Tips for Budgeting and Making a Budget Plan

Why should people create a personal budget plan?

First and foremost, it is important that you realize what an invaluable financial tool budgeting can be.  A personal budget plan is without a doubt the most effective yet fundamental financial and money management tool that is available to you.  No matter how much you earn annually, whether it is tens of thousands of dollars or hundreds of thousands, it is imperative that you know not only what you are spending the money on, but how much you actually can afford to spend.

In the simplest of terms, a budget plan is a financial vehicle that enables you to control and organize your monetary resources.  Additionally, budgeting also enables you to decide – in advance – how your finances are going to work in your best financial interests by helping you set financial goals and realize them as well.  In so many words, budgets can be extremely powerful considering how simple they can be to create.  Just remember that the underlying premise or purpose of budgeting is to ensure that you have money for all expenses – known or unknown.

Advantages to creating a personal budget plan

The main drawbacks to creating a personal budget involve being completely aware of your finances as well as taking considerable time to create that budget.  However, the benefits and advantages far outweigh those drawbacks as well as the horrors of not following a personal budget once you have developed one.  The following is what we feel are the 6 key advantages to creating a personal budget.

• Advantage #1:   communicating with the family – if you find yourself in a position where you are in charge of budgeting with a significant other, money handling differences can be resolved if everyone in the household is aware of that budget.

• Advantage #2:  controlling finances – the key advantage is that you are able to take control over your finances and money.  A personal budget gives you the tools to know where your hard-earned money is going.

• Advantage #3:  saving money – this is probably one of the more significant benefits to the family or individual that follows a personal budget plan.  It is the most effective financial tool for creating more spendable income.

• Advantage #4:  enabling extra time – the questions “how was the money spent?” and “when was the money spent?” are easily answered when you have developed your budget.  Additionally, if there are questions asked by creditors or you need to prepare your taxes, you have all the information necessary for either.

• Advantage #5:  knowing what is happening with your finances – creating and then sticking to a personal budget enables you to always know how much money you have as well as how much you have to spend.

• Advantage #6:  organization – the basic personal budget organizes your finances into two basic categories – expenditures and savings.  Additionally, a personal budget gives you immediate answers to and the knowledge of all financial transactions that have occurred.

Take the time to develop a personal budgeting plan and in time, you will reap some nice rewards for all of your effort.

5 Ways to Easily Save Money

Why is saving money now more important than ever?

Take a look around you folks.  It’s no secret that the US economy as well as other global economies have been a state of unpredictability for a year or more.  The 4^th quarter stock market crash of 2008 is more than evidence of that.  Not to mention the fact that the auto and finance industries have been in trouble as well as the real estate markets and various retailers.  As a result, more and more people are focusing on creating and developing their personal budgets, and trying to save money so known and unknown expenses are covered.

It doesn’t take a rocket scientist to figure out the importance of creating and maintaining a personal or family budget since this is such an invaluable financial tool.  Not creating a personal budget is like that old adage about “failing to plan means that you are planning to fail.”  And that is basically what you are doing.  You have no control over your money, your finances will most likely end up in disarray, and you will never be able to get ahead financially.  The bottom line is that you should not be spending more money than what you actually have.

Five Ways to Easily Save Money

There are many ways that you can effectively budget just as there are a number of ways that you can save money for future purchases or unknown expenses.  Additionally, this will relieve the stress that occurs when you are struggling to make ends meet and pay your bills.  Here are 5 tips you should consider for saving money:

Tip #1:  Create and develop a personal budget

This is pretty much a no-brainer, but you would be amazed if you knew that people were surviving by the skin of their teeth without employing this invaluable financial tool. If you haven’t created a budget in the past, be sure to start one now. When you budget, make allowances for a saving category and save that much money each and every month.

Tip #2:  Get better at recycling, repairing, and re-using household items

This is part of the “Going Green” mentality, but it still makes a lot of sense.  In addition to this, you should consider using alternative energy sources and purchasing only those consumer goods that are manufactured from either recycled goods or sustainable resources.

