters with numbers and symbols. Use character names from your favorite play, book, or TV show. You can use terms from your favorite sport. Strive for passwords with 10 to 14 characters .