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Budgeting for Beginners: These 5 Steps Will Help You Get Started

Setting up a budget is challenging. Doing it forces you to face your spending habits and then work to change them.

But when you decide to make a budget, it means you’re serious about your money. Maybe you even have some financial goals in mind.

The end result will bring you peace of mind. But if you’re creating a budget for the first time, remember that budgets will vary by individual and family. It’s important to set up a budget that’s a fit for YOU.

Budgeting for Beginners in 5 Painless Steps

Follow these basic steps and tailor them to your needs to create a monthly budget that will set you up for financial success.

Step 1: Set a Financial Goal

First thing’s first: Why do you want a budget?

Your reason will be your anchor and incentive as you create a budget, and it will help you stick to it.

Set a short-term or long-term goal. It can be to pay off debts like student loans, credit cards or a mortgage, or to save for retirement, an emergency fund, a new car, a home down payment or a vacation.

For example, creating a budget is a must for many people trying to buy their first home. But it shouldn’t stop there. Once you’ve bought a home, keep sticking to a budget in order to pay off debt and give yourself some wiggle room for unexpected expenses.

Once one goal is complete, you can move on to another and personalize your budget to fit whatever your needs are.

Step 2: Log Your Income, Expenses and Savings

You’ll want to use a Microsoft Excel spreadsheet or another budget template to track all of your monthly expenses and spending. List out each expense line by line. This list is the foundation for your monthly budget.

Tally Your Monthly Income

Review your pay stubs and determine how much money you and anyone else in your household take home every month. Include any passive income, rental income, child support payments or side gigs.

If your income varies, estimate as best as you can, or use the average of your income for the past three months.

Make a List of Your Mandatory Monthly Expenses

Start with:

  1. Rent or mortgage payment.

  2. Living expenses like utilities (electric, gas and water bills), internet and phone.

  3. Car payment and transportation costs.

  4. Insurance (car, life, health).

  5. Child care.

  6. Groceries.

  7. Debt repayments for things like credit cards, student loans, medical debt, etc.

Anything that will result in a late fee for not paying goes in this category.

List Non-Essential Monthly and Irregular Expenses

Non-essential expenses include entertainment, coffee, subscription and streaming services, memberships, cable TV, gifts, dining out and miscellaneous items.

Don’t forget to account for expenses you don’t incur every month, such as annual fees, taxes, car registration, oil changes and one-time charges. Add them to the month in which they usually occur OR tally up all of your irregular expenses for the year and divide by 12 so you can work them into your monthly budget.

Pro Tip

Review all of your bank account statements for the past 12 months to make sure you don’t miss periodic expenses like quarterly insurance premiums.

A woman with a dog reviews financial docements spread out on the floor.
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Don’t Forget Your Savings

Be sure to include a line item for savings in your monthly budget. Use it for those short- or long-term savings goals, building up an emergency fund or investments.

Figure out how much you can afford — no matter how big or small. If you get direct deposit, saving can be simplified with an automated paycheck deduction. Something as little as $10 a week adds up to over $500 in a year.

Step 3: Adjust Your Expenses to Match Your Income

Now, what does your monthly budget look like so far?

Are you living within your income, or spending more money than you make? Either way, it’s time to make some adjustments to meet your goals.

How to Cut Your Expenses

If you are overspending each month, don’t panic. This is a great opportunity to evaluate areas to save money now that you have itemized your spending. Truthfully, this is the exact reason you created a budget!

Here are some ways you can save money each month:

Cut optional outings like happy hours and eating out. Even cutting a $4 daily purchase on weekdays will add up to over $1,000 a year.

Consider pulling the plug on cable TV or a subscription service. The average cost of cable is $1,284 a year, so if you cut the cord and switch to a streaming service, you could save at least $50 a month.

Fine-tune your grocery bill and practice meal prepping. You’ll save money by planning and prepping recipes for the week that use many of the same ingredients. Use the circulars to see what’s on sale, and plan your meals around those sales.

Make homemade gifts for family and friends. Special occasions and holidays happen constantly and can get expensive. Honing in on thoughtful and homemade gifts like framed pictures, magnets and ornaments costs more time and less money.

Consolidate credit cards or transfer high-interest balances. You can consolidate multiple credit card payments into one and lower the amount of interest you’re paying every month by applying for a debt consolidation loan or by taking advantage of a 0% balance-transfer credit card offer. The sooner you pay off that principal balance, the sooner you’ll be out of debt.

Refinance loans. Refinancing your mortgage, student loan or car loan can lower your interest rates and cut your monthly payments. You could save significantly if you’ve improved your credit since you got the original loan.

Get a new quote for car insurance to lower monthly payments. Use a free online service to shop around for new quotes based on your needs. A $20 savings every month is $20 that can go toward savings or debt repayments.

