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How to Budget for Your Next Home Renovation

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Renovating their homes has become a way of life for US homeowners. They constantly want to improve their abodes and add to their amenities. Of the homeowners who completed home renovations in the past 12 months, 75% plan to renovate the following year, too. That cycle of constant improvement partially stems from great budgeting advice from home improvement experts.

Know When Major Home Features Require Replacement

Every major feature of the typical modern home eventually requires replacement. For example, an asphalt shingle roof lasts about 15 years. A heating, ventilation, and air conditioning (HVAC) system lasts about 15 to 25 years, says home improvement guru Bob Vila. When you learn the expiration date of each major home feature, you empower yourself to budget for their replacement. If you purchased a home with a five-year-old HVAC system, calculate the cost of a new one 10 years from now, including inflation, and save one-tenth of the cost each year. When the HVAC system breaks down or begins wearing out, you will have the money ready to replace it.

Prioritize Your Renovations

Perhaps you dream of new crown molding in every room and a new deck. Your foundation starts sagging and a support beam splits. Although the wraparound deck sounds the most fun, it comes last on the priorities list, while the support beam fix tops the list. Always put safety first and spend your renovation funds on what ensures your home will last longer. Exterior work and foundation work come first because both require outdoor work and good weather; without them, your house falls down.

Save small, indoor renovation projects for winter months. You can hang crown molding or wallpaper in any weather. Indoor painting and flooring projects also offer cold-weather opportunities. These smaller projects cost less but offer a sense of accomplishment when finished.

Increase Curb Appeal with Outdoor Projects

Instead of trying to accomplish the entire renovation at once, divide the projects by season. Tackle your deck and outdoor projects in the spring and summer. Decks, patios, and other hardscapes vary in cost, ranging from $2,500 to more than $100,000, according to The Backyard Way. Obtain quotes for the next season’s projects while you complete the current season’s projects to help you plan ahead.

More About Organizing Projects by Season

Determine the average cost of the types of projects you want to do in your state or city using home improvement websites. Once you know the general amounts, build a rough budget for the entire renovation. Divide the projects by season to dole them out throughout the year, scheduling indoor projects for winter.

Research the slow times of year for each type of contractor you’ll need to use. If you wait until June to hire a deck builder, you’ll find them all booked. Only warm weather states would provide suitable weather for deck building during winter though. For some types of work, you can’t schedule during the slow time for that type of contractor, but you can obtain quotes then and schedule their work for the earliest possible time.

Create a Home Maintenance and Improvement Fund

Many individuals find it easier to save for a project when they create a separate bank account to do so. Consider setting up an automatic deposit to this savings account so you can contribute the same amount each month. This process helps you build savings, increase your net worth, and prepare you for home emergencies that might require spending a large amount of money at once.

Budget for Constant Home Improvement

It’s a fact of homeownership that you’ll need to conduct annual maintenance. You’ll also need to repair and replace certain items. You’ll probably find things you want to upgrade or change, so create a budget for the things you know you’ll have to address and a savings account for emergency repairs.

Penny Pinchers’ Paradise: The Crème de la Crème of Budget Planners

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best budget planners

When you need to create a budget, having a roadmap to follow makes the process easier. With a budget planner, you essentially ensure that nothing falls through the cracks. Plus, some may contain sections or tips that can help you achieve goals that didn’t seem possible previously, and many have fun elements to make the process engaging. If you’re looking for an excellent solution that will help you get your financial life on track, here’s a look at some of the best budget planners around.

Clever Fox Budget Planner

The Clever Fox Budget Planner is an excellent option for anyone new to budgeting, as well as experienced budgeters looking for a straightforward solution. It includes a spot for a monthly budget, expense trackers, monthly budget reviews, savings tracking, debt tracking, and income tracking. Plus, there are places for notes, goal setting, personal financial aspirations, and much more.

There is also a built-in pocket for loose notes or bills. There’s an illustrated user guide to help you get started and three built-in bookmarks to ensure you can get to different sections quickly. Another fun part is that this planner comes in a wide array of colors, so you can choose a hue that brings a smile to your face, making your budgeting activities feel more enjoyable.

Stress Less, Spend Less Budget Planner

The Stress Less, Spend Less Budget Planner doesn’t just provide expense tracking and planning tools; it also focuses on broader financial wellness. It offers ample structure and plenty of space to get organized, as well as mindfulness exercises designed to reduce financial anxiety. You’ll also find financial literacy tips, making this ideal for anyone who has limited experience with money management.

Along with being excellent for creating a budget, this planner has sections to track savings goals. There’s a handy holiday budget section to plan spending related to occasions like Christmas. Plus, there are areas where you can write notes related to reflection topics, which can help you learn more about your money mindset.

