Category Archives: Everyday Ways To Save

Building an Emergency Fund on a Tight Budget

The existence of a healthy emergency fund is absolutely paramount for any adult. Unexpected expenses and occurrences happen all the time, often when people least expect them. A plentiful emergency fund can, and often does, determine whether or not an individual or family is ruined by financial hardship or able to foot the unexpected bill.

Despite the importance of an emergency fund, not everyone has one. One of the most common reasons is a tight budget. Of course, saving money is critical, but how does one go about doing so when they’re living on a tight budget. Thankfully, there are various strategies which can be used to create an emergency fund, regardless of one’s budget.

Build in Moderation

Many people believe that they can only build an emergency fund by putting aside large sums of money. However, this is not necessarily true. Emergency funds can be built slowly and moderately — and should be for individuals who are on a tight budget. Putting aside $20, $10, or even $5 per week may not seem like much money, but with time and consistency, it will add up fairly quickly.

Reduce Expenses, Increase Revenue

The creation of a healthy emergency fund will inevitably require changes in money management. These changes will involve the reduction of expenses and an increase in revenue. It goes without saying that the more money one has, the more they can put towards their emergency fund. Reducing expenses and increasing revenue will also gradually allow people to put aside larger amounts of funds. Many working individuals have a tendency to consume in greater amounts when their profits increase. However, discipline is certainly required in the process of building an emergency fund.

Set Specific Goals

Believe it or not, having a specific goal in mind can simplify the process of achievement. In the case of establishing an emergency fund, having a specific dollar amount in mind for one’s emergency fund can make a nice difference. Generally, experts advise people to have three to six months worth of living expenses in savings. The amount of time required to establish this amount will depend on a variety of factors. However, each bit of money which is placed towards the emergency fund will ultimately make a difference.

A Final Word

Timing is a huge factor in the creation of an emergency fund. In most cases, the earlier one starts, the better. Even young college students can begin creating their own savings by putting modest amounts of money aside. Building an emergency fund also requires discipline. The temptation to spend money is everywhere; those who constantly dig into their savings in order to fulfill their desire for instant gratification will inevitably find themselves out of funds when a true emergency arises.

 

Authored by Gabrielle Renee Seunagal

Comparing & Contrasting a Roth IRA vs. 401K

At some point, many individuals will become serious about saving money and putting aside funds for retirement. This often, in turn, prompts the opening of various retirement savings accounts. At this point, Roth IRAs and 401Ks are some of the most popular options. However, these two accounts are not the same, by any means, and should not be treated as such.

Some people are better suited for 401Ks while others do exceptionally well with putting money into a Roth IRA. Nevertheless, a critical and thorough understanding of the differences and features of the aforementioned accounts is absolutely paramount.

An Overview

One of the greatest distinctions between Roth IRAs and 401Ks is the functionalities of the two accounts. Investopedia explains that while Roth IRAs are started between an investment firm and the people which come to them, 401Ks are plans where workers permit their employers to put a percentage of their pay into the account. Each individual has their own ideas of which retirement savings account is best for them. Both Roth IRAs and 401Ks each come with their own upsides, guidelines, and stipulations.

The Benefits

Both Roth IRAs and 401Ks come with their own benefits which are designed to appeal to prospective customers. The Simple Dollar lists the following benefits which are associated with Roth IRA accounts:

  • Future tax-free withdrawals
  • Ability to withdraw contributions without facing penalties
  • Ability to select desired brokerage firm and choices pertaining to investments

401K retirement savings accounts also come with their own unique upsides, which read as follows:

  • Potential annual tax savings
  • Opportunities for monetary employer match
  • Options to set up automatic deposits
  • Gradual increase on allowed contributions

Which One is Best For You?

Ultimately, each individual will have to decide which retirement savings account is best for them. Believe it or not, choosing whether or not to set up a Roth IRA or 401K does not have to be an “either/or” decision. There are some people who have both accounts and others who employ alternative means to save money and invest in their retirement.

However, for individuals who are interested in setting up one (or both) of the aforementioned accounts, Fidelity has some helpful hints and advice:

  • 401Ks may prove to be slightly more beneficial for long-term savings.
  • Roth IRA accounts are usually better for individuals who see tax increases in their future.
  • People who wish to diversify funds put aside for retirement may find that setting up a 401K and Roth IRA accounts is advantageous.

 

Authored by Gabrielle Seunagal

How to Financially Prepare to Leave Your Parents’ Home

As the cost of living becomes more and more expensive, many young adults are living at home with their parents or other relatives. However, many people reach a point and time where they wish to live on their own. This is quite understandable and to be expected; however, leaving home and venturing out into the real world requires serious, calculated preparation. This is not something which should be done carelessly or on a whim.

Anyone who is thinking about leaving their parents’ homes will benefit from the following pieces of advice. Not only do they provide insight regarding this particular situation, but the forthcoming tools can also be applied to achieving general, economic success.

Know the Cost of Living

In general, the cost of living greatly varies according to one’s geographical location. Bearing that in mind, young people who wish to leave their parents’ homes should first know how much it will cost them to live on their own, explains Money Crashers.

This means doing research and looking into not only the costs of rent, but also utilities, groceries, transportation, and miscellaneous fees. Many young people may be shocked to learn that independently supporting themselves is more costly than they thought.

Have A Decent Amount of Funds in Savings

Even in the best of situations, unexpected events have a way of popping up. This is why The Balance advises young people to have extra funds put aside in case of emergencies. Car accidents, damage to valuables, and other unforeseen occurrences happen each day and preparation is paramount. Having a few thousand dollars put aside in cases of emergencies is a good idea and will likely pay off sooner or later.

