Tag Archives: Budgeting

How to Financially Plan for Having Children

Having children is one of the most significant milestones in the life of any adult. In the best case scenarios, knowing that a baby is on the way can be very exciting and even a little nerve-wracking. However, without the proper financial planning, excitement can quickly become stress while nerve-wracking can morph into downright terrifying. This is why financial preparation for the newest member(s) of the family is absolutely imperative.

Understand that Children are Incredibly Expensive

Virtually everyone has heard the infamous phrase: “Kids are expensive.” Many people even believe it and rightfully so. However, hearing that children are pricey and getting a numerical breakdown of the associated, ongoing costs of childcare are two different things. The exact digits can help people understand the gravity of the costs which will definitely become real.

Anyone who is preparing to have kids needs to, at the very least, have an idea of the specific average costs. Thankfully, Discover thoroughly breaks down each facet of childcare and how much they amount to. For instance, the average annual expenses of raising a child within the first two years cost over $12,600.

This breaks down to the following average, yearly costs: $2,900 for education/childcare, $1,800 for transportation, $800 for clothes, $3,700 for lodging, $1,600 for food, $1,200 for healthcare, and $900 for various other expenses. Granted, these costs can be higher or lower depending on assorted factors, but nevertheless, the aforementioned costs provide an idea into how pricey it is to care for one child just within the first 24 months.

Have a Plentiful Emergency Fund Stashed Aside

An emergency fund is paramount for all adults; however, it becomes fifty times more critical when a baby is involved. The truth is that no matter how much money is carefully budgeted out, unforeseen costs have a way of arising, especially when babies are involved. According to USA Today, new parents are advised to save up to [at least] six months of living expenses in the event of any crises or urgent matters. Even after the arrival of the baby, the aforementioned emergency fund should not be touched unless it is absolutely necessary.

Ensure the Existence of Steady, Reliable Income

While budgeting and saving money are incredibly important financial planning steps for having children, the positive impacts are severely counteracted without the existence of steady and reliable income. This is why Money Crashers recommends for expecting parents to have ongoing pay and preferably an established position, particularly if one works in a company.

Each family has varying work situations and what is applicable to some parents may not be suitable for others. While each circumstance and career path is different, steady and reliable income is utterly paramount when starting and expanding a family.

A Final Word

Children are a blessing to any loving couple who is ready to grow as a family. The ability to enact strategic financial plans is guaranteed to make raising kids much easier and stress-free than it would be without any preparation. Understanding the expenses associated with children, maintaining a healthy emergency fund, and ensuring streams of reliable income will make a significant impact. Although the ups and downs of parenthood are unavoidable, even with the best of plans, following the foregoing steps will prevent many problems both in the short-term and the long-term.

How to Financially Plan for an Upcoming Trip

Wanderlust, also known as the strong desire to travel, is more common than some people might imagine. The truth of the matter is that the world is a very big place. There are many places to visit and an amazing plethora of things to see and do. While the upsides of traveling (such as learning, exposure to new, diverse cultures, etc) are well-documented, financial planning is absolutely critical, especially when a forthcoming trip is involved. Financial planning can often make the difference between a successful trip or a failed trip.

However, despite the paramountcy of financial planning, there are still many individuals who struggle with the involved technicalities. Thankfully, the following steps will prove to be helpful and answer many existing questions.

Start Saving Money Ahead of Time

Saving money prior to one’s trip is one of the most critical steps of financial preparation for any traveling excursion. According to Pocket Sense, individuals who are getting ready to go on a trip should start putting funds aside for food, shopping, airfare/transportation, lodging, and other travel-related expenses. In most cases, a monthly budget is best because it permits the person at hand to still meet their ongoing expenses, whilst stashing aside capital for their upcoming journey.

Remember to Stay on Track with Your Regular Bills

It is not uncommon for the excitement of forthcoming or current travel to sometimes serve as a distraction. Often times, the hustle and bustle of travel can engender forgetfulness about certain matters; this can be especially problematic when bills and other expenses are involved. Therefore, Quicken suggests setting up automatic payments which are linked to one’s bank account. This ensures that expenses are covered even during times of travel. Imagine the horror of coming home from an eventful, fun trip only to realize that the lights or heat have been shut off.

In this day and age, virtually every bill can be paid automatically. Automatic payments are especially applicable and recommended for persons who will be traveling for weeks or months on end.

