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How to improve your finances on a low income

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Improving your financial situation is hard for anybody. It can be even more difficult if you have less to work with.

This is an all too common problem in America, as 78% of full-time workers live paycheck to paycheck (Source). Even scarier, 34% don’t have any money saved whatsoever (Source).

That said, there are steps you can take and resources you can utilize to better your financial picture.

Budget

The first and one of the most important things you should do is, create a budget. This is a great way to figure out where you are at. Here are the steps:

  • Write down your expenses for the last few months (month-by-month breakdown)
  • Line items for expenses – housing, utilities, debt, food, transportation, bills, discretionary spending.
  • Write down your monthly income
  • Compare the two numbers to see exactly how much you have left over.

Here’s another way to look at it.

  • Write down your income
  • Write down your necessary expenses (housing, utilities, bills, transportation, food, debt)
  • If there is any left over, do you want to save it, pay down more debt, or have fun with it

If there isn’t any left, you need to figure out how to lower your expenses and make adjustments as needed.

Lower expenses

  • Move closer to work – this should reduce your transportation costs
  • Take public transportation – much less expensive than driving a car
  • Walk or ride a bike – if you live close to work, this could save you tons on commuting costs
  • Move to a less expensive place to live – if you work in a metropolitan area, housing probably isn’t super cheap, look for a cheaper place to live
  • Shop at discount stores
  • Shop at thrift stores
  • Use coupons – Or coupon sites like Coupons.com
  • Use apps – A great list by LifeHack
  • Find a side hustle – Again, solid list on BudgetsareSexy
  • Only buy necessities

Automate

Automating your finances is an important step, though not possible for everyone. If you have a lower income, you may be afraid that the money won’t be in your account for that automatic withdrawal.

Automate what you are comfortable with, or voraciously set reminders. Don’t forget to pay a bill. You can damage your credit score and incur late penalties.

Additionally, having a small transfer from checking to savings once a month can be a great way to save up for emergencies.

Take advantage of social programs

Open a credit card

There’s no denying it, your credit score is important. It determines your interest rate on loans, it can influence where you live, it can even play a factor when applying for a job.

Start small and start slowly. Open up a credit card. Look for one with no annual fee and a great rewards program. Make small, necessary purchases each month and pay them off right away.

Don’t carry a balance month-to-month. Doing this will inevitably cost you money via interest charges. And never miss a payment.

Start an emergency fund

If you don’t have one, set one up today. Having some sort of safety net available is vital. If you don’t have that, you’ll probably charge an emergency expense, which will cost you more money in the long run.

Start small and stay consistent. Contribute a little bit each month or each week to build up that emergency fund.

Get rid of debt

This will have a huge impact on your financial life. Once you are free from debt, you will have more money available for savings, fun money, or for improving your situation in other ways.

There are a few methods to help with debt repayment.

  • Debt avalanche – This method targets high-interest debt. You will pay the minimum to your other debt accounts and pay as much as you can towards your debt with the highest interest. Once that is paid off, you refocus that money towards the debt with the next highest interest
  • Debt snowball – This method targets low-balances. You pay the minimum on your other debts and pay as much as you can on the debt with the lowest balance. Once it’s paid off, you redirect that money towards the next lowest balance.
  • Balance transfer – If you have credit card debt and have a high-interest rate, it may be beneficial to transfer your balance to another card. Many cards have 0% interest, introductory offers on balance transfers.

This will also save you a lot of money on interest payments! Debt is very annoying, and getting rid of it will feel so liberating. Work towards this goal.

Go to the library

There are two ways the library can help you.

One, it’s filled with knowledge. If you want to get a different job, but don’t know much about your target industry, there are resources to help you. If you want to get promoted at your current company, and need to learn about different job roles and responsibilities, you can learn more.

Two, the more time you spend at the library, the less you have to spend at home. You can turn off the heat or air conditioning, and your lights while you are gone. This could drastically lower your utility bill.

Conclusion

One thing I forgot to mention, is the benefit of small rewards. When you are trying to better your financial situation, and are focusing everything on that goal, it can feel discouraging and you can quickly lose motivation.

If you meet a milestone, like paying off a debt account or you cut a balance in half, reward yourself.