Start small and see how big of a wave it makes.

Oh, and don’t forget to remind yourself of your financial goal when you’re craving Starbucks at 3 p.m. But remember that it’s OK to treat yourself — occasionally.

A couple organize tax-related paperwork.
Lindsey Cox and Jonathan Tuttle dig into income- and expense-related paperwork as they prepare to file their taxes at their home in Temple Terrace, Fla. Tina Russell/The Penny Hoarder

What to Do With Your Extra Cash

If you have money left over after paying for your monthly expenses, prioritize building an emergency fund if you don’t have one.

Having an emergency fund is often what makes it possible to stick to a budget. Because when an unexpected expense crops up, like a broken appliance or a big car repair, you won’t have to borrow money to cover it.

When you do dip into that emergency fund, immediately start building it up again.

Otherwise, you can use any extra money outside your expenses to reach your financial goals.

Here are four questions to ask yourself before dipping into your emergency fund..

Step 4: Choose a Budgeting Method

You have your income, expenses and spending spelled out in a monthly budget, but how do you act on it? Trying out a budgeting method helps manage your money and accommodates your lifestyle.

Living on a budget doesn’t mean you can’t have fun or splurges, and fortunately many budgeting methods account for those things. Here are a few to consider:

  • The Envelope System is a cash-based budgeting system that works well for overspenders. It curbs excess spending on debit and credit cards because you’re forced to withdraw cash and place it into pre-labeled envelopes for your variable expenses (like groceries and clothing) instead of pulling out that plastic. 
  • The 50/20/30 Method is for those with more financial flexibility and who can pay all their bills with 50% of their income. You apply 50% of your income to living expenses, 20% toward savings and/or debt reduction, and 30% to personal spending (vacations, coffee, entertainment). This way, you can have fun and save at the same time. Because your basic needs can only account for 50% of your income, it’s typically not a good fit for those living paycheck to paycheck.
  • The 60/20/20 Budget uses the same concept as the 50/20/30, except you apply 60% of your income to living expenses, 20% toward savings and/or debt reduction, and 20% to personal spending. It’s a good fit for fans of the 50/20/30 Method who need to devote more of their incomes to living costs.
  • The Zero-Based Budget makes you account for all of your income. You budget for your expenses and bills, and then assign any extra money toward your goals. The strict system is good for people trying to pay off debt as fast as possible. It’s also beneficial for those living to paycheck to paycheck.
A hand writes financial-related labels on envelopes.
Tina Russell/The Penny Hoarder

Budgeting Apps

Another money management option is to use a budgeting app. Apps can help you organize and access your personal finances on the go and can alert you of finance charges, late fees and bill payment due dates. Many also offer free credit score monitoring.

Step 5: Follow Through

Budgeting becomes super easy once you get in the groove, but you can’t set it and forget it. You should review your budget monthly to monitor your expenses and spending and adjust accordingly. Review checking and savings account statements for any irregularities even if you set bills to autopay.

Even if your income increases, try to prioritize saving the extra money. That will help you avoid lifestyle inflation, which happens when your spending increases as your income rises.

The thrill of being debt-free or finally having enough money to travel might even inspire you to seek out other financial opportunities or advice. For example, if you’re looking for professional help, set up a consultation with a certified financial planner who can assist you with long-term goals like retirement and savings plans.

Stephanie Bolling is a former staff writer at The Penny Hoarder.



Source: thepennyhoarder.com

Prepare for Holiday Shopping with These Timely Credit Tips

October 29, 2020 &• 5 min read by Constance Brinkley-Badgett Comments 0 Comments

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According to a YouGov Parent Survey in 2019, a quarter of parents entered the 2019 holiday shopping seasonstill paying down debt related to 2018 holiday spending. Deloitte numbers put holidayretail salesgrowth in 2019 at 4.1% year-over-year. In 2020, Deloitte predicts growth of between 1% and 1.5% year-over-year for the holiday season.

It might be that some people no longer want to pay for holiday gifts, decorations and food a year down the road. But it’s also true that the COVID-19 pandemic has hit consumerwallets and some people might be cutting back this year.

That doesn’t mean that people aren’t shopping. Google and other thought leaders note that changes to shopping habits and the need for social distancing and other measures will likely spread the holiday shopping season out longer. Shoppers are also likely to turn to online shopping.

With a ton of shopping opportunities, a longer holiday shopping season and pent-up pandemic energy, it might be easy to overspend and create debt you’ll deal with into the future. Follow these tips to prepare for holiday shopping so you can protect your financial standing, save money and make the most of the resources you have this season.

1. Check your credit scores

Begin by checking your credit scores and reports. They tell you where you stand if you want to apply for credit. They also give you a baseline of where you are so you know if your score goes up or down later with no explanation.

