Financial Planning

Do you need help creating a monthly budget that works? Just follow the seven tips below and you will be well on your way to creating a working monthly budget.

Tip #1 – Know Where You Are – It is important to know where you are financially before you create a month budget. This process includes documenting all your income sources, what you think you spend on expenses each month, and listing all your creditors and the debt that is owed to them. By doing these three things you will get a better understanding of where your finances stand.

Tip #2 – Track you spending – Tracking your spending for 30 days before creating a budget will give you the concrete numbers of how much you spend in each expense category every month. Many people are surprised to see how all the little purchases at up at the end of the month. By knowing how much you typically spend in each expense category you can now plan those expenses for the next month in your budget.

Tip #3 – Plan for periodic expenses – When creating a monthly budget that actually works you will need to plan ahead for periodic expenses such as car insurance (if not paid monthly), yearly car registration, gift giving, school shopping, and insurance deductibles just to name a few. If you estimate these expenses for the year and then divide by 12 you will get an amount that you can save each month for these expenses.

Tip #4 – Allow for Savings – It is always a great idea to plan to save a certain amount of money each month. This can be the beginning of an emergency fund so when unexpected expenses come your way you don’t have to reach for your credit card. This is an important step to getting and keeping yourself out of debt.

Tip #5 – Write Needs/Wants on a Special Worksheet – As members of your family express certain needs and wants, it is helpful to record them on a needs and wants worksheet. This will help to spend money wisely as it becomes available instead of make impulse buys and forgetting what you really wanted or needed.

Tip #6 – Use the Right Worksheets – When creating a budget it is helpful to use the worksheets that will have all the information you need to make a working budget. These worksheets should include a way to track spending, your repayment of debt, a monthly financial report and a monthly budget worksheet. These worksheets will make it easy for you to see all the information you need to create a working budget and show you expense categories you can adjust to make a balanced budget.

Tip #7 – Allow Yourself Some Mad Money – The best tip you can have when creating a monthly budget is to allow some mad money for yourself and spouse in the budget. This is the number one reason most budgets fail and people do not continue using a monthly budget. The resentment of not being able to spend any money makes people frustrated and then they stop tracking their spending all together. If you allow yourself and your spouse even a small amount of money to be spent on anything you wish without having to confer with the other person, your budget will have a much better chance of being successful. If money is tight just allowing a very small amount will help keep the resentment at bay.

Budgeting money is easy, if you have a basic process to follow. By following a few simple steps, you can put one foot in front of the other and create a workable budget very quickly. Follow the steps below to create a basic budget to build on:

1. Ask yourself what you want to accomplish by creating a budget. Maybe you want to save money for a down payment on a house. Maybe you’re tired of paying a large portion of your paycheck towards credit card bills and want to get rid of them. Or, maybe you’re having trouble paying all your bills on time and you want to change that for the better. A budget is nothing more than a plan for how you want to spend your money. So, deciding what’s important for you will determine what your budget will be focused on. Get out a piece of paper and a pencil and write down in a single, positive sentence, what you most want to achieve with your budget.

2. On the same piece of paper that you wrote your budget goal on, list how much money you receive as income on a monthly basis. If you can get this exact, great. If not, estimate. This doesn’t have to be exact. For example, if you’re paid every other week, just list double the amount of your typical paycheck and mark it with an asterisk (if you get paid every other week, two months a year you get an extra paycheck. But, if this is your scenario, don’t worry about the extra paychecks – they’re gravy – move on.)

3. Now, list your expenses: Mortgage/rent, utilities, car payment, insurance, groceries, gas, credit card bills, etc. Include any items that will help you achieve your ultimate budgetary goal. A fast way to help you remember everything is to logon to your online checking account and review the past 60 days of activity. Don’t burn hours of your time worrying about getting everything perfect the first time out – no one is going to grade your work. Your first goal should be to get a roughly accurate ballpark estimate of where you’re at.

