Practically every financial adviser, column, article, or blog will tell you that the key to budgeting and spending wisely is to track your spending. It is impossible to know where to cut back if you are not tracking where your money is going. Keeping track of every purchase and categorizing it, however, can be very tedious and it can seem so overwhelming that you just don’t know where to begin. Here are some ideas to help get you started:
- If you like excel and have the time, you can set up a simple spreadsheet to enter each transaction and assign a category. There are also lots of different templates available that you can download. The budgeting app Mint offers a free template as well as Microsoft just to name a couple.
- You can purchase budgeting software such as Quicken.
- You can use a free app such as DollarBird, Fudget, GoodBudget, Mint, or Mvelopes.
- Keep it simple especially when you are just starting out. For example, if you buy food, cleaning supplies, hygiene products, and pet supplies all from one store at the same time, track your spending at each store instead of calculating each separate category from a receipt. As you get a handle on your finances and really want to analyze and trim your spending, you may need to calculate the exact amount for each category but doing so from the start can be too overwhelming.
- Finally, get started! Don’t put it off until next month or the next paycheck. The hardest part of any lifestyle change or project is getting started. So, even if it seems like too much work, start tracking your spending today and you may be surprised at how easy it can be and how much you learn about your spending habits!
A new trend in shopping is buying everything from diapers to TV service through subscriptions. Setting up subscriptions is convenient, and it allows you to forget about having to pay for services. Sometimes you are even able to save money by taking advantage of a discounted rate when you allow the company to automatically charge your credit card or withdraw funds from your bank account. However, many people forget that they signed up for a subscription service. Unless they are meticulously reviewing their bank statement each month, they might not notice the $5 or $20 charge and are wasting money on a service they don’t even use. Luckily, there are apps that you can use that review your bank statements for you and help you save money by cancelling subscriptions that you are not using. Truebill, Bobby and Trim are all apps that help you manage your subscriptions.
Beware that there may be a charge to cancel some subscriptions and the app may suggest new subscriptions based on your current interests (ensuring that you keep using their app). Thus, it is best to review your bank statement carefully each month to check for fraud and unnecessary subscription charges. But if you need some help getting started, take advantage of a free app to help save you money!
We all would like to make more money, but before asking your boss for a raise, you should make sure you deserve one. It is intimidating to ask for more money and you can risk losing your job if you are too aggressive when you ask. Thus, it is important that you prepare a few items before asking to meet with your boss. First, you should research to see how your current pay relates to the current local job market. O*Net Online is a helpful resource for conducting a job analysis. Second, you should review your job performance and find talking points to support your request for a raise. For example, have you received positive feedback from superiors, coworkers, and clients about your job performance? Have you completed tasks well and on time? Have you gone above and beyond your specified job duties to help the company? Have you taken on any new responsibilities?
Once you have prepared your talking points, practice the conversation and think of any follow up questions your boss may have. It may be helpful to ask a significant other or friend to practice with you and ask them for feedback. Be sure to focus on why you deserve the raise and not why you need it. Also, be prepared to hear no and remember to be polite.
Creating and following a budget can be tiresome and overwhelming. If you are unsure of where to begin or need to re-start your budget, there are plenty of online resources that can help. Practical Money Skills is a site that provides “financial literacy for everyone.” They have tools for you to understand the basics of budgeting, assess your financial situation and create a budget tailored to you. You Need a Budget offers free online and webinar courses to help you create and stick to your budget. They also have a mobile and desktop app that you can use to create and maintain your budget; however, they do charge a small monthly fee to use their app.
There are several other budgeting apps available for free. The Balance provides a review of 8 different budgeting apps based on different needs (to stop overspending, create a budget with a partner, etc.). With so many different tools available, there is no reason to put off creating your budget any longer!
Having insurance protects us from the possibility of having to pay a considerable sum in case of an accident and/or can help provide for our dependents in case of our death. Thus, it is very important to have insurance and to make sure you have purchased insurance from a reliable company. It is very easy to get confused and overwhelmed when researching what company and which policy you should buy. Luckily, there are some agencies that can help. The National Association of Insurance Commissioners keeps a record of complaints against life insurance companies, provides consumer alerts, and other resources including online education about insurance at http://www.insureuonline.org/ . There are also several agencies that provide insurance company financial ratings such as A.M. Best Co, Fitch Ratings, Moody’s Investor Service, Standard & Poors and Weiss Ratings. You will also want to take into account a company’s quality of customer service and how quickly they respond to claims by talking with the agents at the company and current (or past) customers. Be sure to take your time and research the company thoroughly so that you can choose the right company and obtain coverage in case of an emergency.
One advantage to owning your home is that you can take out a loan or line of credit against it if you have built up enough equity (i.e., you owe less than what the house is worth). However, you should consider all the pros and cons of home equity loans and lines of credit before deciding to get one. Some advantages of home equity loans and lines of credit are: they typically have lower interest rates and longer repayment times than traditional loans, they are easier to obtain if you have flawed credit, and there are no restrictions on what you use the money for.
A disadvantage is that your house serves as collateral for the loan or line of credit–that is why it has better terms than a traditional loan. If you default on your payments, you could lose your house. Additionally, if the market value of your house declines, you could end up owing more on your house than what it is worth. For these reasons, you may only want to obtain a home equity loan or line of credit to do home improvements which increase the value of your home. If you decide to get a home equity loan, be sure to borrow only what you need and be sure that you can afford the monthly payments so you won’t default on the loan and potentially lose your house.
When you get ready to file your taxes this year, it is important to research the best way to do so. If you feel comfortable completing the tax forms yourself, the IRS has a free file program for anyone whose income is $66,000 or less. There are also different companies such as H&R Block, Turbotax, TaxAct, Credit Karma, etc. that offer free e-filing for simple returns or you can pay to use their software for more complicated returns.
If you pay to use a tax company’s software, be aware of upselling and hidden fees. Most companies will offer to file your simple return for free but try to sell you extra services such as audit protection. Depending on your situation, you may want the audit protection but just be sure to read the fine print to know exactly what type of protection you are receiving when purchasing that service. Additionally, these companies will offer to let you pay for services using your refund money, but this usually comes with a hefty service fee. The seemingly “free” tax refund advances can also come with hidden fees such as prepaid card fees, fees for tax preparation, etc. Although these advances are preferable to the once popular high interest tax refund loans, you should be careful when deciding whether to sign up for one.
If you choose to have a professional tax preparer complete your tax forms, be sure to choose someone you trust. Take the time to review the tax preparer’s work, ensure they are licensed, and know how the forms were completed to make sure you are receiving all applicable deductions and credits.