7 Ways to Manage Money Better than Your Parents Did

Don't let your parents' bad habits become yours. Here's how to do money the right way.

Every generation has their own habits when it comes to money. Whether it was our parents stashing cash in paint cans or their bedroom mattresses, or our great grandparents balking at investing after the Great Depression, generational events help mold how we manage our lives.

Sometimes it’s a good thing. Learning to be frugal after living through hard times can leave you better off, for example. Then again, some financial habits from decades ago have absolutely left people worse off.

If your goal is avoiding many of the financial pitfalls your parents (or their parents) fell into, you should strive to learn positive money habits while unlearning any lessons that stifle wealth.

I spoke to several financial planners to hear their thoughts on how the younger generation can do better than their parents. (Full Disclosure: I am also a certified financial planner.) Here’s what they said.

1. Avoid Placing Blind Trust in Financial Advisors

Your parents and their parents likely met with a financial planner during their lives. They didn’t have as much information at their disposal as we do today, so they hired professional help.

Unfortunately, many placed too much trust in the financial professionals they hired. Without much oversight, old school financial advisors were able to line their own pockets at their client’s expense, usually by selling them high-cost investments with low returns they didn’t understand.

To avoid falling victim to bad advice, you should learn as much about investing as you can, says Colorado financial advisor Matthew Jackson of Solid Wealth Advisors.

“Dedicate yourself to learn about investing so you can make educated decisions about your retirement rather than risk being led down a wrong and costly path,” Jackson said.

“In the age of technology, educating yourself about finances can be free and done in the comfort of your own home,” he continued.

You should still consider hiring a financial advisor, however. Just don’t trust them blindly. Brian Hanks, a financial advisor and author of How to Buy a Dental Practice said  your best step is to find an independent, helpful, fee-only advisor who is paid a flat fee to offer comprehensive advice.

By avoiding advisors who are paid commissions for the investments they sell, you can ensure you’re getting unbiased advice meant to benefit you.

2. Diversify Your Investments

Many people from the older generation have a narrow view of what it means to invest. Unfortunately, they tend to believe their way is the best way – even if it’s not the best way for their kids.

“If the parents are risk averse, they tell their kids to save their money in bank CDs, pay down debt, and avoid things like equities,” said financial advisor Joseph A. Azzopardi of The Well Planned Retirement. “If the family’s wealth was primarily made in private business, they encourage their children to focus their capital on business ownership.”

While many of these strategies can be successful when it comes to building wealth, there is no single best strategy. That’s why Azzopardi and many other advisors suggest their clients diversify instead of putting all their eggs in one basket.

“Diversifying a family’s balance sheet is a valuable way to lower overall risk and create multiple sources of income,” he said.

3. Switch Employers When it Benefits You

Our parent’s generation was strikingly loyal to a single employer, often to their detriment. Even when they had the opportunity to make more money, they often eschewed that option based on a misguided sense of duty.

“Many people just put their heads down and went to work every day, never thinking that there might be a better opportunity across the street,” says financial planner for business owners, Grant Bledsoe.

While loyalty is admirable, the advice to stick with a single employer for life is rather outdated today.

“You can be loyal to your employer of course, but need to be more strategic about your career advancement,” says Bledsoe. “You can really boost your earnings by continuing to improve your skill set and taking calculated risks along the way.”

4. Plan for a Lengthy Retirement

These days, people are living significantly longer. For the younger generation, that means we need to save up more cash to retire.

“As life expectancy continues to grow, present and future retirees will need to plan for a retirement that could span the course of several decades,” said Seattle Financial Advisor Josh Brein.

Whether you sit down with a financial advisor or plan your investments yourself, make sure you’re planning for a lengthy and expensive retirement. According to the Social Security Administration, men and women who reach the age of 65 can expect to live until ages 84.3 and 86.6, respectively.

5. Put Your Own Financial Health First

Our parents placed a lot of faith in higher education, so much so that many worked hard to pay for their children’s college education while neglecting their own retirement needs. This is a mistake, said financial advisor Joe Carbone of Focus Planning Group.

