5 Helpful Apps for Families on a Tight Budget

Because it's hard enough to maintain a budget for one, let alone your entire family.

It’s hard enough to keep a budget for one, let alone get your entire family on track with their finances. Fortunately, there are plenty of apps out there that can help keep you, your spouse, son, daughter and 11-year-old pug (OK, maybe not that last one) from spending beyond your family’s means.

Here are some choice apps that can help with your household budgeting.

1. Goodbudget

Platforms: iOS and Android

Essentially a digital version of the envelope system — you know, where you put money allotted for a particular spending category in one and then don’t use any dollars beyond that — this app syncs up across household devices. That way, everyone in the family can know exactly what’s left to spend on groceries, entertainment and other categories each month. The free version lets you set up 10 regular envelopes and 10 annual envelopes across two devices. A subscription service with unlimited envelopes and device syncs costs $5 a month or $45 a year.

2. You Need a Budget

Platforms: iOS and Android

You Need a Budget (YNAB) is another app that lets folks sharing finances sync their devices and work together. This app pairs with web software of the same name to help users implement the YNAB four big rules: give every dollar a job, embrace your true expenses, roll with the punches and age your money. You can try the latest version, launched in late 2015 and dubbed “The New YNAB,” for free for 34 days. After that, a subscription costs $5 a month or $50 a year.

3. Home Budget

Platforms: iOS and Android

This digital expense tracker from Anishu includes a feature called Family Sync, which — you guessed it — enables household devices to exchange income and spending information within a single, shared budget. There’s a free version (Home Budget with Sync Lite) which limits your expense and income entries, and a paid version (just plain ol’ Home Budget with Sync) that costs $5.99.

4. Wallet by BudgetBakers

Platforms: iOS and Android

This budgeting app lets your share selected accounts with family members so everyone knows what’s going on with the household budget. You can also choose to connect your bank accounts to the app to get automatic updates about their standing. Wallet has a free version with limited features and several paid subscription versions that vary in cost. Its top tier, called Master plan, allows up to 10 users, unlimited bank connections and customized financial analysis. It costs $5.49 a month or $44.30 a year.

5. EveryDollar

Platforms: iOS and Android

This budgeting app helps people apply the money management principles of budgeting guru Dave Ramsey. It syncs across devices so you can budget from your smartphone or your household desktop. There’s a free version and a Plus subscription, which lets you connect your bank accounts to the app and call for support. It costs $9.99 a month.

Balancing the Family Budget

Remember, you’ll want to read the terms and conditions of any app you’re looking to use so you know what it costs, how your data is protected and whether any information will be shared with third-parties. You can find more information for vetting mobile apps on the Federal Trade Commission’s website.

And, when it comes to maintaining a household budget, it’s also important to keep track of your credit because a bad or even fair credit score can really cost you on everything from mortgage interest to your family’s cell phone plan.

If your credit isn’t in great shape, you can improve your scores by disputing errors on your credit reports, paying down high credit card balances and getting delinquent accounts back in good standing. And, as always, you can maintain good credit by paying all your bills on time, keeping debt levels low and adding a mix of new credit accounts over time. 

Image: golero

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How To Talk To Your Kids About Student Loans

Student loans are much more of a reality for kids today than they were for their parents and other previous generations of college students. The cost of education has risen so quickly that in 2014 almost seven out of 10 students graduating college had loan debt—nearly $29,000 each, on average.

This means discussing student loans needs to be a key part of family discussions on college. The earlier these talks happen, the better. I know this first-hand, as my eldest daughter is a college freshman this year.

Affordability is key

The conversation about how student loans work can include talks about what your family can afford in terms of college. At one end, a family may decide that they will find a way to pay for the best colleges to which their college-bound student is admitted—no holds barred. Even if both parents have to get second jobs, they will pay for their child to attend the most prestigious college to which he or she is accepted.

In our family, the chat was quite different: We told our daughter what we could afford and invited her to apply to colleges that were reasonably within our budget range. There was no sense in having her look for her “College Charming” and then tell her we couldn’t afford it.

We also talked early—during her sophomore and junior years in high school— about student loans and the importance of limiting them as much as possible. Why? Heavy student loan debt can be a tremendous burden on new college graduates. It can limit their choices of jobs because they often must earn enough to pay off their debt, especially if they can’t count on financial help from parents or other family members. In the long run, significant student loan debt, like any other debt, might also delay or limit the borrower’s ability to buy a home, start a business, or even begin a family.