Now, don’t go crazy, but a small reward for a job well done can keep you motivated.

You can improve your situation, but it has to be a priority. Do your best to improve a little bit each day. These improvements will compound over time and you’ll be amazed where you stand in a year or two.

If you’d like to learn more about improving your financial situation and for our disclosures, visit www.crgfinancialservices.com.

 

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How much do I need in retirement?

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Conventional advice tells you that, for retirement, you need $1 million to $1.5 million saved, or that you need 10 to 12 times your current annual salary.

For example, if you make $100,000 per year, you’ll need $1 million to $1.2 million saved for retirement.

Are these numbers and calculations good enough? Is there a better, more accurate way to figure out what you’ll need to save for retirement?

In this post, we’ll look into that and more.

Check out retirement calculators

There’s a huge number of them out there. I recommend trying a few different ones, that way you can compare and average out the numbers. They’ll ask you things like age, current savings, current income, future contributions, etc.

Here are a few of the better ones.

Using some or all of these calculators, you can probably get a good idea of where you’re at currently, how to improve, and where you’ll need to be at the end.

What are the factors?

There are a variety of different factors at play. You’ll have different expenses and different income levels, and some of those numbers won’t stay steady throughout retirement.

For example, a couple’s health care costs in retirement are said to be $275,000 (Source). However, not all of that will hit you in the first few years of retirement.

More than likely, you’ll have minimal costs in the beginning, and they’ll slowly increase as you age.

Where will you live?

This can be a huge variable in retirement. Its widely known that different areas of the country have a higher cost of living. San Francisco is more expensive than Lincoln, Nebraska.

Another important factor regarding your living situation is if you have a mortgage or not. No mortgage means fewer expenses, which is less going out of your pocket, and more that can be saved for the future.

Not having a mortgage can also give you some leverage. If you decide that your current home is too big and would like to downsize, you can use the proceeds from the sale of your previous home to, hopefully, buy your new one outright.

Living Expenses

We’ve talked briefly about health care expenses during retirement and we talked about housing. Without a doubt, these are the two largest expenses during retirement. There are a few more to consider, however.

  • Transportation – did you relocate? Or do you have family in other parts of the country? Transportation and lodging need to be taken into account when figuring out your expenses for retirement, especially if you’ll be traveling regularly.
  • Entertainment – you might be looking for something to fill your time. It could be filled with expensive hobbies or other activities. If you are looking for something to do, or are looking to start a hobby, be sure your budget will allow for it.
  • Remaining expenses – the leftover expenses are ones you deal with right now (food, clothes, utilities, bills, insurance, etc.)

A budget is just as important in retirement as it is now, if not more so. Keeping track of your expenses and your income is very essential to your finances during retirement.

You often hear people in retirement say they are on a fixed income. What that means is they have lost their ability to earn more money. What they have is it. If you are spending more than your savings and your income allows, you are setting yourself up for failure.

Income

Your income from retirement could come from a variety of places.

  • Social security – provided by the government. The normal advice regarding social security is that it shouldn’t replace more than 40% of your income. Meaning 60% should come from another place. Your monthly payout from Social Security does increase the longer you delay taking it, and the reverse is true if you take it early.
  • Pension – these are becoming less and less popular as time goes on. They were huge back in the day when workers would stay with one company until they retired, but because people switch jobs so often nowadays, employers don’t want to take the chance. If you have one, consider yourself lucky.
  • Retirement savings – more than likely, this is where the other significant portion of your income will come from. This is where having a financial advisor is beneficial because you have to use enough of your savings to afford your retirement, but not too much so you don’t run out of money. Tricky.
  • Other areas – there can be other sources of income during retirement. You could have some dividend or interest income from your investments, you could work part-time to stay active and earn a little extra, or you could possibly have a rental property or several.

If you want to learn more about where your income could come from in retirement, click here.

Wherever your income comes from, it’s important to coordinate effectively so you maximize your current income without jeopardizing your savings.

What will you do in retirement?

How you spend your time will also have a huge effect on your expenses.

If you plan on spending most of your time with your grandkids, retirement could be more affordable than if you planning on golfing a few times per week. Although it could quite possibly be much more expensive than golf, we all know how grandparents are with their grandchildren.

