Category Archives: Budget Basics

Budget Basics – Wiggle Room in the Budget

Photo Credit: www.keepcalmomatic.com

Photo Credit: www.keepcalmomatic.com

When it comes to allowing wiggle room in the budget, there are two main and drastically different styles: Those who wiggle, wiggle, wiggle and those who are rigid, rigid, rigid. Despite being able to “go with the flow” across most areas of my life, regarding my budgets I do not like to bend—which has resulted in some seriously over dramatic breaks when the numbers don’t work themselves out exactly, I have to put less than I planned toward my debt, or I spend more money that I originally intended and/or planned to. As I accumulate more life experiences (and monetary moments that don’t go along with my perfectly budgeted plan) I keep noticing that my life—financially and otherwise—tends to be a little bit better when I loosen my grip on my extremely detailed, overly analyzed, and fiercely capped budget to embrace a little wiggle—where some wiggling is warranted of course.

After years of drawing a maximum budget line and never crossing it, I have finally convinced myself that I’d be better off with a new found mindset—determined to interweave the rigid budgeting strategies that help me stay on track and achieve my financial goals while incorporating some cushions that increase my ability to stay calm and happy on my journey to accomplishing them. While rigidity is the backbone of any budget, there are some specific types of sub-budgets that can greatly benefit due to some built-in wiggle room.

When Looking at our Sub-Budgets we must ask ourselves:

To Wiggle or Not to Wiggle?

Photo credit: Disney

Photo credit: Disney

Since setting a specific budget and saving the funds to pay for my upcoming wedding with cash, I have spent MONTHS refusing to add some wiggle room. It literally makes my stomach turn when I envision myself saving (not even spending—because that is how crazy I can be) $10 more than the reasonably budgeted amount my fiancé and I agreed upon. Through my rigid-budget-ice-queen-glasses saving more than the set budget looks like planning not to reach the goal we set for ourselves—so then what’s the point of the budget anyway!?!?! However, after much research, listening to firsthand accounts of others, and reflecting on my own personality downfalls differences when I’m stressed about money I realize that a wedding budget—or any other budget that is large in sum and typically created over several months—is a prime place to leave some wiggle room. The reality is that not planning on a having any “surprise expenses” doesn’t ensure that there won’t be any “surprise expenses”. Hence, the very definition of the word “surprise”.

definition of surprise

photo credit: Google

I encourage Type A Budgeteers (not a typo, I just invented that word. Go me.) to relinquish delusional grips on what can’t be controlled—the inevitability of surprises—when budgeting for a wedding or any other large scale event, and make good decisions regarding the matters you can control—which in this case is saving above the budget to give yourself room to wiggle during the process. When it comes to big money, it’s better to be safe than sorry. And if you are like me, feel free to give yourself a daily reminder that just because you save that extra does not mean you will end up spending it.  “I’m not a budget failure. I’m not a budget failure. I’m not a budget failure…”

Related Posts: Wedding Planning on a Budget: Shifting your PerspectiveWedding Budget 101: A Step-by-Step Guide to Wedding Budgets for the Financially Unprepared Bride-to-Be

gft-givingWhen it comes to gift-giving, I am a firm believer in over-budgeting and leaving room for the wiggle. While I struggle to leave a buffer on budget areas that are directly related to me, myself, and I; I actually would much rather over spend on others than under spend. Not only do I believe cheap gifting to be tacky behavior, but not letting my gifts represent how much I care about my loved ones leaves me with a “yucky” feeling in my stomach (truth: I was literally scrunching my nose up while typing that sentence—physical manifestation of “yucky”). That being said, the budget can’t be completely thrown out the window because my income is not limitless. When I know that birthdays, holidays, babies, and housewarmings are in the near future, I always over save to create a buffer. Then when I meet my girlfriends on their birthdays I can bring a gift and chip in with everyone else to cover the old lady’s tab 😉 My peeps are worth it a hundred times over. <3