GoGirl Budget Planner & Monthly Bill Organizer

With the GoGirl Budget Planner & Monthly Bill Organizer, you get a financial planning book with built-in pockets to hold statements, bills, and notes. It’s a spiralbound book, too, which helps it lay flat when you’re writing. It’s also available in an array of colors, and you’ll find a variety of helpful sections inside, giving you plenty of tools to make achieving your financial goals easier.

Along with budget areas, there are monthly review and spending analysis sections to help you see if you’re on target. Every month has a calendar for simplified tracking, and there are spots to list upcoming expenses that you need to plan for in advance. You also have areas for savings and debt tracking, and there’s a spot for an annual summary that can help you use how far you’ve come.

Clever Fox Budget Planner Pro

Another fantastic option from Clever Fox is the Clever Fox Budget Planner Pro. This one stands apart because it incorporates a cash envelope system, allowing anyone using that technique to get started with greater ease. Plus, it includes all of the features you’d expect, such as expense, debt, and savings trackers, along with monthly budgets, goal setting, income tracking, budget reviews, and more.

This option also comes in a decent variety of colors, allowing you to choose one that catches your eye. You also get three bookmarks built-in, making it easy to get to the sections you’re using regularly. For convenience, there’s also a user guide, ensuring you get started on the right foot.

Do you know of any other options that should be on a list of the best budget planners available? Have you tried any of the budget planners above and want to tell others about your experience? Share your thoughts in the comments below.

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A Guide to Accurately Determining the Value of Your Totaled Car

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totaled car value calculator

If you’ve been in a car accident and your vehicle was damaged, there’s a chance that your insurance company will declare it a total loss. Usually, you’ll receive a payout based on the car’s estimated value, which the insurer determines. However, if you’re uninsured or want to buy back the vehicle to potentially resell it, you might want to determine the value of your totaled car yourself. If so, here’s what you need to know.

When Is a Car Totaled?

When an auto insurance company declares a vehicle totaled – or a total loss – that doesn’t mean it doesn’t have any value. Instead, a car is totaled when the cost to repair the existing damage exceeds how much the vehicle was worth in the current market in its pre-accident state. When that occurs, it costs the insurer less money to simply compensate you based on the car’s pre-accident value than to repair the damage.

As a result, a totaled car isn’t necessarily damaged to the point of being unrestorable. Many totaled cars could be fixed and returned to the road. It just doesn’t make financial sense to the insurer to go that route.

Determining the Value of Your Totaled Car

Use a Totaled Car Value Calculator

Usually, the easiest way to estimate the value of a totaled vehicle is to use a totaled car value calculator. You might find calculators explicitly designed for totaled vehicles online, or you can use traditional car value calculators to get a general idea.

The information you need to provide to the calculator is typically straightforward. You’ll need to input the make, model, and model year of the car, as well as its current mileage. Details about its features and equipment are often necessary, as well as the location of the vehicle (or the zip code associated with where you’d potentially sell it) and it’s color.

With the totaled car value calculators, be wary of those offered by companies that buy cars in any condition. The price you’re presented with is usually based on what that business is willing to pay for your vehicle. Since their goal is usually to resell the car – either in whole or by parting it out – to make a profit, the value they assign may be lower than fair market.

With traditional car value estimators, you’ll need a calculator that lets you set the vehicle’s condition as fair or poor. Which of those options is best for your situation depends on the extent of the damage. If you’re not sure where to begin, the Kelley Blue Book What’s My Car Worth tool is a solid place to start, as it will guide you through selecting the right condition.

Check Out Your Local Vehicle Market

While it may seem like the simplest way to gauge the value of your totaled car is to attempt to sell it, that isn’t an option immediately. Totaled vehicles typically need a salvage certificate issued by the Department of Motor Vehicles before they’re eligible for resale. As a result, you can’t merely see what potential buyers are willing to pay, as most won’t offer anything without the salvage certificate.

If you work with your insurer and choose to keep your car, the insurance company may handle the reporting of a totaled vehicle for you. If you’re not working with an insurer, then you typically need to tackle those steps yourself.

However, you can get insights into the value of your totaled car by looking at prices for vehicles like yours in similar condition – including being classified as a salvage vehicle – in your area. Typically, this process works best if you’re in or near a larger city, as there may be more cars available for a comparison.

You can also contact local dealerships that purchase salvage vehicles. While dealerships typically pay less than private parties, the selling process is often simpler. As a result, putting out some feelers if you’re willing to go through the steps required for a salvage certificate is worth considering if you’re trying to determine the car’s value in its current state.

Explore Your Local Parts Market

When it comes to the vehicle market, the sum of the whole is potentially worth less than the value of its parts. Essentially, depending on your make, model, year, and other details about the car, you might earn more by selling it for parts.

Usually, you’ll want to connect with local salvage yards to find out the value of your vehicle for this purpose. If specific parts are in-demand, they may offer more for your car than you’d get by selling the vehicle to a private party or dealer.