Try to Minimize Use of Credit

One of the biggest financial mistakes people make is overusing credit cards. They continuously swipe their cards and are then unable to pay the bill when it comes due. This leads to subsequent interest charges which quickly pile up on top of the original debt. Before you know it, interest outweighs income and people sink further and further into financial hardship. For this reason, Mint urges young people to minimize their use of credit and reserve credit cards for only emergencies.

Of course, doing this requires a degree of discipline and stable, regular income, but reducing one’s use of credit is much better than the alternative.

A Final Word

In many regards, moving out of your parents’ home and becoming financially independent is a rite of passage. The majority of society also views this milestone as the true beginning of adulthood. By knowing one’s living costs, saving money, and using credit as infrequently as possible, young people will more than likely do well for themselves as they venture into the world of adulthood and independent living.

 

Authored by Gabrielle Renee Seunagal

How to Financially Prepare for a Recession

Nobody likes to think about recessions and all the havoc which they can bring upon a society and to the economy. Nevertheless, many people have lived through and experienced the plights of recessions. Although they take a toll on virtually everyone, members of society who are most vulnerable and least prepared tend to suffer on considerably higher levels. This is what makes financial preparation so absolutely paramount.

Failure to plan is ultimately a plan for failure. However, the following steps will allow people to not only prepare for a recession, but also protect the businesses and funds which they have garnered over the years.

Consistently Save Money

As stated by Money Talks News, constantly putting aside money always make a big difference, but it especially comes in handy during a recession. Financial advisors currently recommend for people to put aside at least six months to one year’s worth of living expenses. This is something which a surprisingly high percentage of people fail to do. Many of them believe that a crisis will not befall them, but a safety net always comes in handy. Consistently saving a certain percentage of funds from each paycheck makes a difference.

Saving money prior to a recession can truly determine the difference between survival and homelessness.

Look Into the Gig Economy

There are many opportunities which exist within the gig economy. Driving for Lyft/Uber, renting out rooms on Airbnb, content writing, graphic design work, and more are all opportunities which people can and should take advantage of. Not only does this allow for individuals to create an additional revenue stream, but funds earned in the gig economy can be put into savings, bills, etc.

Every person will find that money and savings are their greatest economical allies, especially in the face of a pending recession.

Pay off Any Incurred Debts

Another important thing to do in preparation for a recession is paying off debts. No matter the state of the economy, credit card companies will continue to charge interest for unpaid balances. Over time, this can truly chip away at your income; besides, any money which goes towards interest is lost income which could have otherwise gone towards savings or bills. It’s also worth noting that paying interest does not decrease one’s debt, but merely lessens the fees for not paying one’s debt on time.

Money is an incredibly valuable resource; it becomes infinitely more valuable during times when the economy is experiencing a recession. For this reason, everyone should be actively working to become debt-free.

A Final Word

Ideally, people should be saving money, creating additional revenue streams, and paying off debts regardless of whether or not a recession lies in the near future. Being in the strongest financial state is always the best way to set oneself up for success. While economic recessions might prompt stronger precautions, you can never go wrong when you are in good financial health.

 

Authored by Gabrielle Seunagal

Financial Advice for Immigrants

Many individuals who immigrate to various countries have experiences and journies which differ from natives. This is not to say that immigrants cannot be successful and prosperous; however, the playing field is somewhat different. Having the right information and the proper financial awareness always comes in handy. There have been countless immigrants who have been successful in their lives and endeavors after moving to new countries.

The following financial advice will furthermore ensure that more and more immigrants get to continue on the same path as those before them.

Be Open to Working Multiple Jobs

As documented by Mint Life, many people who emigrate to new countries may not be able to sufficiently meet their needs with one, singular day job. Thankfully, in this day and age, there are many options for people who are looking to diversify their income and revenue streams. In addition to working a day job, immigrants may also benefit from marketing their other skills within the freelance and gig economy. Platforms like Upwork, Fiverr, and Freelancer are amazing and can be great for immigrants to supplement their income. Some people even become so proficient within the freelance market that they are able to quit their day jobs and work full time within the gig economy.

Do Not Spend More Money than You Actually Have

One of the most critical factors for success is economic security and prosperity; this is especially applicable to individuals who happen to be immigrants. Therefore, immigrants should proceed with extreme caution regarding credit cards or even borrowing money from institutions which will certainly expect a return on the borrowed funds (coupled with likely, subsequent interest fees).

The Luxe Strategist strongly recommends immigrants to live within their means and abstain from spending money which they do not currently have. This means that immigrants who are struggling financially should seek legal means of increasing their income and not apply for credit cards or borrow money from banks or agencies.

Always Keep a Watchful Eye Out for Opportunities

One of the greatest things about immigrating to a new country is the plethora of opportunities which come with hard work. Giving one’s best effort and getting the job done is always important; simultaneously, immigrants should also keep a watchful eye out for the opportunities which may be around them. Opportunities could manifest as a potential promotion at work, a new client within the gig economy, etc. The specific possibilities will vary for different immigrants, however, the opportunities are always out there.

A Final Word

Never underestimate the power and efficiency of hard work. There have been many immigrants who have worked their way up and created amazing lives for themselves and their families. Anything is possible with the determination to succeed combined with the will to put in the work. Moreover, immigrants will greatly benefit from working multiple jobs, living within their means, and always keeping an eye out for opportunities which may present themselves.

There will be good days and bad days. Never give up. Always keep pushing forward. When there’s a will, there’s a way.

 

Authored by Gabrielle Seunagal