How much is too much?

Syndicated author and radio talk show host Clark Howard suggests students not take out more in student loans (in total over four years of college) than the entry-level salary they can expect to earn their first year after college. If the student expects to earn $30,000 in their first job, that number should be the ideal student loan limit in total. (College students can estimate entry-level wages in their field with online tools such as salary.com.) Of course, seeking advice from financial aid consultants might be helpful (if pricey), and many colleges offer financial aid resources.

Learning about loans

The U.S. Department of Education requires students to enroll in online counseling when they first take out federal student loans. Sitting through it with your student may provide opportunities to help explain the concepts covered, such as accruing interest and repayment rules.

The repayment calculator was a huge eye-opener for my daughter, as she was able to see what her student loans could cost her in actual monthly payments. Making the loans real is a great way to discourage overborrowing.

More things for students to consider

Emphasizing a few key factors may be helpful to your student in understanding the essentials of college loans. For instance:

  • Personal expenses. Loans aren’t intended to cover personal expenses. Your child could cover pocket money by working during college, even if that’s just five to 10 hours per week.
  • Quitting college. If your student leaves school or drops down to less than part-time status, there is only a six-month grace period before your son or daughter must begin paying back federal student loans.
  • Credit score. Paying loans on time and as agreed to helps your student keep his or her credit score healthy, which is important when attempting to rent an apartment, get a car loan and much more. Credit reports are available for free one time each year at annualcreditreport.com.
  • Declaring bankruptcy. It’s very tough to walk away from unpaid student loans. Even if other debts are discharged during a bankruptcy, you will usually remain responsible for any federal student loans. Again, this underscores the importance of not overborrowing.
  • Charging college expenses. Using credit cards is not a good choice for paying for college. A close relative of mine charged his entire senior year of college on credit cards. As you might imagine, the interest rates make paying back the loan amount incredibly challenging.
  • Private student loans. These loans should be considered carefully, and perhaps only as a last resort. According to Howard, private student loan interest rates may be much higher than federal loans, and a student often has little flexibility on repayment plans. Like other school loans, private loans are not usually discharged during a bankruptcy. Students short on money might be better off attending a less expensive community college for their first two years to satisfy many general education requirements. Others might consider working more hours and attending school part-time if necessary. Borrowing from family members such as grandparents might be another option.

 

Post-college plans and opportunities

We emphasized to our daughter that paying off student loans should be her first priority after college. Our family places a high importance on living free of debt, and she’s getting the message that student loans are no exception to this rule. We are encouraging her to plan on “living like a student” for several years after she graduates so that she can put every dollar possible toward paying off her student loans.

Depending on your graduate’s line of work, he or she may also want to look into student loan forgiveness programs. Many teaching and public service jobs offer this as a benefit to encourage college graduates to work in underserved communities.

As Mary Hunt, author of the book Raising Financially Confident Kids, wrote: “It’s not as if student loans and big credit card balances are mandatory graduation requirements. … It is possible to graduate debt-free, but it does take a lot of work. And you’ll have to buck a financial system that encourages students to take the easy way out by diving into a lifetime of debt.”

 

9-Year-Old Sells Lemonade to Raise Money for His Own Adoption

sellinghome

Tristan Jacobson is in the 3rd grade in Springfield, Missouri and — like what most kids his age do when it gets warmer — set up a lemonade stand at the end of his driveway. But he wasn’t hoping to get money to buy a video game or new toy. He was saving every dollar he could so he could be adopted.

Jacobson was just 4 years old when his biological mother left him in the doorway at a Missouri shelter. When he was 5, Donnie Davis and her husband Jimmy took him in and have been raising him ever since.

The Davis family wanted to make Jacobson their son officially on paper, even though they already thought of him as their own.

“This is more for reassurance for him, knowing that he has his forever family and he has our name,” Donnie told the Springfield News-Leader.

Despite the desire, they couldn’t afford the legal fees to go through with the adoption. That’s when this darling 9-year-old stepped in, selling bottles of lemonade for $1 each to help make Donnie and Jimmy his legal mom and dad.

“She will be my parent,” Jacobson said. “I’m happy because I have a new mom who loves me.”