Related Post: Holidays on a Budget

traveling - wiggle

I believe that the traveling budget deserves a little wiggle room for a few different reasons. The first reason is that “traveling” is a very broad term—are you traveling to Costa Rica or are you traveling to your grandmother’s house for Thanksgiving? If you are going on a big trip to an unfamiliar destination you are going to need to create more wiggle room than if you are traveling a short, familiar trek that you’ve conquered many times before. For a short trip, you’d be wise to establish a budget and then be sure you have access to additional buffer money just in case an unfortunate scenario, like car trouble, leaves you stranded in a Motel 8 for a night (that actually happened to me once). For big-time trips I usually create a buffer that totals about one-fourth of my entire travel budget just to be on the safe side. The most difficult part for me  regarding travel wiggle room is to detach myself from “vacation mode” after I get back and actually do something responsible with the buffer I’ve created and didn’t have to spend—hello impulse coffee table purchase that was the main catalyst in scaring me into better spending habits nearly two years ago…

Related posts: Saving Money on your Road Trip across the USofA

 Caution: No Wiggling Recommended Beyond this Point!

Groceries – I think food is one of the areas that people overspend on, and I really think my grocery budget has cut out more mindless spending more than budgeting any other area. Creating a buffer for your grocery budget is simply not necessary. It will open you up to being less aware of using what you already have, throwing away unused/spoiled food, and buying overpriced junk. It just makes you forget to be appreciative of food. Don’t wiggle!!

Monthly spending money – No buffer needed. Period. Start finding ways to spend your time that don’t involve spending all of your money. Trust me, it’s easier than you think.

Shopping – If you let yourself wiggle a little bit when you head out shopping (especially if you don’t tote around shopping bags too often) your wiggle is very, highly likely to snowball into a full-blown Harlem Shake. Before you know it your “buffer” has doubled your original budget and that’s not what “wiggle room” is all about. Set a shopping budget, grab some cash, and never look back.

Bills – Take advantage of the consistency that comes with bills—it might be the only good thing they’ve got going for them, right? Set those automatic withdrawals and forget ‘em. No wiggle room needed.

Head on over to BrokeGIRLrich to see more posts featured in this week’s Financially Savvy Saturday!

brokeGIRLrich

 

For more information on how to gain control of your finances check out our Getting Started page by clicking the link in the menu bar at the top of the page. Which “sub-budgets” do you allow wiggle room in and where do you hold your ground mercilessly?

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 Brittany

My Life on a Budget: A Year in Review

 

Year in Review Sam EditionJust a little over a year ago Brittany and I decided to start Fun on a Budget Blog to document the outcome of 20-somethings trying to live well on a budget. We wanted to share our financial battles and triumphs as we fought the good fight against our debts and gave our best effort to keep living lives that kept us happy and excited to get out of bed each morning.  We had a few different purposes in starting Fun on a Budget:

First, we wanted to support other people that were in the same situation as us. Debt is one of those topics that most people are ashamed to talk about, so we knew that there were probably many silent sufferers out there that could use some help.

Second, we wanted to learn more about how to be better with money…and we have learned A LOT!! A huge amount of research and many conversations happen each time we prepare for a post, and from those actions new knowledge is gained.

Finally, Fun on a Budget Blog was a way to stay motivated to keep our focus and momentum strong because after all, paying off debt can be a long term and difficult goal to achieve. Fun on a Budget Blog has 100% fulfilled its role in being a tremendous motivator for staying focused on our end game of getting debt paid off as quickly as possible. Every month we sit down and write up an entire report about how much debt we’ve ditched or how much money we saved, and this gives us the opportunity to reflect on what we are doing well and what we need to start doing a little bit better. Don’t get me wrong, I do hope that people like our budget blog, and I hope that if some Googler stumbles upon it (probably on the 5th page of search term results, haha), that it will help him in some way—but at the end of the day, if I it’s just me, Brittany, and our moms reading the darn thing, we are okay with that. We’re okay with it because we truly enjoy not just living on a budget, but writing about it.

So, here we are one year later, and it just wouldn’t be right not to reflect on how being on a budget has impacted our lives, right? I must say that I originally assumed I would post about how my budget has impacted my debt only, but once I started taking a deeper look at all that has happened (or not happened) and changed over this past year, I realized that the debt numbers are only half of it!

Debt by Numbers: How Being on a Budget for a Year has Impacted my Debt

Year in Review Total Debts
In just one year I have cut the number of total debts I owe by 75%, went from having paid off one debt to having three fully paid loans under my belt, decreased nearly all of my debts to less than the original amount I was loaned (interest is the WORST), reduced my minimum monthly payments by $228.34 , and decreased my overall debt by over $18,000.