The sale process is also reasonably simple if you go this route, suggesting you have a salvage certificate. Plus, if there are local laws in your area about selling unsafe vehicles, even if you have a salvage certificate, this option allows you to avoid violating the rules or any form of liability.

Have you ever had to figure out the value of a totaled car? If so, do you have any other tips that can help someone calculate the value of their totaled car? Share your thoughts in the comments below.

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10 Signs You Should Start Budgeting More Seriously

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Creating a budget to manage your finances better is relatively straightforward and easy, but sticking to that budget for prolonged periods is much easier said than done.

Whether you have been budgeting for one month or one year, here are several signs that could be telling you that you may need to reconsider your budget or start taking your budget more seriously.

What are the ten tell-tale signs you should start budgeting more seriously?

If your budget doesn’t seem to be working for you, there could be several signs trying to tell you it’s time to start budgeting more seriously or at least reconsider your budget.

Instead of listing them all, here are just ten tell-tale signs you should refresh/upgrade your budget so that it works for you.

  • You live in constant fear at the checkout that your credit or debit card is going to be declined
  • Your credit or debit card does get declined regularly
  • You haven’t stopped buying unnecessary purchases
  • Your bank balance is still less than a couple of hundred dollars (or equivalent currency value) even after months of budgeting
  • You have given up on keeping track of your finances/purchases/transactions history
  • You have used the same budget for months, but nothing seems to have changed
  • You have ended up dipping into your overdraft or into your savings account
  • You still forget which bills are due to come out on certain days of the month
  • You don’t have enough money for important things like bills/groceries etc.
  • You switch between budgeting strategies, but nothing seems to work
  • You have lost your job, or your current living/homelife situation has dramatically changed
  • You have to borrow money or take out another loan to cover certain costs of things

Can I still subscribe to my favourite TV show, sport, and movie streaming sites or play my favourite casino games while on a budget?

Yes. You can still subscribe to your favourite streaming sites and play your favourite video games or casino games while on a budget. Here are some useful tips so you can still budget and have fun at the same time.

For example, it might be a good idea to check the highest payout casinos, and then only play at licensed casino sites with above-average RTP % (Return to Player Percentage) payout rates. You have a slightly better chance of winning than at casinos with lower RTP % payout rates.

You can then budget even further when you register a real money account at today’s best online casinos. For example, you can use the ‘safer gambling tools’ feature at online casinos licensed by the UK Gambling Commission (one of the world’s top-tier licensing authorities).

That’s right. Reputable online casino operators today actively promote responsible gambling. They try to ensure you have a safer and more enjoyable experience each time you log in to your account to play their games.

You can set deposit limits (e.g., daily, weekly, and monthly deposit limits). Setting session time, spending, and win/loss limits is also possible. These responsible gambling tools are the best way to help you stay within your budget when you play at sites like these.

Also, if you have signed up to multiple streaming sites, such as Disney+, Amazon Prime, and Netflix, perhaps you could cut back on at least two of these streaming sites and then alternate between the three by rotating on a monthly basis. This could save you upwards of $/€/£25 per month.

Also, when you subscribe to Disney+ and Amazon Prime Video, you can make in-app purchases, which we recommend avoiding. For example, you can get early access to films on Disney+ before other Disney+ members can watch them.

These can cost anywhere from $/€/£10 to $/€/£25.00 per movie/season, so you’re just better off waiting like everyone else from them to arrive in your regular Disney+ subscription rather than paying to watch them as soon as they are released.

It’s similar on the Amazon Prime Video website. You can rent or buy the latest movies or shows at an extra cost to your regular subscription, so try to avoid the temptation and wait for them to arrive in your regular Prime subscription like most other people.

Some of the most popular channels you can subscribe to inside your Amazon Prime Video subscription are the following:

  • Arrow Video
  • Paramount+
  • Shudder
  • Lionsgate
  • Discovery+
  • Britbox
  • Studiocanal
  • BFI Player
  • MGM
  • Crime Investigation
  • Hayu
  • Curzon
  • Docubay
  • Full Moon

Others you can subscribe to in Prime today are Sundance Now, Gaia, MUBI, Film Box, ITV Catch-Up, History Hit, Hallmark TV, Acorn TV, and Shorts TV, to name a few.

They tend to cost between $/€/£0.99 and $/€/£7.99 per month on top of your Prime subscription, and it can get a little costly if you subscribe to too many of them.

Final note

Budgeting doesn’t mean that you have to stop having fun. It just means that you have to be more aware of what you spend your money on and try your hardest not to waste money on things you don’t necessarily need.

It can take a while, but you must be determined to stick to your budget if you want to start saving money for rainy days. You have to stay strong and have plenty of willpower and determination to succeed. It is much easier said than done, but it is possible.

