Monthly Archives: March 2017

Are You Living Paycheck-to-Paycheck?

A large number of American households live from one paycheck to the next. This number has gone down since September 2016, according to a survey conducted by McKinsey & Company, where consumers expressed more confidence in their financial stability compared to the last eight years. But about 24% of the participants in McKinsey’s study still lived paycheck to paycheck. This means they struggled to cover their basic expenses and had empty checking accounts until the next pay period. With families to support and unexpected additional expenses, this can be a very difficult experience for anyone to go through.

The problem can arise for several reasons, but the main driving factor is not having enough financial knowledge. When you are financially knowledgeable, you understand the essentials of budgeting and how managing your money will help you be stable and reduce anxiety and stress.

Creating a Budget Can Help

If you are living from one paycheck to the next, the first thing you need to do is make a budget. What are your expenses? What are necessary and what are extraneous? How much do you need to have every month for your required expenses (rent, food, insurance, etc.)? When are these payments due? Cash flow also can affect payments significantly and your stress level. If you are getting paid only on the 20th but your payment is due on the 1st, you are always going to be behind.

The first step you can take to budgeting and healthy money management is to monitor your expenses. You must know how you are spending your money, down to the dollar. It is essential that you know how you are spending your money and on what.

Begin by monitoring your spending for a couple of weeks to gauge your habits. Keep track via an online software system such as mint.com, or at the very least, a notebook. Use a method and tool you like. The most important thing is that you are aware of all your transactions.

Handling Additional Expenses

Budgeting will also help you prepare for unexpected expenses, emergencies and seasonal expenditures. You can see from your prior spending where your dollars are going. The more you prepare, the better it will be. You can also include gifts, holidays, vacations and other expenses. Budgeting early on prevents headaches later!

Next, do the math. What is essential? See where you can trim. This is easier if you have a salary. You may be getting a fixed amount every month you can work with. Look at your pay stubs to figure out your average income after tax.

After you subtract your essential expenses such as rent, food, insurance, etc., do you have any money left over? This is money that will need to go towards savings and also can be used for discretionary spending.

Lowering Personal Spending

See where you can lower your spending. Budgeting takes time. No one is a pro at it immediately. You have to adjust that budget based on your lifestyle and what you’re learning about your spending habits through tracking over time.

Find ways to increase your income through an extra job, extra hours at your current job or other ways to get paid.

Finally, be realistic. If you are too drastic in your spending cuts, you will find it hard to stay motivated and may miss your target goals. Give your budget some flexibility so you can stay on track and keep going forward.

 

Best Budgeting Software of 2017

The best budgeting software helps you manage your money in a way that is organized, provides the detail you require and displays the information that you need in a way that allows for quick comprehension and analysis.

Here are four budgeting software systems that meet those criteria. Each system is distinguished by how it could best fit your personal approach to managing your finances.

Best for Fans of Zero-Based Budgeting

You Need A Budget (YNAB for short) is built on the zero-based budgeting principle that calls for you to “give every dollar a job.” With YNAB you need to be involved in your finances and willing to change old habits to make the system work.

According to YNAB, following those four rules will help you pay off debts, save money and stop living paycheck to paycheck. It’s a tall order, but YNAB users say it works.

This browser-based subscription system runs on both Windows and Mac computers. Android and iPhone apps are available and are able to sync data back to your desktop. YNAB also connects to bank and credit card accounts to download transactions, but it does not offer a way to track investments. Following a 34-day free trial, YNAB costs $50, billed annually.

Best for Envelope Budgeters Anxious to Go Digital

Mvelopes is based on the familiar (pre-computer) budgeting system of putting cash in envelopes each pay period. Each envelope is labeled for an individual bill or discretionary expense. For discretionary expenses, when an envelope is empty, spending in that category is done for that pay period.

At it’s core Mvelopes provides you with a familiar system of using envelopes on a digital platform, but that is not all the software service provides. It is also able to link to bank and credit card accounts, allowing you to see past spending and assign money to future “mvelopes.” You can set up the system to move money out of your spending envelope into a credit card payment envelope so that you don’t run up your credit card balance.

Mvelopes Basic is the simplest offering from the budgeting site and costs only $4 per month. Pricing ranges as high as $79 per month for Mvelopes Complete, the software’s premier service. The system is online and works with both Macs and PCs. Android and iPhone apps let you manage your accounts, add and edit transactions, adjust your budget and monitor expenses on the go.

 

Idea Staycation Your Summer

As the kids finish school and the weather heats up, many people are getting excited about long-awaited summer vacations. Summer vacations are a time to relax, unwind and spend some quality time with loved ones. Big vacations, however, do require quite a bit of planning and, of course, can end up costing some serious cash, especially with a whole family in tow.

If you haven’t gotten around to making summer vacation plans, or it’s just not in the cards this year, you might be the perfect candidate for a summer staycation. (A staycation can be just as enjoyable as a vacation, and can enrich your life for the whole year.

A staycation is like a vacation, only you spend it at home. Instead of spending lots of money on airfare and expensive hotels, you can take advantage of the attractions your area has to offer that you never get a chance to enjoy. This includes your house – when was the last time you relaxed at home?

Get Out

Outside, that is. National parks, state parks, county parks, metro parks and nature centers all provide a place to run around and enjoy nature. As an added bonus, many are free. You can easily spend a day hiking, swimming and picnicking in your local park.

A rainy day during your staycation is a terrific opportunity to visit a local museum or two. Art museums, aquariums, planetariums, science museums and natural history museums can be enjoyable and interesting. You can search for museums at the American Association of Museum’s website

Get Active

Take advantage of the local swimming pool, tennis courts, golf course or skating rink. Go for a bike ride, a walk, or try a new sport. Dust off the old baseball mitts, soccer balls and Frisbees and have fun.

Get Festive

Summertime is usually ripe with festivals in one form or another. Your local newspaper or Chamber of Commerce can keep you up to date with goings on. In addition to daytime festivals, many locales host free music nights during the summer months.

Learn Something New

Have you always wanted to learn how to throw pottery or paint with watercolors? How about cooking Cuban food or home-brewing beer? Your local recreation department or community college probably has a great choice of classes to get you started. Many of them will be one-day introductory classes that won’t require a huge investment.

Be Pampered

With all the money you’re saving on your staycation, you just might be entitled to a trip to the local spa for a massage and facial. Most spas do require advance reservations, and many offer specials and packages so be sure to ask.

Tell Ghost Stories

Pitch the tent and build a small fire – in your back yard. Camping in the backyard is a fun and easy way to camp. You can chase fireflies, sing songs, look at the stars and roast marshmallows (or make s’mores: roast a marshmallow until golden brown, place between two graham crackers with a piece of chocolate and squeeze together).