Tip #3:  Cutting food waste will cut spending

What is the point in purchasing more meats or fresh vegetables than you can possibly consume at one sitting? More importantly, how much sense does it make to let leftovers go to waste and then get thrown in the garbage?

Tip #4:  You can still maintain a normal lifestyle inside or outside of the home by shopping sensibly

You don’t need to spend a fortune to dress and look good, nor do you need to spend a lot of money on food if you just pay attention to discounts and sales as well as not being a name brand junkie.

Tip #5:  Automated Payroll Deductions

Some companies will allow you to send part of your paycheck to a savings account. You just tell them how much you want to send from each paycheck and they will transfer it. This automated process makes saving money much easier.

Developing and Using a Budget

It might be very easy for you to make money but being careless in handling it might cause you to end up with nothing at all. What you need to do is write down a plan of  where and how your money will be spent. If you fail to do this, then you are inviting debt into your life and no one wants that. Here are some basic steps to budgeting your money.

You must know that the more basic your plan will be the better. When you make a list of planned expenses, the first thing to remember is to keep it very simple. You must list the typical things that you and your household needs to run smoothly. List your normal fixed expenses such as house or rent payments,  gas, electricity, water, telephone and any recurring bills.

List all money that will be coming into your account including your interest income, paychecks, child support, alimony and other costs. Doing this will help you become an effective budgeter.

After writing down the amount of money from all of your income sources, you must then identify your other expenses. This can be hard. You know why? Your expenses might change from month to month. You might have expenses you are not aware of. Create a miscellaneous category and try to guess what amount you will be spending.

You must have a good estimate of your monthly expenses  including the cost of gas, food, as well as utilities. The categories must include all areas where you typically spend money.  You will soon see where most of your money is being spent. Sometimes you will want to create sub-categories.

Some banks offer online services that automatically put your expenses in categories for you so you can easily see what you have spent your money on. This makes budgeting extremely easy.  In one glance you can see what you have spent on restaurants, which with the popularity of fast food and the great restaurants available now, make this one category that can be embarrassingly large. You can also set up categories that you most commonly use and customize your budget.

By budgeting and having your expenses written down somewhere or at least available to you online, you will be able to know where your money is going.  Analyze what you are spending for several months and it will soon become clear to you where you can cut back and how much money you can set aside for things you really want to have. Saving your money for doing something fun with your family or getting something you’ve always dreamed of is much easier when you have your budget planned and you set aside a certain amount of money every month.

Don’t stress out if you haven’t yet created a budget or you aren’t used to using one. You can always change your life by starting today to create a budget that will help you achieve your financial goals. You’ll be much happier in the long run and have much more satisfaction in being able to do the things you’ve always wanted to do.

Tips to Saving Money on Your Vacation at Disneyland

Considered as the “Happiest Place on Earth,” Disneyland is a child’s utopia. For adults, planning a trip to Disneyland or even to other amusement parks can be a nightmare. Following these tips will hopefully bring the fun back into visiting these places.

Avoid the front gates – Although naturally, these would be the places parents turn to for purchasing tickets, it is possibly the least cost effective. The regular amount is multiplied depending on the number of people you are with. With the Disneyland Resort, there are multiple theme parks, at least two located in California alone. For each of the Disneyland resorts, a separate admission fee is required unless a Park Hopper Pass is purchased.

Park Hopper Pass – This pass allows the user to visit both Disneyland parks in California. These passes are valid between one to five days. Similar to the idea of annual passes, the prices becoming cheaper as the longer days are purchased. Try purchasing these on ebay to save money.

Buy online – Disney offers discounts for tickets purchased online in advance. These can be directly printed or sent through mail.

Annual Pass – Amusement parks usually offer these passes to encourage visitors to come more often. For residents living near Disneyland, this is the most cost effective if utilized more than five times during the entire year.

