Life is never fair. Just when you think you have hit rock bottom and things cannot get any worse, they get worse. You would have thought that a recession would mean premium rates would stay the same. In your dreams, you might have hoped for the rates to fall. After all, there’s massive unemployment – it’s the worst level of unemployment for more than sixty years. With household incomes falling and no job security, this is not the time to find premium rates increasing. Yet when those premium notices drop into your mail boxes, the evidence is there. And it’s not just you. Premiums are going up for most drivers. This is so unfair! All but three states in the union have mandatory liability insurance. For everyone who wants to stay legal on the roads, the price of driving is getting to deterrent levels. First it was the price of gas shooting up like a rocket. Now it’s those premiums! What’s going on?
You have definitely heard the expression “umbrella policy” and maybe someone has even suggested that you get one. But why would you need such a policy if you already have homeowners insurance? Well, you surely hear numerous stories about odd and even outrageous lawsuits going on every now and then. And umbrella coverage is one way you can protect yourself from being involved in such a story.
Houses in dark spot areas and insurance rules basics
If your surroundings are not too promising in terms of weather conditions when the wind is practically blowing in your ear all the time and raindrops keep falling down on your rooftop there is a very good chance that you might have to pay extra for your house insurance. England is famous for its rains and floods that have taken over the country lately have ended up costing millions and millions of pounds in claims. This fact, of course, could not be ignored by the insurance companies that have already stated that premiums will be raised not only in England but all around UK as well.
If your surroundings are not too promising in terms of weather conditions when the wind is practically blowing in your ear all the time and raindrops keep falling down on your rooftop there is a very good chance (and it’s not surprising) that you might have to pay extra for your house insurance. England is famous for its rains and floods that have taken over the country lately have ended up costing millions and millions of pounds in claims. This fact, of course, could not be ignored by the insurance companies that have already stated that premiums will be raised not only in England but all around UK as well.
Being disciplined when it comes to personal finance budgeting is a key component for anyone seeking financial freedom. Taking control of your finances is the first step to starting down the road to building the life you always wanted and the quickest and easiest way to do this is with a budget. The most critical part of the personal budgeting journey is the emotional and mental side of the equation. Why?
Our behavior with money is the reason most of us get into financial problems in the first place. Our own wants over ride our common sense and before we know it we have a house full of stuff that we end up paying for twice over. Many financial experts say that personal finance is 80 percent behavior and 20 percent math.
This is where the household budget comes into play. In this day and age the great majority of people have no idea how much money they make each month let alone where the money goes once they cash their pay check. Before long this behavior catches up with everyone and they are in perpetual catch up mode when it comes to paying bills and meeting their financial needs. A budget, if done honestly, allows you to see exactly how much money is coming in and not only how much is being spent but also what it is being spent on.
Once you see what you have been spending money on you can come to grips with the bad behavior that has gotten you, and so many others, into a financial mess. Eating out two or three nights a week, going out to lunch everyday, that morning visit to the coffee shop, they all add up and chances are once you look over your written budget you will find many areas where expenditures are a little to high and are breaking the budget.
Here are four personal finance budgeting secrets to help keep a new budget on track.
1. Probably the hardest part of keeping a budget is keeping track of daily expenditures. One way to do this is to keep a small log book or ledger where you can keep track of your daily expenses.
2. Before going grocery shopping it is a good idea to make a list of the things you need. Check the fridge, the cupboards, and the pantry to make sure you aren\’t buying stuff you already have. Stick to the list once at the store and do not buy things not on the list.
3. Going to the store just to do some shopping is one of the easiest ways to suffer from an impulse purchase. Nothing will destroy a well thought out budget quite like an impulse purchase.
4. For large purchases over $300 or more it is a good idea to step back and wait a day or two before committing. Once given the chance to think it over chances are you will realize you don\’t really need it.
Personal finance budgeting is about taking responsibility for your money and hunting down and killing those behaviors that are costing you money. The beauty of the budget is it shows you exactly how your behavior with your money is affecting your financial situation.
