Budgeting For Investments

When people think about budgeting, many people think of doing it to save for a car or maybe even a holiday. Not many think to do it for the purposes of investing in a stock portfolio or the more obvious option of an investment property. While it's often the last thing people want to do with their money, should they not have a great deal of disposable income, it should really be the first!

Investing is a financial decision that many people don?t make until they have superfluous money sitting in the bank however, this time may never come for many people. It's important to maximise the money you have and to do that you should seriously consider investing. The problem is that not many people have spare cash lying around to put into investments, so here are some easy ways to save for your investment portfolio.

Rent

While you may dream of owning your own home, if you are renting in an expensive area, that dream may take a lot longer to come true. While certain areas have a great lifestyle appeal, it's important to weigh up whether that lifestyle is really worth the money you are spending each month. Consider this; If you were to move to an apartment or house where you paid 25% less in rent each month but in a less popular suburb or area, would that be an option? Alternatively look at it from a different angle; If you were to have 25% more in your bank account each month without a salary increase and the money could grow, should it be properly invested, would that be an option?

Entertainment

Are your weekend pastimes partying, shopping or even playing an expensive sport? While it's important to relax and enjoy yourself, it's also essential that you are not spending a large portion of your income on activities you can really live without. Look at one activity you do on a regular basis ? then cut it out. How much money will this save you over a year? $100, $1,000, or even $10,000 could be sitting in your account at the end of the year, ready for investment with one simple sacrifice.

Food

Most people love to dine out on a regular basis ? it's easy, there's no mess at the end of the meal to clean up and it usually tastes better than anything you can usually whip up. And while all of those points are good reasons to dine out, the main issue that you probably won?t realise until you add it up is the cost! Commit to only eating out once a week, or better yet once a fortnight and you'll find that that bank account balance keeps growing and growing.

Investments do require a decent amount of money and need continual attention from either a broker or yourself to be profitable. It's easy to see that by making some very minimal sacrifices in the short term, your bank account, investment portfolio and lifestyle will benefit in the long run.

Read More

The Benefits Of Envelope Method Budgeting

While it has an unusual name, envelope method budgeting is perhaps one of the simplest ways to get yourself into the habit of following a budget.

The first stage is to work out how much you have to keep aside each pay period for all your different bills (pretty much like any other budget). For example, if your internet bill was $40 a month and you got paid weekly, you would have to put aside $10 from each pay to cover that bill. Once you've figured out how much you are setting aside, you then get an envelope for each major bill or expense category and write the name of the expense on the front. When you get paid, you simply put the amount you worked out per pay period into each envelope, and then set the envelopes aside.

You can have as many or as few different envelopes as you want. At the most basic you might create one for food, one for "fun", one for your various utilities, one for irregular expenses (like car servicing) and one for unexpected expenses. Or you might have separate envelopes for every bill you get - phone, electricity, gas, internet, etc. How many envelopes you have is up to you. The important thing is that you put the money in the envelope, and then put the envelope aside.

The only time you access the money in the envelope is when you want to pay that bill. For example, when going grocery shopping you would take the food money envelope with you, and pay for the groceries with that money (and only that money). It would be up to you to keep track of your total while shopping in the store, and make sure that you don't try to spend more money than you have with you. While this may seem limiting at first, after a short while having that fixed limit in place should feel comforting.

The benefits of envelope method budgeting are simple. Because you only have the money in the envelope to spend, it is extremely difficult to spend extra money and break your budget. True, you can choose to just take money out of another envelope to buy extras that you haven't budgeted for. But this makes it an obvious physical act when you want to break the budget - you can no longer just hand over your plastic to spend you money, you have to go and actually get the money out of an envelope.

A second benefit is that you always know exactly how much you have to spend. Instead of having to think to yourself "do I have $10 or $20 left for food this week?" every time you need to buy groceries, you can simply see the amount left by looking in the envelope.

Of course, there is one important note about this method (besides remembering to do it!) As it will involve you having cash sitting around your home, be sure to keep the money in a hidden and secure location (and no, the freezer is neither hidden nor secure). The last thing you want is for someone to break in and steal your money!

Read More

Making A Family Budget

Whether you've just started a family and are new to the lifestyle, or you have several kids as old as high school age, it's likely your finances could use some help. If you are in debt, aside from a mortgage, you need to make some changes. If you have no retirement plan because you think you can't afford it, you need some help, too.

Debt comes in all shapes and sizes. You could have car loans, small business loans, loans from family, credit card debt, or money owed from any type of financing. You need to find a way to either increase your income, decrease your spending, or do a combination of the two in order to have extra income to pay off your debt. Once you've paid off your debt, you can start funneling more of your excess income into a retirement account.

By making a family budget, you can adjust your spending to start saving. I call it a family budget because your whole family needs to cooperate to make it work. You and your spouse need to be on the same page. If you make a budget and your spouse continues to spend more than you planned, your hard work will go to waste. Likewise, if you continue handing cash to your kids whenever they ask, not only will you be wasting more money, but your kids will never learn to work for their money. Make them get a job and start earning their money.

