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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 check hvac contract, 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.

If your vehicle is deemed a total loss after an accident, understanding the legal implications is just as crucial as determining its value. For detailed insights into handling auto accidents and related legal matters, visit Consumer Shield’s guide on Auto Accidents to ensure you are fully informed and prepared.

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.

 

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 free coupons in newspapers or online 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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Top 7 Financial Resolutions For 2023

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Financial Resolution for 2023

The start of the year is a classic time for creating new goals, giving you direction for the months to come. With inflation and a possible recession on the horizon, many people are focused on their finances. Fortunately, there are plenty of suitable objectives that can help you get your money in order. Here are the top seven financial resolutions for 2023.

1. Build an Emergency Fund

One of the most critical steps you can take to secure your financial well-being is building an emergency fund. By having some cash set aside for the unexpected, you give yourself a safety net that doesn’t rely on debt.

If you’re just starting out, set your initial savings target at $1,000 or the total cost of your vehicle and homeowner’s or renter’s insurance deductibles, whichever is higher. If you already have that set aside, work to increase your emergency fund to cover three months of living expenses, giving you a cushion in case of sudden unemployment.

Once you have three months of living expenses, six months of expenses is the next target you should go after. Then, work your way up to a year. That way, you’re covered against emergencies big and small.

2. Create a Workable Budget

Having a functional budget gives you a framework for your financial life. The issue is that many people are overly optimistic about how they’ll handle their money. As a result, it’s smart to focus on being realistic.

The easiest way to create a workable budget is to start by writing down information about your debts and recurring expenses, such as utilities and insurance. Next, review your spending over the last three months to see how much you commit to groceries, fuel for vehicles, and other cost areas that typically fluctuate.

By seeing where your money is going now, you can identify areas for adjustments. Start with minor tweaks, making it easier to adapt to stricter spending limits and focus on other financial goals, like saving. Then, if that first month is a success, see if other minor adjustments are viable. That strategy lets you take a slow and steady approach, making it easier to stay realistic while making positive changes.

3. Capture the Entire Employer Match

If you’re employed at a company that offers an employer match on retirement contributions, make sure you’re contributing enough to qualify for the full match offered. The employer match can significantly impact your financial future by giving you more funds for retirement. Plus, it’s essentially free money, so it’s an employee benefit that’s worth maximizing.

Just be aware of any vesting rules in place at your company. Usually, you can only keep the employer match if you remain employed at the organization for a minimum time period. By knowing how long it takes to become vested, you can make sure that you’re fully capturing this financial benefit before leaving for opportunities elsewhere.

4. Pay Down One High-Interest Debt

If you’re carrying any high-interest debt, choose one account and make it your focus for 2023. It’s ideal if you can aim to pay it off during the year. However, if the balance is high, simply work on paying it down as much as possible.

Begin by ensuring that you’re making the minimum payment on it and every other account as required, as well as handling your recurring expenses. Then, send any extra cash to the chosen debt that you can without completely derailing the rest of your budget. Every little bit more helps chip away at the principal faster. As a result, you’ll pay less in interest over time.

If the debt you’re focused on is a credit card or other revolving account where the minimum payment shrinks as the total owed declines, keep your monthly payment the same, using the current payment as the guideline. That creates consistency in your budget and helps you make progress faster. Additionally, don’t add to that debt along the way, as that undoes your work.

5. Adopt the 72-Hour Rule

Using the 72-hour rule can curb unnecessary spending significantly. Essentially, if you see a non-essential item you’d like to purchase, make yourself wait at least 72 hours before actually buying. By using this strategy, you’re delaying splurges that are potentially motivated purely by the emotion of seeing the item in the moment. When you revisit the idea of buying the product in 72 hours, that initial feeling is typically gone, making you less likely to purchase anything you don’t actually need.

If you still feel strongly about purchasing the product after 72 hours, take a moment to reflect on why. By considering your motivations, you can understand more about what’s driving you to get the item. At that point, if you have a legitimate reason and the money in your budget, you can potentially move forward. However, if you still have doubts, wait another 72 hours to see if the picture becomes clearer.

6. Try a No-Spend Challenge

No-spend challenges involve not spending any money on anything aside from bills and certain living expenses you can’t cover in advance – such as refueling a vehicle or fresh foods that won’t last for the entire time – for a specific period. Many people try no-spend February since it’s the shortest month of the year. However, if that idea is intimidating, try a no-spend two weeks as a starting point.

Before your no-spend period, you have to make sure that you plan your groceries for that entire period. Use a frugal approach by taking advantage of bulk items, sales, freezer meals, and similar strategies that can reduce your costs and make the experience less stressful. Just make sure you don’t go on a spending spree to compensate for a no-spend period before or after it happens, as that doesn’t positively impact you financially.

After the no-spend period, you should have some extra cash available. Take that and put it toward a specific goal, such as paying down debt or beefing up your emergency fund. That way, it has a positive impact on your financial picture.

7. Start Investing Outside of Retirement

While many people have company-sponsored retirement plans, investing outside of them can make it easier to ensure your long-term financial security. Whether you have access to a 401(k) or similar program at work, consider opening an IRA – either traditional or Roth, depending on your financial situation – to shore up your retirement savings. If you have children, you may want to explore 529 plans to put money aside for their college education.

However, even if you only have general saving goals, investing is still worth considering. You can open an account at a brokerage and start putting money into the market, potentially letting you capture better gains than if you put the cash into a savings account. Just make sure that you diversify. In many cases, going with index funds or ETFs makes that easy. Do a little research to find funds with solid track records and align with your risk tolerance, creating a personalized portfolio that meets your needs.

Did you decide to have a financial resolution for 2023? If so, what did you pick and why? Do you think resolutions are helpful or not? Why do you feel that way? Share your thoughts in the comments below.

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