 

These 5 Money Habits Will Keep You Poor

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Money Habits That Keep You Poor

Living paycheck-to-paycheck is difficult. Along with leaving you uncertain about how you’ll make ends meet, it often prevents you from setting money aside for the future. A situation like this can occur regardless of a person’s income level, particularly if they don’t develop skills that help them get ahead. Here’s a look at five money habits that will keep you poor, as well as how to overcome them and start moving in a better direction.

Not Creating and Sticking with a Budget

Overall, designing and following a budget isn’t the most fun, but it’s generally critical for financial success. When you create a budget, you’re making a plan for your money. You have full awareness of your expenses and the opportunity to allocate your income to make sure you’re covering your bills on time and handling your living expenses.

Without a budget, it’s easy to spend in a way that leaves you short on something critical, like rent or utilities. If you do fall short, you can make a challenging situation worse. For example, it could trigger utility shutoffs, late fees, evictions, or similar outcomes.

Take the time to create a workable budget. Begin by outlining your various bills, allowing you to allocate income to those first. Then, take what’s left and divide it into various spending and saving categories.

When you figure out how much should go into the spending categories, make sure you’re realistic. Usually, the easiest thing to do is look at your average spending and use those as a baseline. Begin with necessities like groceries and gasoline, and move your way toward optional spending like entertainment. Make sure you aren’t being overly optimistic about how much you can scale back on the necessities, as doing so can set you up for struggles when you inevitably spend more in that area.

Keep refining your budget over time, too. Costs in specific categories can shift, so you want to account for that as quickly as possible. That way, your budget adapts to your life, ensuring it remains a good fit.

Racking Up Debt

Relying on credit cards, personal loans, or similar financial products to make ends meet or support the purchase of non-necessities makes it harder to get your financial footing back. The cost of interest often adds up far quicker than you’d expect, causing you to essentially throw away hundreds – if not thousands – of dollars on interest every year.

High-interest debt is classically difficult to pay off, causing it to hang over you for years. Plus, high balances on credit cards on credit cards can harm your credit score, making it harder to secure lower rates down the line.

Focus on finding ways to avoid the need to accrue additional debt. For example, if you’re considering a non-essential purchase, don’t go forward if you can’t cover it with cash. If you’ve been using a credit card to make ends meet, see if you can revamp your budget and cut back on non-essentials to avoid having to go that route.

It’s also potentially wise to check into options if your debt is becoming too difficult to manage. For example, going with a reputable credit counseling agency could provide you with insights that can help you get back on track. Some even have debt repayment plans available that can help reduce your interest rates while you focus on paying off the debts, which can leave to savings while giving you a clear path for becoming debt-free.

Spending More to Capture “Savings”

Many people justify unnecessary purchases because the items were on sale or there was a coupon. The issue is that you’re not saving any money if it’s something you didn’t genuinely need. Instead, you’re still spending; it may just be a bit less than it would be otherwise.

Usually, this type of issue involves the “fear of missing out,” which is a feeling brands and retailers create intentionally. If you succumb to that feeling, you end up spending money you didn’t plan to send out the door, and that can put you in a bind.

One way to avoid this situation is to reduce your exposure to this kind of messaging from retailers. Don’t comb over sales flyers or look at every coupon. Instead, if you’re looking for discounts on things you do need, focus those efforts to ensure you’re not looking at information you don’t need. For example, many cashback or rebate apps have search features that let you see if there are rebates on specific items. By doing that, you aren’t skimming a long list of cashback opportunities that don’t apply to your genuine needs.

It’s also wise to unsubscribe to sales emails from stores that don’t sell necessities. Again, this helps you reduce your exposure to advertising that’s designed to make you worried about missing out, often preventing you from unnecessary splurges that can bust your budget.

Lifestyle Inflation

When you get a raise or bonus at work, changing your lifestyle due to the extra money can keep you trapped in a challenging cycle. Essentially, if you start spending more every time your income goes up, you may prevent yourself from getting on better footing. It limits your ability to leverage the extra funds to make positive progress.

Instead of spending more, consider how you can take the extra cash to get ahead. Consider paying down debt, boosting your savings, or similar steps that reduce your expenses long-term or provide you with a financial cushion. Try to keep your other spending relatively level as you work toward those other goals. Then, once you start hitting those targets, you can reevaluate the situation to determine how you can stay on a more positive path while loosening things up a little.

Confusing Needs and Wants

One area where many people struggle is confusing needs and wants. For example, people need food to live, but going to a restaurant for a meal is a want, even if it meets that need. Primarily, that’s because dining out isn’t the most affordable way to address that need, which causes it to shift into the want category.

The same situation can unfold in numerous ways. You may need clothes, but you might want higher-end clothing. You may need a car, but you might want a luxury model with all of the bells and whistles. Ultimately, needs usually represent the base-level approach that ensures you can live, while wants offer an elevated experience that isn’t genuinely necessary.

