This early to do tip may help avoid a strain in the budget.

Babies are cute….and costly.  Sometimes finding they’ll be arriving just over the horizon comes as a surprise, while others are more or less planned for. In either case, there is approximately 9 months to get used to, and prepare for, the new arrival.  But, if possible, plan this ahead.

If there are two incomes now, that will change — maybe for a few weeks or months, or maybe permanently – so one or the other of the couple can stay home with the baby full time.

If the Mom is returning to work in a short time, there will be child care costs.  And further on, day care, or pre-Kindergarten.  All very costly….. because you want to choose only the best for your child.

If you are one of the couples who get to plan the upcoming event, several months before you make set plans, figure if doing this…or doing this now…will fit into your budget.  Babies need diapers….tons of diapers,, wipes, washcloths, formula, clothing, car seat, crib, highchair, some stimulating toys, not to mention all the doctor visits for check ups and shots etc., etc., etc.  The list goes on and on ….and grows…and grows….getting more expensive as the child grows.  These are definite, normal, known costs that have to be added into the budget.

So, before all is said and done, whichever of you will be staying home for whatever length of time you will, starting now, take that paycheck…the paycheck of the one to stay home…put it away in a savings account.  Do so for a few months, to be sure….to make sure….you can live with only the paycheck of the other…..   But don’t forget to add in all the baby things, because there will be three living with one income.  And don’t use the money you’re putting aside from the stay-at-home parent.  Remember, all expenses will come from only the one income.

Because this is how you will have to budget once the baby comes, it’s best to know you can handle it that way beforehand.  The money from the other paycheck can be a start to their college fund…. but remember, each child you have should also have a college fund….and, and. and.  Each child needs these things, some can be handed down, but some can’t.

Second hand but new for me…..

Thrift shops sometimes called consignment shops are a treasure trove of amazing things, at amazing prices…other fun places to shop are yard sales, and weekends in Spring through Fall, there could be any number taking place….my go to place(s) when I have to replace something.

Having been to all, an array of items, some still favorites, are scattered about my home. Pride takes over when a specific piece is mentioned by someone, and I can rattle off exactly where I got it, and sometimes the price…..it’s part of the story behind the item.

Decades ago, my mother shopped in the neighborhood second hand store, and so she wouldn’t waste a quarter on the item, she had that child (there were 7),  go to the store, with the quarter and specific instructions of where she had ‘hidden’ the item so we could try it on and see if we liked it. Dutifully we went to the store and, if it was something that was liked and it fit, we’d buy it. It was then put in a used (usually crinkled) bag. We left the store with the purchase along with the hope that no one we knew saw us, because they’d know we shopped at the second hand store. The item was washed, and we wore it…..though second hand, it was ‘new’ to us.

Today, however, to me it’s a badge of savvy shopping…. I take pride in bargain hunting, and the better the bargain, the better the story behind it.

If you’ve never been, make it a point to start checking them out.  Not only a fun ‘field trip’, but surer than not, you’ll come out with a bag…or two, and a few stories of your own.  Just don’t overbuy….only buy it if you need it.

Are you guilty of pretending?

Pretending you are ‘richer’ than you are is a bad idea…a very bad idea.  It only leads to financial disaster… your financial disaster.  It is doubtful that any of those you’re trying to impress will help you get out of debt.  Do not pretend.  Do not do it.

Trying to keep up with others by spending on things you know you can’t afford, such as a more expensive car, or a bigger house, or gatherings you can’t afford to host, or pricey clothing, electronics etc, is a place where so many have foolishly put themselves.  Oftentimes, their ‘friends’ disappear from their lives, but the nightmare of keeping up with payments for the ‘showoff things’ has dug such a financial hole, it can take years to get out, or sometimes things are just repossessed.

Even pretending on a smaller scale is not a good idea.  Spending on dinners and drinks out with friends, buying ’rounds’, pricey gifts, even entertaining at home, may seem small at the time, but it all adds up and has to be paid for when due.