If money is tight and you are looking for things to fill your day, there are many free or low-cost activities available to you.

  • Volunteer – not only is this a free activity. You’ll feel useful, you’ll get to use your brain, and you’ll have a sense of community, all are shown to increase longevity.
  • Go to the park – take a walk, bring a book, or just interact with nature and the community.
  • Community center – not all municipalities have one, but go to your local community center or go to your municipality’s website. There you will find local events, most of which are free.
  • Discounts – most places offer senior discounts. If you aren’t offered one, make sure you ask for it. This really could save you a lot of money on activities, food, etc.

How long will you live

The most depressing point in this post, but one of the most important. Unfortunately (or fortunately, depending on how you look at it), no one knows how long we are going to live for.

One way to get a little indication, but not really, is your family history. If your grandparents or parents lived into their 80s, 90s, or 100s, the chances of you living a long life are a little higher.

On the flip side, if most of your relatives passed away in their 60s or 70s, your odds of living into your 80s and 90s are lower.

However, this really is no indication on how long you’ll live for. One of the most important things you can do for yourself is to live a healthy lifestyle. Take a walk once or twice per day, do something daily that will engage your mind, interact with friends and people in your community, and eat better.

The 4% Rule

You’ve probably heard this before too. Here’s what it is. Once you retire, you withdraw 4% of your retirement savings every year. This is considered a safe withdrawal rate, as the withdrawals would consist mostly of interest, dividends, and unrealized gains from your investments.

Let’s say you have $1 million saved for retirement. The 4% rule would allow you to withdraw $40,000 per year. All else staying the same, you have 25 years worth of withdrawals using this method. Be advised that no growth was factored into this calculation.

Conclusion

I suppose you’d like an answer to the question we proposed in the beginning. Here it is. It depends. It depends on your current and future expenses, it depends on where you’re income will come from, it depends on how much income you expect (outside of retirement savings), and it depends on how you live your life during retirement.

Most importantly, you need to work with a financial professional, ideally someone that specializes in retirement planning.

To learn more about retirement planning and for our disclosures, visit www.crgfinancialservices.com.

The Difference between an HSA and an FSA?

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Introduction

Nowadays, health insurance and the medical care you receive is expensive. There are some products available to help you with those expenses, however.

Enter in the HSA and the FSA. These two products are making it easier for consumers to save for and pay for medical care.

But how does each of them work? Which one is better?

What’s an HSA?

An HSA is a Health Savings Account. These types of accounts are available to people who have High-Deductible Health Plans (HDHP).

An HDHP is defined as a health insurance plan with a deductible of $1,350 for individuals and $2,700 for families, and an out-of-pocket maximum of $6,650 and $13,300, respectively.

An HSA is sometimes offered by the insurance company that provides the health insurance, but can often be applied for at many financial institutions.

An HSA has several key characteristics.

  • Contributions are made pre-tax or tax-deductible
  • Assets grow tax-free
  • Funds used on qualified medical expenses aren’t taxed upon withdrawal/use
  • The maximum contribution is $3,450 for individuals and $6,900 for families
    • Contribution max increases by $1,000 at age 55 or older
  • Can no longer contribute once 65 and on Medicare
  • Can invest contributions in mutual funds, stocks, and other investment products
  • Unused funds can be carried over year-after-year

Qualified medical expenses include the following.

  • Medical services
  • Emergency medical services
  • Medical equipment

You can find a complete list of eligible expenses here.

What’s an FSA?

An FSA is a Flexible Spending Account. Only employees of eligible employers qualify for an FSA.

There are several characteristics of an FSA.

  • Use it you lose it – Unused funds do not carry over from one year to the next
  • Contributions are made pre-tax via payroll deduction
  • Contribution maximum is $2,650. Your spouse can contribute an additional $2,650 too
  • Can be used on qualified expenses
    • Deductibles
    • Copayments
    • Medical services
    • Medical equipment
    • Prescription medication
    • Can’t be used on premiums
    • See the full list of qualified expenses here.
  • You may have two extra options available to you depending on your employer
    • You have an extra 2 ½ months to use up funds from the previous year
    • You can carry over $500 from the previous year

Which is right for you?

