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  Milk almost outdated?…make pudding, corn chowder, or cream sauce.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.

Continually audit your budget

Nip…….Overspending in the bud.  Your budget should consist of absolute essentials: Savings, Rent/Mortgage, Heat, Light, Phone, Food, Health needs, Internet, Transportation and Insurance. Although essential, some can be trimmed down. Anything beyond that can be nipped.  There are, of course, times when incidentals are needed and should be purchased.  And spending for an occasional treat is good for the psyche.  But each paycheck, nip everything possible.

Tuck…..Tuck everything you nip from the budget and add the money saved to one of your savings accounts. Even a small amount counts…..it all adds up.

Sculpt…..Sculpt your dreams and goals around your Retirement Portfolio, and aim for saving to meet those goals and to one day make those dreams reality. Time moves quickly…..plan and prepare.

Each of you need to know how to handle budget matters.

In a relationship there are two of you.  You are in it equally and therefore add to, as in income, as well as subtract from, as in spending, and everything else in between.

This means you both – equally – fall into the ‘Need to Know Category’.

Set time aside each week, say one hour (more if needed), to go over all the finances from the past week.  Knowing how hectic life can be is a known factor, but this one hour date each week is essential to staying on top of your finances – getting a handle on it right away if it needs fixing.

It’s not handled by one and not the other…..it’s something that is shared – done together.  The income of it, the saving of it, the spending of it, the balancing of it.  Each should know where the money has gone…and why.  Spending should not be done without the knowledge of it to the other.  Special occasion gifts might be the exception to the rule.  But other than that, set a limit – say $50-100., that cannot be spent without letting the other know first.  Keep it all above board.

Too often we hear, “Oh, he takes care of all the bills, I have no idea about that”.  Or, “She’s better with money, so she handles all of it, I don’t have time, or a clue on how to do it”.  As soon as the relationship starts to get serious, work on the budget together.  If already in the relationship, start now….right now. Make a spreadsheet, so it’s all there, in black in white.

As time moves forward in the relationship, knowing what you have, and how to save, how to budget and stay within it, and how/when bills are paid so there are no interest charges or late fees, is common sense.  It’s doable and easy…… no excuses not to.

It is inevitable that we all take our last breath.  Knowing all about every aspect of your Financial Health over the years together, will be one less thing the remaining spouse/partner will have to try and figure out at an already stressful time.

Living alone or sharing, some tips to follow…..

Congratulations!  You are on your own and looking forward to living in, and decorating your own home.

Until you can purchase furniture pieces you choose yourself, many will use ‘hand me downs’, which is fine, and often some of those pieces will last for many years and be very useful to you.

If you can buy your own furniture, it is best to choose good, sturdy pieces so you won’t have to replace it in a couple of years.  It’s better to buy a few needed pieces, ones that will last, and hold off on others until you have the money to buy them…..this also gives you the enjoyment of ‘a treat’ here and there.  Choosing pieces that ‘store’ things do double duty… choosing a table with a drawer and/or bottom shelf, or a small chest of drawers in a hallway etc., can automatically keep things out of sight and neat.

A cleaning hint: instead of furniture polish,, dampen a micro fabric cloth with water, squeeze it out tight, and after having cleared the items off the furniture wipe it down with the micro cloth, let the furniture dry completely, then replace the items back on it.  No furniture polish to buy.

Keep things simple…… sparse is better.  It looks neater (and less to keep clean).

If any problem arises (with plumbing, leaks, large appliances, electrical, anything having to do with the apartment itself), notify the landlord or rental agent immediately.  A phone call is fine, and especially in an emergency, but an added “insurance” for you is to have it in writing as well.  So send an e-mail, stating that you are following up with your phone call, and put all the details in writing.  This gives you written verification… something to fall back on… should you have a problem arise about  any….”you didn’t say that before” conversations.  Always get/put things in writing.

Landlords typically ask for first and last months’ rent, along with a security deposit, (often a full months’ rent).  The security deposit is held by the landlord separately in a savings account, and when you move out, the security deposit, along with interest, is returned to you, providing there is no damage to the apartment done by you. ‘Normal wear’ is not counted as damage, nor is the replacement of old or now non working appliances.  If there is damage caused by you, the cost of repair(s) is taken out of your security deposit, and the balance (if any) is returned to you after you vacate the apartment. This can take 30-60 days), so keep tabs, and be sure you get any money due you.

It’s a good idea to have a separate account for your rent…. You should add a ‘cushion’ of a month or two of the cost of rent, and each month round up the rent figure and add that too.  Remember when you move, there will be moving costs, along with first, last, and security deposit for the next apartment.  This is 3 months of rent money you’ll need up front.  If there is a rental agent/broker, there is usually a fee for them too.

An important note, if you’re sharing the apartment, and the cost of rent, along with any related costs (utilities, food etc),  keep up with your savings account, but do so privately.  Do it separately.  Do not use that account as the one you use to share the rental fees.

Bottom line…..Be prepared…… have 3-4 months ‘rent’ money set aside for next time. You will need it, so don’t use it for anything else. And again, keep this account separate if your sharing the apartment.

Enjoy your new place!