Income Distribution

From August 2013 to August 2014, my income was delegated into four different categories: debt payments, living expenses, flights (home and for trips) and savings. 42% of my income went towards my debt snowball, 43% was used for living expenses like rent and food, 7.5% went toward flights to visit family and friends, and the final 7.5% went into my savings account–which was primarily used for moving across the country.

Current Debt Comparatives YIR

The chart above gives a more detailed look of how being on a budget can have a significant and positive impact on getting rid of your debt.

 Yeah, Yeah, Yeah…So you paid off a lot of debt, but what else have you done??

Well, you might be surprised

One of the most rude frequently heard comments that comes out of someone’s mouth when he/she learns I believe in sticking to a budget is “Oh, I couldn’t put myself on a budget because I still want to do things.”  Give me a break…I was on a budget from August 2013 – August 2014, and I did A LOT of “things”.

During my first year on a budget I…

Fun Pics

And I did a little traveling too..

Travel Pics

The good, the bad, and the really really good

I would be lying if I ended this post with my fabulous traveling pictures and told everyone that being on a budget is all rainbows and ice cream cones all the time. It’s not. You aren’t idiots, and you already knew that.  I whined like a child when I had to miss friend’s weddings, wear running shoes that have holes in them, go hungry during happy hour, and had to start drinking water at the bar after I ran out of money (but felt pretty happy the next morning hangover free).

When you are on a budget you cannot do 100% of the things you want to do, buy 100% of the things you want to buy, or travel to 100% of the places you want to travel. You must pick and choose, but whenever I feel down about being on a budget, I remind myself that one of the most important and impacting choices I made in this past year was to LIVE on a BUDGET. Because that choice brings good things to me now—like paying off debt quickly and never bouncing checks—and will bring really-really good things to me in the not-so-far-future—like being able to save for retirement and use money to travel and celebrate in the present —the blips of “bad” that I’m experiencing just don’t seem so bad.

Brittany lived on a budget the past year too! Check out how she fared by clicking the link: Brittany’s Life on a Budget: A Year in Review

For more information about transitioning to life on a budget click on our“Getting Started” link in the menu bar at the top of the page, and get your free printable budget by visiting our “Materials” page.  We have a couple of options for you there.

But enough about me…I want to hear about your experiences on a budget–what works and doesn’t work? What are the best and worst parts of holding yourself accountable with money? Follow the “Reply” link at the top of this post to share your thoughts with Brittany and I!!

Follow us on FacebookPinterest, and Twitter!

Follow on Bloglovin

Sam

My Life on a Budget: A Year in Review

title pic

Just a little over a year ago Sam and I decided to start Fun on a Budget Blog to document the outcome of 20-somethings trying to live well on a budget. We wanted to share our financial battles and triumphs as we fought the good fight against our debts and gave our best effort to keep living lives that kept us happy and excited to get out of bed each morning.  We had a few different purposes in starting the Fun on a Budget:

First, we wanted to support other people that were in the same situation as us. Debt is one of those topics that most people are ashamed to talk about, so we knew that there were probably many silent sufferers out there that could use some help.

Second, we wanted to learn more about how to be better with money…and we have learned A LOT!! A huge amount of research and many conversations happen each time we prepare for a post, and from those actions new knowledge is gained.

Finally, Fun on a Budget Blog was a way to stay motivated to keep our focus and momentum strong because after all, paying off debt can be a long term and difficult goal to achieve. Fun on a Budget Blog has 100% fulfilled its role in being a tremendous motivator for staying focused on our end game of getting debt paid off as quickly as possible. Every month we sit down and write up an entire report about how much debt we’ve ditched or how much money we saved, and this gives us the opportunity to reflect on what we are doing well and what we need to start doing a little bit better. Don’t get me wrong, I do hope that people like our budget blog, and I hope that if some Googler stumbles upon it (probably on the 5th page of search term results, haha), that it will help him in some way—but at the end of the day, if I it’s just me, Sam, and our moms reading the darn thing, we are okay with that. We’re okay with it because we truly enjoy not just living on a budget, but writing about it.