It very much depends on what is available to you. If you don’t have a High deductible health plan, then you are ineligible for an HSA. If your employer doesn’t offer an FSA, I’m sorry, that’s not available to you either.

If you have the option to pick between the two, most often I would lean towards the HSA and there are a few reasons why.

  • You are able to contribute more, which gives you more money to use on qualified expenses and could effectively lower your tax liability.
  • You can carry over unused contributions year-after-year.
  • This can be used as a retirement savings vehicle. Decades of contributions and compounding returns could give you a sizeable amount to use on medical expenses in retirement

You should not use an FSA if you are in good health. An FSA is more appropriate for someone with recurring and somewhat predictable medical expenses. If you are healthy, the odds of you contributing to an FSA and not using the funds, are pretty high.

Conclusion

Health insurance and medical care are expensive. Having an FSA or an HSA available to lessen the blow of those expenses is HUGE.

It is very important to know which one you can use, and which one would be the most beneficial to you.

Use this information to carefully select and effectively use what’s available to you.

To learn more about saving for medical expenses and for our disclosures go to www.crgfinancialservices.com.

 

Everything You Need to Know to Set Up Your Own Emergency Fund

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How many of you have had an unplanned expense recently? How much was it $500? $1,000?

Unplanned expenses are anything but, unplanned. Sure, we don’t know when they will occur, but they will occur.

Being able to “plan” for those expenses will save you a lot of grief, and will probably save you money.

If you don’t have a rainy day fund, how do you pay for an unexpected expense? Your credit card?

Having an emergency fund has many benefits, and having one set up can make a big difference in your life. But how do you save for emergencies? What characteristics does an emergency fund have? And when should you use it?

What is an emergency fund?

It’s exactly how it sounds. It’s an account, usually a savings account or a money market account, that you designate for emergencies.

You set this up to “plan” for unexpected expenses. For example, you set aside money for the future in case your car breaks down or your furnace stops working.

Why do you need one?

The emergency fund is designed to save your monthly budget. Unexpected expenses can be expensive and can do significant damage to one’s monthly budget.

If you have money set aside for a rainy day and something unexpected happens, you can use the money from your emergency fund to pay for that expense. Your monthly budget isn’t affected at all.

What are the characteristics of an emergency fund?

There aren’t really many characteristics of an emergency fund. Here’s essentially what you need:

  1. You need an account separate from your checking account.
  2. This separate account needs to be easily accessible and liquid.1
  3. You should have 3-6 months worth of expenses saved in this account.
  4. You can have too much.
    1. Having 3-6 months, or even a year is fine, but anything else should be saved and invested for your retirement. (Savings accounts earn next to nothing in interest)

What strategies can you implement to save for an emergency?

There are many things you can do to save money for your emergency fund.

  1. Create a budget
    1. List your income
    2. List your necessary expenses (housing, transportation, food, etc.)
    3. List your discretionary spending (fun money)(keep this to a minimum)
    4. Compare income to expenses and adjust as necessary
  2. Reduce your expenses
    1. Cut the cable, use subscriptions instead
    2. Eat out less, or don’t eat out at all
    3. Rent movies, TV shows, and books from the library
    4. Walk or ride your bike instead of driving (when applicable)
    5. Control your utilities (open windows during summer, layer up during winter)
  3. Automate your savings – Set up automatic transfers from your checking to your savings. Have it take place at the first of the month or every Monday. If this happens first, you can’t spend it away.

When should you use it?

You should use your emergency fund whenever you have an unexpected expense that could disrupt your monthly budget.

Here’s a small list of examples:

  • Car repairs
  • Home repairs
  • Emergency, short-notice flights
  • Life expenses post-job loss

When shouldn’t you use it?

Your emergency fund shouldn’t be used on large once per year costs like:

  • Property taxes
  • Owed taxes
  • Holiday spending

Conclusion

Unplanned expenses can wreak a person’s monthly budget. It helps and makes a dramatic difference to have money set aside for a rainy day.

Besides the financial aspect of having an emergency fund, you also have a psychological benefit. Peace of mind knowing that you have money available if a large expense were to come into your life.