He set a goal and saved the money to accomplish it — talk about learning a major lesson early on in life. Jacobson said he wanted to raise $5,000 but surpassed that immensely, raising $7,100 from the lemonade stand and a yard sale and almost the same amount from a YouCaring.com fundraiser.

“It means everything,” Donnie told the Springfield News-Leader. “He is absolutely our son. He is in our hearts.”

Donnie said that any money left over after the legal fees for the adoption will go toward Jacobson’s college fund.

If you’re considering adoption, there are several methods you can use to be financially prepared. (Read about possible finance options to help pay for your adoption here.) Since adoption can be pricey, many potential parents turn to loans. If you choose to borrow money to fund an adoption, having a good credit score may help. You can see two of your credit scores for free, updated each month, on Credit.com.

More Money-Saving Reads:

Image: monkeybusinessimages

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7 Ways to Shop Like a Chef & Save

chef

If you’re looking to save money on groceries, chances are you’re already clipping coupons, looking for point-of-sale discounts and buying in bulk any items that you use frequently. But if you want to up your game, the following professional kitchen tips can help you eat better, waste less food to spoilage and reign in your food budget while also making the entire shopping experience easier and more enjoyable.

1. Plan a Weekly Menu … & Stick To It

Chefs never go to the market or order supplies for their restaurants without a plan, and neither should you. So before you head to the grocery store or farmers market, make sure you also have a plan in place by creating a menu for the entire week. Not only does this keep your shopping on point, but knowing ahead of time what you’re going to have for dinner every night can be incredibly helpful when you’re tired. You’ll never again have to come home and wonder what you’re going to make, or if you even have anything to cook. And because you have options at home, you’ll be less likely to order take-out or head to a restaurant on a whim.

You can start the planning process each week by looking at what is already in your pantry, refrigerator and freezer. Are there items that need to be used right away? If so, create a meal plan around those items. If you’re not terribly creative in the kitchen, try entering a few items from your refrigerator and pantry into a Google search and see what recipes pop up. Have some chicken, cannellini beans and cheddar cheese? Boom. You’ve got the foundation for a white chicken chili.

The important thing to remember is to plan every meal for the week and build in some flexibility. If, while shopping, you stumble upon an ingredient you really want to try and you’re unfamiliar with it, see if you can substitute it for something already on your list. Or just plan to create a bonus dish for one of your meals.

And by all means, schedule a night or two for take-out or eating out. It’s good to get out of the kitchen sometimes.

2. Think Seasonally

Buying what is in season is a great way to save money and add variety to your diet. Sure, you can get blueberries in December, but they’ll typically cost you a lot more than they will when they’re in season in North America in June and July. Instead of blueberries, consider what’s in season. In this case, citrus fruits and late-season apples, and get creative with their preparation.

3. Frequent Farmers Markets

Seasonality is in its full glory at farmers markets, and more frequently than not, what you’re buying was raised or produced nearby, meaning there’s no middle man and limited shipping, which helps keeps costs low.

You’re also more likely to stumble upon foods you might not have eaten or cooked before, or at least a variety of that food you haven’t seen, and that’s great news if you’re an adventurous cook (or eater who knows an adventurous cook!).

The USDA estimates there were more than 8,000 farmers markets operating in the U.S. in 2014, so chances are there’s one near you.

4. Visit Local Farms & Food Businesses

If you stumble upon a farmer, wine maker or other purveyor at your local market that you just really love, plan to visit their farm, vineyard or place of business. Many of these businesses welcome visitors and some even provide tours of their facilities where you can learn more about their practices.

By getting to know your local farmers and food purveyors, you can easily get a heads up on what products they’re particularly excited about as the new season approaches, and you might even get a discount for being a valued customer.

5. Shop Early in the Morning

Most stores stock overnight or early in the morning, so you’ll get the absolute best selection if you get there early. That’s especially true for farmers markets, which can quickly sell out of popular items.

6. Skip Dry Goods – Have Them Delivered Instead

Even if you don’t have the storage space to buy in bulk, buying your toilet paper, paper towels and even cereal and canned goods online and having them delivered can make a lot of sense and save a lot of money.

Online retailers typically sell items like toilet paper, paper towels and household cleaners more cheaply than your local grocer. Buying these items online also cuts down on the amount of time you have to spend in the grocery store, and you can schedule these deliveries so they come at regular intervals — monthly, semi-monthly, etc.