A potluck dinner where each brings a favorite food shares the cost  is a fun way to get together inexpensively.  Food items can be in a ‘theme’, Italian, casseroles, BBQ etc.  Serving beer and/or liquor can be pricey.  Entertaining with each bringing what they drink, and an appetizer/entree will be just as enjoyable a gathering.  Or a brunch on a Sunday morning each bringing their favorite recipe dish is a fun and relaxing way to gather. Those who ‘have anything to squawk about’ can stay home.  They will come around sooner or later, and join the group again, bringing their offerings too.  Start a trend.  You’ll be gathering, having fun, and making great memories.

Children’s birthday parties have become a major event!  Jumping houses, bowling, arcades etc.  are very pricey and not necessary.  A pizza party at home, cake, ice cream and only a few best friends.  Remember, each child you invite, is another gift you have to give when your child is invited to their event.  The guest list and gift giving list only gets longer, and more out of hand financially, because everyone is trying to outdo the others.  Get a few of the mothers together to discuss paring down guest lists.  Then listen, you’ll hear a audible sigh of relief from them.

Be yourself.  Don’t pretend.  Live within your means, even if it’s meager. You’ll be happier and less stressed out.  And you’ll have zero balances …… and, savings account(s).

Saving in small ways… but it all adds up in your Savings Accounts.

• Turn the heat down a few degrees if no one is at home.  When you return, turn it back up, or put on a sweater.  It can also be turned down while you’re sleeping, you have blankets on.
• Turn the water heater thermostat down a few degrees, leaving it hot enough for showers and washing dishes.  When you’re going to use hot water, turn on the cold first, and then turn on the hot, adding the hot to it….you’ll use less hot water, but with the same comfort.
• Turn the AC up a few degrees when you’re not at home.  Close blinds on the sunny side.
• Follow the sun….In Winter, leave blinds open on the sunny side, close when the sun goes down.  In Summer, close the blinds to the hot sun, and open when the sun goes down.
• Use cold water for washing laundry.  Don’t overfill either the washer or dryer.  Overfilling the washer may mean clothes won’t get clean.  Overfilling the dryer takes clothing longer to dry – there’s no room for air to circulate between the clothing, resulting in more wrinkles. As soon as clothing is dry, sometimes sooner than you think, take dry items out and immediately fold or hang – less ironing, and the rest of the clothes can toss and dry quicker.
• Turn off lights when not in use.  To avoid falls, night lights give off plenty of light to see.
• Don’t waste food.  Leftovers can be contained and frozen for a later date, or used for lunch the next day or two.  Use your freezer – if ‘best by’ dates are coming up, freeze the item.
• Actually, use by/best by dates are only a guide….. if it looks fine, and smells fine, it usually is.
• Leftover coffee in the coffeepot?  Either reheat it, or put it in the fridge, and enjoy iced coffee later.  Milk almost outdated?…make pudding, corn chowder, or cream sauce.
• How many cable channels do you actually watch?  Scrutinize your bill and shave it down.
• With so many movies streaming on TV, make movie night happen at home…. include some treats like popcorn.  Perks = no travel, stay in PJ’s, comfy seating, treats, and it saves $$$$.

These are only some things that are easy to do and are all money savers…..money you have been spending, and can now save!!!  You’ll think of lots more.  Put what you save in the bank.

The importance of Saving

Think of the word SPA…… bet you thought ‘relaxation’.  Well, relaxed is how you’ll feel knowing you kept Saving Pro Actively, and have saved for emergencies, both long and short term, as well as having a cushy nest egg to relax and spend your retirement years. Your mind will be at ease knowing you can handle an emergency without the stress of the financial burden it carries, and also knowing you’ll be able to live a lifestyle you’ll enjoy after working all those years.