It's important that you pay off your debt as soon as possible because your debt will keep growing and earning interest. You can and should open up a 401K or 403B, if you work for the government or nonprofit, and start contributing to it. I recommend contributing a small amount now in order to take advantage of time and compounding, and then increase your contribution substantially once you've paid off your debt.

If you feel like you don't spend a lot but are still living paycheck to paycheck, you need to take a serious look at how you're living. You don't have to be going into debt and be a shopaholic to be living above your means. It's the small things that can save you money. Cut back on your television subscription, downgrade your car to get rid of car payments, buy store brands, or skip your morning coffee. Maybe it's your residence that is doing you in? Buy a smaller house or a cheaper apartment until you get your finances under control.

Read More

Five Simple Ways To Spend Less

Budgeting and living within your means is often perceived as a difficult, daunting task. In reality, there are plenty of simple ways to trim your budget all they require is a little time and effort.

1. Pack your lunch.
Instead of spending upwards of $40 - $50 a week eating out, take your lunch with you to work. Even if you go out for relatively cheap meals, the total cost (plus tax and tip) adds up quickly. A great way to do this is to cook double or triple the amount you'll need for dinner the night before, and set lunch portions aside ahead of time.

Another way you can simplify the entire process is to cook a large amount of food over the weekend say 8-10 chicken breasts, a big lasagna or pasta dish, for example and portion it out for lunches and dinners throughout the week. If you're pressed for time and don't have anything prepared, head to your local supermarket and pick up a few microwavable meals and other healthy items like single-serving-size frozen vegetables or fruit packs. This option is a bit pricier than cooking from scratch, but still much cheaper than eating out every day.

2. Hand-wash your car.
Skip the $5 - $10 drive through car wash and soap up your car yourself. It may take a bit longer than the drive through option, or it may not, depending on how far you have to drive to get to the car wash in the first place. Regardless, washing your car yourself can save you $30-plus per month. If that doesn't sound like much, think of it this way: it adds up to about $150 per year.

3. Take a walk.
Next time you need to run to the corner store, to drop off your child at soccer practice a few blocks away, or to pick up a couple of items at your neighborhood grocer, skip the car and make the short trip on foot. You'll conserve gasoline which is good for both your budget and the environment and you'll be doing something healthy for yourself. It's a win-win situation.

4. Enjoy the outdoors.
Next time you're looking for a fun family activity, skip the movie theater or other venue in favor of the great outdoors. Most cities and towns have a wealth of public parks, complete with jungle gym equipment, swings, shade trees and sunshine everything you need for a fun afternoon of quality time with your family. And it's free!

5. Check out consignment.
Looking for a new top, bag, or shoes? Head to your local consignment shop instead of the mall odds are you'll find great deals on quality items (though you may have to do a little digging). Many cities have upscale consignment shops, too, offering designer items at a steal of a price. And next time you clean out your closet, make a pile of your best give-away items and take them to the consignment shop instead of Goodwill. You may just pad your wallet with some extra cash. If the items don't sell, you can opt to pick them up after a set period of time (usually about three months) or have them donated for you.

Read More

5 Ways To Cut Costs Around The Home

The world is in an economic crunch and more people than ever are looking for ways to save money. Every penny matters and yet many people do not realize that within their own home there are probably a number of things they can do today to save money. Cutting costs does not mean giving up on the things you love, want, and need. It is important to look at the way you are living and then find ways to significantly reduce your investment. Chances are good some of these items below can be done right now and add money to your pockets.

#1: Appliance Management

One of the biggest draws of money within the home is the use of appliances. Do you hear the television in the background? Do you have fans running or perhaps even have the toaster plugged in? Most people realize the importance of turning off lights in the home, but what about unplugging. You may not realize it but when appliances and other devices are left plugged into an electrical socket, they draw electricity. Therefore, by not only turning them off, but also unplugging them, you will be saving money.

How much can you save from just managing your appliances better? You could decrease your electric bill by as much as 25 percent in some instances. Big culprits are televisions, computers, and larger counter top appliances.

#2: Adjust The Temperature

Another big way to save money is to adjust the thermostat in your home. Did you know that you could reduce your heating and cool bills by as much as 20 percent by simply decreasing your heating temperature by two notches and by increasing your air conditioning temperature by two points? Do you feel the difference between 66 degrees and 68 in the summer, sometimes, but not by much. In the winter, what would the different between 64 degrees and 66? It may mean wearing an extra layer of clothing, but for a savings of 20 percent, it may be worthwhile.

#3: Know The Grocery Bill

While other expenses like your mortgage and utilities may be difficult to reduce, you may find it far easier to reduce your grocery bill. Perhaps you think that you are already doing so? Here are a few ways to reduce this large cost.

* Shop the outside aisles of the grocery store instead of the center. You get more healthy foods and less prepackaged products that cost far more.

* Consider store brands. The quality of store brands has risen in recent years. You may not notice the taste difference but you will notice the difference in the lower bill.

