Frequency of income, and how you budget it goes hand in hand.

Most workers are paid on a set schedule….weekly, bi weekly, or monthly.  Per-diem  workers are paid sporadically, and depending on their hours worked.  Those who are self employed have busy and slower times, so uneven months. And most teachers  receive an annual salary paid evenly throughout the school season., but not Summers. Seasonal workers, landscapers, snowplow drivers, etc, are paid when they work.

When the paycheck is always the same, and you receive it on a set schedule, it’s easier to budget – because you receive it evenly throughout the year.

Teachers have to budget differently, figuring the annual total income into 12 months, and as each pay period arises, part of it should be set aside immediately so in the Summer months when they don’t receive a paycheck,….there is a ‘paycheck’ set aside. Some work a side job in the Summer to add to their income during those months.

Those who are self employed should, in their busy months, set aside some of the extra money earned for when any slower months arrives… in other words, be prepared….the money you’ve set aside is there as ‘fill-in’ to add in when you have a month that is a little slower – evening it out.

Seasonal workers may, and may not, have a regular income from another job.  If they do have a regular job,  the seasonal job is ‘gravy’.  Either way, seasonal is not always definite,

No matter how your income is received……be budget savvy.  Be disciplined. Don’t let yourself get short of cash.

Time flies….your financial future comes along fast

You’ve heard over and over about Retirement Accounts.  IRA, Roth, 401K, 403B, etc. Although your retirement years may seem aeons away, don’t neglect to open it as early as you can. And if you’re older, still open it.  Speak to someone in the HR department of your company to see if the company is set up for you to withdraw money automatically from your paycheck.  This is the best way to do this.  The money you don’t see, you won’t miss. Or if you work in a smaller business with no Retirement Plans available, you, yourself, set money aside each paycheck, putting it in a savings account until you can speak to a Financial Adviser.

Interview some reputable Financial Advisers.  Ask if they’re a Fiduciary (a person who acts in your best interest)… some are not a Fiduciary but rather an Adviser who gets a commission for a product (usually insurance) they sell to you.  Ask questions, understand answers, be informed before you make a final choice.  Your Adviser can be changed, and certainly if you find they aren’t working with your money the way you think they should or are comfortable with.  You want to know where your money is allocated and why it is allocated there.  Ask questions.  It’s your money.  You’re the boss, and if you don’t get or don’t understand the answers, change your Adviser.

People usually retire in mid to late 60’s.  So starting to save for it in your 20’s gives you 40 or so years for growth in your account(s).  You want to diversify your money.  The market can be very volatile, and if you have not spread out your money, and the market goes down in the area where your money is allocated, you now have less money in it.  No one has a crystal ball.  That’s why it’s best to diversify.  A good Adviser will guide you and will recalculate your investments accordingly to re-balance your account(s).  This is imperative.

As you get older, you may want to be a little more conservative.  You should meet with your Adviser at least annually, and speak with him/her with any questions or concerns in between.

Social Security has been around now for decades.  A deduction is taken from your paycheck, is put in the Social Security System Account. People retire and are eligible to receive Social Security Benefits each month, although it was never meant as an income that would sustain you fully.  Over the decades, the money there was allocated differently, and although millions receive benefits, the Social Security System will become insolvent in about 15 years, unless Congress fixes it.  In other words, don’t depend on it as an income for your retirement years.  Depend on only yourself.  So save, save, save now.

Whichever type of Retirement Account vehicle you choose, always try to put the maximum allowable amount in each year.  You will not regret it.

Every cent counts…..it’s common sense

Have you ever taken change out of your pocket or purse and set it aside in a jar?  Most have.  They’d do this each day or so without a thought, and then find a bigger jar as it was filling up, setting it aside in the corner, tossing change in it on a regular basis.

