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It is best to plan for an emergency before it happens. You should start an emergency fund that contains at least three months? living expenses. Note that this is not just three months? rent, but three months? worth of money to cover all of your expenses: rent, utilities, car payments, daycare, groceries?everything.

Emergency money has to be something that you can access in an emergency. This means that you can?t have it in an investment that you won?t be able to get at. You might choose to keep it in a separate account than your normal account. The challenge is that if your money is easy to access, you might be tempted to use it for purchasing things on a day-to-day basis. Your emergency account is not for daily expenses or impulse purchases. It should be used for medical expenses, unexpected car repairs, and in case you lose your job.

Be wise with your emergency account. If there are layoffs happening at work, you might need to consider adding more money to your account. If your car repair bill is something you can cover without using your emergency money, don?t use your emergency money.

You need to choose an account that you will be able to access. You might choose to go with a savings account. You might also choose a money market account which will earn you more money. You want an account with no fees. Ask your banker about what account is best for you. Sometimes, to have no fees, you need to maintain a minimum balance in the account. This might even be an incentive to not spend the money in your account.

It might seem difficult to make payments into an emergency fund, especially if money is tight. Regardless, you should start with as little as $40 a month, or as much as you can afford (remember: more is Read more…

Everyone makes budgeting mistakes. It can take several trial and error months to get it all right. Budgets are constantly evolving. You have to work hard to find one that works for you. But there are mistakes you can avoid.

Here are the top nine mistakes that people make when budgeting:

Mistake #1: Using preset categories that fit someone else’s personal spending habits, not your own.

You can’t cookie cutter yourself into what anyone says your finances should be. Work with your spending and your goals to form a budget.

Mistake #2: Inaccurately setting your income level.

Look at what you are making right now. What is your take-home pay? Don’t project your future bonus into your income until the bonus is in your hands.

Mistake #3: Too few categories

You can’t have a budget that doesn’t allow for groceries or gasoline money. It isn’t an accurate picture of your spending. Have categories for each of your costs. You don’t have to be detailed down to the cent, but don’t leave things out.

Mistake #4: Forgetting yearly expenses.

Remember to include the expenses that don’t occur on a monthly basis, such as personal property taxes, service contracts, homeowners insurance and so on.

Mistake #5: Not tracking your cash spending.

Cash is one place where money leaks right out of a budget. It disappears really quickly and, often, you can’t remember where it went. Make sure you right everything you spend down or keep receipts for record keeping later.

Mistake #6: Forgetting to budget in savings.

You need to treat your savings just as you would any bill that must be paid. Remember, pay yourself first? That applies to your budget. Take out the savings before you spend money.

Mistake #7: Not sticking with it.

Budgeting takes a commitment and a good attitude. You have to be willing to review and change your budget as needed. You need to look at it several times a week to keep it fresh Read more…

If you are going to set up a household budget, you’re going to need to prioritize your spending. You simply cannot buy everything you want. You have to purchase the things you really need first.

So, how do you separate your “wants” and “needs” so your household budget will be successful?

To set up a household budget you will need to do three activities:

- List your income.
– List your expenses.
– Set priorities and make changes so that your income will be greater than your expenses.

Listing your expenses is important because it allows you to see where your money goes. Setting priorities will help you control spending so it is less than your income.

You’ll need to keep an accurate record of everything you spend. Carry a notepad with you so you can write down the cost and short description every item you buy.

You can group individual items into categories to make your expenses more understandable. Keep recording your expenses for a full month.

After a month of recording everything you spend, you’re ready to set some priorities. This means that your household budget may reduce or eliminate spending for some items in order to make your expenses come below your income.

It’s always painful to begin cutting back. But, you will probably be the first to admit that your spending has been somewhat out of control.

So, are there objective ways to establish priorities within your household budget that can help minimize the pain of setting spending limits?

=== Objective Standards for Household Budget ===

Yes. The primary contribution of respected psychologist Abraham Maslow was a hierarchy of human needs. This prioritizing of needs can give you some guidance for setting your household budget priorities. This hierarchy has been described in the following form (starting with the most important level):

1) Physiological needs (food, water, sleep, personal hygiene)
2) Safety needs (employment, security of income, protection from violence, family security, health)
3) Love / Belonging needs (friendship, family relationships, social networks)
4) Esteem needs (recognition, self-respect, sense of contribution)
5) Self-actualization (ability to use your talents, creativity, appreciate life)

=== Applying The Hierarchy to Your Household Budget ===

In setting up a household budget, you should allot money for items that satisfy the physiological and safety needs before allocating money for needs at other levels. Let’s see how this works.