* Do shop the sales, but that is it. When something is on sale, this loss leader is a good bet. Stock up. But, avoid impulse buying during these trips. It could cost you. Moreover, use coupons on top of sale prices to pay half the price or less for the item.

#4: Bundle Services

Sometimes you can save a good deal of money by simply bundling your services. For example, your local cable provider may be running a special that allows you to get your Internet, cable service, and phone service for a fraction of the cost you are currently paying. Find out what special offers are available. Also, talk to your insurance agent and ask for discounts. By having multiple products through one provider, you may save considerably.

#5: Track Spending

Regardless of if the purchase is for the home or if it is for personal use, you should track what you are spending. While most people hate this word "budget" it is one of the best ways to know where your money is going and to help to reduce costs.

Go ahead and try out some of these methods. Chances are good you do not realize just how much money is going out the window in these areas.

Read More

How to Save Big When Buying Goods

No matter what walk of life you come from unless you are extremely rich you will have undoubtedly had a budget of sorts you worked from. Whether that was a rather haphazard last minute budget or a stricter more resolute budget most families or individuals would at least have tried a budget at sometime. In order to save money you need to accomplish one of two things. Either increase your income by taking on a second job, doing odd jobs around the town for a few bucks or even sending your spouse back to work. If none of that can be accomplished it may be time to ask your current employer for a raise.
If none of those options are available to you then you may need to consider cutting back on what you spend altogether. Although this may appear easy it can be a source of frustration for a family not being able to purchase things they want or would like. However if you have a healthy savings plan in order then there is no reason why you can't buy what you want. When buying new products you have the advantage of using comparison shopping sites to find the lowest cost. This benefits you as you will be able to source a budget friendly product and make a saving on what you would normally spend if you just went out and bought it.
Another trick to try is to simply wait before you buy. All too often we rush out and buy everything we think we need to find out we did not really need it after all. To ensure you make the right decision and one that is not based on impulse buying take a period out from shopping to see if you really want it or not. Then assess whether it would be a good idea to buy and look for a cheaper alternative.
It is all too tempting to buy the latest designer labels. The TV ads suck you in and the glossy ads in the magazines make you want to go and buy it even if it cost hundreds of dollars. If you are this sort of person then STOP. Take a look on the internet or other not so well known shops and see if you can spot a similar item. More often than not cheaper items have the exact same quality as the branded versions so don't be fooled or be a shop snob.
One of the best things to do when buying new is to negotiate a cheaper deal. This is to your advantage when you pay in cash. Shop assistants and managers are all too eager to make the sale they will agree to almost any request. You can save up to 20% doing it this way so don't be shy and take the plunge.
The last tip I will share is to choose a lower cost alternative. Look around at deals. Don't shop on impulse buys and really take a good look around. You can source nearly anything by researching what's available in your neighborhood or on the internet.

Read More

Personal Finance Budgeting: Major Personal Budget Mistakes

In this article we are going to talk about some of the common personal budgeting mistakes that people make when writing and trying to follow their personal budget. The following personal budgeting mistakes are some of the most common ones that cause people to or quit on or fail on their personal budget.

1) Not creating a personal budget

I decided to put this first because I know that some of you are still thinking that you can get away with not writing out a personal budget for yourself. You think that you can keep it all under control in your head and you are wrong. This is the most important step in budgeting and it is sad that most people do not even make it to this step. You cannot fail or succeed in your quest for financial freedom if you do not try.

2) Being sure that you are adding correctly on your personal budgeting worksheet

This is a somewhat dumb, yet common among budgeting mistake. Often people make simple addition and subtraction mistakes and end up thinking that they are spending $200 less than they actually are. It is always a good idea to double check all of your budget numbers to make sure they are correct.

3) Lack of Consistency in Savings

People need to have a specific line on their budget worksheet that it dedicated to tracking their monthly savings. After doing this people need to establish a specific amount that they plan to save each month and then stick to it.

4) Failing to establish an emergency fund for unexpected expenses

The majority of people do not realize that they need to have an emergency savings funds to help in case unexpected expenses comes up. This money is set aside in a savings account so that you don't have to deviate from your budgeting plan if unexpected expenses come up.

5) Making only minimum payments on your Credit Cards

When people setup their budget they often only budget to make the minimum payments on their Credit Cards. People need to do their best to allocate a large amount of money toward Credit Cards payments each month so that they can pay off their debts quicker.

6) Taking all the fun out of life by having a overly restrictive budget plan

When you make your budget plan you need to plan for a portion of your money to go to fun and entertaining activities. If you do not do this you will find your plan to be to restrictive and will likely not follow it. You can budget for this by cutting out some other expenses.

7) Spending more money than you make

This is often the biggest mistake in a personal budgeting plan. When making your budget you need to make a plan where you are spending no more than you make.

This is a short list of some of the major personal budgeting mistakes that people commonly make. If you can avoid these mistakes it will greatly increase your chances of being successful in your quest for financial freedom.

Read More