Then, they’d lug it to the bank or roll the coins themselves….and were pleasantly surprised at the total there. The same holds true with a savings account.  It starts small, but when added to on a continual basis….as much as you can comfortably put aside, it will become second nature….a very good habit.  Remember, every penny counts.

Pay yourself first…. Even when reducing your outstanding debt, add a few dollars to your savings.  You will not only be getting into the habit of doing it, but when your debt is paid off, you should now put the amount you had been using to pay off the debt and add it into your already opened savings account….as though you were still paying the debt.

Now, watch it grow (in your savings account).  And remember, the figure each month you see in the savings, is yours…not the creditors.  It also shows you how much you wasted over time, paying late fees and or interest fees.  Lesson learned.

Savings takes discipline then becomes second nature.  Do this for yourself, you deserve it.

There was you, and now there’s…almost…two

You are single….moving through life.  You are making a good income, and are financially savvy.  You have no outstanding debt,  no credit card debt, no outstanding loans, and you have your essential savings accounts set up and consistently and faithfully add to them.  You’ve done all the right things.  Great job! Congrats and kudos to you!  Keep up the good work!

Now you meet ‘someone special’.  You date, you are compatible in many ways, you become serious and start talking about a future together.  All very nice, very sweet, but slow down a bit.  Almost all the boxes are checked off in the ‘these are things I’d like in a lifelong mate’ column. ‘Almost’… being the key word.  The  box regarding finances isn’t checked off.  You’ve found out that he/she has a lot of outstanding debt.  It’s time to step back…. put the brakes on.

Your intended might be perfect in every way…. except…. you’re not on the same page handling finances.  He/she has outstanding debt, lots.  Mounting credit card debt, a college loan, a car loan…and they pay only the minimum each month.  They have a closet full of clothes and shoes, but think they still need more, they enjoy eating out more often than not, and think its necessary to have a drink or a few in order to have a good time.  These are red flags.  Every single one of them.

Even though a wonderful person, there is a problem. This is and will continue to be a major problem — for you — moving forward.  Their debt becomes your debt if you marry.  Their debt will bring your credit score down, because you would now be sharing the credit score number too.

Don’t make set future plans unless and until this debt is gone, and ways of saving and spending is on the same page as you. A financial plan is needed…now.  One that will eliminate their outstanding debt.

If you go forward with the relationship, you’re not only working on eliminating their debt, but should the ‘two become three’, (surprises do happen), then there are child care costs added to the bills, and you will wonder how someone so tiny needs so much and costs so much, maybe while all done on a single income because the other parent is the stay at home parent now.  So think hard….now.

Don’t be to quick to jump into a lifelong commitment.  Hold off, postpone the marriage vows, You can still stay involved, while showing him/her how to budget and stay within the perimeters of their income, all while they pay off their debt, and starting a savings plan that will continue on. If that’s not acceptable to the other, then it’s probably time to end the relationship and move on.

Starting out already in a financial hole is not a good idea.  Right from the beginning, being on the same page regarding finances is imperative in a relationship.

Once the debts are paid, exchange vows, and moving forward work together on the finances.  Having the same financial goals, and working together keeping and staying within a budget is imperative.

You worked hard to get where you are financially, if you go into a commitment with a messy financial history that has no end in sight, that’s not fair to you.  Don’t do that to yourself.

Setting up separate checking accounts

Think about it.  In your home you have cabinets and drawers to separate things.  You can go to a particular drawer or cabinet to get specific item to do a specific job. Having separate checking accounts for particular bills is just like that.  It keeps things organized.  You always know at a glance what you have, and what needs to be added.  That said….

A checking account for rent/mortgage with auto  deposits by you and auto withdrawals by the landlord/lender, is a good idea.  Another is to have an excess in the amount of 1-4 months of what the rent/mortgage is.  With your diligence of auto deposits, the auto withdrawal part is there so you don’t have to think about the payment date.  The 1-4 months of excess is there for  rent raises or moving costs, or to make a ‘principal only’ payment on your mortgage.