Package Deals – Intended to entice more tourists, some hotels within the vicinity of amusement parks or other tourist attractions offer a discount on admission tickets if staying with hotel. Disneyland has three seasons: Value Season, Regular and the Peak Season. It is most advised to book during the Value or off peak seasons as these will give the visitors the most discounts.  Special Adults Price For some years during the months of January up until early spring, adults can avail of the same admission prices in Disney as kids do.

Discount Passes for Residents in California – Disney offers special discounts specifically for residents in South California, teachers who are members from various state unions, university students, some employees, retired individuals as well some car organizations in the state.

Birthday Passes Started in 2009 – Disneyland has offered a special discount for birthday celebrants. To avail of this discount, inform the park in advance and claim at the front gate with a valid ID for verification. Unfortunately, this pass is only given to the celebrant and valid only for that day.   Military Passes For soldiers in the military, whether in active duty, National Guard, Reserve, DOD or retired, Disneyland also offers special discounts depending on the time of the year. This requires presenting their military ID at the gate.

Travel Agency Discount – ARES, a travel agency of good reputation offers discounted tickets on its website which can be purchased and used for admission into Disneyland. Do research and inquire about other local travel agencies on whether they offer discounts on other amusement parks or tourist spots.

Foreigner discount – Residents from the United Kingdom can avail of discounts from Theme Park Direct. UK residents intending to purchase must take caution and compare conversion rates before buying.

Being aware of these options will hopefully make planning the trip to Disneyland a less stressful and burdensome task.

5 Reasons Why We Fail To Save Money

Money makes the world go round. That is something we all have to admit. We often try to save money but once spring sales or holiday sales kick in, we blow all our savings by breaking the bank.

It sure is hard to save money especially if you see something on sale and sometimes when we window shop. We also have a tendency to buy  things. Most of the things that we buy are not necessarily what we need but we buy them because they’re just too pretty to be sitting there at the shop.

Apart from binge spending what else stops us from saving money? Here are a few things why we fail to save enough money:

1. Just Not Having Enough

This is the most common reason for many people but not having enough money to save is not the real issue. We usually do not have enough because we spend too much money. Growing savings in the bank requires us not to spend and that on its own is a rather difficult task. One thing all of us should remember though is –it is doable.

2. Not Starting Early

Saving money should be part of a person’s values even at an early age because the earlier we all start saving, the more money is saved in our bank accounts. Children should learn how to save money at an early age so they can be educated about finances. Financial literacy is sadly not taught in schools even if it is vital for day to day activities. If you have children teach them how to save so they won’t have to go through what most people are going through –not having enough most of the time.

3. Not Prioritizing

After getting our paychecks, we usually spend on a few things that we don’t actually need. Prioritizing what needs to be paid first would definitely stop us from spending on unnecessary things. Prioritizing would also keep the bills from piling up. This is something that most of us want to escape from –paying three or even five months worth of telephone bills or cable bills. Something that should have been affordable in the first place turn into big amounts just because we do not know how to prioritize.

4. Not Budgeting

Not doing our monthly budget is one culprit of overspending which leads us to not saving a dime. Budgeting will lay down all the things that are needed to be paid and what are needed to be purchased. By budgeting you sometimes come to the realization that there were quite a few things bought last month or last payday that aren’t actually needed.

5. Not Paying Up

A person who has a lot of debt and is not keeping current with their payments gets more interest fees and owes more than they did. Having to pay on credit cards for a very long time makes saving money barely possible. Put an end to this vicious cycle by making payment arrangements with creditors.

Frugal Tips For Saving Money

Saving money isn’t that hard when you take a frugal approach to it. I know that the words “saving” and “frugal” don’t bring the happiest thoughts to your mind. And that is the number one reason you aren’t able to save any money. You have the wrong attitude. It is surprising how easy it is to change your attitude. When you succeed at saving money, you are helping yourself. Keep you goals at the top of your priorities. When you have a budget and live frugally, you don’t have less, you have more. It is all about having more money. Not less.