4. Do a little analysis. The odds are good that if you’ve followed the first three steps as described, you’ll actually have a little bit of leftover money showing when you subtract all your expenses from your income. If you’re scratching your head at this because you’re usually running behind every month, here is the aha moment you’ve been waiting for: coming up short means either an unexpected expense has run you awry and/or you have many small expenses that you underestimate on a daily basis that quickly add up to real (budget busting) money. Four dollar latte’s in the morning, magazines, happy hours, eating out one too many times and 500 channels on your television (10 of which you watch regularly) all contribute to this. Which leads us to step number five…

5. Weed out the unnecessary expense. If you think this is poverty consciousness, think again. Even rich people – especially rich people – don’t waste their money on things they truly don’t value. You can make finer coffee at home for much lesser expense, get your tabloid needs more than met on the Internet, have sinful barbeques and happy hours at home with your friends and family for a fraction of the price of going out and survive on less than the extreme deluxe satellite television package, all while having more fun for less money than you thought possible.

6. Keep your mind focused on a budget that leaves you with money left over at the end of the month. Repeat steps 2-5. That’s it. Keep refining the accuracy of listing your income and expenses, and keep weeding out the unnecessary expenses in your life. An extra-credit thing you can do to help you with your budget is to put as many fixed bills on auto-pilot as possible (auto-draft or automatic online bill pay) and withdraw a set amount of cash periodically to cover the miscellaneous expenses. That way, you won’t have handwritten checks, excessive debits or ATM withdrawals goofing up your budget.

Follow the above simple process for creating a budget that will meet your needs, making your life and your family’s life the best it can be.

Personal Finance Tips for You includes twenty-four topics covering an array of areas. The author states in the introduction “it is important to know as much as you can about managing your personal finances in these economic times.” Some of the areas covered are credit card traps, keeping on track to pay your bills, handling your checkbook, the price of gas, identity theft, catching up on retirement planning, what to do if you receive a lay off notice from your job, checking your credit report and talking about finances if you are planning to get married. These are just a few of the topics. There are many more.

The first topic covered is Don’t Get Caught Up in The Credit Card Trap, Stop Yourself Before That Happens. This is a very important chapter for everyone to read because it is so easy for this to happen in tough economic times. The author offers several excellent tips to help anyone who has this problem. It is clearly explained why it is so important for you to pay down the credit card debt.

Another important topic covered is How Do I Keep On Track to Pay My Bills on Time. The author gives the reader some tips on creating a budget and keeping track of your income and expenditures.

How do you survive the high cost of gas? We all know, not long ago the price of gas kept soaring. The author gives us many tips on how to save money by doing some simple things like consolidating trips just to name one of the pointers. There are many tips mentioned that I never thought of myself.

How do you establish your credit if you are young and just starting out on a job? Nocita Carter tells you exactly how to go about doing this.

Do you think you can save any money by just saving your change? This is one of the tips made by the author. I can personally vouch for this one because each day when I purchase an item, I take the change and add it to an old coffee can. After a few months, it gets quite full. I am always surprised by the amount of money I saved from my loose change.

I could go on and on with each chapter because there are so many good points in this book but I think you get the message and would get more out of Personal Finance Tips for You if you purchase it and read it yourself.

There are several aspects of this book that I really liked. It is written in language that is very easy to understand. It is not like some of the other books on finance that require you to have a dictionary by your side as you read. The book is very organized. Each chapter starts with an introduction to explain the topic. Once that is done, the author lists several tips to help the reader accomplish these tasks. Nocita Carter has written this book in a manner that makes the reader feel like they have a personal finance expert right there beside them. Personal Finance Tips For You is recommended for any age. It will be a valuable tool for younger people who are starting their first job. On the other hand, one is never too old to find something they did not know in this book. After reading this book, I learned quite a few tips to help me with my finances. You will find this an excellent resource guide to keep by your side at all times.

Money management is much easier to control and understand if you create a well thought out and realistic budget. How do you know what a realistic budget looks like? First of all, you need to recognize that while it is important to cut your spending of frivolous items and daily trips to the vending machines you should still create a section in your budget for fun. This will prevent you from feeling deprived while managing your money, but once that money is gone for the month your spending will have to cease as well.

