If one of your New Year’s Resolutions for 2010 is to create a budget and stick to it, I found a nifty tool that you might find helpful. Kiplinger.com has a budgeting tool that will help you get started. It lists several possible expenditures that your family may incur, and it has the function to do the math for you, so you will know in an instant how successful you were at sticking within your budget.
Don’t be discouraged if at first you find it difficult to determine how much should be allocated to each expense. It will take time to figure out what is practical and reasonable. It will also take some time to get used to having to stick within a set budget, but you can do it. Believe me, it’s worth it if you don’t want to squander all of your money.
I especially like the fact that this tool also accounts for your savings budget, containing fields for an emergency fund, a vacation fund, etc. The tool was created for Americans as one of the fields is labeled Retirement/401(k), nevertheless this tool can be used by anyone, and Canadians can put their RRSP savings into this field.
If you don’t already follow a budget, I want to encourage you to set one up for 2010. This tool will help you to get started. Click this link to check out the budgeting tool.
Pam Budgeting
Now that 2010 has come upon us, I think it’s important to make a few New Year’s Resolutions. When it comes to finances, it’s always important to set goals and to stick with them. I want to share with you my three main Financial New Year’s Resolutions for 2010 in hopes that they will encourage you to set your own goals for this New Year.
Resolution #1: Stick within our grocery budget. I often tend to overspend on groceries and I have discovered that little extras here and there tend to add up quite quickly. I vow to be more careful in 2010 and am bound and determined to stick within my grocery budget.
Resolution #2: Since my husband and I plan to do some extensive traveling in the near future, we want to save as much money as possible this year in every way possible. I also plan on working some overtime in the hopes of building up our travel fund even quicker. I find it is much easier to save when we have an exciting use for the money. It is quite boring to save otherwise. So, yes, my second resolution is to save, save, and save some more!
Resolution #3: I vow to do more homework on learning how to be more tax efficient with our money. I will do more number crunching to determine how much is worth contributing to our RRSPs and how much should be set aside elsewhere to supplement our retirement income. I also want to do further research on the home renovation tax credit to see if we can take advantage of this program before it’s too late.
For other financial resolutions ideas for 2010, check out globeinvestor.com’s article on the subject at this link.
Pam Budgeting
Although you may have failed at managing your money wisely in the past, it’s never too late to start to develop good habits. Whenever you begin to feel it’s a losing battle or that there is just no way you can make ends meet let alone save for your retirement, think of WD-40.
For those of you who have never heard of it, WD-40 is a spray designed to repel water and prevent corrosion. It’s creator, Norm Larsen, invented WD-40 in 1953 after 40 attempts! That means he failed 39 times before finally getting it right! He was persistent. If he had given up, the world would never have been able to benefit from such a product. In the same way, you cannot afford to give up on developing good money management skills. Giving up is not the answer.
There are many ways you can improve your money habits. You can meet with a financial planner at your local financial institution and they can crunch some numbers and help you to create feasible goals for yourself. You can create a budget and stick to it, and you can also read books and Internet articles that will give you ideas on how to save money and invest it wisely.
Although it will take discipline now and mean that you will be making some sacrifices in the present, you will reap the benefits in the future. The sooner you start getting your finances in order, the better off you will be.
Pam Budgeting
Every one should have goals. If you don’t have goals, it’s a good idea to make some because when you set goals, you have something to measure your achievements against. Although most of us do have goals, we don’t all set up goals for the short, medium, and long term. We may only set short-term goals or perhaps we might just think about our retirement.
A short-term goal might involve saving for a much-needed vacation within the next year or perhaps saving up to buy a vehicle. A medium-term goal could be to save money for a down payment on a home, and a long-term goal could be to save for retirement or for your child’s education. By setting goals for different timeframes, you are more likely to achieve your dreams by following a disciplined approach.
Short-term goals such as saving for a vacation could be as simple as putting money into a locked-in account such as a GIC or investing in something like a Money Market or T-Bill. This way your capital is secure and you can still see some growth in your investment.