The physiological needs are the most important. You need food, water, sleep, and personal hygiene to survive. This helps set your household budget priorities.

Expenses related to these needs take first priority. Basic nutrition, shelter, and personal hygiene expenses take first place in your household budget.

Next in line are the safety needs. These needs include enabling you to support your family and keep them safe. Basic expenses for transportation to and from work, clothing for work, making your home and neighborhood secure (which include taxes), and health care are included here.

But, here is where you need to be careful.

Let’s look at some of the household budget items included in these first two areas such as food (basic nutrition) and transportation to and from work.

It is easy spend more money than is required to satisfy these basic needs. You may confuse expenses for basic necessities with money that would contribute to recognition and self-esteem (need levels beyond the basic levels).

For example, buying nutritious groceries and making healthful meals at home helps fulfill your basic physiological Read more…

One of the hardest things that young couples report during their first year of marriage is getting to grips with joint finances. While most are willing to share what they have with their partner, they are not sure on the best way to bring this sharing into effect so that they can share with their new partner, but at the same time maintain financial security and a degree of independence. Some couples resolve this by resorting to separate finances and others find a way to keep things together, but it is generally reported as one of the biggest strains on newly married couples.

As well as this, there is also the problem that many people find it difficult to budget and control their finances. It is one thing to fail to keep track of expenditures when you are single, but when you are married you have more to answer to than just yourself. This is especially true once you have children. If one partner fails to keep control of their spending while the other is forced to worry about finances, it can create an enormous strain on the relationship.

Family Budget

One of the best answers to this dilemma is to create a family budget. This should outline what is allowed for the various expenses, which is to be responsible for what expenses and how much each partner can spend on discretionary expenses. While this may seem like a drastic response that takes away all the responsibility and financial independence from both partners, all it is really doing is getting both parties to sit down together beforehand and work out how much they can afford to spend on what, and then Read more…

With 2006 nearly upon us, many people use this time to look optimistically towards the year ahead by setting financial goals and planning for the future. How often however, do we find ourselves looking back at the winter months and feeling truly satisfied that we accomplished the goals we set for ourselves? For many of us, achieving our goals is more of a lofty dream than a reality; but it is never too late to change that trend.

No matter how overwhelmed you may feel, your financial goals can be achieved; and by following three simple steps you might even find yourself with a few extra bucks in your pocket.

Step 1: Build a Household Budget
Before you establish a general goal for your family?s finances, set up a budget to document exactly how much you can afford to spend on each household need.

Step 2: Examine Your Expenses
Once your budget is built it can tell you just how much or how little income is left over after all your costs are accounted for. Pay close attention to each household need or category, and decide with Read more…

Ideally, what comes in does not necessary all go out to creditors. Unfortunately, most of us know, that is one of our better dreams. Sometimes we find all our dreams shattered completely. Would you be prepared?

Once upon a time, I was living the ideal life. I had an excellent paying job. Who had to worry about finances or budgets? Ha! Not me. In fact, I never really paid much attention to price tags. I just knew I wanted it so I bought it. I had money in the bank, a nice car and a swell cushy condo.

But, in a blink of an eye, my dream life turned into a nightmare and I was totally unprepared. It was very frightening and intimidating to realize I had to do something drastic. Consequently, I had to learn quick, fast and in a hurry how to reduce my debts and budget my money or I would literally be out in the street.

Health problems forced me to give up my wonderful job and every luxury that went with it. My savings dwindled and I went from riches to rags faster than greased lightning. The shame of it all, what would my family and friends think? Oh poor me. What did I ever do to deserve this? This is so not fair!

Turns out, I was my own worse enemy. My family still loves and supports me and my friends are still my friends. As soon as I stopped feeling sorry for myself, I resigned myself to the fact that this is the way it was going to be, nothing in the world was going to change it and I had better learn to live with it. Don?t misunderstand me, it took quite awhile to get to that point, but the point is I?m there and I didn?t fall off the face of the earth. I still enjoy life, my illness is not terminal, I?m just on a darn ol budget. Grumble, grumble.

Sound familiar? You see my friends, you are not alone. Hopefully you will accept the fact, sooner than I; you have absolutely nothing to be ashamed of. Many, many families find themselves in the same boat. So come on, put on your life jackets and let?s row, row, row!

