Category Archives: Money

Are You Living on a Reasonable Monthly Budget?

Are You Living on a Reasonable Monthly Budget?If you are living on a monthly budget, bravo! You have taken an important step toward financial responsibility, one that not everyone takes. However, do you have a reasonable budget that covers all the basics? If your budget includes housing, transportation, medical, clothing, and food, you’re off to a great start. But wait, there’s more. Actually, there is quite a bit more that should be added to a reasonable monthly budget to make it sustainable for the immediate and foreseeable future.


Everyone needs an emergency fund that is immediately accessible for expenses like the home insurance deductible for a flooded basement, a refrigerator that stops working, or a costly car repair. The money for these expenses should be liquid, that is, not tied up in a long-term investment account, but available through immediate withdrawal or a debit card. Some families put away ten percent of their net income for emergencies or unexpected expenses like an unplanned weekend getaway or house guest. Any amount is preferable to saving nothing for expenses like these that can pop up anytime.


A savings account for future goals is essential for most people. You might need a college fund or save toward the next vehicle purchase, something that will be needed eventually but not right away. If the savings are not earmarked for a particular purpose, you can start an investment account or a high-yield saving account so that the funds earn interest over time.


Even those working in a career position sometimes unexpectedly lose their jobs or get bored and decide to switch careers, thus requiring further education. As children come of age, they may decide to go to college, and tuition is not cheap. Putting aside money for education now helps to offset high costs later. Don’t forget to factor in possible dormitory expenses and textbook fees.

Entertainment and Leisure

While many people often budget for entertainment expenses, sometimes they designate too little for this category. Entertainment might include activities like movies, plays, sports events, concerts, dining out or fast food (unless it’s part of the food category), coffee shop breaks, etc. These may be unplanned or seemingly minor expenses, but they add up quickly. For example, buying a specialty coffee shop beverage each day for about $3.50 adds $105 per month to the budget. Habits like smoking or regular alcohol use can be even more expensive. Vacations should also be factored into this category.

Holidays, Birthdays, and Celebrations

These may appear to be a subset of the entertainment category, which is fine, but keep in mind actual costs. A recent survey reported that the average family spends an average of $700 just for Christmas expenses, including gifts, greeting cards with postage, wrapping paper or packaging, decorations, electric for outdoor lights, dinner food, baking supplies, etc. It’s no wonder many people get stressed around the holidays if they haven’t budgeted these extra expenses. The typical birthday celebration could include a gift card, dinner, special event, and bakery cake at a total cost of perhaps $50 per person. Multiply that by number of family members, and the cost grows exponentially. Celebrations like weddings and graduations usually require a gift that may average $50 to $100, added to the cost of new clothing and travel expenses if the event is not local.

These added budget categories will vary from one person to another. Other categories not included in this list might entail hobbies, charitable giving, or medical deductibles for unexpected injuries or special needs (depending on insurance coverage).

Make time to take a good look at your monthly budget to be sure it covers all the basics as well as extra “hidden” expenses you may be paying. With a little more financial planning, you can stick to your budget and avoid falling into a money pit that could set you back a considerable amount.

Save Thousands By Focusing On The Big Picture

This is a post from Pauline of

One thing that makes me want to bang my head against the wall is when I see people call themselves frugal, yet be the poster child for “penny wise, pound foolish”. Ok, you save and save every single day, a little here, a little there. Globally, you’re pretty miserable because you have removed all the good things out of your life. You have no more gym membership, cable TV, magazine subscriptions, you eat rice and beans day in, day out… I even met a guy who had no central heating!

He was in his 70s and he really broke my heart. When it was very cold in winter, his bedroom on the upper floor of his house became too icy to sleep in. So he would come down to the ground floor, where he had an electric heater. He would carry his mattress on his broken back, and sleep on the floor of his living room! He claimed the electric socket upstairs were too old to bear a heater. That discomfort could have been fixed with less than a thousand dollars. How far he was willing to go for the sake of saving money made me scratch my head.

That won’t make a big difference on his net worth. What will is taking action to reduce and optimize the big expenses in your life. Your mortgage for example. Rates are at historic low levels right now, and finding a mortgage refinance at just 0.5% less than what you are paying at the moment can save you thousands. Yes, thousands.

The average US home is worth around $250,000. At 4.5%, you are paying $1,266 a month over the next 30 years. These days, you can find a 30 year refinance for 3.5% on average. That means lowering your mortgage payments to $1,123 per month. Saving yourself over $50,000 in interest in the process. I did my last refinance online. I decided to pay a little for the convenience of staying with the same bank, and not having to provide a new one with the mountain of paperwork they usually require. It took about 15 minutes to drop my rate by 0.5%. No fee, no valuation, the bank had all the details already.

15 minutes of my time for thousands in saving? Any day.