I know that personally, my biggest challenge is wanting more. It is something that is hard to fight. We are saturated by advertising. We see new and more expensive things all around us. Many of us struggle with issues surrounding shopping and acquiring. I have the fear of being without something I need, so I buy everything I might use someday. I have to constantly remind myself that if I don’t buy it now, I will have the money to buy it later. It is in the attitude. You can change it.

One of the easiest ways to start saving is to cut down how much you have to buy. You can stretch things out a bit. Use less cleaning supplies and soaps by diluting them with water. Save scraps and reuse old clothing as rags. Look at the uses of things that might be considered trash. If you can avoid a shopping trip by reusing something once, you are saving.

I have found that being frugal has a great side effect. You can lose weight. Start by only drinking water and milk. Cut out the sodas. Save juice for breakfast. Don’t make the sugary drinks. None of it is good for you anyway. Drink water. Cut the calories and feel healthier.

You can also cut out a lot of money, and calories, by only buying healthy foods. These are often cheaper than the prepackaged convenience foods. Instead of frozen pizza treats, have a salad or turkey sandwich. Eat fresh veggies and fruits instead of chips. Shop on sale. Don’t eat as much each meal so that it goes further for your family.

If you have the money to stockpile on sales items that you will use, then by all means, shop up. Buy enough to last you until the next sale. But don’t get carried away. Only buy items that you will absolutely use. Canned and frozen veggies, flour, sugar, tomato sauce — look for the items that are staples of your diet. In fact, if you can only buy sale items when you shop, you’ll be doing pretty good.

When you stock up your pantry and have plenty to eat, it is easy to focus on other matters. You don’t have to worry about finding the money for food. The food is already there. When you can make something yourself, make it. You can often save money by simply putting a little time into it. And it is often quite satisfying.

And my number one way to save money — pay off those debts. Take every penny you are saving and put it towards getting rid of that debt and building an emergency fund. Don’t buy things you can’t afford and don’t need. Ask yourself what is more important to you — having some item or living a stress-free financial life? Having the money you need when you need it is more important than having some gadget sitting around collecting dust.

Martin Lukac represents RateTake Refinance Rates marketplace. RateTake matches consumers with multiple lenders offering low rates.

Article Source: by Martin Lukack

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The Success Of The Kids’ Fun Fund

Our family recently returned from a week of vacation, and I’m proud to report that the Kids’ Fun Fund that I mentioned a few months ago worked just as I had hoped. Throughout 2009, my kids have been doing little chores around the house, chores for which they can earn a little money. A portion of this money gets deposited into the Kids’ Fun Fund – just a plastic square container decorated with their names and labeled Kids’ Fun Fund.

The purpose for our Kids’ Fun Fund was pretty specific. Our kids love to go to an arcade – a very specific arcade – located about fifteen minutes from where we go on vacation. This arcade is really more than just an arcade, it’s more like a small-scale amusement park, complete with miniature golf course and go-carts. My kids, for some reason, just really like to this particular arcade.

Last January, when we started to plan for our vacation, I asked my kids what they thought about creating a Fun Fund, so that they could save up a big pile of coins to use at the arcade. They really took to the idea an the Kids’ Fun Fund was born. You can click this link to read more details about the Kids’ Fun Fund.

The Kids’ Fun Fund really worked. Our kids worked hard – and worked hard together – to earn money for the Fun Fund. They were both so proud, when we were preparing for vacation, to pack their big jar of coins. When we arrived at the arcade, we all stuffed our pockets with quarters, and headed inside. The kids had a blast and it was great to see them enjoy the reward for their labors.

It’s cool to note that the kids could have spent every penny in their Fun Fund, but they chose not to do so. In fact, they used just a small portion of the money that they had saved. Now, they are in the process of deciding exactly what to do with the rest of the Fun Fund. I’ll guide them as they make the decision, but I’ll leave the final choice up to them. Whatever they do, I’m super-proud of my kids. They set a goal, worked hard to achieve it, and then had a blast at the arcade. Success!