When creating a budget to manage your money you should begin by writing down all of your fixed monthly expenses. This would include your rent or mortgage, insurance, phone and Internet bills, electric and anything else you receive a monthly bill for, along with their amounts.

Take a close look at each of these items on your list. While some may be unavoidable, there may be others that you are either paying too much for each month or can eliminate altogether. A classic example of this is your phone bill. Many people pay way too much for a cell phone and a land line. If you have reliable cell phone service in your own home and a good cell phone plan, cancel your home phone subscription. If you feel you are paying too much for cell phone service, switch to a prepaid card. You can purchase a $20 card and make it stretch for the entire month. This will allow you to manage your money better.

After you successfully scrutinize your fixed monthly expenses, look at how much you are currently spending on variable expenses such as groceries, dinners out, gas, cable, clothing and entertainment such as movies. It is important that you look at a realistic account of how much you spend in each of these categories. This will allow you to make realistic adjustments.

Dinner out is another one of those classic examples that can kill money management efforts. If you and your partner eat out once a week you will spend somewhere around $200 a month or more depending on how expensive your taste is.

There is nothing wrong with treating yourself every once in a while for special occasions like birthdays or anniversaries, but you are throwing your money out the window if you frequently dine out. Set a limit to the number of times you can eat out that will fit comfortably into your budget. If you can realistically afford to eat out once a month, set the date on your calendar and make it a special night.

Money management skills begin by disciplining your budget. Once you have determined a specific amount of money you can spend each month in each category of your budget create envelopes for each category and label them. One envelope will be for groceries, one for movies, one for gas, etc. Then place the exact amount of cash you calculated in your budget into the envelopes. This money will have to last an entire month, so pace yourself. If you have extra money left over in one of the envelopes when the end of the month rolls around then you can treat yourself to an extra movie or fun activity, or maybe even save it.

If you can follow the budget you have set for yourself, you will be well on your way to having good money management skills.

Financial Planning is the process of creating strategies to help you manage your finances in order to meet your life goals. It is a complicated matter that all rational and capable people must one day begin to pursue. Financial Planning consists of four primary steps: creating Financial Planning Objectives, developing plans that will fulfill these objectives, creating a budget by which the assets will be obtained, and finally review and revision of the financial plan.

The Financial Planning Objectives can be divided into 5 sections. The first is the basic things you need for survival, and obviously this is the primary objective that must be met before others can be considered. These things are comprised of food, clothing, shelter, and even our automobile expenses. Next is the money left over that we can afford to put into savings or an emergency fund.

Then there are the discretionary insurance you put on things such as life insurance, home owners insurance, and auto insurance. Investment is the next step, the accumulation of assets in order to secure a return. Finally, we have estate planning which includes providing for heirs by leaving them assets and minimizing taxes.

After the Financial Planning Objectives have been laid out, financial plans must be devised in order to fulfill them. This is done by analyzing both your current problems that are keeping you from obtaining your goals and whatever economic opportunities from which you may currently benefit. Solutions are then developed on how to fix the problems or benefit from opportunities and then they are implemented. The final step is to monitor and keep track of these objectives and review their progress.

The third step in the financial planning process is to devise a budget by which the previous objectives can be accomplished. There are three steps to the budget creation process: identify how you’re spending your money, set goals for yourself that will accomplish your financial plan, and track your spending to make sure you’re following your budget. Look for small expenses that add up over time, reduce larger expenses, and try to cut taxes. Finally, keep track of how inflation will influence your savings.

The final step in financial planning is to review and revise your financial plan There are many reasons for this step, the most important being to make sure that you are meeting your objectives and that these objectives are helping to achieve your goal. It’s also important to review and revise your financial plan as you may have a drastic change in circumstances, your objectives may have changed, and maybe you have made a change to your long-term financial goals.

Financial Planning may seem to be difficult and time consuming, which it is, but with practice and dedication you will find it to be easier than you expected. There are also many financial institutions and computer software that can aid you when it comes to financial planning. Remember that with social security becoming less trustworthy, you’ll never to young to begin to prepare for retirement.