A checking account for monthly bills with auto deposits by you, and auto withdrawals by the creditor is also a good idea.  Keeping your check register up to date, this too will show you, at a glance, what you have in the account. And if things are getting a bit squeaky, meaning you need more money in it to cover upcoming bills, this is the time to revamp your budget.

A checking account for annual or semi annual bills and gifts.  This is worked in the same way with your deposits and the withdrawals are usually from insurance, taxes, registry fees, etc.

As far as the gift part goes, make a list of those you give gifts to…. write it out on paper.  Don’t leave any out — remember too the gifts you give to the friends of your children, all the birthday parties they go to. Some names will be there 2-4 times,(Birthday, Anniversary, Holidays, Mother’s/Father’s Day, Holiday gifts, etc). There are also Shower, Wedding, Baby gifts to add in.

Now… put a dollar figure next to each name.

Now… add up the dollar figure.

Are you surprised at what you actually spend on gifts?  While gift giving is a very nice gesture, it gets costly, and if you are scrimping somewhere else in your budget (you are on a budget, right?) ….or if you aren’t paying your bills in full and on time each month, …..then you need to cut back your gift list.  Do not let gift giving put you in the poorhouse. And remember, the money in this account is primarily for insurances, taxes etc.  You need the money there for these things.

Over time, you will get into the habit of checking a few times a month each of these accounts, making sure you are ahead of the game on each one.  This also saves any overdraft fees.

Organize your ‘financial cabinet’.  It will make things so much easier for you.  You deserve that.

Stuff happens……. expect the unexpected

Things can change quickly – in the blink of an eye.  Circumstances can change along with your priorities.  Because of what is now facing you, you have to shuffle things around, making things work while you’re figuring things out.  You’re not alone.  It happens to everyone at one time or another.  The thing is if you’ve been planning and preparing all along, the stress of what happens in life will be a little less stressful…if not, you can still get through this….just differently.

First…..  take a few deep breaths.  Focus on what is important.

If you find yourself out of work, your immediate goal is to keep a roof overhead, and food in the fridge.  If you know it will be a length of time, call your landlord or mortgage lender.  Explain the circumstance, and see if they can accept a different payment option.

You will still have to pay for your rent/mortgage in full, but letting them know of the situation you’re in might get you extended payment dates, or less payment each month until you can catch up.

It’s probably a hard phone call for you to make, but put your pride in your pocket, stay calm, focused, and understanding to their side too.  Your rent/mortgage goes to payments they pay out. It’s the chain of money.

And no matter the outcome of the call, say thank you, thank you for your time and understanding.  If you got a negative answer in the phone call, you may get a call back in a few days after they’ve thought of your plight, and have now come up with a payment plan you can both work out.

Make phone calls to any creditors, car loans, credit cards, etc.  Keep all up to date of any progress being made.  They make notes on your account, which will stop creditors from calling.

Food in the fridge…..  Use what you have on hand.  Be recipe creative.  At the supermarket avoid the snack aisle.  Eat less meat, eat more vegetables. Keep meals simple yet nourishing.  And do not waste any food.  Use leftovers within a few days, if not, freeze to use at a later date, maybe when you’re busy….just pull out the leftovers and reheat.  No cooking that night.  Leftovers in the fridge or freezer do not mean from a night of dining out or take out… cooking at home is cheaper.

Living on bare bones….. This can and needs to be done now.  No coffee stops, no quick stops for incidentals, no manicures/pedicures, no hairdresser, massages etc.  No eating out, take out, movies, shopping sprees…. nothing…..other than your overhead, and food (cooked at home).  Of course, medical/dental as needed is a necessity.  The idea is, you have no income, so don’t spend what you don’t have.  Don’t do that to yourself. Because if you do, it has to be paid, by you, adding in interest, late fees, and the vicious cycle of debt is added to your plate.

This too shall pass.  Think positive thoughts.