So, here we are one year later, and it just wouldn’t be right not to reflect on how being on a budget has impacted our lives, right? I must say that I originally assumed I would post about how my budget has impacted my debt only, but once I started taking a deeper look at all that has happened (or not happened) and changed over this past year, I realized that the debt numbers are only half of it :)

Debt by Numbers: How Being on a Budget for a Year has Impacted my Debt

Debt by the Numbers-Comparison

In just one year I have cut the number of total debts I owe in half, went from having paid off zero debts to having three fully paid loans under my belt, decreased nearly all of my debts to less than the original amount I was loaned (interest is the WORST), reduced my minimum monthly payments by over $200.00, and decreased my overall debt by nearly $25,000.

Income distribution

From August 2013 to August 2014, my income was delegated into three different categories: debt payments, living expenses, and savings. Just over half of my income went towards my debt snowball, 37% was used for living expenses like rent and food, and the final 11% went into my savings account–which was primarily used for Christmas shopping and wedding savings.

Ind. loan progress

The chart above gives a more detailed look of how being on a budget can have a significant and positive impact on getting rid of your debt.

 Yeah, Yeah, Yeah…So you paid off a lot of debt, but what else have you done??

Well, you might be surprised :)

One of the most rude frequently heard comments that comes out of someone’s mouth when he/she learns I believe in sticking to a budget is “Oh, I couldn’t put myself on a budget because I still want to do things.”  Give me a break…I was on a budget from August 2013 – August 2014, and I did A LOT of “things”.

During my first year on a budget I…

what i did 2

what i did list

And I did a little traveling too…

travel2

travel list

The good, the bad, and the really really good

I would be a big, fat, dirty liar if I ended this post with my fabulous traveling pictures and told everyone that being on a budget is all rainbows and ice cream cones all the time. It’s not. You aren’t idiots, and you already knew that.  I hopped on the waaambulance a handful of times during my first year on a budget, for a variety of different reasons—missing the bridal shower and bachelorette of a bestie, missing the wedding of another, keeping my own wedding small, and no longer being Anthropologie’s #1 customer—are a few that really got under my skin and left me flustered for days.

When you are on a budget you cannot do 100% of the things you want to do, buy 100% of the things you want to buy, or travel to 100% of the places you want to travel. You must pick and choose, but whenever I feel down about being on a budget, I remind myself that one of the most important and impacting choices I made in this past year was to LIVE on a BUDGET. Because that choice brings good things to me now—like paying off debt quickly and never bouncing checks—and will bring really-really good things to me in the not-so-far-future—like being able to save for retirement and use money to travel and celebrate in the present —the blips of “bad” that I’m experiencing just don’t seem so bad. :)

Sam lived on a budget this past year too! See how she fared by clicking the link: Sam’s life on a Budget: A Year in Review

For more information about transitioning to life on a budget click on our “Getting Started” link in the menu bar at the top of the page, and get your free printable budget by visiting our “Materials” page.  We have a couple of options for you there.

But enough about me…I want to hear about your experiences on a budget–what works and doesn’t work? What are the best and worst parts of holding yourself accountable with money? Follow the “Reply” link at the top of this post to share your thoughts with me and Sam!!

Follow us on FacebookPinterest, and Twitter!

Follow on Bloglovin

 Brittany

Intertwined Lives, Separate Bank Accounts: How to Cohabitate with a Happy Financial and Emotional Mindset

Time and time again studies have shown that money is the number one instigator of problems between couples. Sidenote: I want to know where exactly “farting” ranks on those lists because it definitely should be close to the top… Okay, okay, back to money: While it seems to be common sense that relationships with our significant others should be prioritized above money, an uncountable number of failed relationships have proven that it’s easier said than done.

San Fran

So I am coming to you equipped with a few years of experience in the area of lovebird cohabitation and zero years of joined bank accounts under my belt to share what has and has not worked for my better half and I when it comes to splitting the tab of life from two separate bank accounts.

STEP ONE: Get on the Same Page—or Get Out Now!

golf pic

We have similar values and interest across many aspects of life, but likeness in monetary values creates a strong foundation for our relationship…just a tad more than mutual okay-ness at golf.

If you are living with your significant other in hopes that you will one day be walking down an aisle together, you better make sure you are on the same page when it comes to money values. It’s okay to have different styles and desires, but if your spending habits are completely opposite of each other (i.e., he saves every penny he earns, and she maxes out credit cards on shoes every month) you either need to find a compromise that keeps both of you satisfied or get the heck out of the relationship before one of you milks the other dry. The hardest part of step one is taking an honest look at the facts, but doing so immediately will save you a lot of heartache and money woes in the future.

