Tag Archives: saving money

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

Financial Advice for Wealthy People

Wealth (officially defined as the abundance of valuable resources) can be earned and/or inherited. However, regardless of how one manages to secure wealth, if they neglect proper management and maintenance, the money is unlikely to last for very long. There are countless horror stories of people running through large sums of money in relatively brief time periods because they misused their resources and failed to maintain healthy income streams.

An art to money exists; there’s an art to earning wealth and an art to maintaining wealth. The implementation of various financial strategies moreover ensures that the production of valuable resources overpowers the consumption of valuable resources. This, in and of itself, is paramount knowledge for individuals who wish to maintain the wealth they’ve inherited or worked hard for.

Invest, Invest, Invest

According to Investopedia, some of the best investment options for wealthy people include stocks, bonds, and commercial real estate. Generally, stock market investments are considered to be riskier, due to the somewhat 50/50 odds of gaining or losing money. However, there are different strategies which people have to predict certain trends in the stock market and the wisdom in certain investments. Bonds are somewhat similar to stocks, but like the former, with the proper judgment calls, this form of investing can be quite lucrative and beneficial.

Commerical real estate investments come with many options. For instance, by purchasing various blocks of homes, the investor can then rent out rooms or apartments. Over time, the income from tenants will more than pay for the original price of the blocks. This is also a form of passive income, which is also critical for building and maintaining wealth.

Maintain Multiple Streams of Income

Hanson McClain affirms the importance of multiple income streams. By maintaining multiple streams of revenue, wealth is not only preserved, but also increased. No matter how much money someone has, there are still certain guaranteed expenses, such as the cost of living, bills, etc. Truly wealthy individuals have enough money to stop working and still live comfortably; yet, in a somewhat converse paradox, people with the foregoing levels of wealth usually continue working, or at the very least, they have passive streams of income which allow them to continue making money without trading time for profit.

Put Aside (at Least) 20% of Your Earnings

CNBC advises wealthy people to put aside at least 20% of earnings. Saving is always an excellent financial habit, regardless of one’s economic status, yet it is truly critical for wealthy people. Having an increasing amount of funds put aside in the event of emergencies or other unforeseen occurrences is always important.

Saving money furthermore promotes discipline and helps to counteract the temptation to spend, spend, spend. Remember: as one’s net worth, assets, opportunities, and bank accounts flourish, their savings should be following suit. Many wealthy people also have money in multiple places: savings accounts, on-hand cash in safe boxes, etc.

Nine times out of ten, having money stashed and saved in more than one location is advisable.

Authored by Gabrielle Seunagal

Financial Advice for Less Well-Off Individuals

Life is different for each and every person. People have different work lives, different families, and different situations. Some people make millions per year while others make thousands. Some individuals are able to independently support themselves which other may receive assistance from friends, relatives, or even the government. Despite the stereotypes and assumptions which are usually made regarding high-income people and low-income people, the great equalizer comes in the form of benefits of financial advice.

Granted, financial recommendations for someone who earns $100,000 annually will be different from a person who earns a yearly income of $10,000. Nevertheless, the following strategies and hints are great for less fortunate individuals.

Engage in Extremely Frugal Money Management

When funds are tight, frugality is absolutely paramount. While saving money can be difficult when funds are low, there are generally certain steps which can be taken to truly get the complete bang for one’s buck. KNS Financial has some excellent tips: first and foremost is seeking out banks which do not bill monthly fees or otherwise require customers to maintain a certain amount of funds within the account. There may also be certain banks which choose not to bill low-income customers with overdraft fees.

Another excellent way to stretch money is selling items which are in reasonable shape, yet not used very frequently. Some people do this by having yard sales, listing their items on Craigslist, or pawning them at applicable shops. Upon attaining these extra funds, putting them aside is a really proactive way of getting used to saving money.

Other simple, yet effective ways of frugally handling money include, but are not limited to, buying groceries on sale, walking (or carpooling), using utilities conservatively, and unplugging devices which are not being currently. This can truly add up and save money, especially when done habitually.

Look for Relatively Inexpensive Ways to Increase Income

While saving and being frugal with current funds is a great first step, it will only do so much for low-income people. The best thing that less fortunate people can do for themselves is increase their earnings. In 2018, there are a variety of available options, even for individuals who were recently laid off, currently in between jobs, or otherwise unemployed. The gig economy is a truly innovative and lucrative tool for people to take advantage of. Those who do not have computers or laptops in their home can go to the library and use the internet to create profiles on freelancing job boards such as Upwork, Freelancer, or Fiverr. Other options include driving for Lyft or Uber or renting out rooms on Airbnb.

A Final Word

At the end of the day, rising above poverty ultimately entails two life changes: decreasing expenses and increasing income. Ideally, doing both of these things simultaneously is the best course of action. Not only are lowered expenses and surging income a blueprint to escaping from poverty, but it also sets less fortunate people on the track to achieving wealth. Although Rome wasn’t built in a day, it did come into being with consistency and time.

The same dynamic applies to the aforementioned steps which will eventually engender the rise from financial hardship to financial prosperity.

 

By Gabrielle Seunagal

How to Financially Support Yourself

The ability to support oneself is a paramount life skill for any functioning adult. However, despite the gravity of this skill, many (young) adults still struggle with it. Habits have a tendency to stick, especially in one’s formative years of adulthood. A lack of preparation and necessary skills usually breeds bad habits which in turn engender downward spirals.

Moreover, individuals who lack the ability to financially support themselves often fall into common traps, such as debt, borrowing money, and failing to engage in productive behavior. Thankfully, hope is not lost; there are certain steps which can be taken, regardless of age or where someone may be in life.

Ultimately, there is always room for improvement.

Live Within Your Means

Someone who truly aspires to financially support themselves must first manage to live within their means, as affirmed by WikiHow. Sadly, this is a feat which many people struggle to accomplish, especially young people. The urge to have the nicest things, shop frequently, and otherwise live a life of extravagance are admirable, yet they must be earned.

The very first step of living within one’s own means first entails learning the exact amount of one’s monthly income. Having a specific number not only allows the individual to assess exactly how much money they earn, but it also allows them to put together a budget.

In turn with putting a budget together should come adding up one’s expenses (such as phone bills, rent, utilities, groceries, etc) and then subtracting monthly expenses from the aforementioned budget. After these steps are completed, the individual can then determine exactly how much money they have left to save or devote towards extra activities, such as shopping, going out, etc.

Save! Save! Save!

Second to living within one’s means, saving money is absolutely paramount. This manner of preparation is even more critical for very young people who are just starting off in life. Having a budget is excellent. Being aware of monthly income and expenses is also great. However, the ability to save money always comes in handy, regardless of how old you are or where you are in life.

Mistakes happen. Accidents happen. Unforeseen occurrences happen. Without funds put aside as a financial cushion, an unexpected emergency can have serious ramifications. Therefore, putting a certain amount or percentage aside from each payment is strongly advisable. Many experts refer to this behavior as “paying yourself first.” Not only does saving money assure that the individual at hand will not have their life turned upside down by unforeseen occurrences, but knowing that extra money is put to the side can also provide a psychological sense of security.

A Final Word

Financially supporting oneself is a process. This process requires time, life experience, and money. At the end of the day, most individuals do wind up finding their way and settling into a routine which works for them. However, living within one’s means and having a comfortable amount of funds stashed aside always has merit. You can never go wrong by following these steps.

Authored by Gabrielle Seunagal