Can You Help the Economy to Recover?

This is a great post about the part that consumers, you and I, played in the current economic recession.

The encouraging thing is that maybe you and I can help to eventually turn the tide by being responsible with our money. Thus this blog.

Now May Be The Time To Invest

This article is a bit older, but it is a good post about why now may be the right time to invest.

How to Use a Budget - Post #3

Now that we've walked through the steps of creating a budget (see here and here); we'll talk about how to use your new tool.

The purpose of creating a budget is to understand how much money you have available to actually spend so that you only spend that amount. Now you know how much money you can spend on eating out or buying clothes this month without getting into trouble. Although the real trick can sometimes be actually sticking to your budget. Let me point out that a budget that you don't stick to is a waste of your time. So how do you make sure that you're spending what you decided you should?

Although this is a little old fashioned, if you're having difficulty sticking to your budget here's a really helpful trick: Keep your money in envelopes for each category and only spend what you have in the envelope. Once your envelope for clothes is empty, you don't buy any more clothes until you earn more money to put in that envelope.

I'm obviously someone who likes technology, and I grew up on a debit card. But I found that it was difficult to keep our spending under control when my husband and I were both on the debit card for all of our purchases. So we moved to a cash only basis for our "free" money. This has been very beneficial for 2 reasons: We only spend the money we have on hand so we're sticking to our budget; and we frequently spend less than our allowance so we're able to save up for bigger "fun" items. Saving our unspent allowance is how we got the TV we have now.

A budget can help you to stop spending too much money, and it can even help you to stop spending money altogether on some items. If you find that your Starbucks habit just doesn't allow you to balance your budget, you could cut it out completely and stop spending money there.

Used correctly, a budget can be the tool that helps you to get your spending under control and truly manage your money.

How to Create a Budget - Post #2

This is the second in a series about how to create a budget. These steps take you through the mechanics of actually creating and working with a budget. Read here for the first three steps.

Step 4: Create categories for all of your money. These categories will be driven primarily by how you spend your money, and so you'll need to modify it for yourself; but here's a list to get you started.

Savings (yes, it's first on the list because you should make it priority for those inevitable lean times)
House - mortgage/rent, insurance, repairs
Auto - payment, insurance, fuel, maintenance
Food - dining, groceries, lunch money
Entertainment
Credit Card
Cash allowance (I know, cash is a little old fashioned, but it's easier to stick with the right amount on your "free" spending than using a debit card)
Charity donations
Daycare
Medical
Life insurance
Telephone - land line and/or cellular, ISP
Utilities - water, gas/electricity, sewage
Garbage Removal
Gifts
Vacation
License Plates
Television
Bank Fees
Business Expenses
Clothing
School Supplies & Fees

Step 5: Based on your tracking of how much money you spend, assign a certain amount for each category per month (or whatever time frame you're using.)

Step 6: Balance your budget. This is a vital step, your income has to be at least as much as your expenses. If you find your expenses outstripping your income, you will need to make some tough decisions about where you can cut back. Can you spend a bit more on groceries which will save money on food since it costs less than eating out? Can you check around and see if you can get a better deal on your insurance? Do you qualify for any assistance programs for your utilities or daycare? However you get to the bottom line, your income has to cover your expenses.

The next post on budgeting will talk about how to use this new tool to actually make a difference. Because that's just what a budget is, a tool. And no matter how fancy or thoughtful your tool is, it only works if you use it correctly.

SNL's Answer to Debt

Because it's been harder than I realized to find the energy and motivation to post as often as I should after working full time and taking care of a house and kids; I decided to post some comic relief.

This skit from Saturday Night Live sums it all up!



The second post on how to budget will arrive soon!

How to create a budget - Post #1

I realized that I’ve posted several times and referred to your budget. But some folks may not know the mechanics of starting a budget. So with the new year approaching, I thought I'd post a series on the steps for creating and working with a budget.

Step 1: Determine what time-frame you’re going to use for your budget. The typical time-frame is monthly, but if you get paid on a different frequency and prefer to budget bi-weekly or bi-monthly, that works too. Just choose what works best for you, after all, it is your budget.

Step 2: Determine how much income you make during your budget time-frame. Please see this earlier post about converting your pay frequency to monthly (if you want to budget monthly); and how decide how much income you should budget if you aren’t paid on salaried basis.

Step 3: Figure out how much you’ve actually been spending. This is where your eyes can really be opened to where and how you’re spending your money. If you use software to track your checkbook, you should be able to run reports that will give you this information. If you don’t currently track your spending, you may have to start tracking it for a couple of months before you can really create your budget.

Please check back for the next post that details the next steps in the mechanics of creating a budget.

Can you have ANY fun with your money?!

During these times when everyone is feeling the pinch of the economy, we all hear advice that we have to be very careful with our money and watch every penny that we spend. I agree with that advice, but not to the same extent that I hear in some recommendations.


I agree that it is very important to make a budget and to understand where your money is going. But part of that budget should include some "fun" money. We all need to be able to spend money on things that we enjoy from time to time. You may not have enough money to spend much on fun activities, but you can probably include a little in your budget and set it aside each time you get paid. After you've saved for a little while you'll have enough for that small vacation, the trip to the amusement park, or whatever activity you and your family really enjoy.

I agree that it's important to be fiscally responsible, but you should be able to live life and have fun at the same time.