Imagine setting out on a cross-country car trip with no itinerary, no maps, no money and no source of help. Jumping in the car, and heading across the country with no direction and no planning may sound like fun (and it might be for awhile), but what happens at the first sign of trouble? Living without a budget is a lot like that car trip.
It may seem easy enough to buy what you want, when you want it, use credit cards to handle those nuisance bills that come along very few months (like car insurance, vehicle tags and registration and even a prescription or two), but what do you do when something big hits? Would you find yourself in serious financial trouble if your income suddenly changed due to layoffs or a career-change; the roof needs to be replaced; or an unexpected baby arrived?
Spending plans, otherwise know as budgets, are just that: a plan for how you handle your money, to better prepare you for all of life’s twists and turns. Most people hate even the thought of budget. Why? Because they have been taught that a budget limits what they can have; what they can do; and what they can spend. Smart financial planners know that the opposite is really true. A good budget can be used to set the stage for financial security, and gives the freedom to spend money on honestly, anything.
Imagine the next time that bi-annual car insurance bill arrives in the mail: you open it, looked at the total and reach for your checkbook, knowing that the entire amount is there, just waiting to be paid. Whew! Sound too easy? It doesn’t have to be. Setting up, and living by, a good budget can free you of the stress and chaos of juggling paychecks and credit cards to meet the bills. It’s a way for consumers to break free from the bondage of debt and have the money for the fun stuff , without the worry of how to pay for it later.
What else can a budget do for you? Here are 5 important benefits of budget-based living:
1: Following A Realistic Budget Helps Free Up Cash For The Fun Stuff.
Budgets aren’t designed to deny the user from doing or having the things that are important to them. Budgets are an excellent tool to help stop wasting funds on little things that you don’t need, but sure can add up! For instance, one smart budgeter realized that if she just bought her favorite soda from the grocery store and took it to work with her instead of buying it from the machine, she could pocket nearly $400.00 a year! She took that soda money and used it for a weekend at her favorite spa! Instead of denying her of her favorite soft drink, her budget simply alerted her to an unnecessary expense, which ultimately allowed her to use that money for something she really wanted, yet didn’t think that she could afford.
2: A Budget Helps You Prepare For Emergencies.
Eventually something big is going to beak and need replaced. It may be a $400 washing machine, or it could be a $20,000 car. Are you ready for the inevitable? Budgets allow the user to see where their money is going, and to help them better equip them to both save for emergencies, and clearly see where changes can be made if an unexpected expense comes up. When Bob was suddenly laid off from his job, he and his wife Nancy had very little saved, but they used their budget figures to immediately see what temporary cuts could be made to get them through a few lean months with very little stress and worry.
3: A Budget Can Both Get You Out of Debt; and Keep You Out Of Debt.
The average American household owes more than $9,000 in credit card debt. That doesn’t even begin to account for the hundreds of thousands of dollars we each carry in additional mortgages, car, and student loans debt. Owing money is an American epidemic. It has even been cited as the #1 reason for divorce in the United States. Creating a budget the whole family can live with, will ease the burden of debt on the American household by teaching everyone in the household how to curb their overspending habits and live a more sensible, and stress-freeing financial life.
4: Budgets Teach Responsibility.
We see in every magazine, on every billboard, and in every commercial: you want it, you deserve it, go get it – no matter what the cost. The instant gratification of American credit has taken a severe toll on our sense of responsibility. After all, we can buy now, and pay later, much later, so who needs to think responsibly? Unfortunately, those bills eventually come due, and many people aren’t ready for them. Budgets help reign in over spenders, and teach them real financial responsibility.
5: A Budget Eases Stress.
Money concerns are a top stress inducer in today’s over indulgent society. It has been reported however, that those who live by a budget experience less stress in their daily lives. Surprisingly, that was true for both minimum wage workers, as well as high-income workers. It didn’t seem to matter how much (or how little), income a household reported, the fact that they knew how to best spend their money seemed to play a significant role in the stress they reported in their overall life.
Creating a budget may seem like an exercise in futility to some, but the statistics are clear: budgets are good for you! What do you have to lose except for a little worry? Try one and see what unexpected benefits you find yourself reaping.