Learn to identify the difference between needs and wants, and spend time considering whether any spending you’re about to do crosses into want territory. By getting into that habit, it’s far easier to determine if you’re justifying a want purchase by incorrectly labeling it as a need, allowing you to adjust your mindset and start making wiser financial choices.

Can you think of any other money habits that keep you poor? Do you have any tips to help people overcome money habits that can lead to financial trouble? Did you struggle with any of the issues above and want to tell others about your experience? Share your thoughts in the comments below.

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Budgeting Tips for When You’re Between Jobs

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Most people take a job they hate quickly because they need to start making money immediately, but that’s not the best idea. If you’re between jobs, you should be able to take your time, apply to several places, and try to find an environment that truly works for your needs. Therefore, you must learn how to budget correctly. Let’s find out more!

1. Define Your Bills

The first part of budgeting is determining how much you spend each month on average. First, you should look at the priorities such as groceries, utility bills, mortgages, and insurance. You can create a spreadsheet on your computer to track a few things. Figure out the minimum amount of money you need each month and try to lower everything else as much as possible. You might have to make some sacrifices, but that’s part of handling your finances correctly.

However, you should always have some money in case of emergencies. According to the National Flooring Safety Institute (NFSI), around one million slip-and-fall accidents end up in emergency rooms across the country. You never know what could happen, so you must factor in that extra expense just in case.

2. Go by the 50, 30, 20 Rule

If you don’t know where to start, you can always follow the 50, 30, 20 rule. Fifty percent of your income should be placed on bills and necessities, as those are your fixed costs. Thirty percent should typically account for varying expenses like entertainment and food. You’ll have to cut most of this out when you’re in between jobs.

Finally, you should save 20 percent of your budget. You’ll have to force yourself not to touch that money and continue saving as much as possible while trying to find employment. Your savings account might be there for emergencies, but only use it if you need to repair necessary things like plumbing. One in ten homes in America has leaks that can waste around 90 gallons of water daily. That increases your bills, so always stay on top of your home to prevent things from worsening when you’re trying to save between jobs.

3. Find Other Sources of Income

A household shouldn’t depend on one job for its entire survival, although that’s sometimes inevitable. Most people start collecting welfare or insurance benefits after being laid off. Some other programs might help with your finances while you search for other employment. You could also try to find side hustles and gigs that will still bring money so you don’t exhaust your savings. Nowadays, people can find jobs online that don’t take so much of their time. Working from home is even better than trying to find other temporary employment.

Marketing is vital online; you could get a great opportunity even if you don’t know much. You can learn little facts, like how clients remember things only when they see or hear them at least ten times.

4. Cut Down on Unnecessary Expenses

After defining your bills, you might have noticed optional expenses. People usually cut things like their cable or extra channels between jobs. Getting a Netflix or another streaming site subscription could be the perfect solution. It’s much cheaper and more efficient since you already pay for the internet. In today’s world, the internet is considered a necessity. You’ll need it for side hustles, job searching, interviews, and more.

5. Hunt for Deals

You’ll probably have more time when you’re in between jobs, so you should try finding all the deals online and coupons in newspapers that you can use. Anything that can reduce your bills by even a fraction can be a huge relief. These discounts will probably only help with your food and hygiene products, which are part of your fixed expenses.

If you follow this advice, you can take your time and look for the right kind of job. Otherwise, you might quit your new workplace and have to start searching and budgeting again. Take care of your finances well, so you won’t be rushed into something you hate.

What Causes People To Have So Much Anxiety Over Finances

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Anxiety and Finances

If you’re worrying about money, you’re not alone. Financial anxiety is incredibly common, and it’s often quite difficult to manage. But even knowing that it’s widespread, many people don’t understand the causes of financial anxiety. Here’s a look at anxiety and finances, and why they so often seem to go together.

Why People Have So Much Anxiety Over Finances

Overall, the causes of financial anxiety are surprisingly varied. In some cases, the concerns are based primarily on a lack of assets. For example, living paycheck to paycheck and struggling every day to make ends meet can lead to significant worries about money. Essentially, not feeling that you have enough cash to live comfortably or safely potentially leads to anxiety.

Another cause of financial anxiety is concern that you can’t handle a financial emergency. These worries can occur even if you’re able to pay your bills and address your various needs. In this case, the issue is primarily that your financial situation is a bit tenuous, as a single major incident could functionally derail your financial life.

In some cases, people get anxious about their finances because they don’t feel they are well-informed about money. Not knowing what moves are smart or right can lead to a substantial amount of worry, especially when a significant financial decision lies ahead.

Others may experience financial anxiety based on what they want for the future. For example, even if you’re making ends meet today, concern about whether you’ll be able to afford retirement when that time comes could lead to anxious feelings.

