Budgeting for 2019

Have you made your 2019 budget yet? Do you have any money saving tips to share?

I've made my financial plan for the New Year. I'm already The Officially Cheap Bastard©™ but this year I'm upping my game, tightening my belt by another notch or two. I rely on budgeting apps like Everydollar.com to help keep me on track.

This means no more spending on anything that is not absolutely necessary. The only luxuries I allow are my streaming services. I admit, I'm a TV junkie. On the other hand, I have not been to the movies for at least two years, and going to the theater or a show are out of the question for me. 

I also NEVER do anything like go out for coffee, or buy prepared or takeout foods. I have a meal out only once a month, and my budget is $15.

Here's a tip: you can sometimes renegotiate service contracts. I managed to reduce my comcast bill by $30 a month. It took a half an hour on the phone with a manager, who tried every trick in the book to keep me on my old plan, but I was adamant.

FINANCIAL LITERACY - NO TIME TO BUDGET?

I'm not a financial expert of advisor. These are just some things I've learned. 

I started keeping a budget in July of 2015. I learned how to by reading books, blogs and online articles. .

I have saved thousands of dollars by having a plan, a roadmap, a blueprint. By cutting out things I don't need or can't afford. By spending less than I earn. By making sure I pay myself first, in my money market savings account. By learning how to say "no" and when to say "yes."

I don't have any debt - I've always been debt averse and rarely borrowed without definite a plan for a pay back date. 

But for people who do have debt - how much of your money are you basically just giving to the bank by not paying down your debt? 

The only way to get a grip on your money is to have a plan. Think if the money you will save! Is that worth your time? You bet!

 

These days, I am loving the online budget tracker from everydollar.com. It's free, and so easy to use.

 

 

FINANCIAL LITERACY - STORY OR NUMBERS

I'm not a financial expert, or a financial advisor. These are just some things I've learned and think about. 

 

Numbers can tell a story, but can a story help clarify numbers? I don't think so. 

When you are thinking about numbers and budgeting, it may be helpful to think things through with a narrative. It may help clarify your motivation, needs, wants, patterns. But when it comes time to discussing the actual finances, story can get in the way. 

Imagine this conversation about a proposed vacation:

"I work really hard all year and I deserve to go to Bermuda for a couple of weeks.  Just because I will have to go into a little more debt to pay some bills coming due, that's no reason not to go to the beach. It's not that expensive, just air fare and a hotel, but I didn't book the most expensive hotel, and I really need to relax.  Remember that time a few years ago that you wanted to buy a new refrigerator and I thought it was a bad idea? Did I tell you not to?  No I did not. Well I want a vacation. You have no right to tell me how to spend my money."

Cool story. But where are the numbers? How can anyone make a financial decision based on a story? 

How about this, instead?

 The caveat. You have to make a budget first!

And, as Suze Orman would say ...."VACATION DENIED!"

FINANCIAL LITERACY - A PENNY SAVED

I'm not a financial expert or a financial consultant. These are just some ideas I've learned and thought about. 

 

My dishwasher died last week. It was one that came with the house when I bought it three years ago, and it was always just so-so. 

I did some research on prices for a new one, found the one I wanted from a local dealer that I like. I picked a Bosch, because I have had good experiences with their appliances before. The cheapest one I found was about $600 installed. That's not so bad. I could have chosen another, cheaper brand, but in the long run, I don't think that's a good idea. 

My short-term  financial goal  is to save or earn $5,000 by November 1st. I've already saved $2,000 by using my Piggy Bank System, and I've got the next few months budgeted. But $600 would take quite a chunk out of it. 

My solution? A $28 stainless steel dishwashing rack (with a draining mat and a wire utensil holder.) Initially, I bought a cheaper one, but it was too flimsy and I'd have hated using it. So I splurged on the one I liked best. 

I cook every meal at home, but usually it's just for me, so I don't accumulate that many dishes. Maybe I will  buy that new dishwasher next year, but you can bet that I will be using my Piggy Bank System to save up for it. 

 

Cost of dishwasher    $600

Cost of dish rack          $28

________________________

Money saved             $572.00

 

A penny saved is a penny earned. 