No matter what, you should remember you can’t borrow money for retirement. And, once you reach retirement age and find you’re short on cash, it’s too late.

6. Learn Basic Financial Education Early

In many families, the topic of money has always been taboo. You don’t speak of it because it’s “rude,” or because it’s an adult topic that shouldn’t be discussed with the kids.

But, not talking about money can be devastating for young people who reach adulthood without basic financial knowledge. Because of this, most financial advisors agree today’s parents should teach their kids money basics like budgeting and how to manage credit scores.

“Let’s face it, it almost completely falls on the parents to be the money professor since it’s rarely touched upon in our education system,” said Kansas City Financial Planner Clint Haynes.

If you don’t teach your kids about money, you can expect them to learn their lessons the hard way.

7. Build a Lifestyle That Doesn’t Require Debt

Today’s climate of cheap and easy credit started decades ago. Unfortunately, many of our parents embraced the idea of borrowing money to buy things they couldn’t afford.

This has led to the acceptance of ideas like the “perpetual car payment” and huge mortgages.

Albuquerque financial planner Jose Sanchez said his dad fell into the trap of financing an expensive car long ago when car loans first came into play. After getting his first job, he went out and bought a new 1968 Camaro, mostly because he thought “he deserved it.” But, after having kids and settling into working life, he realized the purchase was more of a financial burden than he thought.

Today’s workers would be wise to reject the easy credit atmosphere that is so prevalent today. The less money you owe, the more options you have.

And when it comes to building a life you truly love, the more options you have, the better off you’ll be.

Image: Zinkevych

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5 Financial Lessons I Learned in the Military That Anyone Can Benefit From

A financial coach shares the money skills she learned in the U.S. Air Force.

When I first joined the U.S. Air Force, I was scared out of my mind. I had just committed four years of my life to something I wasn’t 100% sure I could do. Not to mention, I was getting yelled at and working harder than I ever had in my 19 years of life. There was a lot to process. Through it all, I learned many life lessons.

It wasn’t just life skills I picked up in the military. I also learned financial lessons. Today I’m a financial coach helping others with money. My service in the military laid the foundation for my financial career. Some of the lessons I learned there were harder than others, but each contributed to how I handle money today. Here are the financial lessons I learned while serving in the military.

1. Have Control of Your Money at All Times

Physical money management is taught early on in basic training. Every bit of cash you have needs to be accounted for and neatly organized. Our instructors asked us to write down the serial number of every dollar you earn. This reduces theft and teaches the habit of keeping track of the money you earn and spend. Not everyone keeps the serial number of all their bills, but you should know where your money is and how it’s being spent, saved or invested. If you don’t have a handle on your money, who will? You are the one in charge of your money, not anyone else.

2. If You’re on Time, You’re Late

In the service, you quickly learn you need to be ahead of schedule for everything. Being late is not acceptable. If you’re late, it could affect an entire mission. Planning to complete tasks early ensures you’ll be on time even if something unexpected happens. This applies to paying bills and saving as well — something could come up to make you late. Instead of waiting until late on the day your bill is due, take care of it in advance to ensure that even if problems come up, your financial life stays on schedule. Even better? Consider automated payments so you don’t have to worry about being late.

3. Save Money From Every Paycheck

Every supervisor I had while serving made it clear to me: Living paycheck to paycheck was not the way to live. For most young folks joining the military, it’s their first time away from home and their first time earning a paycheck. The sudden influx of money and freedom can lead to crazy spending and zero saving. (Even if you don’t serve, this is a common experience for recent graduates starting their first job and receiving their first salary.) Each supervisor I had encouraged me to live within my means and save part of each of my paychecks. By saving money from each check, you’ll build up money for when the unexpected happens.

4. Use Your Resources

As a new Air Force recruit, I didn’t know all the resources available to me. Fortunately, I had supervisors who mentored me through some of my early financial mistakes, like charging all new things for my apartment instead of borrowing household items from the lending closet on base. I could have used the borrowed items and bought the things I needed as I was paid instead of running up my credit card debt. The lesson here? Take advantage of any free resources you have before spending money unnecessarily. Asking for help to find the free resources available can save you money. (Use this free credit report summary to your advantage to see how your spending habits are affecting your credit.)