A medium-term goal such as saving up to buy your first home could be achieved by setting up an RRSP and taking advantage of the Home Buyer’s Plan. You could set up preauthorized payments into the RRSP on the same day you get paid and over time your money will grow.
An example of a long-term goal would be a couple who just had their first child They decide that it is important to them to fund their child’s future post secondary education. They set up an RESP (Registered Education Savings Plan for Canadians) and begin to contribute to it monthly. By doing so, they have time on their side and their funds have the time to grow enough to adequately provide the funding for their child’s education. Had this couple not had the foresight to set up the RESP right away, they would have had to come up with a lot more cash to help out their child.
Planning ahead and disciplining yourself to put money aside each month to contribute to funding your short, medium, and long-term goals is well worth it. Although you might feel that you are on a tight budget, you can take comfort in knowing that you are paying yourself first, and that your scrimping and saving will pay off as you achieve more and more of your goals.
Pam Budgeting
Most people are familiar with Suze Orman’s advice about saving up 8 months worth of living expenses as an emergency fund. It seems like an awful lot of money, but I can definitely see her point. Especially in this troubled economy when it’s possible to lose your job and it’s better to have a cushion of money to keep you going while you are looking for another one. But, when the economy is at its best, do we really need 8 months worth? And if not, how much is enough?
I think it should be a personal choice. You know what you can comfortably live on. (If you don’t I would recommend making a budget so you can track how much you spend.) It definitely is a good idea to have some cash on hand in the event of a roof leak or an emergency root canal procedure. But if an amazing investment opportunity comes your way that is too good to pass up, you may decide to forfeit part of your emergency fund. That’s okay, as long as you have something else to rely on such as a low interest credit line. You always want to make sure that you have something to fall back on that won’t charge high interest rates (i.e. you don’t want to have to rely on credit cards.)
If you are unsure about how much you should be saving, you might want to ask yourself this question: If the worst possible scenario happened to me right this minute, how much money would I need to keep my family going? No one can really tell you the perfect amount to have saved up for a rainy day. The point is that it’s important to always have some tucked away.
Pam Budgeting
It is a good idea to get a mortgage pre approval by a financial institution prior to doing some serious house shopping. It is free and usually offers a 60 day interest rate guarantee from the date of the pre approval. However, it is important to understand that the dollar figure they present to you is not necessarily the amount you can truly afford. You don’t want to end up being “house poor” so I would recommend taking a serious look at your current financial situation and goals before deciding on how much to spend on your home. You want to take into account not only the mortgage payments, but also the utility costs, taxes, and so on. Make sure these expenses can fit into your budget.
As an example, when my husband and I went to a lender to get a mortgage pre approval, we were presented with a dollar figure that seemed quite high considering our current financial situation. During that time, if we had actually purchased a home for the amount we were pre approved for, we would have gotten into financial trouble. Instead, our goal was to spend at least $30,000.00 less and that is exactly what we did.
So, if you are considering buying a house, make sure to buy one that is within your budget so that you don’t become overwhelmed with financial stress. It’s just not worth it, and rather than regretting your home purchase, you can enjoy it, knowing that you made a financially sound decision. It is definitely wise to get pre approved, just be sure to take the figure with a grain of salt.
Pam Budgeting
The first thing you need to do if you want to make a budget is to gather all of your monthly bills together and sit down at the table and compare your income to your expenses. The ultimate goal for making a budget is to ensure that you are spending less than you are earning. If you are already at that point, that is great. If not, don’t worry, that is why you are making a budget.
To get you started, I have included some expenses that you may incur in your household:
Read more…
Pam Budgeting
If one of your New Year’s Resolutions for 2010 is to create a budget and stick to it, I found a nifty tool that you might find helpful. Kiplinger.com has a budgeting tool that will help you get started. It lists several possible expenditures that your family may incur, and it has the function to do the math for you, so you will know in an instant how successful you were at sticking within your budget.