A sense of a lack of control can also lead to financial anxiety. Worrying about where every dollar goes, being hypervigilant about household spending, and being concerned that a single misstep can cause everything to fall apart can lead to anxiety, even among people who are living comfortably from a financial standpoint and are prepared for the unexpected.

Finally, some people end up with anxiety about their finances because their parents were worried about money. In this situation, the person is incidentally taught that finances are hard to manage and worth worrying about, essentially causing them to develop the habits their parents showed as they grew up.

How to Deal with Anxiety About Your Finances

If you’re experiencing anxiety regarding your finances, then addressing the root cause is typically essential. Here are some approaches based on a range of situations.

Education Yourself on Personal Finance

When it comes to personal finance, knowledge is power. If you’re not overly familiar with the world of money, spend time learning the fundamentals to improve your skills. Dig into how to write a budget, plan for the future, and use various financial products without getting yourself into trouble. Look at how compound interest can work for and against you. Read about smart credit card use and how to avoid missteps.

Often, learning about your finances can do a lot to relieve anxiety. It removes some of the mystery about how money works, and that can quell fears that are stemming from a lack of understanding.

Create a Budget

In some cases, concerns about money are based on not knowing where your money is going or if you have enough to address your needs. In this situation, having a budget can potentially relieve your anxiety. It allows you to allocate your income to specific purposes, creating a plan that will enable you to make ends meet and manage savings goals.

When you begin, start by examining your spending patterns, preferably your activity over the last six to 12 months. See how much you’re spending in various areas. Then, use that information to identify categories where you’re overspending and establish baselines for certain expenses. Once you do that, you typically have enough details to put a realistic budget together.

Talk to Someone Trusted

Money is often a bit of a taboo subject, so it’s common for people to bottle up their feelings about it and not discuss it with others. However, speaking with someone you trust about your concerns is often beneficial. It gives you a source of support – and potentially guidance – which can make moving forward easier.

Additionally, it’s often critical for spouses to talk about their finances regularly. By doing so, it’s easier to get on the same page and plan together effectively. Plus, it ensures that one spouse doesn’t end up in the dark and prevents spouses from taking financial actions behind the other’s back, which can avoid feelings of resentment or distrust.

Remain Future-Focused

In some cases, people experience financial anxiety because they’re dwelling on a financial mistake that created hardship. While it’s wise to spend a little time looking into what went wrong – as that can help you avoid similar missteps down the road – it’s best to quickly transition to a future-focused mindset.

Concentrating on how to fix the problem can relieve anxiety. It helps you focus on solutions instead of errors, which can spur forward progress that improves your financial situation. As the issue improves, that can often lead to a sense of relief, making it easier to keep moving forward.

Create a Safety Net

A financial safety net can do a lot to relieve anxiety about money. When you have an emergency fund, you know you’ve got a cushion for handling the unexpected, and that makes your financial situation seem less precarious. Similarly, saving for retirement can relieve concerns about your financial future, which may reduce anxiety.

Precisely what the financial safety net should look like will vary based on your situation. However, aiming for at least three months of living expenses in a savings account is a reasonable goal. Additionally, contributing to a retirement account as soon as possible gives you the benefit of time, allowing smaller deposits to grow and making it easier to stay on target.

See a Counselor

If your financial anxiety is problematic to the point of it disrupting daily life, seeing a licensed mental health professional is a wise move. Finding one that focuses on finances is potentially the best option, but choosing a specialist that concentrates on anxiety isn’t a bad choice either. In both cases, the counselor can help you learn about the origins of your anxiety and can provide insights that make managing your feelings easier.

Can you think of any other reason why anxiety and finances often seem to go together? Do you have any tips that can help someone reduce anxious feelings when figuring out how to manage their money? Share your thoughts in the comments below.

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Is Lifestyle Creep Ruining Your Financial Future?

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Lifestyle Creep

As you progress in your career and receive a raise or promotion, or you finish paying off a debt, one thing usually occurs; you suddenly find yourself with more money in your bank account. Typically, it’s an exciting moment, particularly if your budget previously felt tight. However, the higher bank balance might also lead to some unwise financial decisions, particularly in the area of lifestyle creep. If you’re wondering how lifestyle creep can ruin your financial future, here’s what you need to know.

What Is Lifestyle Creep?

Lifestyle creep is a scenario where your spending increases when your income rises. Essentially, whenever you have more room in your budget, you use those funds to improve your lifestyle.

Often, lifestyle creep is discrete and seemingly innocuous. It typically plays out as a series of small lifestyle improvements, many of which aren’t immediately noticed by members of the household. Minor luxuries are purchased more frequently, or versions of regularly purchased items – like groceries – elevate slightly over time. It’s the slow nature of the shift that led to the use of “creep” in the term.

How Lifestyle Creep Harms Your Financial Future

On the surface, lifestyle creep doesn’t seem overly harmful. In many cases, an improving lifestyle is simply viewed as a reward for hard work, allowing a household to make purchases that weren’t previously within reach.