If you?ve lost your job, there is, of course, unemployment. And, depending on your circumstances, there are state and county agencies that offer additional benefits especially if you have children. It would be advantageous for you to investigate the possibilities. You may qualify for assistance such as; locating a job, temporary financial assistance, health care, food stamps, clothing banks, shelter and transportation.

Perhaps you?ve been spending more than you make and you find yourself in a serious financial situation. Let me share with you some of the ways you may be able to achieve some financial stability.

Obviously, you need to set up a spending plan or budget. But at this point, it will be of no value if you are robbing Peter to pay Paul.

First and foremost you need to reduce your debt and establish ways to save money. Once you?ve gotten your expenses inline, then develop a viable budget. You must discipline yourself to stick to it or you will find yourself without that life jacket and no boat to row, row, row.

You?ll need to do two things. Find some extra cash and reduce your debts. Here are some suggestions to help you achieve both. At the same time, you will be setting the ground work for your new budget.

Ways to obtain cash:
? Have a garage or yard sale. I was amazed at the amount of money I pulled in.
? You might want to look for a second job. I know, I know. What a yukky idea. But look on the bright side, it?s just until the crisis is over.
? Sell that extra car.

Ways to reduce your expenses:
? Refinance your home at a lower rate to reduce your mortgage payment. But do it now because the word on the street is that the Fed is going to increase the interest rate again!
? Increase your insurance deductibles. Then shop around for better rates for your homeowners, auto, life and health insurances.
Read more…

Your boss has just informed you that your department is being reduced by two and you are fired. After he leaves, what are you going to do?
This is not about finding a job it?s about being prepared for financial change. How you prepare for employment change is different for everyone. Being prepared for financial change is the same person to person.

1. Build an Emergency Savings Account

Everyone should have a passbook savings account with money to use in Emergencies. This money is to never be touched except when your car needs repairs you can not afford, your basement floods and you need to pay to clean it up, or your Great-Grandma Ruth is dying and you need to go to her bedside.

Use your Emergency money, and immediately start rebuilding it by paying yourself. A good amount to have in this account will equal six months of your net income (after taxes). This will provide you with a cushion for when you receive the pink slip. If you have a little time to search, you will be able to find enjoyable, quality employment.

2. Prepare a Spending Plan

You already know you should be living on a spending plan now. Have you thought about how you would live after a job loss? Take time today to create a ?Job Loss Plan? so you will have an idea what spending you will reduce as soon as you know you our out of work. Then as soon as you are told those two little words (You?re Fired) you can pull out the plan and start conserving your money. Do not deny what happened and continue trying to live like you did before.

3. Carry No-Debt

This is good advice for everyone, but as it pertains to this article no-debt is really wise. If you are out of a job, you do not want to be paying $500 a month in non-mortgage bills. By keeping your credit card and even your mortgage debts Read more…

Do you know how to budget? Strangely enough, most people are unaware of how to do so. Hopefully, this information will prove to be a useful guide.

As a consumer, you face many choices on how to manage your money. Knowing how to manage money can help you make smart choices. Your money will work harder for you. You’ll be more likely to avoid traps that can undermine your ability to attain your financial goals. You’ll be in a better position to pay off debt and build savings.

A few simple steps can make a big difference in making your money work harder for you. The first step is to create a budget:

Monthly fixed expenses:

Start with monthly fixed expenses such as regular savings, housing, groceries, utilities, and car payments. Put these continuing obligations under the heading: Fixed.

Make estimates for all money spent – regardless of how you pay: cash, cheque, credit card, debit card or automatic current account withdrawals. Use current account statements, credit card statements, receipts and other records to help you complete this estimate. Be realistic – it’s better to estimate high than low.

Monthly variable expenses:

Once you have noted all your fixed expenses, write down your expenses that vary each month such as clothing, vacations, gifts and personal spending money. Put these expenses under the heading: Variable. You might have these expenses every month, but the amount you spend could change.

Make a list of all your variable expenses by writing down every expense for a month – even small purchases. Use a small note book or other informal method to Read more…

Let’s face it grocery shopping can take a bite out of your paycheck. While this isn’t an expense that you can eliminate, there are ways to make it more affordable.

As you try to make ends meet you have a new appreciation for stretching $10. A good way to save money is to shop with just as much cash as you feel you will need. This is one way to ensure you do not go over you budget.