7. Eat While You Shop

Most stores offer tastings while you shop, and you should really try to take advantage. Why? First, those items are typically being offered at a discount. Second, it could introduce you to a whole new world of flavors, even if you think you might not like it.

If you do happen to find something you really like, use the tip from No. 1 above and see if you can substitute it for something already on your list, or plan a bonus dish so you and your family can experience a little culinary adventure.

More Money-Saving Reads:

Image: michaeljung

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7 Last Minute Things to Get Done Before The Start of Summer

Summer

I love the summer and getting extra time off, but there always seems to be something that gets overlooked. We all know Summer is coming but we allow procrastination to get the better of us. While not bad, per se, it can hinder us in the long run.

The Summer time is when your expenses can skyrocket out of nowhere. Vacations, BBQs, and outdoor activities can consumer a lot of your disposable income. Getting ahead of your finances and taking pro-active steps can help you prepare for what’s ahead. Here are some last minute things to tackle before the start of summer.

Make A Debt Payoff Plan

Do you have any consumer debt you’re currently paying off? More than half of Americans feel insecure about their finances, most often about their debt. If you have debt, you don’t have to feel ashamed or uncertain about your efforts to pay it off. You can take control of your debt with a payoff plan.

Write down all of your debts and figure out what’s needed to pay off each one. That may mean getting a personal loan to consolidate the debt, or it could mean finding a way to make extra money to throw at the debt. Form a plan and take action on it. You’ll be that much closer to becoming debt free as a result.

Start Working on an Emergency Fund

Would you be able to handle an emergency if one happened tomorrow? The Federal Reserve reports that 48% of people would have to sell something to cover an emergency of $400. That’s not really that much money when you think of it.

I know it seems silly to build an emergency fund when interest rates are so low, or if you’re paying off debt. That’s not the point. You never know what will happen in life, so you want to be prepared. Start small, even if it’s $50 per month. Begin there and build on that to amass a respectable emergency fund.

Use Your FSA Money

A FSA, or Flexible Spending Account, provides a way to save money on healthcare costs. There is one catch with FSAs though, it’s a use it or lose it system. In most instances, you lose any money you have in your account if left unused at the end of the year.

If you have a FSA through your employer, there are many ways to use those funds. Visit the doctor, make that trip to the dentist you’ve been avoiding or see the optometrist. Just make sure to verify the expense qualifies before using the money.

Invest Your Money

Investing may be the last thing you’re thinking of as you celebrate the holidays. Don’t let the hustle and bustle of the holiday season hold you back. Instead, look for ways to start investing if you’re not already doing so. If you’re looking for the best online brokerage account to begin your investing journey, always take into consideration the number of trades you’ll be making as well as the commission amount.

Will you receive the full match in your company’s 401(k)? If not, adjust your withholdings to receive it all. Have you opened an IRA account? It’s not too late. Don’t listen to the excuses not to invest, instead find a way to get started in the last few weeks of the year.

Prepare Your Taxes

Like it or not, tax season will be here soon. Now is the time to start planning for it, not April. There are many things you can do to start planning for tax time, such as:

  • Getting all your financial records in order
  • Making charitable donations
  • Taking advantage of business expense reimbursements

Not only will getting everything together save you time in the spring, but it can potentially save you some money.

Think Back over the Past Year

I don’t know about you, but this year has been a busy one for me. While I’ve accomplished some of the goals I had in mind at the beginning of the year, other things have fallen by the wayside.

I like to take some time before the year is over to review my progress toward my goals. You want to be honest with yourself here so as to truly see where you did well and where you fell short. Use those findings to take action and complete the next step.

Start Planning for the Next Three Months

The takeaway from these last minute things is to take action. We will greet summer in a few months.  Don’t let debt and a lack of financial preparation set you back for the last half of the year. If you start planning ahead, you’ll be able to enjoy life without overstretching yourself.

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Are You Dreading Your Credit Card Statements This Month?

Are You Dreading Your Credit Card Statements This Month

It’s hard to believe, but the holiday season is over. A new year has started that’s full of opportunity. Whether you call them goals or New Year’s Resolutions, it’s exciting to consider the potential for 2016.

There’s one small problem. You had a great Christmas, but it was funded largely on credit cards, thus the problem – the rolling in of credit card statements over the next few weeks. If you’re how I used to be, you’ll dread opening those statements. Here’s how to handle that temptation and have a fresh start this year.