To do this, all along your working years, you need to save a part of your earnings for various reasons.  That’s why it is imperative that you start early and  ‘pay yourself first’ when budgeting your income.  Keeping separate accounts for each type of need means you’re less likely to dip into the wrong account.

• An Cash Reserve ‘Cushion’ Account:  This account should equal at least 6, but better yet 9-12 months of expenses should you lose your job, need unpaid medical leave, or any other reason you no longer have a paycheck coming in.  Should that happen, funds there are for those necessities only: rent/mortgage, food, utilities and insurance.  It is an Emergency Account, and as such, should not be used to dine out, or for entertainment, shopping sprees, etc. When you return to work, beginning with the first paycheck, start replenishing the account for a future emergency.
• Diversified Retirement Accounts:  There are several, 401, Roth, Annuities, CD’s just to name a few.  You need to do your due diligence, and figure which is the right one(s) for you in your retirement years. Financial Advisers are plentiful, so you should interview a few and find one you trust and are comfortable with.  Ask if he/she is a Fiduciary.  A Fiduciary is an adviser who is serving your best interest.
• A Liquid ‘What If’ Account:  This would be used for a short term unexpected expense…. new tires, refrigerator, a plumbing emergency etc.  And again, when money is taken from it, that amount, and more if you can, should be replenished as quickly as possible.
• Children’s College Funds:  There are particular college funds, but they have specific rules and should be thoroughly understood before you open one.  Or a regular money market account can be added to, then along the way, rolled into a CD, repeating this process again at the maturity of the CD.  There are several options…. always check the interest rates.  And remember, if you start one for one child, you should start one for each child…it’s only fair.

“If it ain’t broke, don’t fix it”

Internet is wonderful for many many things.  However, having always used a paper check register (the kind that comes with the box of your checks), is a personal preference. You can ask for one at your bank.  You can also make your own either on your computer or on paper.

Understandably, clicking a button, and getting your latest information at a glance is a time saver, and that’s a good thing to keep if it’s how you’ve set up your bank, but having a backup of a paper check register or spreadsheet is a good idea.  Actually, it’s the only way I do my banking, the only way I’ve ever done it. And….I have never paid a service charge or an overdraft charge…. ever.

Online Example: You have $500.00 in your checking account.  You pay a couple bills, and Tom’s birthday is coming up.  You write a check for $50.00, but Tom puts the card and check in a drawer, where it sits until Tom cashes the check two months later. But the $50.00 still shows in your online account as part of the balance of ‘being there’.  It shows in the Ending Balance (because it hasn’t left your account yet).

Now you pay another bill, and because you think you have what the ending balance shows, you write yet another small check.  But no sooner do you do that, when Tom finally cashes his birthday check.  You get an overdraft charge, because the last bill you paid, really didn’t have enough money to cover it, because Tom cashed his check just before you paid that bill.  You are now hit with an overdraft charge.

This happens too if you get a paper statement, but if you are diligent about keeping your paper check register/spreadsheet up to date (and always check your addition and subtraction figures), you’re all set. The balance you show in your paper check register is what you have in your account….. because you have already deducted Tom’s $50. check two months ago.

Check Register Example:  You have $500.00 in your account, and as you write a check out, you deduct it immediately from your register. The balance you now show is the money left after paying out the check(s) you’ve written out.  You write Tom’s birthday check, and immediately deduct $50.00 from the running balance you show…. Tom can leave his check in the drawer for a year, that’s okay.  You have already deducted it, so what shows as your balance is what is there.  You won’t write out that last small check, because you know what you actually have, because you deducted Tom’s check two months ago.  Once you deduct the amount you paid out, that money ‘isn’t there’.  No overdraft fees involved.  Simple. Old fashioned, but it works.