An unexplained drop in your credit score can be a sign your financial information is compromised. Unfortunately, the holidays are prime time for many scammers. Using a service, such as ExtraCredit’s Track It feature to keep tabs on 28 of your FICO scores, helps you know when you need to act to protect your credit.

2. Ask for a credit limit increase

If you have existing credit cards and you’re a cardholder in good standing, the months prior to the holidays can be a good time to ask for a credit limit increase. You’re not asking so you can spend more-it’s typically advisable to keep spending in line with your budget no matter how much credit you have.

You’re asking for a higher limit so you can spend what you already planned to without hurting your credit utilization. Credit utilization is the second-most important factor in determining your credit score-second only to payment history. It’s the ratio between your credit limit and how much of that credit you have used.

If you have a card with a limit of $1,000 and you spend $300, that’s a utilization rate of 30%. But if you get approved for a credit limit of $2,000 and you spend $300, that’s a utilization rate of only 15%, which is better for your score.

3. Apply for a credit cardwith a 0% APR introductory offer

Those with good or excellent credit might want to consider applying for a card with a 0% APR introductory offer. If you qualify for such a card, you typically have one or two years to pay off purchases made during the introductory period without accruing any interest.

This can be a way to finance your entire holiday without paying anything more for the privilege of doing so. However, it’s still important to maintain your budget and not overspend just because you won’t be paying the balance off until later. Otherwise, you make this season’s holiday festivities next season’s problem.

4. Pay down debt before-and after-the holidays

Speaking of last season’s debt: If you can pay it down before you start spending this season, that’s a great accomplishment. It also frees up your credit and your budget so you can better enjoy the current holiday season. If you’re paying $100 a month on your debt, that’s $100 a month that might go toward gifts or celebrations that you don’t have to put on a card this year.

If you do use credit to pay for the 2020 holidays, have a plan for paying it down as soon as possible. That’s especially true with 0% interest cards. The longer you wait, the greater the chance you’ll miss the introductory period and potentially be on the hook for a lot of interest expense.

5. Create a holiday spending budget

Whether you’re using cash or credit-or a mix of both-enter the 2020 holiday shopping season with a plan. Take an honest look at your personal budget. If you don’t have a budget, create one before you move forward. Then decide how much you can realistically spend during the holidays.

Consider which gifts you want to buy and which events you want to host or attend. You might not be able to do everything, and that’s OK. Be honest with yourself, your family and your friends about what you can afford to do with your time and money this year.

Then make a list and assign each item a monetary budget. That can include:

  • Gifts as a total
  • Gift extras, such as wrapping and tags
  • Shipping, both for receiving items you buy and for shipping gifts to others
  • Food and drinks
  • Travel
  • Decor
  • General festivities, such as tickets to holiday events

Once you assign a dollar amount to a category, stick to it. That’s a good idea even if you’re spending with credit.

6. Align budgeted spendingwith credit cardrewards

Once you know how much you want to spend, decide how best to spend it. If you’re using credit cards for the holidays, check your accounts to see if any offer cash back or rewards points. If they do, double-check which categories or stores you can shop in to earn the most points with each card.

For example, some travel rewards cards offer 6x points when you shop at supermarkets. You could use such a card to cover the food-and-drink portion of your holiday budget and reap the biggest rewards possible from that spending. You might also be able to maximize rewards when purchasing gift cards.

7. Guard your financial information and identity

As you enjoy holiday shopping, be on guard. Don’t use debit card PIN numbers unless you have to, and shield the keypad when you enter your information. Keep a close eye on your wallet or purse, and check your credit card statements regularly to ensure all charges are yours. You can also use ExtraCredit’s Guard It feature to help keep your identity and account information safe during and beyond the season.

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Tips for Dealing with Difficult Relatives | ApartmentSearch

Older woman talking to girl with cookie in mouthIf you’ve been living solo for a while, the holiday season may mark the first time you’ll see your extended family in a long time. You may already be dreading spending your long weekends cooped up with nosy aunts and spoiled cousins!

Though we can’t give you your PTO back, we can help you maintain your sanity during family festivities. Keep your holiday season delightful— not dreadful — with these tips for dealing with difficult family members this holiday season.

Step up your self-care before, during, and after family time.

No matter how much you love your family, dealing with difficult relatives can be draining. Make sure you’re not pouring from an empty cup, so to speak, by giving yourself extra time for self-care practices in the time leading up to, during, and following family gatherings.

Step away from the group to do something that recharges you, like journaling, calling a friend, or taking a walk by yourself. The more depleted your mental energy becomes, the less likely you are to handle sticky family situations with grace, so make it a habit to check in with yourself and take a few minutes to recharge whenever you need to.

Steer the conversation with neutral topics and questions.

Maybe you don’t want to spend holidays with extended family because you know you’ll be dealing with your uncle’s political banter or listening to your cousin rehash the drama that happened at her sister’s wedding last summer.