5. Learn From Your Mistakes

When you make a mistake in the military, your supervisor, drill sergeant or peers will call you out on them immediately. Mistakes will happen — they’re part of learning and growing. In the military, I learned not to try to hide or forget my mistakes but to review them to figure out ways to avoid them in the future. That way I don’t make the same mistakes over and over. When it comes to finances, this applies in several ways. For example, charging a bunch of household goods on my credit card was a mistake, but I learned ways to avoid making that mistake in the future by using free resources or only spending what I had saved for.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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Is Your Social Media Habit Causing You to Overspend?

Keeping up with the Joneses gets even harder when it includes celebrities that you follow on social media.

Social media is a multi-billion-dollar industry where ordinary people become overnight sensations and companies cash in on people’s apparently insatiable need to be constantly connected.

The many different platforms have enhanced our lives by making us feel connected and that our opinion matters. Yet what if all this sharing has a dark side?

How to Tell if Social Media Is Causing You to Overspend

Here are some questions to determine if your overspending is caused by social media.

  1. Do you constantly check to see what your friends bought?
  2. Are you spending more time than usual on social media?
  3. Do you feel anxious, jealous or dissatisfied with life after checking social media?

It used to be just the neighbors and co-workers some people tried to keep up with or outdo. Now it’s everyone in your social circles, posting about their latest luxury cruise “just because” or posting beautiful pictures of their latest $100,000 kitchen remodel on Pinterest. It might not even be people you “know,” just people you follow (and envy) online.

This might not even be a conscious choice; you might be overspending just to keep up appearances. You might splurge on a $2,000 sofa because you saw one online, even though it’s way out of your budget. You think it is OK because of the special financing, but you can quickly get in trouble if you miss even one payment, because the interest starts accruing from the day of your purchase. Suddenly that $2,000 sofa balloons into $3,000, and you are still paying on it for months or years after you bought it. (This debt isn’t just adding up interest — it could also be harming your credit. You can find out by reviewing your free credit report summary on Credit.com.)

Resentment could be another byproduct of social media. You see all the seemingly perfect people online and you wonder why your life isn’t like that. You feel like it’s not fair, so you spend the $600 you managed to save for your emergency fund on one wild shopping spree. Then when a true emergency occurs, you have nothing left besides a few cool posts on Facebook and some new clothes or furnishings.

The truth is, you don’t know everything behind the photos and posts. The couple with the gorgeous beach house, two perfect kids and adorable puppy? Their finances could be in worse shape than yours. You only get to see the surface or mask they choose to post. Basing your own desires on what you perceive is like falling for the Wizard of Oz’s tricks. It’s time to see what’s behind the curtain.

How to Stay Connected & Avoid Overspending

How do you turn it around? First, decide what your goals are. What do you want your life to look like? Do you want to be debt-free? Do you want your house to look like a spread in a magazine, complete with a stack of bills? Once you pinpoint your priorities, you can concentrate on mini-goals to reach them.

Take control of your spending by keeping track of every penny. For every purchase, ask yourself four questions:

  1. Is this something I really need?
  2. Do I already have something like this I can use instead?
  3. Can I find it cheaper somewhere else?
  4. How will this enhance my life or goal?

After a while, the questions will become automatic and you will find yourself letting go of the constant need to get new things, and instead become more content with what you have.

Unplug for a while, at least while you get on track with your spending. There are so many ways to connect that it can become addicting. Like any addiction, sometimes going cold-turkey will break the spell it holds over you. Just try it for a week and see how you feel. Better yet, see how your finances are doing.

How you choose to engage could be the difference between failing finances and a healthy budget. Once you master your overspending, social media can be fun again.

This article originally appeared on The Dollar Stretcher.com.

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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. 

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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:

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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:

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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.

The post 7 Last Minute Things to Get Done Before The Start of Summer appeared first on ReadyForZero Blog.

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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