In the never-ending quest to save more money, I have a few more ideas I would like to share…
- For small household repairs, use YouTube to teach yourself to do-it-yourself.
- Look for credit cards that offer cash-back rewards. Many cards now offer increased cash back bonuses for spending on certain categories or at certain stores. The Chase Freedom card, for example, offers 5% cash back on a rotating quarterly basis for gas purchases, purchases at Costco, or restaurants/travel.
- Take a mid week vacation instead of a long weekend… hotel rates during the middle of week are often lower than when your stay includes Saturday and/or Sunday.
- Comparison shop for gas… don’t just stop at the nearest station on the way home, use an app like Gas Buddy (available for iPhone and Android) to find the cheapest gas near you.
- Pay off as much of your outstanding credit card debt as possible to avoid costly interest charges.
I hope this helps you keep more of what you earn!
Why should you even bother to make a budget? “Budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.” (source www.mymoneycoach.ca)
However, not everybody has a budget because they don’t know where to begin… it can be a daunting task. To help you out, I’ve created a simple road map you can use to create an effective budget (effective = reasonable, achievable, and measurable):
- Determine your goal(s). It could be as simple as “save at least $5,000 per year toward retirement” or “eliminate your credit card debt in two years”. You want your goal(s) to specific and measurable so that you know when you get there. Your goal(s) should have a dollar amount and a time frame in order to meet this criteria.
- Determine how much you’re earning and how much you’re spending going back at least one full year. Most major banks/credit card companies allow you to link your on-line data to websites like Mint.com that will help you summarize your data with relative ease.
- Use the data from step #2 above to prepare a projection that goes out at least one year out showing what would happen if you kept spending at your current levels. You can do this using a spreadsheet program like Excel or Google Sheets (free). This is your starting point… and if you’re meeting the goal(s) you set in #1 above, then you’re done and this is your budget. If you’re not meeting your goal(s) set in #1 above, then you’ve got some work to do.
- Separate your spending into two categories. Things you can control in the short term or discretionary spending (e.g., recreation, restaurants, and groceries) AND things you can’t control in the short term or fixed spending (e.g., mortgage/rent, car payment, and taxes).
- Determine how much spending you’d have to cut in order to meet your goal(s). Use that amount and reduce your discretionary spending in whatever categories that make the most sense… e.g., reduce spending on restaurants by $100 per month and reduce spending on vacations by $500 per year. The result is a new listing of your discretionary expenses that will help you meet your goal(s) or your personal budget. If you can reduce your fixed expenses (e.g., by refinancing your mortgage) include those savings in your personal budget as well.
So now you’ve got your personal budget. How do you stick to it? It is definitely possible with discipline and proper tracking. Here’s a few tips to help you out…
- Open a new checking account with a debit card attached to it (do not use a credit card).
- Deposit an amount equal to your monthly spending budget at the beginning of each month.
- Use this checking account and debit card to pay all your budgeted expenses… when you have close to zero dollars left in this account, you know you’re about to go over your budget.
- Use software and/or apps for your smart phone to track your progress toward your budget on a daily basis. Mint.com is a great, free tool for this purpose.
The key is to set an achievable budget that meets your realistic goals and tracking your progress towards those goals. If you’re doing that, you’re doing it right.
Contact my office at 734-377-3641 or firstname.lastname@example.org if you have any questions or would like help in setting up your personal budget.
Consulting a CPA beforehand can help you determine what you can afford. Because there are tax benefits to homeownership, you may be able to afford more than you think.
Contact me at 734-377-3641 if you have any questions.
A decision by the Supreme Court is due by the end of this month (6/30/15) that could seriously impact several provisions of the ACA. See this article for more information.
If you have questions, call me at 734-377-3641 or email me at email@example.com. Or visit me at wolsoncpa.com.
There are always things you can be doing throughout the year to lower your tax bill at year end. We have almost reached the mid-year point in 2015 which is a perfect time to update your tax planning projection. Full year tax projections are a great way to see how what you do now will make your life easier come tax time in 2016 and they can be updated as your circumstances change… contact me at any time if you would like one prepared for you.
As an additional resource, here is an article from Kiplinger with some good ideas you can implement right now.
William A. Olson, CPA: Contact me at wolsoncpa.com