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No Credit Needed: The Success Of The Kids’ Fun Fund

[TheSimpleDollar] Insights into Saving Psychology from The Economist

Recently, while digging through the magazines in our magazine rack, I came across the May 16, 2009 issue of The Economist. The Economist is my primary print source for news and it almost always gives me quite a bit of food for thought.

Anyway, on page 82, I found a really interesting article entitled “Smooth Operators,” which discusses some very savvy saving techniques that have developed in nations with developing economies. First, though, is a bit on why such techniques are needed there:

Paying interest on your savings will strike most people as odd. Yet some poor people in the developing world do just that. In West Africa, for example, some people pay roving susu collectors a fee amounting to a -40% annual interest rate for looking after their deposits. [...] a similar phenomenon in India, where a female deposit collector named Jyothi looks after small savings for people in the slums of Vijayawada at an effective yearly interest rate of -30%.

To us, this seems very alien. Why would you bother to put money in a savings vehicle if you’re charged such outrageous fees?

To put it simply, money security is the real reason. Keeping significant amounts of cash on hand can be dangerous, and after doing a risk assessment, it’s pretty clear that to many of these people, it’s better to pay that painful fee than risk the high likelihood of having the money taken in some method – a -100% interest rate is far worse than a -40% interest rate.

But why save at all?

Many of the subjects emphasized [that] controlling the flow of cash becomes all the more critical when income is not just low, but also unpredictable and irregular.

In other words, many of the people using these savings systems have very irregular incomes, so in order to survive during the many lean times, they need to sock money away. And without personal security, they need a service that keeps the money safe, so they utilize the susu (and other local variants).

It’s not that different than the problems that people face in America, where many people have irregular incomes (I myself am one of them). To put it simply, if your income is irregular, you have to save. You can’t spend what you earn, or else you’ll be in deep trouble during the lean times.

What gets interesting, though, is some of the tactics the savers use.

They are acutely aware, for example, of the importance of some psychological phenomena whose effects behavioural economists have only recently begun to explore. For instance, they purposefully seek out commitments to help ensure that they meet their savings goals. Many of the South African women in the study joined several monthly “savings clubs” in spite of having bank accounts. They found that the extra discipline the clubs provided was valuable in itself, because it compelled them to save no matter what.

This is a really important point, one I think is overlooked in western society. Peer pressure is a huge motivator, and using it for savings goals pushes you strongly towards saving. The idea of a “savings club” seems a bit strange, but why not? Investing clubs are quite prevalent in the United States, and they have roughly the same goal – encouraging people to invest and keeping their eyes on the prize.

If you have some friends that are also trying to save for different goals, why not start a savings club? Meet once a month or so to talk about money saving tactics and to share your progress. Knowing that you have to tell the others in the club about your progress will push you to meet the goals you’ve set, lest you look bad in their eyes.

Another solid tactic comes later in the article:

The mother of a Bangladeshi man who found himself unable to stick to his monthly saving goal found she could make him save more by taking out a loan from a microfinance company. The shared obligation of having to pay the regular loan installments meant he abandoned his spendthrift ways.

At first, this might not seem like the best idea. Taking on debt to force yourself into regular savings behaviors?

But think of it from their perspective. That microloan might have a 10% interest rate. On the other hand, the susu down the street charges you 40% interest on your savings. Seems like a good deal to me.

This is not altogether different than when people play games with 0% balance transfers on credit cards. They write a cash advance check from card A into their savings account, then do a 0% balance transfer from card B to card A to cover that check. Then they hold the cash in their savings, earning 2-3%, until they have to pay back the 0% transfer. Along the way, they can usually earn a few bucks, particularly if the amount isn’t large enough to really harm their credit.

In both cases, it’s a crafty way to use the financial tools available to you in an unexpected way to put yourself in a better financial place. Don’t just think of a credit card as a way to buy more stuff. Don’t think of a low interest or a zero interest loan as bad simply because it’s debt. Instead, look at all the tools available to you – and use them together to maximize your situation.

Personal finance lessons can come from anywhere. Always keep your eyes open.

The Simple Dollar

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