The key to grocery savings is not to be brand loyal. Always watch the grocer store circulars and use coupons in conjunction with a store sale price, or better yet find a buy one-get-one-free sale. Be a smart grocery shopper. Use all of the coupons and grocery cards you can for items you need to purchase.

Grocery Shopping Suggestions:

* Eat before you go grocery shopping so you won’t be tempted to make impulse purchases.

* Don’t forget to buy the generic or store brand for those items where a brand name is not necessary: sugar, flour, toilet paper, paper towels, napkins, etc.

* Stock up on food staples when they are on sale.

* Buy store-brand cereal instead of national brands. If your household goes through a box or more per week, you can save over $100 per year by purchasing store brands.

* When buying pre-packaged fruits and vegetables for a flat cost, i.e. 5 pounds of potatoes for $1.88, actually weigh the bags and find the bag that weighs more than 5 pounds.

* Check out the price per ounce/pound/piece. Just because it is a big box, doesn’t mean it’s cheaper! Sometimes two smaller packages are cheaper than the big box. Compare prices ounce per ounce.

* Stretch the food that exists in your cupboards. I bet you have Read more…

Does your budget never seem to balance the way it should? Are you constantly digging into the savings to make ends meet?

If you find that your budget isn’t doing the job, then it’s time to take a good look at essential components you might be missing or you have not allowed sufficiently for.

Some of the biggest budget blunders are . . . . . .

1. Failure to plan for inevitable expenses

We all have irregular expenses that we naively refer to as “unexpected.” Come on, is that flat tire really unexpected? Don’t you secretly know that these things happen? Have you ever owned a car that did not need repairs or maintenance? If you have, you probably didn’t own it long enough. The solution; Start counting on the car breaking down instead of hoping it doesn’t!

The car isn’t the only area we slight in the budget. Do you find yourself hoping and praying that the hot water heater, washer, dryer, or some other major appliance doesn’t need to be repaired or, worse yet, replaced.

Home maintenance is always a factor in our finances. Even if you rent, you probably have some home related expenses waiting to creep up on you.

These are just a couple examples of variable expenses that we often overlook.

When you consider the following other categories that could be included in this list, you can see the serious consequences this oversight can have on your budget. . .

Property, Auto, Health and Life Insurance if not paid on a monthly schedule.

Even if you do pay monthly, you should try to save for a lump payment if at all possible. Most companies charge up to a $3 fee for monthly payment options. It doesn’t sound like a lot but, over a years time it’s $36 you won’t be investing in their cause. I say, it’s always best to invest in yourself. Don’t you agree? Put the $36 in your savings!

Taxes – Property, Federal, and State – If you know you will have to pay Uncle Sam, prepare for it. If you value your home or other property investment, prepare for the costs. Don’t scramble at the last minute to come up with enough to pay your obligations. It’s likely other areas of your budget will suffer greatly, since these expenses have a high priority.

Clothing – Now, I can wear a piece of clothing ’til you can see through the threads. I work at home, so I only have a few choice pieces for special occasions. I’m a no frills kind of gal. But, I have four kids. Do I expect them to stop growing or somehow not care how they look to their peers? Of course not! But, I’m working on it. Just kidding! I know that they will need more clothes, more shoes, more accessories….etc., etc., etc., etc…..

I use every resource available to me to cut down the clothing budget, I know I must account for this expense. It will arise, whether I am prepared or not!

School Supplies – This is another one you just can’t omit if you have kids. You can, however, use some clever money saving techniques and multiple resources to keep this expense to a minimum.

Pet Care – If you have a pet, you most likely have expenses that come with this beloved family member. Vaccinations, flea control, veterinarian, and food are just a few that come to mind. Again, minimize the costs by using all your resources.

Tip: My local county animal shelter gives rabies vaccines for $5. Good for three years if regularly vaccinated. Does yours?

Gifts – If your friends, family, and kids don’t care if they don’t get gifts from you, if you’ve declared war on the holidays, or have a convenient hiding place when these occasions take place, then you can skip this one!

I’m guessing most of you are including this one. It’s inevitable. My best advice is to set strict limits and be a smart shopper. Seek out the bargains and buy when it’s a deal, even if it’s months ahead of time.

Medical – Unless you’re lucky enough, or not lucky (depending on how you look at it), to qualify for medical assistance, you undoubtedly have medical expenses over and above the cost of your health insurance; Co-pays Read more…