The Holiday Hangover

Gallup reported Americans were planning on spending at least $830 on Christmas gifts in 2015. That’s a lot of money, especially if not included in your budget. Much like overconsumption of food or drink during the holidays can cause weight gain; overspending will bring a financial hangover – debt.

As such, it’s not surprising to see credit counseling services increase by 25% during January and February each year as individuals deal with the reality of needing to pay off holiday debt. I love to give presents to those in my life though no gift is worth accruing debt over. That being said, it is possible to avoid the nasty hangover that comes from holiday overspending.

The Time to Start Saving is Now

You may view the holiday season as an isolated incident. You may think it’s nearly a year away so you can save money later. As I’ve learned in life, “later” rarely happens and if it does it’s often too little too late.

As Miranda pointed out a few weeks ago, the time to start saving is now. She may not have been thinking of saving for the holidays though the point still rings true. Not saving is indicative of a larger issue – living solely in the present with no planning for what will happen in the future. That can include anything like not investing in the stock market for future needs or simply not planning for holiday spending before it happens.

As you feel the pain of the holiday hangover, consider what it’d be like to shop with confidence later this year for gifts; to experience the confidence of knowing where the money will come from to pay for the given items. That confidence is addictive and, when channeled, helps grow confidence in many other areas of your financial life.

Use This as a Learning Experience

Speaking from experience, I know you want to condemn yourself for going into debt during the holidays. While there is a time to look back, now is the time to look forward and commit to stopping the cycle. That will only happen by taking the opportunity to view this as a learning experience.

For example, tips on how to avoid debt during the holidays are always popular. People want to save money, so they seek out tips to help plan. What many miss is the vital first step – planning for that shopping throughout the year. When you add planning to saving money, you set yourself up for success.

That can include something as simple as pulling money out of your bank account each month to go towards gifts at the end of the year, to deciding to cut back on such spending or something else. This will require some work on your part, but the feeling of being free of debt and having a positive net worth is well worth it in the long run.

 

Credit card statements will soon roll in for your holiday shopping. If you’re avoiding them, use that feeling as a springboard to change your future.

 

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How to Break the Paycheck-to-Paycheck Cycle

How to Break the Paycheck-to-Paycheck Cycle

We often think of people living paycheck-to-paycheck as those who earn a lower income or struggle with debt. It makes sense as living paycheck-to-paycheck results in little to no money left in the bank at the end of each month. Surprisingly, the former issue isn’t always the case. A recent survey conducted by CNBC reports that 25 percent of those making over $100,000 a year are living paycheck-to-paycheck.

I know income is somewhat relative, but $100,000 is a good salary. Remembering back to my days of this lifestyle, I wasn’t making anywhere near that amount. Ultimately, it doesn’t come down to income. It’s the mindset that matters. If you’re currently living from paycheck-to-paycheck, here are some ways to break that cycle.

Know What’s Going On

This is the foundation of breaking the cycle of having little money at the end of the month. You need to know what your money is doing. You need to know where it’s coming from and where it’s going. Without this knowledge, you’re unable to make your money work for you. You must change that in order to live freely.

I know this sounds a lot like a budget. In many cases it is. Don’t let that scare you away. Budgeting, when done right, breeds freedom. If you don’t want to make a budget, then track your spending. All of it. You want to know where each and every cent is going. That knowledge creates power – power you can use to better manage your money. Without that, you can’t make your money work for you.

Cut Unnecessary Spending

Once you track your spending, you will find things to cut. Some of the likely big-ticket candidates include:

All of those bills can be cut, in some cases significantly so. You can go without cable, find a cheap cell phone plan, reduce food waste and instantly add several hundred dollars to your budget each month.

This is not to say you have to cut everything. What I am saying is you need to look at the value you receive from each item and cut where necessary. In most instances, you’ll find you won’t even notice the cuts and may even get more enjoyment out of life.

Make More Money

You can only cut so much from your budget. At some point, you won’t get good value back and you want to enjoy life. This is where making extra money comes into play. There are many ways to make extra money. You can either add a part-time job, start a side hustle or monetize a skill.

Don’t just spend the extra money you earn. It’s ok to do that, to a certain extent, but you want to use this extra money to beef up your financial standing. If you have debt, you can use it to get out of debt quicker. If you don’t have an emergency fund, you can grow that. If you have those covered, you can invest in the stock market to begin saving for retirement.