CPA / personal financial specialists are experienced professionals who are in the best position to help their clients to stay on track with their financial plans regardless of the economic condition. The clips youre about to watch, provides advice to help you manage your financial situation.
Any suggestions (other than Quicken) for budgeting and personal finance software for a Mac?
The new Administration is taking over facing an unprecedented economic crisis. The country is already deep in debt and proposes to spend billions more to help prevent a long-lasting recession. Looking overseas, the war in Iraq still has eighteen months to run and there is no end to the war in Afghanistan in sight. So some would argue this is not a good time to start proposing major changes to the health care system. The last time this was tried under the Clinton Administration, the economy was doing well and the momentum for change was lost. Trying it again now is inviting a battle over the legislation when the country would be better served if its leader was focussed on the economic problems. Well, the nay-sayers would be wrong. This is the right time to talk about it again.
In this post, I would like to present personal budget guidelines, and hopefully, point out some potential holes or problems in your budget. The goal here is of course, to help you find ways to increase your disposable income, or the amount of money left over after all bills are paid. After reviewing this post, I hope to ignite some ideas in your mind about ways to cut expenses, and the things that are really eating holes in your budget. The following chart is a mixture of what other personal budget experts think, and my personal opinion of how to allocate your money:
Percentage of Income
Expense Description
10% God / Church
25% Housing
10% Utilities
18% Transportation
10% Food
2% Clothing / Attire
5% Misc. (eg Phone, Internet)
5% Medical Expenses
5% Other Debt
6% Savings
4% Entertainment
In the above table, I have listed the expenses in order of importance (to me, anyway). There are a couple of key things I want you to notice in reference to the above table:
Taking God Out of the Equation
The absolute worst budget mistake you can make. Without God and his blessings on your life, you are doomed. Do not cut your budget here!
Housing
This is where many people make a huge mistake. Many lenders will allow you to borrow up to 50% of your monthly income towards a house. This is ludicrous! Buy something within your means, or wait, and offer on several different houses at a discounted price to fit into your budget.
Transportation
Most people will not be able to fit into the 18% allocation for transportation, because they have a car payment that is 10-20% of their monthly income already. By the time you add the cost of gasoline and general maintenance, you are well above the 18% mark.
Miscellaneous
Cable TV, Long Distance Service, House Alarm System Service, Incredibly High-Speed Internet Service, etc. are budget killers. Stick to the basics in every service, and do without as many of them as possible!
Food and Entertainment
Do you need fillet mignon, caviar and two nights and the Weston 2-3 times a month? Do you have to have name brand cereal, Netflix, and StarBucks? Count up the cost of these and you will be shocked. Stay with off brands in the grocery store, and limit or cut back the high dollar, high frequency entertainment, I guarantee it will come back to haunt you. On a personal note, buying movies at Walmart in the $5.50 bin is a much better bargain than paying $3.99 at the rental store for only 5 nights of viewing.
I think you will find it remarkable how implementing just one or more of these personal budget guidelines and suggestions can make a difference in your family budget. The main thing is to group and count the cost of all the various expenses in your budget, and start trimming the fat. I track all expenses in my budget (except for entertainment) to make sure I do not overextend myself. If you are wondering why I do not track my entertainment expenses, it is because I hate wasting money, thus I have no budget for entertainment. This forces me to think twice about any entertainment expense, because I know it will put me over my total personal budget!
Get more great finance and investing tips at Jeffry Evans’ personal finance blog. Personal Budget Guidelines is just one of many great articles you will find at Personal Finance Resources.
Everyone spends his or her money differently. While one person may find eating out a necessity, another prefers to put a little extra aside for faraway vacations. How you ultimately spend your paycheck is up to you. However, when applying for a mortgage, or other large loan, you financial institution will be looking at some important spending ratios to determine if you qualify. It’s important to try and stay within these limits on certain spending items. Check with your particular lender for limits.
According to the U.S. Bureau of Labor Statistics Consumer Spending Survey, most American consumers spend the following amounts on the following items:
Food: 14.1%
-At home: 7.7%
-Away from home: 5.4%
-Alcoholic beverages: 1.0%
Housing: 32.9%
-This includes mortgage/rent; utilities; insurances and upkeep/maintenance.
