Tag Archives: budget

Tips for Budgeting Your Money to Achieve Financial Freedom

An eagle soars in freedom

Making wise decisions regarding your money will encourage personal financial growth and stability. A budget gives you financial freedom. It helps you identify where your money goes, which results in better financial decisions. Here’s how to get started and stick to it.

A Plan of Action

In short, a budget provides the tools for personal wealth. Using one helps you refrain from making poor decisions regarding your money. With a clear view of your debt and your income, you can achieve financial goals. You learn how to pay down your debt and keep more of your money for personal gain.

Eliminating Wasteful Spending

Most people will admit that they waste money. You may do so without noticing. Habits you develop, such as buying coffee on the way to the office or ordering meals out a few times a week, are normal occurrences. Unfortunately, they are sapping your extra cash, leaving you short financially for the things you need. You can afford to spend money on products that benefit your personal hygiene and health, like Konjac sponges and an electric toothbrush.

Reuse Instead Using Once Then Tossing Away

The good news is there are dozens of ways to spend less on the things you need. For example, you use traditional paper towels once and toss them away. Instead, consider replacing disposables with items you can reuse. Bamboo paper towels and cotton cloths are two examples that will save you money and help reduce waste in landfills and toxins in the air. Travel mugs and water filters eliminate the need for disposable cups and plastic water bottles. You get the idea.

Pay Your Bills on Time

Paying your bills on time eliminates accrued interest and late fees. It also helps you increase your credit score, a three-digit number that can work in your favor or against you. A poor credit score can cost you dearly. It can prevent you from buying a home, a car, or sending children to private schools and colleges. It can also make it harder to get into an apartment and cause you to pay a security deposit on utilities. On the other hand, a good credit score opens the door to the lowest interest rates on large purchases, saving you a ton of money over the term of the loan. It also gives you access to the best insurance companies and can make you a desirable candidate when searching for a job. 

Smart Shopping

Before making any purchase, it’s always best financially to shop around to make sure you get the best price. Food shopping costs the average family over $200.00 weekly. Comparing the weekly fliers of the local supermarkets and using coupons for the things you need can shave $20.00 or more off the bill weekly. That’s $80.00 or more a month and nearly a thousand dollars a year in savings. Shopping on certain days and after a holiday can provide a savings of 40, 50, or even 60-percent off a product’s original sticker price.

Establish Savings

Unexpected expenses will happen. However, if you have money in a savings account for these moments, they become more like non-events. Unfortunately, without savings, any small hiccup that requires money can quickly become a financial disaster. 

Allocate Funds to Several Places

When you have a budget, you set aside funds for the things you want. You can allocate money for a down payment on a home or to purchase a new car. You can also set aside money to fund your child’s education and to enjoy financial comfort in your retirement. 

Budgeting your money doesn’t mean that you live life without. In fact, it provides the opposite, financial freedom. Use a household budget to achieve these goals and enjoy a better quality of life. 

3 Things We Pay For That Prove We’ve Become Lazy Americans

Back when my parents were kids, budgeting was pretty simple. You needed to set aside money every month for shelter, food, and transportation (maybe – a lot of families still didn’t have a car, or two, when my parents were children). Life was simpler then, so it seems like because of all the new technology we have, we’re considered lazy Americans.

Our grandparents’ generation didn’t have to worry about paying the cable or cell phone bill, expensive gym memberships, and many of the other luxuries we’ve come to incorporate – without a second thought – into today’s monthly budgets.

But even today, there are certain things that people budget for that they don’t really need, and, more to the point, for things they can do themselves. Not only are these things evidence that Americans are prone to throwing money, but it’s also tangible proof that many of us have become lazy Americans.

Housecleaning Services

I don’t employ a housecleaning service myself, but I know plenty of people who think this is a crucial part of their monthly budget. Some pay per visit, others pay per hour, others a flat monthly fee for a cleaning company to come in their house on a regular basis. One of my closest friend’s spends $150 a month on housecleaning services.

Here’s my beef with that: unless you’re working 80 hours a week, you have the time to clean your own house. Yes, you’ll have to shell out a little cash to purchase cleaning supplies, but otherwise, this is something you can do basically for free. If my friend were to put that $150 back in his monthly budget, he’d have an additional $1800 a year to put into his 401(k) – an account to which, by his own admission, he rarely contributes.