Take Advantage of Opportunities to Reduce Certain Expenses

As a general rule, travel is widely regarded as a costly endeavor. However, taking a trip does not have to be as expensive as many people might think. In this case, it’s not about who you know; it’s about what you know.

First and foremost comes transportation. Nine times out of ten, travelers arrive at their desired destinations via plane. While airfare can be pricey, there are some ways to get around sky-high fees. First comes how far in advance the individual chooses to book their flight. Generally, purchasing airline tickets anywhere between six to four weeks in advance is wisest. Flying on weekends or holidays is often always more costly than buying a ticket during the week. As U.S. News reports, the Skyscanner app is an excellent tool for comparing airfare prices and getting the best bang for one’s buck.

Another opportunity to reduce travel expenses comes in the form of the Airbnb app. Although this app has become more popular in the past few years, there are still many travelers who book hotels as lodging accommodations. However, using Airbnb instead of hotels can determine whether or not a traveler pays $50 per night or $150 per night for lodging.

A Final Word

Traveling is a luxury that can greatly enrich each person’s life if they allow it to. However, financial planning for any trip is incredibly important. Although no one journey will be exactly the same, saving money ahead of time, keeping up with ongoing expenses, and using apps like Skyscanner and Airbnb to reduce some of the most costly travel fees can make a world of difference!

Happy traveling!

Should You Keep All Your Money in the Bank?

In this day and age, money management is a critical skill for financial success. A considerable aspect of money management involves knowing where to store one’s funds. Although people have traditionally kept their money in banks, more and more people are beginning to question the wisdom of the aforementioned decision. Furthermore, those who are against keeping some or all of their earnings in banks are wondering about the existence of other alternatives. Thankfully, there are options for people who wish to store their funds elsewhere. The case for keeping minimal capital in the bank is also quite strong.

The Necessity and Flaws of Banks

In 2018, banks are, arguably, a necessary evil. Virtually everyone has a bank account. In most situations, these accounts are essential for transferring, receiving, and withdrawing funds. Nevertheless, banks are inherently flawed and while closing a bank account is ill-advised, exercising certain degrees of caution and pragmatism is highly recommended.

First and foremost, whenever one deposits money into a bank, it is no longer truly “theirs.” Granted, the numbers of the deposited amount shows up on any account, but in actuality, banks loan out deposited funds. These funds are why accounts which incur negative balances are still able to function in at least some capacity. Nestmann furthermore states that were everyone who deposited money into a bank to withdraw all their money simultaneously, the bank would not be able to cover it. This, in and of itself, serves as credence to the reality that your money stops being “your” money when you deposit it into banks.

Despite the aforementioned flaws, keeping somewhat minimal amounts of money in the bank is still a sound judgment call. There are still some businesses which do not accept cash payments. Therefore, a credit or debit card will be necessary in order to receive certain goods or services. Transportation via Lyft/Uber, travel accommodations such as Airbnb, and the purchase of plane tickets are several instances where a credit or debit card is required for payment.

In the case of banks, keeping some, but not all or even most of your funds in an account is the smartest decision in 2018.

Other Places to Store Capital

While many people are aware of the problematic factors of banks, they remain unaware of other places to store their earnings. While some individuals opt to keep large amounts of cash in safe boxes or other hidden places, Investopedia confirms the variety of options for those who wish to store their capital outside of banks.

Government bonds, precious metals, and other collectible assets are great avenues for those who wish to store their money outside of traditional banks. Unfortunately, there is not a risk-free location where money can be stored, however, with the proper steps and decisions, each person can greatly minimize the risk of losing capital. Many people have found that storing various amounts of earnings in different locations is preferable than keeping all of their money in one metaphorical basket.

A Final Word

Banks should be viewed and treated as necessary evils. While some people may view banks as virtually secure, this is not as accurate as most would like to think. Ultimately, the decision lies with each individual; however, most people usually feel the inclination to protect and preserve their earnings.

Authored by Gabrielle Seunagal

Basic Money Handling Tips

The ability to handle money appropriately has never been more imperative. In this day and age, people who are aware of just the most basic ways to manage capital do significantly better than individuals with poor money management skills. The perks of managing capital appropriately are well documented. Any individual who is serious about his or her financial future would do well to learn some of the most basic, yet paramount money handling tips.