For more information about emergency funds and for our disclosures go to www.crgfinancialservices.com

If reading this blog post makes you want to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Freedom Debt Relief Reviews Dealing With Debt When You Are Unemployed

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Losing your job can be defeating. But bills don’t care. They just keep coming. How do you deal with mounting debt when your income is no longer there?

Freedom Debt Relief shares several tips in this article to help you bridge the gap until you land your next job.

Don’t Raid Your Emergency Fund

It can be tempting to drain your emergency fund or even retirement in an effort to pay off some debt and cease at least a few monthly payments. However, this isn’t the best option. It will only lead to accumulating more debt, probably on your credit cards at a high rate of interest.

Make only the minimum payment on any debt. This will help stretch your existing dollars as far as they can go. Make use of your existing checking balance and any severance money.

Negotiate With Creditors

Immediately let creditors know of your current employment situation. Try to get your interest rates lowered.

Some lenders will not do this while you might have luck getting at least one of those terms. Freedom Debt Relief mentions that not trying isn’t an option. With no money coming in, you need to try every tactic possible to keep as much money from going out as you can.

Rework Your Budget

The budget that worked while you were earning money isn’t the same budget that will work while you’re unemployed. Things are about to get extremely tight.

Freedom Debt Relief reviews says you have to start shifting into a completely different mindset. One of survival. When you’re in survival mode, you aren’t thinking about luxury items, take out pizza, leaving lights on or buying lotto tickets.

Instead, think food, shelter and utilities.  Freedom Debt Relief reviews mentions that it’s only the necessities that should be consuming any money. This also includes minimum payments to creditors, including your car note. At this point, your budget is very predictable and should be far less than when you were employed. If not, your budget needs lots more work.

Financing Options

Finding some way to keep up payments when you have no income can seem like mission impossible. It can be tempting to sell out and try to get a high rate payday loan. Freedom Debt Relief reviews says don’t do it. You’ll send yourself so far backwards, wishing you could take back your decision. But it will be too late.

Instead, turn to family and friends if you must borrow. Add interest to any borrowed amount to let them know you are serious about paying back the loan. Then continue your job search every day.

Conclusion

Freedom Debt Relief is on your side. Having monthly notes coming in without any income is definitely scary. We are here to help you find a way to navigate these troublesome waters.

 

Are Free Google Play Redeem Codes A Scam?

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Getting free play codes and gift cards in exchange for answering a few questions may sound like an easy way to get some free goods, but don’t buy into it. In fact, be very careful. Why? Because not only are code generators a scam, they are trying to infect your system with malicious malware and steal your identity. Google Play redeem codes are no different.

Many sites offer free Google Play codes in exchange for answering a few questions and offering your opinion on their marketing efforts. It only takes a few minutes of your time and, since you’re offering an opinion on whether or not their marketing efforts are hitting their mark, it makes sense that you’d get paid. But instead of getting paid in dollars, these survey sites are offering Google Play codes as payment.

They claim that you can use the free redeem codes for music, games, and videos, but in reality, the codes don’t actually work and you’ve wasted your time with the surveys. In addition, the chances that your computer is now open to an attack or your identity is at risk is very high.

Gift card and code generators are developed by very experienced hackers. They con you into doing some kind of task, like answering surveys, and offer you free Google Play redeem codes in exchange for your time. But guess what . . . they are using these surveys to gather enough personal information to steal your identity. They may also be planting a virus in your computer with each click of the mouse you make. And while these sites look like the real deal, they are really fake sites, used only to gather your information.

Google Play redeem code generating sites, for the most part, are a scam so avoid them. Their only goal is to collect your information. While you’re busy taking a survey, the hackers are stealing your email and any other information you provide. They will give you a free Google Play redeem code in in exchange for your information, but it won’t work. Do not trust any site that offers free Google Play redeem codes.

But there is one option that is safe and offers real redeem codes in exchange for your opinions.

TokenFire is an advertising app that offers rewards for your opinions. You can earn “tokens” for things like watching videos or playing games on their app. Then you can exchange your “tokens” for Google Play redeem codes or other gift cards. There are various ways to earn “tokens” and each task offers a different number of tokens depending on how much of your time it will take and the difficulty of the task. Once earned, your “tokens” are easily redeemable for Google Play codes. You can even exchange them for Amazon gift cards if you’d like.