Changing Your Own Oil

“But this is too difficult!” you’re probably saying. It may not be the cleanest job you’ll do, but it’s not an overly complicated process. The only cost is the motor fuel. – Your local garage is really overcharging you for this!

Last year, I changed the oil in my car four times. At $35 a pop – including all taxes, fees, etc. – it came out to $140 to pay someone else for something I could do on my own.

And even if you’re not willing to take on the task of changing your own oil, at least take a look at your vehicle’s owner’s manual. You may be surprised to read that your car’s manufacturer recommends changing the oil every 5,000-7,500 miles, rather than the 3,000 miles suggested by most mechanics.

Lawn Care

Drive out to the suburbs, and you’ll see neighborhood after neighborhood of perfectly manicured lawns – and in front of a lot of those lawns, you’ll see a company’s truck. Lawn care services vary from region to region, depending on the terrain, topography, size, and condition of the property in question.

I know people who pay the neighbor’s kid $10 to mow the lawn each Sunday; I also know people who pay a company $25 to mow the lawn once a week, then spend even more on add-on services like fertilizing, trimming and edging, and aerating the yard. When you break it all down, these folks are paying thousands of dollars a year for something they could do themselves.

Maybe you don’t own a lawnmower, though, and you think you’re actually saving money by paying something to do your lawn care – after all, if you only have to pay that neighbor kid $10 a pop, it might seem like a deal. But consider this: a self-propelled (aka, push) lawnmower starts at under $100; you can get a cheap walk-behind for under $200. With the typical growing season lasting about six months (that’s 26 weeks), you could pay for a nice mower by the end of the summer for what you’d pay the kid down the street.

Are there any places in your monthly budget where you’re paying for services you could do yourself?

Learning To Spend Money

It’s a funny thing about money. Some of us have no problem spending every penny we earn, while others have strict rules about how they spend and save money.

In the world of personal finance, I’ve come across a lot of bloggers (and even more “commenters,” individuals without a website who comment on personal finance posts) who are amazing at saving money. They are great at budgeting, they keep track of every dollar, where it goes, how it’s invested. They build up huge emergency funds – which, by and large, they never have to use – and many of them contribute the maximum amounts to their tax-exempt retirement accounts. They pay down debt while refusing to take on new debt. In short, they lead exemplary lives from a financial point of view.

Except for one thing: they don’t know how to spend money.

And this is a problem.

This isn’t a problem unique to personal finance bloggers and those who read these sites. It’s a pretty universal problem, as illustrated by an old Fidelity commercial that shows a husband and wife following that ubiquitous green line as they learn how to spend money in their retirement years. We spend years learning how to save money, invest money, budget money – but, except for the spendthrifts among us – do we ever really get comfortable spending it?

I’ll admit, sometimes I have issues here too.

For example, my wife Lauren and I are finally taking our honeymoon this month. Back in September, when I asked you how much we should spend on this trip, we’d already started saving for it. In fact, by the time we arrive, we’ll already have enough money to pay for it in full. But, despite our solid budgeting, despite the fact that we’ve earmarked this money for this specific purpose from the very first penny, it’s still hard to actually hand over the cash – or check, or credit card, etc.

Here’s another example: a friend of mine has been saving up for a new car for literally years. Each month, he funnels a portion of his paycheck into his designated “new car” account. He’s almost reached his goal…and yet, now he’s starting to waffle. He’s making excuses (“I don’t really need a new car; my old clunker gets me where I need to go” – this is a fallacy, as his car has more starts and stops than Lindsay Lohan’s movie career), trying to come up with a reason – any reason – why maybe he shouldn’t spend the money on something he not only needs but wants. It’s not that he’s suddenly decided he doesn’t want that new car; rather, he’s getting gun shy about pulling the trigger on such a big purchase.

I can understand that; I can sympathize with that. I know that it can be almost painful to spend money, even if you’ve spent a lot of time budgeting to spend it for exactly that purpose.

But here’s the thing – if you’re going to make the effort to save all that money, shouldn’t you at least feel good about spending it? Shouldn’t you bask in that sense of accomplishment (“I saved for X, and I reached my goal!”) instead of feeling guilty as you make the big purchase?

Do you ever feel guilty making a purchase, even if you’ve budgeted to spend that money in a specific way?