 

FINANCIAL LITERACY - EXCUSES

I'm not a money expert, or a financial planner. These are just some things I think about and try to live by.

I have heard all of these...and I've said them all, too. 

But an excuse is not a plan. 

How does your spending affect your bottom line? Do you have a bottom line? Do you know where it is?

If you have spent too much on the things you DON'T need, and find that you don't have the resources to pay for what you DO need, you have robbed Peter to pay Paul. Sometimes you are both Peter AND Paul. 

Make a budget. A budget is a plan, a map, a blueprint. 

 

FINANCIAL LITERACY - BUDGETING TOOLS

I'm not a money expert, or a financial advisor. The ideas I'm sharing are just a synthesis of things I've learned and try to stick to.

Budget is key. I don't use a lot of online apps, though they are available and some people love them. .

I use my credit union online banking service to keep track of my (non-cash) payments and my income. I pay all my regular monthly bills by direct pay. Before I did this, I'd always have a growing mountain of bills sitting on a side table, which I would avoid every day. The stress, plus the late fees, made my financial life a nightmare. Now I know they are paid on time, and I can track them easily.

To make my budget I started by making a list of every bill that comes in monthly or regularly. Insurance, taxes, utilities, cable and streaming services, garbage and snow removal, loans, etc. I added them up, decided which ones I could live without, and cancelled them. Add them up again and you have your monthly "nut." I subtracted the "nut" from my personal income. And voila, that's my spending money for the month. 

BUT--- there are other regular expenses : the variables. Groceries, gas, dentist, appointments, vet bills.

If there are kids living at home, the variables can become intense. Mine no longer live at home, so that helps. College fees, though! That's a subject in itself. .

FINANCIAL LITERACY - SPENDING JOURNAL

I'm not a money expert, or a financial advisor. The ideas I'm sharing are just a synthesis of things I've learned and try to stick to. 

Keep a spending journal. In addition to figuring out your monthly "nut" (see my lat post) its important to know Where the rest of your money is going. You might be surprised to see how quickly the little things add up, and how often you pay for things things that you don't really need. .

I use an ordinary spiral, lined notebook. And a pencil. I write down each purchase, no matter how small. .

A daily $2.00 coffee x five times a week = $10. That's $40 a month on coffee. That's $520 a year!
Buy a thermos, make your coffee at home, and use the savings to pay down your debt. Or fix a window sill. Or put it in a savings account. Or your kid's college fund. .

I use cash for almost everything, so its extra important for me to write things down each day. I forget where the money goes otherwise, and you probably do too. .

The first few months of my spending journal I taped receipts onto the page. It's good to know how much you spent at the grocery store. Even better to pay attention to what you are buying and how much it costs. .

Did you really need to buy a hardcover edition of a new book? Or the latest edition of a glossy magazine? Or that new pair of shoes? Maybe you did. Maybe you didn't. But you will be aware of how much they add to your weekly expenses. With that knowledge you can begin to make better choices and build a sustainable budget. 

FINANCIAL LITERACY - WANTS AND NEEDS

 

We all have things we need, and we need to pay for them. Healthful, nutritious food, A roof over our heads, clothing to keep us warm or dry. In this era, we need other basics, like health insurance, education, transportation. These are tangibles. And must be paid for. Sometimes directly, sometimes through taxes.

Other needs are maybe not so tangible, that is, we can't purchase them. Clean water, clean air, beauty, justice, friendship, peace, love, safety, respect. 

And there are things that are for sale that we might want, but we don't need. I love cookies, too. And I love to buy things for my home. But buying these things without a plan is just reckless. Remember, the little numbers add up. 

Make your budget, map out your wants and needs. Pay for the things you need. Pay down your debt. Figure out how much college will cost for your kids, if that's in their future. Decide if you really need that expensive vacation, or is there another way you can have fun and relax?

Do you have a "fun bank?" Do you have an emergency fund? 

Learning the difference between want and need is one of the hardest lessons, and one of the most rewarding. 

 

 I use my "fun bank" for cookies. And sometimes, for having friends over for a little tea party. That's fun too. 

 

 

FINANCIAL LITERACY - THRIFT

 

Spending within your means is one way to be thrifty. 

Putting money into a money market savings account, or other growth account, is another way to be thrifty. 