STEP TWO: Divide and Conquer the “Easy-To-Split-Stuff”

Taken just as our cohabitation officially began

Keeping the simple stuff simple, has helped us smoothly transition into sharing our lives together.

We treat the payment of our rent and household utilities as if we are roommates (which we are in the sense that we are 2 individuals with 2 separate incomes and 2 separate bank accounts). That means we split rent, gas, electric, and cable straight down the middle each month. There are a few ways to do this with little hassle and near guarantee that everyone is living up to his or her end of the bargain:

OPTION ONE: Put all utilities in one person’s name (this is the time to let the organizer of the relationship showcase those responsibility skillz) and have the second person write the “organizer” a check each month to cover his/her half of the costs.

OPTION TWO: Put roughly one half of the utilities in each person’s name so that each person directly pays about half of the monthly expenses without ever needing to deposit or wait on a check from the other. This option is better for those who are a little more flexible and will not spitefully bring up owed pennies during an argument about what’s for dinner on Tuesday night.

STEP THREE: Create a Strategy to Tie up All Loose Monetary Ends that Leaves Both Parties Financially Satisfied and Comfortable

skidate

Money strategy and agreement are key factors to enjoying a nice vacation.

After the big expenses that occur regularly each month are equally distributed, you need to make a plan of action for all other expenses that occur in your shared life. These expenses can be regular—like groceries—or more varied—like vacations. The key is to be sure each person (in the loving relationship that you cherish very very much) knows the plan and is comfortable with the plan. I’ve listed some general strategies and helpful tips that help us avoid money spats on a daily basis, which is excellent because less fighting means more loving :)

Each Little Love Bird Must: 

♥ Know and respect how much money each person wants/needs to spend each month.

♥ Know and respect what each person likes to spend money on each month.

♥ Agree on a plan to tackle groceries.

Grocery style

♥ Be happy with a plan outlying how to pay for dates.

Date Style♥ Be happy with a strategy to pay for vacations and weekend trips.

Vacay Style

♥ Communicate with each other EVERY GOL’ DARN DAY about your money and your feelings about how your money is being spent (or not spent).

anni pic

Remember to keep a level head because at the end of the day, you love that beautiful face you wake up to each morning much more than Benjamin or Andrew…unless of course it is Benjamin or Andrew you are waking up to 😉

What strategies have helped you transition into and successfully conquer being in a serious relationship with molded lives but separate bank accounts?

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 Brittany

How to Stay Sane and Maintain Friendships while Living on a Budget

Sometimes when you are fighting tooth and nail to get out of debt or save a large amount of money for a future expense, such as a down payment on a house or college tuition, your intensity takes you across a fine line, and your healthy determination becomes an unhealthy obsession. If—okay, okay, WHEN—this happens you have to take a step back and remove your blinders because money is just money, and being a miser not worth losing out on relationships and monumental occasions with your friends and family.

We all know that being financially fit is an important part of survival in today’s world, but there are other parts of life that are just simply MORE important. When you feel yourself over-stressing about monetary situations that are minor blips on the radar of life, fearing that your friends have forgotten you exist due to your new hobby of hermit-ing (pretty sure that’s a word I just made up), or shaming yourself for the lack of love you’ve been sharing with others, it’s useful to have strategies to get yourself back on track to living a life you love—and keeping your relationships with your peeps alive and well.

Just because you are “on a budget” does not mean you are destined to eat Ramen alone every night. There are some ways that you can make sure you keep a level head about money matters, maintain positive relationships with your friends and family, and continue to share love with your peeps no matter what kind of budget you are following.

word art

1. Brainstorm a list of your current life priorities, and put them in order. When you see that money isn’t at the top of the list, you can motivate yourself to quit acting like it is.

priority

Money can buy you things, but consciously examining your life priorities reminds you it’s not the only path to a full life. Don’t let yourself forget that!