Transportation: 19.1%
-Vehicles: 9.1%
-Gasoline: 3.3% (In 2003)
-Insurance: 6.7%
Apparel and Services: 4.0%
-The cost of new clothes, dry cleaning expenses, etc.
Healthcare: 5.9%
-Doctors, dentists, eyewear expenses; over-the-counter-medications, medical co-pays and deductibles. This does not include healthcare premiums.
Entertainment: 5.0%
-Movies, outings, vacations.
Personal Care products and Services1: 1.3%
-Haircuts, salon fees, etc.
Reading: 0.3%
-Magazine subscriptions, books, etc.
Education: 1.9%
Tobacco Products: 0.7%
Miscellaneous: 1.5%
Cash Contributions: 3.4%
-Religious tithes, charitable contributions, etc.
Personal Insurances and Pensions: 9.9%
-Health insurance premiums, 401K contributions, life insurance, disability insurance, etc.
Every family’s expenditures will be different. However, if you notice one of your own spending accounts in excess of these national statistics, it may be time to reevaluate why you are spending so much in a particular area.
Some areas that may be cut, according to most financial experts include:
Transportation: if your transportation (car) costs are much higher than the 19.1% national average, the odds are you own too much car for your budget. Try downsizing to a less expensive vehicle. You’ll not only save on monthly loan payments, but also on insurance premiums, upkeep and gas.
Miscellaneous accounts can be a budget killer for many. This is where we spend on the most frivolous items: morning coffee; specialty items; expensive gifts; etc. Try and keep this percentage under 1.5%, warn experts.
Entertainment can be a budget buster for some. While the average percentage is 5% f your annual bring-home salary, that amount can be excessive, especially for higher wage earners. This is an easy area to bring down expenses. While it’s fun to g out every weekend with friends and pick up the tab, try staying at home or having a quieter, more low-key (and less expensive), get-together with friends instead.
Food. Most Americans spend more than 14% of their monthly income on food – regardless of their family size! Considering that more than half of that amount is spent eating out at restaurants and fast food joints, it ma be time to hit the grocery store and eat at home in order to save a bundle at the checkout.
Saving money doesn’t have to be difficult. Taking the time to see where the money waste in your household is spent can be a great way to streamline expenses and learn to save.
Think about this. There are two ways to make money. You can exchange your time for money or you can make your money work for you. Most of us work 40 hours a week. In this case, you are trading your time for money. But wouldn’t you rather earn more than you are making? If you are making $1,000, wouldn’t you rather be earning $5,000? Most people think the only way to earn more is to work more. Work overtime is their motto! But there is more to life than working. Investing gives you the chance to let your money work for you—saving you time and earning you money.
But is the purpose of investing to get rich?
Some people don’t invest because they think that investing is something you do to get rich. They figure they’ll never earn enough to get rich, so why bother. But that’s not what investing is for. Investing is a way for you to be able to maintain your current lifestyle.
Think about this: what if the company you worked for suddenly closed down? What are you going to do when you get to retirement? Sometimes working more is not a viable option. Investing gives you another source of savings and earning income. You don’t invest to become a multi-millionaire (of course no one would stop you if that happens); you invest so that you can provide for yourself in the way you are accustomed to both before and after retirement.
Many people are convinced that investing is the right thing to do at this point, but, there are some misconceptions people have about investing that prevents them from actually doing it. These misconceptions are that:
Investing is too hard
Investing is too risky
You need a lot of money to invest
Let’s look at each one of these misconceptions.
Investing is too hard
You may think that investing is just too hard. But a lot of that has to do with the terminology of the investment industry. I mean who knows what Fed Fund rates, mutual funds, indexes, or blue chip stocks are? But you don’t need to be scared off by a bunch of words—in the end they are just words. Just like you probably didn’t know what PMI was before you bought your first house or what APR was before you got your first credit card, you can learn what these things are. And you will find that they aren’t so hard to learn. And if you seek the advice of a professional, they can explain it to you.