But "thrift" must also include good stewardship, not only of your personal finances, but also for stewardship for your community. When you put your money into a Credit Union, your money works for the community. When you put it into a national bank, your money can, and probably does, go to invest in  businesses like The Dakota Access Pipeline, or other environmentally destructive enterprises. 

Likewise, if you invest in stocks, make sure that the companies you invest in are environmentally accountable, are not in the business of arms profiteering or other harmful shennanigans. 

We are all connected. 

The inverse of Extravagance is Thrift. 

The root word of "thrift" is "thrive." What do you need to thrive?

 

follow along on instagram

 

 

FINANCIAL LITERACY - EXTRAVAGANCE

Think of your budget as a map. Extravagance is going outside the boundaries of your budget. This will vary from person to person, family to family. The first step to staying within your means is to make a budget. Then stick to it. 

For some, going to the movies will be extravagant. For others, a trip to Europe will be an extravagance. There are ways to budget for things, but ignorance, intentional or not, will take you outside the limits. Remember that every penny counts, and the little things add up. 

Are you going into debt for the necessities because you have spent too much on the extravagances?  It helps to know the difference between want and need, and to plan for the "wants" without going into debt for the "needs."

In other words, set limits. Boundaries are a good thing. 

follow along on instagram

 

 

FINANCIAL LITERACY - PIGGY BANK TIME

I'm not a money expert or a financial advisor. The ideas I'm sharing are things I've learned and try to stick to. .

You never know when an emergency will hit. Or if there will be a big ticket item you need to buy. When my 12 year old dog needed emergency surgery earlier this year, I was glad I had saved enough cash to pay for it. .

If you give yourself a weekly cash allowance (see my previous post) you might find, if you spend carefully, that you have extra left over. Piggy bank time!

I save cash in addition to the 10% of my monthly income that I put into my money market savings account at my credit union. 

In addition to my emergency fund, I love my "fun bank." I only go to a movie, or to a restaurant, or order take-out, if there's enough in the fun bank to pay for it. If that's only once or twice a month, that's fine with me. I don't even buy coffee out anymore.

I don't know about you, but I love to watch my savings grow. As I age, the stakes are higher, and knowing I'm banking on my future is with its weight in gold. 

Follow along on instagram

FINANCIAL LITERACY - SPENDING CASH

 

I'm not a money expert or a financial advisor. The ideas I'm sharing are some things I've learned and try to stick to. .

CASH

I figured out my monthly fixed expenses and a general idea of monthly necessary variables (see my last posts on budgeting and keeping a spending journal.)

I also add my monthly contribution to my savings account - 10% for me - to my monthly spending sum.

Do allow for random extra  necessary variables like dentist appointments, kids birthday parties etc. AKA padding. And add that amount into your monthly expenses. Then subtract the total from the monthly net income.  

If you have debt...pay it down as regularly as possible. I'm not an expert on this, but you can find some good advice online, or ask a professional financial advisor about it. Whatever you decide, add this amount into your monthly expenses. 

Divide by four and that should give you a weekly cash budget. You should still have enough in your checking account for your monthly fixed bills AND some random necessary  variables. 

I use cash for almost everything. I take some with me in my wallet, and leave the rest in a safe place at home. If I have to use a credit card or a check, I remove that amount from my weekly cash allotment and put it in the piggy bank. .

My goal is to have some left at the end of the week to put into my cash reserve piggy bank. 

Remember to keep track of every penny spent. .

FINANCIAL LITERACY - SOME THINGS I'VE LEARNED

I'm doing a series on Financial Literacy, as far as I understand it, on Instagram. I'm not a financial expert, or advisor. These are just some ideas I've learned and try to stick to. I'll be posting them here, as well. 

These days I think about money and do my best to make careful choices. This was not always so. I used to be terrified of taking charge of my spending, and avoided thinking about, or being aware of, my own habits and my financial picture. One day, at age 66, I realized that if I did not figure it out ASAP, I might not have a chance of supporting myself as I age. This was sobering.
I spent a year keeping a daily expenses chart- it was very instructive. I read books, blogs and IG accounts about finance. These are a few goals and ideas I've learned, and that I live by now, after a lifetime of avoiding the topic like the plague.