Determine Your Why

This is the key to breaking the paycheck-to-paycheck cycle in my opinion. You need to know why you’re working. You need to know your goals. That is what should drive you. Instead of focusing on the short-term reward of spending, focus on the long-term freedom you will have when you gain control of your finances.

I know that seems difficult, if not impossible. It really isn’t. It does require discipline, knowing yourself and being aware of your spending triggers. Simply put, you need to know the why behind your work in the first place. Once you determine that, you start down the path of breaking that paycheck-to-paycheck cycle that handcuffs so many.

Living paycheck-to-paycheck is no way to live. With work and discipline, you can break free and move towards financial freedom.

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4 Ways Frugality Is A Fool’s Errand

The One Major Mistake You're Making When Getting Out of Debt

I discovered the wonders of frugality when I was paying off debt. In my previous life, I spent money on any whim that surfaced. Whether it was large or small, I made the purchase with little thought to how I could pay for it. After a few years, my spend crazy ways forced frugality into my life.

All of a sudden I had to live by a budget. I had to find ways to save money on virtually everything. While a shock at first, I learned to embrace frugal living and all the benefits it brings. What I’ve learned over the years is that frugality can often be a fool’s errand. Here’s why.

You Can Only Cut So Much

Frugality, at its core, is being economical or sparing. That sounds great. I like to save money like everyone else, but you begin to learn something along the way – you can only save so much money. At a certain point, you’re unable to save anything of significance.

The value received begins to deteriorate, and your return is minimal. This is not to say you shouldn’t find ways to save money on your bills but realize it is possible to have a happy balance.

You Give Up Too Much of Your Time

This is something I learned early on in my new life. Frugality, when taken to an extreme, takes a lot of time. You become consumed with finding the cheapest price or best value. Saving money is great, but when you give up too much time to get that savings you end up losing.

You Sacrifice Quality

This is a commonly overlooked area of frugality. You need to buy an item and find two possibilities – one is significantly cheaper than the other, so you choose that item. To your dismay, the item you bought breaks down within a few months, not lasting the expected duration, forcing you to buy a replacement. This is not a guarantee, of course, but often times the cheaper item is of lower quality and does not last – costing you more money in the long run. I know it hurts to spend more at the outset, but the quality of the item must come into question in many cases.

Growth is Overlooked

This is the key argument against frugality. You spend so much time finding ways to cut back and save money you forego finding ways to earn extra money and grow your wealth. This is the “big win” mentality that so many promote in the personal finance world. These individuals want to save money but they also realize you don’t become rich by cutting your spending.

Cutting expenses has its place and time, but it should take a backseat to growing wealth. By no means should you spend aimlessly, but combine efforts to save money with wealth production to get to the next level.

Balance is Possible

This is something I learned after a few years of frugal living. Saving money and wealth production can live together if you seek balance. This is when the pursuit of financial independence becomes clear.

Frugal living is noble to pursue. There are many ways to save money that take little effort. Pursuing it to an extreme, however, will only take you so far.

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When Do You Cut The Cord on Your Adult Children?

When Do You Cut The Cord on Your Adult Children

As a parent of three young children, I want to do all I can to provide for them. That’s as simple as providing food and shelter to more long-lasting needs. In every case, we want to do all we can for our kids, which includes sacrificing our own needs or wants as parents. There comes a point, however, when you need to let your children fly solo.

A recent study from a professor at North Carolina State University reveals 40 percent of adult children (those aged 25-32) still receive some kind of financial assistance from parents. While not really surprising, given the recent economic climate, it begs the question of when to cut the cord on your adult children. This is an issue far larger than a single blog post, but consider some of the following as you think about when your adult children need to be on their own.

You Need to Start Earlier Than You Think

I’m a big proponent of teaching children about money at home. It’s one of the most loving things you can do for a child. Putting off financial responsibility for your adult children will have the opposite effect. It can make them more reliant on you, not less. In short, it does not set them up for future success.

You may think it’s unloving to start once they move back home (assuming they do) or when they first start out, but that’s the exact time you should start – if you’ve not done so already. It can be as simple as charging them rent to live at home, or some other financial contribution. If they’re on their own, you can give them a deadline for when they’ll be financially on their own. Wisdom is needed, of course, but you need to start as soon as possible to help them become independent.