2. After you master the art of saying “no” every once in awhile, make sure you balance that out by saying “yes” every once in awhile too. When you first start picking and choosing which activities or items to spend money on, it can be difficult to walk away without forking over dough. After a little time has passed and you begin to notice progress with your finances, it gets easier to say “no”, and you might find yourself having trouble saying “yes”. Make sure you stay involved in activities and relationships at the top of your priority list because these are the best parts of life.

photo credit: www.capescoaching.wordpress.com

photo credit: www.capescoaching.wordpress.com

3. Talk to people. The gift of gab…never. stops. giving.

talking on the phone

photo credit: www.elephantjournal.com

4. Share what you can. If your budget doesn’t allow you to dole out the big bucks to frequently treat your friends or family to the finer things in life, make a valiant effort to make the best of what you have and give what you can. Invite them over for home cooked dinner or lend them your favorite shade of nail polish. Stumble upon a buy-one-get-one-free coupon for an item you only need one of? Shop with your friend, and share the wealth. Get a promo code via email that you aren’t going to be able to use? Go ahead and forward that to a near and dear who will. When it comes to sharing, think outside of the box and give what you can. Others will appreciate it, and you will enjoy it.

cupcakes

If someone gives you half a dozen cupcakes, give four or five to your friends.

5. Plan activities that aren’t expensive. Who says your only social interactions have to revolve around buying food, drinks, or clothes? Nobody—that’s who! Take the reins, and set up wallet-friendly fun like brunch at your place, going for a walk or hike, cheering on your alma mater in a sporting event, or chatting while your dogs go wild at the dog park.

taking reins

Hiking the Bell Trail in Sedona, AZ was free and exhilarating.

6. Cut yourself a little slack. Whenever I feel like I’m not doing as well as I wish I was—with money, relationships, just being a good human in general—I remind myself that my (perceived) “failure” probably isn’t a very big deal in the whole scope of my life or anyone else’s for that matter. And please know that “I remind myself,” is actually code for, “usually after about five rounds of beating myself up over something insignificant..I remind myself”. Everyone is their own worst critic. If you feel like you messed up or aren’t meeting the standards you have set for yourself, you have to let it go and find a way to move forward. If you can’t do that, you just get stuck.

When you start to feel defeated about money or life, try to see yourself from your dog's point of view.

When you start to feel defeated about money or life, and all else fails–try to see yourself from your dog’s point of view.

 For more information about how to start making progress on getting out of debt or gaining control of your finances, check out our Getting Started tab at the top of our page.

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 Brittany

 

 

 

 

Why Math Matters

I’ve heard ignorance is bliss, but is it truly? Maybe when you are only considering short term effects and reveling in this little thing called instant gratification—maybe that is when ignorance seems blissful. But what happens when you look past the present and begin envisioning your future—does that change the perspective of being ignorant? Ignorance is defined as “lack of knowledge or information,” and its synonyms include but are not limited to “incomprehension of, unawareness of, unconsciousness of, unfamiliarity with, lack of knowledge about, lack of information about…”

ignorance

I don’t associate “bliss” with any of those phrases or words, and I’m guessing that I am not alone. Various life experiences have taught me that when you are aware of expectations and what needs to be done, you are more likely to do “it” better—whatever “it” may be.  When it comes to taking control of your life (of which finances is only one aspect), ignorance is bogus, and it will set you up for failure or copious amounts of unnecessary stress.

Sometimes long-term planning is necessary, and if you are financially preparing for a large expense or extended period without pay (or both) MATH MATTERS. If you are me, you think math sucks, but because I want to increase my chances for smooth transitions and decrease my chances of facing seemingly-impossible financial obstacles, I take the time to sit down and DO the MATH…ahead of time! I have learned that consistently DOING the MATH keeps me from getting blindsided, which makes my life more enjoyable—now and later!

Thinking of taking mathematical steps to create financial stability is just like taking mathematically steps when planning for an upcoming race.

Thinking of taking mathematical steps to create financial stability is just like taking mathematically steps when planning for an upcoming race.

If getting into a financial mindset does not come naturally to you, realize you are not alone. Try comparing the financial preparation of DOING the MATH to the preparation necessary for something more familiar like running a race or doing well on a test. For example, running a race might seem a little daunting, but if you know the distance you will be completing, you can train appropriately so that by the time race day arrives you are prepared and unafraid. In contrast, if you are running a race, and you fail to make yourself aware of the distance you will be covering, you drastically increase your chance of being unprepared—and limping across the finish line with a side cramp and feelings of nausea.

Equation for Solving Upcoming Financial Burdens

 Take these steps and do the math to eliminate financial stress during times of increased spending, decreased income, or both.

Benefits of Doing the Math Ahead of Time

Elimination of Financial Anxiety: Because I’m looking to the future and kicking ignorance to the curb, the mystery of my financial future has disappeared and along with that financially-induced anxiety.