Free Google Play redeem codes are a scam, as are most other free redeem code offers you may find so stay away from them. Only use legitimate sites to earn rewards, it will help prevent you from being hacked.

Zero Sum Budgeting

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Businesses and individuals benefit from careful money management and financial responsibility. In fact, it is virtually impossible to care for your needs and wants without budgeting and understanding exactly where your money is going. Some companies may get by with a basic idea of what funds are coming in and what expenses are going out, but individuals who are strapped for cash — even living paycheck to paycheck — may completely forgo budgeting. This is a mistake.

Zero-sum budgeting is popular for a reason. Even with just a pen and pad of paper, people can take steps toward controlling their finances. Unlike an operating budget or a cash flow budget, a zero-sum budget takes a micro look at every penny that goes in and out of your checking account. This approach is thorough, and it’s the best way to get a grip on your savings while allowing you to spend on the things you and maintaining control over the areas needed to ensure a comfortable life.

The benefits of zero-sum budgeting are multifaceted and include managing one’s debt; eliminating waste; precisely balancing one’s budget; avoiding overspending; and accounting for factors such as savings, investments, food, and entertainment. This means your budget will account for everything that will affect your bank statement, from annual expenses to monthly bills and daily costs. There are many other benefits to this approach, and it can be done starting today. Take this quiz to test your knowledge of this budgeting technique and learn what else you need to do to stay on top of your finances.

How to Plan a Family Budget Just Like the Pros

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Your family budget is likely to be one of the most important things that are on your mind each time you open another bill.  The internet is littered with so many articles on how to plan a budget or living on a budget.  Besides being able to get into the mindset that you always have enough money, or that you need to work more, there are ways that you can plan a budget like a pro and we are going to outline a few of those right now.

Most Important – Note All Income Sources

This might be the most obvious thing, but at the end of the day, there is no way that you can budget without knowing where all the money is coming from.  Take a minute and write down all of the ways that you and your family make money each month.  Of course, this could be as easy as noting your job, but some people do odd jobs on the side or have other passive income they should be considering as well.  Include everything, like tips, alimony, pension, social security, and even child support.  Do not forget anything and if you need someone to double check, that is highly recommended.

Get Those Expenses Figured Out

When you take a minute to look at what you spend each month, there will be the big ones that stick out to you.  Mortgage, groceries, and car insurance are a couple that immediately comes to mind.  There are always expenses that fall through the cracks and those should be noted as well.  Remember the fixed expenses, as well as the variable ones like your electric bill and groceries, which change each month but are still expenses.  Again, make sure to double check your list.  Leaving anything out, especially something major can impact the end result of your family budget.  At the end of the exercise you might feel like you could go earn an online masters degree in accounting, but if that is what it takes to get your budget under control, so be it.  Earning an MSA degree online is easier than ever before.

Adjustments Will Be Needed

When you sat down to pretend that you are an accounting wizard with your finances, you knew that in the end you were going have to make some changes.  Once you have all of the income and expenses figured out, it is time to see where you can make these adjustments.  Things like your cell phone plan, cable bill, or even going out to eat each month can all be adjusted to save you a little more money.  Take your time and plan accordingly.  Some adjustments can be made one month and changed, or swapped with different adjustments the next month.

Spending less money is never much fun, but when you are trying to get your family budget under control, fun is not always part of the equation.  Put small limits in place and see how planning the budget and sticking to it can really make you feel like a pro!

Important Items Your Budget Needs

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Hopefully, you already have a budget and you’re working with it every month. But you may find that you’re coming up a little short. That may be due to that fact that you’re leaving off some important items that you didn’t consider when you created that budget.  And if you have too many unplanned expenses, your budget could be going sideways quickly.

Usually, these items aren’t left off intentional, they just seem so minor that the get overlooked. Here are a few things that you might need to add to your budget to make it work:

Subscriptions

If you love Amazon and shop there frequently, you probably have a Prime membership. And since you only pay your membership fee once a year, you probably didn’t add it into your budget. But you need to include that $99 fee along with any other services and subscriptions you may only pay once a year like magazines, Spotify, or Netflix. And of course, don’t forget your monthly memberships like the gym and monthly subscription boxes. If it’s something you only pay once a year, figure out the monthly cost by dividing the total by 12 then set that amount aside each month starting now to cover next year’s expense.