This summer, I was looking for a house to buy in Southern France. I saw one that fit my needs. It was listed via a real estate agency at $700,000. I thought if I could find where it was, I would save myself the fee. The town was small, but it took me a few hours to locate the house, based on the online ad pictures. When I arrived, the owners were surprised, and said I was the first one showing up without an agent. I had spent hours on Google Maps trying to determine the neighborhoods where the house could be. Once I got there, it only took me an hour to find it. The owners said they wanted $650,000. I didn’t end up buying it, but that would have been a fine payday otherwise.

Another thing that makes me cringe is when people do not value their time. If you make $25 per hour at your day job, but walk back home instead of taking the $1 bus, you are losing on an opportunity to stay an hour more at work, and make $25. Sure, that can be your way to unwind, get some exercise,… but for people who see it from a saving standpoint, I don’t get it. Your time is better invested in yourself (trying to get a promotion, working extra hours, starting a side hustle) than trying to save a few bucks or couponing.

More and more, I am trying to focus on big lifestyle changes that will have a huge impact on my net worth, rather than pinching pennies. I chose to relocate abroad, and that cut my monthly expenses by 60%. I did not buy a car when mine got stolen last December. It has been a little inconvenience, but I have been home maybe 4 months since that happened, and in the meanwhile, the $10,000 I didn’t put on the car (plus insurance, gas, maintenance and repairs) grew on the markets. And whenever I really needed one, to bring back groceries and heavy things, I would rent one for the day, for $30.

The S&P500 had a good run since last December, returning 9.8%. My $10,000 would have yielded $980, way more than what I spent on the occasional taxi or rental. But I understand that this lifestyle switch is not for everyone.

Still, the next time you are tempted to find ways to save more, try to start with the big stuff.

How to Save Money on a Tight Budget

How to Save Money on a Tight BudgetEven a robust savings plan can be sidelined when times get tough. Often, a savings plan is the first thing to go when the economy tightens up. However, that is a big mistake because everyone needs a savings fund for short-term emergencies or long-term goals. Here are a few tips that can help to keep your savings account going strong.

Limit Spending

Eliminate unnecessary purchases, like buying donuts for the office or impromptu shopping sprees. Plan each purchase that you need to make, but also allow for unexpected necessities, like a copay for a doctor visit or unplanned dinner guests. Periodically review your checkbook or debit card register to see where those unexpected purchases occur, and then look for ways to avoid them until your budget returns to normal. Shop for low-rate credit cards and introductory offers if you must use credit.

Reduce Regular Expenses

If you aren’t already doing it each year, contact your insurance company and your utility providers to see if discounts are available. Chances are you may be eligible for a reduced bill based on changes in your eligibility status or special rates that are being offered as a promotion. A good driving record and responsible utility use may lead to unexpected premium or Bill reductions that will help to ease your budget. Take a grocery list to the supermarket to avoid overspending. According to a May 21, 2015 Gallup survey reported in an article by John Fleming titled “Americans Still Spending More, Still Not on What they Want,” 55 percent of Americans claim they were spending more for groceries than on other major purchasing categories, including utilities and car fuel.

Watch for Sales

Take advantage of special monthly, semi-annual, or annual sale events at your favorite stores. For example, a popular supermarket chain in Northeast Ohio offers an annual three-day summer sale event in August just for meat. Buyers can stock up with meat in their freezers for months to come. Some store promotions provide fuel discounts or coupons on your next purchase. To add a little extra, browse online coupon sites like Groupon.

Share the Cost

The amount of food served to an average adult in a typical restaurant these days may be as much as 50% more than it was a generation ago. That means diners are taking home plenty of doggy bags and leftovers for the next day. However, we are also paying for that extra food. To cut costs when eating out, consider ordering a child’s portion if allowed to do so. You can also split a meal with a dining companion. Carpool with neighbors or kids’ friends’ parents to save driving costs to and from school. For summer camp, share the cost of a sleeping bag with your child’s classmate’s family, and then each child take the sleeping bag to camp on different weeks.
Shop Second-Hand.

Consignment stores or thrift shops are excellent places to find great bargains on lightly used clothing, some of which can be brand-name, as well as seasonal items like a winter coat or summer T-shirts. You can also find garden supplies, quality furniture, and a host of other things that would cost far more if you paid full price and bought them new. In addition, many thrift stores offer reduced prices. For example Goodwill has a different color code reduction each week, which adds a 50 percent discount on all items purchased. Furthermore, a frequent shopper card, when full, provides another 35 percent discount. Senior citizen discounts may also apply at thrift stores, so take advantage of these ways to save money if you fall into this category.

Steps like these can help you to save hundreds of dollars a month with careful planning and controlled spending. Then continue to feed your savings account for peace of mind so that you will be prepared for the next opportunity or unexpected need.

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