No late fees: If you run out of money before you make all of your payments, you will most likely be faced with late fees, but if you are mathematically prepared, you will have enough money to make all of your payments on time.

Increased Flexibility: Because you know what you need ahead of time, you can make sure you have what you need ahead of time..and then some. Being prepared actually allows for more flexibility rather than inhibiting it contrary to what many people think.

No Overdraft Fees: You won’t be overdrafting because you are financially prepared, and your bank account will always have money in it. Even if there is not very much money in there, you will know the exact amount…so you won’t make the mistake of spending more than you have.

Avoiding Debt: You look ahead to see how much you need, and you do some math to create a logical plan that helps you accrue the money you need in the time allotted. You won’t need to borrow money from anyone else.

For more information about gaining control over your finances check out our Getting Started section at the top of our page.

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 Brittany

Saving for Retirement? What’s your Style?

What is your Saver Style, and more importantly how will that affect your future?

Take this short quiz to find out–Write your answers on a piece of paper and add up your total at the end to find out if you are a Super Saver or if you’re a Super Spender!

1. I have a 401k through my job and an IRA.
a. I have no idea what you’re talking about.
b. I put 1% in my 401k.
c. I am working to allot 4% of my annual income (my company matches) and put my annual allowance into my IRA.

2. I have long term and short term goals that tell me exactly how much I need to put into savings per month and how much I’d like to have saved in 10 years.
a. I’m too young to need a savings account.
b. I’ll start worrying about that in 5 years.
c. Millionaire by retirement!

3. When I have leftover money at the end of the month, I put a portion of it in my savings account.
a. What money leftover?
b. If there’s money left at the end of the month, I’ll put some of it in my savings account.
c. 10-15% of my annual income goes toward retirement!

4. When I hear people talk about savings, I feel…
a. Bored.
b. Interested but clueless.
c. Like I’m on track.

5. When I think about a savings account, I want to drink…
a. A magic potion that will create a savings account for me when I retire.
b. A bottle of wine (or two).
c. A pot of coffee – let’s start this thing now!

If you answered mostly A’s: Don’t worry…you’re not alone! So many young, single women are just starting jobs and trying to stand on their own two feet. No matter what your current income, you’ll eventually need to start saving for the future. What better time to learn than now?! Once you increase your knowledge about savings plans, it may be more attainable than you think! Congratulations for getting out of debt or never having debt at this point in your life!

Crippled Chart
If you answered mostly B’s: It’s crossed your mind but you’re not sure where to go from here. Do some research about pre-tax retirement investments to get knowledgeable and excited about your financial future! Congratulations for getting out of debt or never having debt at this point in your life! All you have to focus on now is saving to be a millionaire in your 80’s!

Motivated without a Map chart

If you answered mostly C’s: You’re totally on track to having the most amazing and care-free retirement of all time! Continue reading up on ways to invest and stay strong on your current path. Congratulations for getting out of debt or never having debt at this point in your life!

Super Saver Chart*These are ONLY amounts saved from your 401k and does not include other possible investments. The recommended percentage of your income to contribute toward retirement is 15%. These amounts are calculated based on the average household income in the US ($50,000) and a typical percentage contributed annually (4% that you contribute and 4% that your employer matches). What to do with the other 11% that you should contribute toward retirement? Look for our “Retirement Investment Options” post coming soon.

What it all means: Notice that starting 10 years earlier can earn you $436,483 more! I am aware that there are SEVERAL factors to contribute to starting your savings plan later in life and contributing less than 4% of your annual income. The main point of this post is to show you that, if you have the capability of beginning a savings account sooner rather than later, it will pay off BIG in the end!

Tax Tip: The amount of money taken out for taxes from your lump sum depend on the tax bracket you’re in when you need that money for retirement. For example, when you retire and no longer have an income from a job, your tax bracket may be significantly lower than when you are working and contributing toward your 401k.

Definitions:
401k: A contribution plan where an employee can make contributions from his or her paycheck either before or after-tax, depending on the options offered in the plan.

Roth IRA: An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year (currently $5,500 annually). Both earnings on the account and withdrawals after age 59½ are tax-free.
*There are other types of IRA’s that allow a variety of annual contribution levels and options.

Retirement Meme

 

For more information on starting a personal budget, check out our Getting Started tab at the top of the page.

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Sam