However, lifestyle creep can harm your financial future. For example, if you were previously living paycheck-to-paycheck, a raise or paying off a debt could let you escape that cycle. But if you allow lifestyle creep to occur and increase your spending, you could end up living paycheck-to-paycheck again. As a result, you’re functionally in the same financial place as you were previously.

In many cases, the signs of lifestyle creep are reasonably clear. After seeing your income increase or your debt obligations reduce, a stagnant savings account balance typically means you are spending more. Using more of your money on outings or social events is another red flag. The same is true of an unshakeable feeling that you can’t get control of your budget no matter how much you earn.

Tips to Avoid Lifestyle Creep

Generally speaking, avoiding lifestyle creep requires some vigilance and planning. Fortunately, it’s not difficult to head in the right direction. Here are some tips to help you avoid lifestyle creep.

Know Your Financial Goals

Lifestyle creep is more likely to occur if you don’t have any well-defined financial goals to guide your actions. Spend time considering what you’d like to achieve to ensure your financial well-being. Be specific when you outline the targets, assigning dollar amounts, deadlines, and more to help you stay on target.

Once you have your goals defined, find ways to keep reminders on you. For example, putting a picture of your dream house in front of your debit card could give you pause when you’re about to make an unnecessary purchase. It gets you thinking about how your behavior could negatively impact reaching your goal, and that’s often enough to slow down excessive spending.

Update Your Budget

The moment your income rises, take the time to update your budget. Consider how the extra cash in your account can make reaching high-priority goals easier, then work to direct your money in those directions.

When you update your budget, make sure to allocate some cash toward discretionary spending. That essentially lets you have a little spontaneous fun while preventing you from going overboard.

Track Your Spending

Another critical tip to avoid lifestyle creep is to continuously track your spending, at least initially. By doing so, you’ll notice if you’re starting to spend more than you planned, making it easier to nip any newly forming bad habits in the bud.

Automate Your Savings

Generally, it’s harder to succumb to lifestyle creep if you don’t leave the money in your checking account. If you have savings goals you’d like to achieve, take advantage of the automatic transfer features offered by most banks and credit unions. That way, when your paycheck is deposited, the designated amounts automatically shift to the specified savings account, preventing you from accidentally seeing that money as spendable.

Increase Your Retirement Contributions

If you want to use your boosted income to secure your financial future, increase your retirement contributions right away if you aren’t currently maxed out. Make sure you’re capturing your full employer match if you receive one through your work plan. Otherwise, plan your contributions to get you closer to the maximum contribution limit.

Use the 72-Hour Rule

The 72-hour rule is a strategy for limiting impulse purchases that you may later regret. When you see a product or service and feel the urge to buy right away, make a note of what it is and then wait to take any action for at least 72 hours. In many cases, the impulse to buy will diminish during that time.

However, if the urge doesn’t go away, you are still giving yourself time to consider whether moving forward works with your budget. At a minimum, that helps you avoid splurges that would harm your financial well-being, which is still a win.

Pay Down a Debt

If you have a solid emergency fund and your retirement contributions are relatively high, use the extra money in your budget to speed up debt repayment. By doing so, you’ll pay less in interest over the life of the debt. Plus, you can eliminate the obligation sooner, allowing you to get even more room in your budget. In some cases, this strategy may also boost your credit score, which is always beneficial.

Don’t Make Big Changes Immediately

If your income increases significantly, it may encourage you to make certain big changes, like moving into a larger home or buying a nicer car. While there are situations where that could make sense, don’t make these adjustments to your lifestyle right away.

Instead, spend time reviewing the short and long-term implications of those changes, as the financial impact is often significant and lasting. That way, you can ensure you aren’t getting in over your head or putting yourself back in a position where you’ll struggle financially.

Be Cautious About Automated Spending

Subscription-style services may seem convenient, but they’re often costly. Additionally, most people don’t have the same level of awareness when it comes to subscription-style services as they do with other types of spending.

Whether it’s gym members, streaming services, meal kits, automatic product deliveries, or anything of that nature, make sure you’re tracking those activities. Additionally, review your subscriptions every month to determine if they’re worth keeping in place. That way, if something you’re paying for automatically stops providing value, you can end the subscription promptly.

Did you struggle with lifestyle creep and encountered financial hardships because of it? Do you have any tips that can help others avoid lifestyle creep to ensure their financial lives stay on track? Share your thoughts in the comments below.

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How To Ensure Your Budget is Working For You

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Is Your Budget Working

 

When it comes to personal finances, the most common recommendation from experts is to have a budget. However, many people create an initial framework for their spending only to continue struggling. Often, that’s a sign that your budget isn’t quite where it needs to be to serve you well. If you’re wondering, “Is your budget working?” here’s what you need to do to figure it out.