Special Occasions

Birthdays only come around once a year as well so you may not be including those in your budget. But if you have more than one gift to buy in a month, it can really spread you thin that month.  Go back and take a look at what you spent on gifts last year, who you bought for and an average of what you spent. Then, divide the total by 12 to get an amount to put in your monthly budget. Do this for holiday shopping as well so you don’t end up with a huge credit card bill in January.

Car

Your monthly car payment is most likely in your budget, but did you remember to add in gas and tolls?  How about oil changes, new tires, safety inspections, and any other regular maintenance costs?  These items are easy to forget because they don’t come up that often. But they do add up so add a line for routine car maintenance to your monthly budget.

New Clothes

If you are a parent, you know that your kids grow quickly and always seem to need new clothes so you probably have a budget line for them. But what about you? If you don’t shop for yourself too often and like to shop sales, you’ve probably neglected to add these costs to your budget. In addition to new clothes, you’ll need to buy necessities like undergarments and socks.  And don’t forget new shoes!

Fun

You work hard for your money so you deserve to treat yourself once in a while. Maybe it’s dinner at your favorite restaurant or tools for a new DIY project.  Add “Fun Money” to your budget and treat yourself to something you enjoy.

Pets

Your fur babies have expenses too. They need food, toys, treats, and annual vet visits.  If you go on vacation, you might have to hire a pet sitter or board your pets. Add a “Pet” line to your budget then estimate your yearly costs so you can break them down into a monthly budget line item. And keep track of your actual expenses so you know what to budget for next year.

5 Great Ways to Make Your Tax Refund Work for You

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Tax season is wrapping up, and if you’re expecting a nice refund check to hit your bank account any day, you’ll need a plan for how to use it so you don’t waste it away. If the thought of that extra money coming your way is already burning a hole in your pocket, you may want to think about using it in a way that will be financially beneficial to you instead.

 

Let your money work for you. What does your current financial situation look like?  Can your refund check offer you a little more security? Here are some basic financial priorities that you may want to consider using your refund for.

Pay Off Those High-Interest Loans and Credit Cards

If you’re trying to work yourself out of debt, your tax refund can help you reduce or eliminate your high-interest debt that’s costing you more. Use your refund to pay off any loans or credit cards with a low balance.  Or, consolidate high-interest accounts and put your refund towards any transfer or early payoff fees to help eliminate paying more in interest.  Take a look at your high-interest student loans, car loans, or credit card debt and determine the best way to pay these down or pay them off completely.

Start An Emergency Fund

If you don’t already have a healthy emergency fund, now is the time to start.  If you do have one, but the balance isn’t as high as you’d like, your refund check can give it a healthy boost.  If you don’t have an emergency fund, you’re just one unexpected expense away from getting in debt. You should have at least six to eight months’ worth of your salary set aside. Saving that much can take months if you’re only able to set aside a little bit each month, but your refund can help you to quickly build that fund and provide some peace of mind.

Refinance or Make Improvements

If a lower interest rate is available it will help lower your monthly mortgage payment, but refinancing has closing costs and other fees associated with it.  Using your refund to refinance your home will save you money each month on your mortgage; money that can be better spent on something else.

If you have a good mortgage rate already, take a look at your house. Does your air conditioning system need to be replaced? Maybe energy-efficient appliances will help you pay less in utility bills. Making improvements around your home can significantly increase its value and make it more comfortable to live in.

Buy Life Insurance

When you’re young, you tend to feel pretty confident that there’s always going to be time to take care of the ones you love.  Life insurance is usually overlooked. But if you’re married and you have a family or you’re planning one, a term life policy will offer them protection should the unthinkable happen to you. For a few hundred dollars, your tax refund can make sure your family is protected.

Spend It On Something You Need

Is your car in need of repair? Have you been putting off a visit to the doctor’s office? Let your refund help you get these essentials taken care of.

Why spend all of your refund on things you don’t really need when you can use it to save you money and give you peace of mind?