You Need to Be Selfish

As a parent, it feels contradictory to be selfish. It’s not. I would argue it’s very much needed for the long-term financial health of you and your child. Just as with the saving for retirement vs. saving for college debate, it’s not an easy choice but one you need to make.

Think of it this way. Your desire to help your adult child is noble. However, are you putting yourself at risk to depend on them later in life because you were not prudent in previous years? I want to help our children, but the last thing I want is to be a burden on them later in life. Thus, selfishness is needed, to a certain extent. It sounds harsh. It isn’t. It’s prudent while also causing them to find ways to develop the kind of life they want and need.

You Can Have Balance

While I believe you need to have a healthy level of selfishness when adult children are concerned, balance is necessary. The last thing you want is to embitter your child. You can help them prepare for their adult lives in many ways that aren’t strictly financial in nature.

Some of those ways can include dealing with student loans, helping them reduce bills and keeping more money in their budget. It can also include helping them out financially when they have need. As an adult child who benefitted from that several times, sometimes this is the best option. Again, use wisdom and seek a healthy balance for both you and your child.

Cutting the cord on an adult child is rarely an easy decision. There are many factors at play. The key is to find ways to set them up for long-term success.

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Just Got A Big Raise? Here’s How to Handle Your Extra Money

Just Got A Big Raise_Heres How to Handle Your Extra Money

Getting a big raise can be both exciting and overwhelming. I remember my first significant pay increase. I switched jobs and instantly got a raise of somewhere between 25-30 percent. That may not be a lot to some, though to me it blew open various opportunities.

Then the questions came – all primarily around how I should handle the extra money. I did not have any consumer debt though I did have some remaining student loans. I wanted to pay those off but didn’t even know if that was the right thing to do given the interest rate.

I also wanted to do something fun with the extra money but didn’t know if that was the best thing to do. If you’re in a similar situation, here are some things to think through as you consider what to do with your extra money.

Pay off Your Debt

Your situation will likely be different than mine. That’s to be expected. That being said, if you just got a big raise and have outstanding consumer debt, you should consider finding a way to kill that debt once and for all. My suggestion is to start with the highest interest rate debt and go from there.

The hope here is to pay off as much, if not all, of your debt as possible. While I used a significant amount of my raise to pay off my student loans, that’s up to you. From my standpoint, it was worth it to become debt free. You may feel differently, and that’s ok.

Treat Yourself

I know this flies in the face of paying off debt. The last thing we should be is wasteful with our money or jump head first into lifestyle inflation. That’s not what I’m arguing for here.

What I am saying is that it’s perfectly acceptable to take part of your raise and put it towards something you enjoy. Take a look at your interests and adjust your budget accordingly – though be mindful of this if you still have debt. Life is meant to be enjoyed, just make sure to do so within reason. Personally speaking, we increased how much we put away in our vacation fund as we value being able to travel.

Build Up Your Emergency Fund

I know emergency funds aren’t exciting. They really aren’t meant to be; they’re meant to provide protection. If you just got a significant raise, consider putting some of the extra money towards your emergency fund each month.

Most experts tend to say you should have 3-6 months of your monthly expenses in an emergency fund. I tend to take that a step further to include everything you need to get by in a month. Regardless of which approach you take, put a certain percentage of your increased take home pay towards your emergency fund.

Invest, Then Invest Some More

I was most excited to start investing more after receiving my raise. While I had been saving money in my 401(k) to get the company match, I did very little outside of that. The increased income changed that for me. I now had extra money I could start investing in stocks.

If you’re already investing in your 401(k), great. You can use a portion of your extra income to build on that. If you don’t have a retirement account outside of your 401(k), find an online brokerage and open a retirement account. The key here is to begin thinking with a long-term mindset of how the extra money in each paycheck can help you reach your goals.

Refocus Your Goals

I believe refocusing on your goals is the true key to handling a big pay raise. This will take some time to think through, and that’s ok. The point is to give your income purpose to shape decisions. Ask yourself questions like:

  • Do you want to become debt free?
  • Do you want to start a business?
  • Do you want to retire early?
  • Do you want to travel more?

These questions only scratch the surface, though you get the point. Think through what you want your life to look like and find a way to use the increase in income as a way to help make that possible.

Getting a big raise is exciting. It’s absolutely fine to enjoy that increase in income somewhat, just make sure to think through how that extra money can help you get to where you want in life.

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