Don’t Spend Every Dime You Earn

Virtually everyone has heard someone say that they want to “make more money.” The desire to increase one’s earnings is universal, however, the manner in which one handles the extra capital is what truly makes the difference. Far too often, when someone’s earnings increase, so does their lifestyle. For instance, an individual who receives a raise from his or her boss may then feel the inclination to spend more money. In their mind, why shouldn’t they? They’re making more money and can afford to be less frugal, right? Wrong! Far too many people have this mindset and it hinders them from considerable financial growth.

As the old saying goes, “if you make a million and then spend a million, you’re still broke.” A person who is serious about handling money appropriately should first and foremost put more money aside towards savings or fruitful investments when they see an increase in their earnings. This is not to say that one can never upgrade their quality of life, however, it needs to be done in moderation and with steady progression. Anything more is a recipe for financial disaster.

Don’t Go Into Debt

Similarly to saving and investing capital, landing in debt is another one of the most common financial traps that many people fall into at one point or another. It is only human nature to desire nice things and enjoy a certain lifestyle, however, the finer amenities of life must be earned. This is a concept that many individuals fail to realize. The temptation to swipe one’s credit card repeatedly feels great until the bill comes due and the person can’t pay it. All of a sudden interest kicks in, on top of the original debt, and the cost of a $400 wallet is now $20,870.76 by the time it is completely paid off.

Debt and interest are the enemies of financial success and should be avoided at all costs. Those who wish to experience the best that life has to offer must do so by increasing their earnings in one way or another. There are many ways to create passive income streams, including driving for Lyft or Uber in one’s free time, renting out spare rooms on Airbnb, or doing freelance work on a site like Upwork. Regardless, debt should never be incurred. Persons who are already in debt should work to pay it off immediately.

A Final Word

While the list of money handling tips could go on indefinitely, not spending every earned dime and abstaining from debt are two of the most crucial methods of achieving financial success. Although the foregoing changes can be challenging at first, they ultimately depend upon one’s level of discipline, wisdom, and execution.

Authored by Gabrielle Seunagal

Important Things To Do Before Retiring

As people gradually enter various stages of their later life, they may begin to consider the merits of retirement. While some individuals decide to keep working, others feel as though they have worked for long enough and are ready to retire. However, before one enters retirement, there are some very important things they need to do.

Make Sure You Have Enough Money to Retire

The desire to retire from work is understandable, especially as people get older. However, ensuring that one has enough funds is absolutely paramount. According to The Balance, retirees should have enough capital to maintain their current lifestyle. People who are looking to retire should also be able to cover expenses such as car and house maintenance, utilities, and any unforeseen financial emergencies. In many cases, people spend years, if not decades saving up for retirement. One of the worst things in the world would be to retire and then abruptly have to re-enter the workforce due to depleted funds.

Sitting down with a financial adviser prior to retirement is also recommended.

Decide What to Do During Your Retirement

One of the many upsides of work is that it provides structure. Many people wake up in the mornings, go to bed in the evenings, and schedule the activities of their day around their professional duties. Structure comes with both advantages and disadvantages, however, many factors change after an individual makes the decision to retire.

Gone are the days of having to abide by a certain timeframe or schedule. Theoretically, a retired person can do whatever they want to do with their day, so long as they are able to financially support themselves. This is where hobbies and interests come in. Many retirees may decide to take a class, travel, or otherwise engage in activities which they couldn’t partake in during their working years.

Regardless of what retirees decide to do during their new phase of life, having interests and passions is so important. The pitfalls of simply sitting at home all day and doing nothing are well documented. Retirees should make it a point to frequently leave their homes, engage with other people, and make sure that their bodies and minds remain active. Exercise and volunteer work are some productive and affordable activities for retired persons to consider.

A Final Word

Retirement has always been meant to be a time of relaxation, reflection, and hopefully growth. Although the majority of retirees are older people, there is always more room for development. With the proper financial planning, retirement can be an amazing, enriching part of life. Ultimately, each person will have to make the decision as to whether or not he or she believes themselves to be ready and properly prepared for retirement.

If you are retired, what steps did you take to prepare for this new phase of life? If you are still in the workforce, are you considering retirement at a later date? If so, which course of action are you embarking upon to get ready for life as a retiree? \

Authored by Gabrielle Seunagal