You can still use online banking if you prefer to pay your bills without using paper checks, but you can also, as a back-up, use a paper register.  And, if you’re diligent… writing in the check register whatever you’re paying online as you are doing it, the balance in the paper check register is the amount you have left after paying your bills.  Or if you choose to make a spreadsheet as a register, just a click to update your payments will be the amount you actually have in your account. If you’ve ever paid an overdraft fee, this will stop those wasted expenses. Bank fees are yet another waste of your hard earned money, you get nothing for it… well, maybe a headache and stress.

Some financial phrases and words to know….

• Credit Score – It’s your financial reputation.  A number between 350 and 850.  You earn your number according to how well you handle your debt. The higher your Credit Score the better – when it’s time for you to get an apartment or mortgage, a car loan, even a job. If your score is low, you can be turned down for any of the above.
• Budget – Categorizing income minus debt.  No matter the income, your debt should be less.
• Prioritize – List debts in order of importance.  Pay the same way.
• Saving – Putting money in an account for a future time..allowing it to stay, and grow.
• Interest earned – money automatically added to your account by the bank.
• Due diligence – Checking things out for yourself, making sure it works for you.
• CD’s – Certificate of Deposit – gives a better interest rate earned than a saving account, but it usually has a minimum deposit., and is held by the bank for a specified time…6 mos plus.
• Checking account – You deposit money, and pay your debts using that money.  It requires your diligence in balancing it, or you will pay fees – automatically withdrawn – by the bank.
• Overdraft – means you paid out money which you didn’t have and the check was cashed…. you now owe a fee for doing that.  Each overdraft is an additional fee.  Balance your account and avoid these fees.  They’re costly and a waste of money.
• Check register – a paper booklet given by the bank so you can keep track of your deposits and withdrawals. Each time you add or subtract money in the account, write it in and keep the running balance, so you know where you stand, keeping you from spending what you don’t have.  Keep it balanced…. it’s easy (adding/subtracting), and imperative.
• Credit Card – You are legally responsible to pay for any purchases made with a credit card.  Pay in full and before the due date to avoid huge fees.  It is tied to your Credit Score.
• Roth IRA’s – When you begin working, receiving a paycheck, you can open a Roth IRA, on an after-tax basis. Each year, add the maximum amount.
• 18 candles on your cake – Your signature is your word….you are held legally accountable.  It means you, yourself, are legally responsible to pay any and all debts incurred by you, and to uphold any agreement signed by you.  Keep your name and your reputation spotless.

Prepare …… you’ll need to clean sweep your finances

Prepare now for your Financial Future. Save every penny you can.  You won’t be sorry you did.

The word BUDGET is extremely important.  It will be mentioned numerous times throughout these pages. Scramble the letters in budget, and you’ll find the word DEBT. Always remember …..  If you find yourself in DEBT, you most definitely need to BUDGET. Scramble the word again, and you’ll find the word DUE. The payment is due. Scramble again and there’s BUT.  And remember….there are no buts about it.  Budget!  Another word you’ll find it GET.  So, GET GOING!  BUDGET!

Create a budget……and stick to it.  Go over your expenses, all of them.  Some, like rent/mortgage is a set expense.  But the heat/light, cable, phone, and even food can be pared down. Use the money you were able to pare off your bill by paying off your outstanding debt. Once you pay off a debt…and you will….save that amount.  As soon as you receive it, put it in your savings  Each month, continue to pare down anything you can.

Until…….  (you notice the word ‘If’ isn’t used)….. Until you pay off your debt, you have to learn to live on just necessities . The  phrases ‘I want’, ‘I need’, ‘I have to have’, are phrases of the past.

Living on a budget means you’ll now be spending less.  And the money you’re now not spending, is the money you’ll now use to pay off your outstanding debt.

Depending on how much outstanding debt you are carrying, will depend on how long you must live on bare bones.  But, honestly, as you see your debt pile dwindle, living on bare bones won’t bother you at all….because you’ll actually feel better.  Stress drags you down and affects your physical and mental health.  You will notice the difference.

Your goal is to become debt free. It is possible.  This can happen.  You will make it happen.  You can do this.