Do You Feel Overly Restricted?

In many ways, budgets are inherently restrictive, as they’re designed to ensure your money is going to the right places. However, if it’s restricting what you do to the point where it leaves you feeling miserable, that’s an issue.

Ideally, your budget needs to have some room for spontaneity and enjoyment. Otherwise, the rules you’re placing on yourself are challenging to follow over time. Essentially, your budget starts seeming like a punishment or burden, and that can leave you frustrated, unmotivated, or even angry.

While it’s wise to ensure you’re handling all of your financial responsibilities, try to designate some of your money for activities you genuinely love. By doing so, you’re giving yourself an outlet for fun, and that can positively impact your well-being. In turn, following the rest of your budget isn’t as difficult, as you’re still getting some joy from your hard-earned money.

Are You Being Too Idealistic?

When many people sit down to create a budget, they outline their perfect spending plan. The issue is that budgets drawn up in that manner don’t always align with reality. Instead, they’re overly optimistic based on how household members typically act and spend or don’t account for realistic costs for needed goods and services.

Overly idealistic budgets are incredibly common during periods of economic uncertainty, particularly issues like high inflation. They don’t provide enough room for rising prices, which causes households to bust their budgets even if they’re trying to be responsible.

Additionally, not accounting for actual spending patterns means missing the mark more often than not. As a result, it’s critical to take an honest look at your typical spending and set realistic targets in discretionary categories. That helps you mold your budget to your preferences and priorities, ensuring you aren’t being overly idealistic.

Do You Have an Emergency Fund?

Even the best-planned budget is quickly derailed if you can’t cover the cost of an unexpected event. Whether it’s medical bills, car repairs, or anything else, being able to cover those expenses without harming your budget makes a difference.

By having an emergency fund, you’ve got a stash of cash you can tap when the unexpected happens. As a result, the rest of your spending can simply align with your usual budget in most cases.

Make saving money in your emergency fund part of your monthly budget, allowing you to build up the account and recover the cash you had to spend to handle the unexpected. Ideally, you want to make your initial target at least $1,000. Then, work your way up to three months of living expenses, and then try six. That way, you get a sizeable cushion in place.

Did You Factor in Everything?

Common advice is to review your spending over several months as you create your budget. That lets you see where your money is going, which can make it easier to choose reasonable targets.

The problem is that only looking at a few months means you aren’t seeing irregular expenses that occur during the year. For example, you might overlook how much you usually spend on gifts for holidays and celebrations or miss routine expenses that don’t occur monthly, like vehicle maintenance.

If you don’t factor in everything and plan for it correctly, you’ll encounter months where your budget just won’t work. Instead, examine all of your spending during a year. Identify those irregular expenses, and break them down to see how much you need to set aside for them each paycheck or month to ensure they’re covered. Then, shuttle the cash to a designated savings account during the year, allowing you to tap that money when it’s time to cover those costs. That way, you’re planning for those expenses while keeping your monthly budget consistent.

Can You Actually Afford Your Lifestyle?

In some cases, the reason your budget isn’t working is your trying to maintain a lifestyle that you genuinely can’t afford. If your expenses and spending exceed your income, all you’ll do is rack up debt if you keep pushing toward a lifestyle you can’t support. In turn, the cost of your debt repayment usually rises, potentially to the point of becoming entirely unmanageable.

While it’s hard, it’s critical to get a grip on a situation like this quickly. Examine your spending across every account, including bank accounts and debt-related ones, like credit cards. Then, see if your outgoing money exceeds what you’re bringing in, and if it does, find ways to scale back. Otherwise, you’ll need to boost your income to cover the difference.

Are You Making the Right Adjustments?

Budgets aren’t a one-and-done document. Instead, they need to live, breathe, grow, and change. If you aren’t adjusting your budget regularly, what’s currently in place may not match your reality, as it’s based on old information, out-of-date costs, and other irregularities.

Make a plan to review your budget at least quarterly. See if the categories and allocations make sense for where you are today. If not, change your budget to fit what’s happening now, allowing it to grow and change with your circumstances and ensuring it’s easier to follow.

Do You Genuinely Want to Follow a Budget?

While creating a budget is an excellent first step when you want to get control of your financial life, writing one down won’t magically change how you act and spend. Instead, you need to actively commit to sticking with your budget. If you don’t, then the work you put into creating one won’t improve your situation.

Consider what you hoped to accomplish when you created your budget. Think about how adjusting your habits help you reach important goals and what it would feel like to achieve them. Use that as ongoing motivation, regularly reminding yourself of what’s most critical to you to keep yourself focused on the target.

 

Do you have any other tips that can help people answer the question, “Is your budget working for you?” Have you ever discovered that your budget wasn’t working and want to share details about how you got back on track? Share your thoughts in the comments below.

 

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