Now is not the time for confrontation or “family therapy,” and fortunately, you can play a big part in keeping things light and fun. If you make an effort to steer the conversation, the likelihood of controversial topics arising in your discussions can diminish — at least somewhat.

Here are a few questions to ask your family at dinner to get things going (and stay in a safe conversational territory).

Neutral conversation-starters for family gatherings:

  • What’s your favorite memory from a past holiday?
  • What was your first job?
  • What was your wedding day like?
  • What do you remember about the days your children were born?
  • What’s your favorite place you’ve ever traveled to?
  • Have you seen any good movies or shows lately?
  • What’s something you’re excited about over the next few months?
  • What’s your favorite holiday tradition (or movie, or food, etc.)?
  • What’s something you’re grateful for?

If things still take a turn for the worst, you can say something like, “Let’s give the rest of the family the gift of a break from that topic, what do you say?” or be even more direct with “Let’s change the subject; I don’t want to discuss this.” Don’t be afraid to speak up!

Think about a response to personal questions in advance.

Your family is well-meaning, but sometimes they can ask questions you don’t want to answer. How are you supposed to reply to, “When are you getting married?” anyway?! While you can’t always anticipate what family members will ask, you can develop an effective way to divert nearly any personal question.

Think of a few things in your life that are going well right now — or at the very least, some topics you’d be willing to talk about with family — and change the subject to those things. For example, if someone springs a personal question about why you aren’t dating someone, you can chuckle and respond, “I don’t know about that. Hey, I got a promotion at work last month. I really love my work right now. How’s your job going?” If they persist or bring it up again, you can be more direct with a response like, “I’d prefer not to talk about that,” or you can remove yourself from the situation entirely, which leads us to our next tip…

Have an exit plan.

Sometimes, when you’re dealing with difficult family members, you need to step away. If you’re anticipating stressful situations, plan your getaway in advance. This can mean excusing yourself for a few moments of solitude in the bathroom, knowing when to return to your hotel for the night, or even being prepared to leave the situation entirely by packing up and heading home early. It’s okay to need some separation!

Limit or avoid time with family during the holidays altogether.

Speaking of separation, here’s the thing: if you don’t want to spend holidays with extended family, you don’t have to. You always have the option to do something completely different, like hosting a holiday dinner with nearby friends or neighbors. Of course, making your own plans for the holidays may come with consequences you don’t want to deal with (like hurt feelings), but in the end, it truly is YOUR decision whether you attend family gatherings.

If you’re not ready to give a big, hard “NO” to your family gatherings, consider a compromise. For example, you don’t have to schlep half your belongings to your parents’ house and essentially move back in with family for a week or two. Instead, cut your trip down to 2 or 3 days. You’ll still get to see everyone and celebrate, but you’ll save yourself from the depletion that comes from dealing with difficult family members for long periods.

Create a safe haven for yourself.

You can get through almost anything as long as you have something — or somewhere — else to look forward to, right? If you’re exhausted after spending the holidays with difficult relatives, ensure you’ll have a welcoming spot to come home to with ApartmentSearch. Use our apartment finder tool to claim your perfect place, complete with amenities, parking, and PRIVACY! Now, that’s fa-la-la-fabulous.

Source: blog.apartmentsearch.com

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Must Have Tools for Thanksgiving Dinner Prep This Year

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Tools for cooking Thanksgiving Dinner | Thanksgiving dinner | Kitchen tools

We don’t have to tell you that Thanksgiving looks and feels a lot different this year.  This may be the first you you are cooking the big meal yourself.  While we wish we could be there to help, the next best thing is to share with you our favorite tools for prepping a Thanksgiving feast.  And once you’ve got all the tools ordered, be sure to check out our Pinterest boards, for all of our favorite recipes both for Thanksgiving dinner and for the accompanying drinks.

fat separator–ALL THE GRAVY-NONE OF THE GREASE

BRINING=ACING THE TURKEY GAME

SAVE STOVETOP SPACE -SLOW COOK YOUR MASHED POTATOES

BECAUSE YOU’RE PROBABLY NOT EATING THAT WHOLE PIE IN ONE SITTING…BUT WE WON’T JUDGE IF YOU DO

GET THE RIGHT TEMP

Ready to find your next apartment?

BASTE LIKE A PRO

BECAUSE MANHANDLING A HOT TURKEY IS NOT A GOOD LOOK

Stainless Steel Trash & Recycling Center

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Must Have Tools for Thanksgiving Dinner
Article Name
Must Have Tools for Thanksgiving Dinner
Description
Cooking Thanksgiving Dinner for yourself this year? These tools will help you prep Thanksgiving dinner like a pro.
Holli Beckman
Publisher Name
Apartminty
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Source: blog.apartminty.com

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