How much should we save in an emergency fund?

  The best way to deal with future financial troubles is to have a plan in place before they begin. I recommend having an extra five thousand (as a minimum) set aside for these expected but sometimes untimely scenarios. Health plan deductibles, car repairs, and home repairs are a few examples none of us like to spend money on. We don't want to borrow money or dip into retirement savings for these types of expenses. We run the risk of paying high interest on loans and not replacing retirement savings, not to mention a withdraw right before a market run up. I believe an emergency fund should be established before other savings vehicles. We will have less of a chance of getting stuck in the above examples. If five thousand is high for our current income levels, we can start with setting one thousand as a savings goal and try to repeat that plan five times. Finwiz.

Creating a budget makes becoming financially sound easier

   Most of us have the feeling that budgeting is an arduous process, but it's really very simple. We do need to spend some time collecting our monthly income and expenses. Once we've collected all these numbers it's just a matter of doing a monthly review to stay on track.

1. Get your monthly bills for the last six months and list all monthly income you receive.

2. Create a list of all monthly expenses fixed and variable. Including our walking around or pocket money on the expense side of our ledger builds some flexibility into our budget.

3. Total all expenses in one column and all income sources in another.

   More income than expenses! Great!  Add a savings program into our budget.  More expenses than income, work needs to be done in the budget process. We will need to look at variable expenses first to see where savings are possible. We could be spending too much on luxury or entertainment items. Look at how much walking around money you've been budgeting every month and cut back a little at a time, if necessary. When debt payments are a large part of our budget expense, focus on paying it down. When we eliminate debt  from the expense side of our budget, we create the positive cash flow that allows us to save. Isn't saving the reason we create a budget in the first place? Finwiz with contributions from Catherine P.

Seven more money wasters

1. Lottery tickets

2. Cigarettes

3. Buying on impulse 

4. Unused gym memberships 

5. Brand name groceries
6. Bundled cable and phone services
7. Eating out

    My intent here is not to take the joy out of life. We must be aware of excessive spending on feel good items. Eating out is fine once or twice a week if we can afford it. A lottery ticket can be fine for entertainment as well. We might look at our budget and find out one or more of these items takes more of our income than we thought. Looking for expenses that could be reduced a little should be part of our budgeting plan. Finwiz

Be more successful by combining finances after marriage

  Once you make the commitment of marriage, it's a good idea not to hide anything from your spouse. Sit down with your spouse and make plans to consolidate debt and start a long term savings plan. Combine accounts like savings and credit cards. I would make checking accounts joint also. This makes it more necessary to discuss big purchases together. The idea here is to make sure both of you have skin in the game. When one partner is responsible for utility bills the other has no incentive to turn off lights or lower the thermostat. In another example, if only one spouse pays the mortgage it cuts their chances to pay down that debt sooner and reduce loan costs. In the long run combining finances will make it easier to plan and stick to a budget. Living a more frugal life by planning things together leads to huge savings over years and decades. Finwiz.

Five ways to waste money, don't follow the crowd

1: Becoming car poor
    
      Don't decide you can have a car payment all the time and trade cars as soon as the old one is paid for. This sets up a perpetual interest paying machine going out instead of coming in. Buy a three year old vehicle if you can't pay it off in two or three years ,then keep the car for awhile once it's paid for.

  2: ATM surcharges
        
      Paying somebody to access our own money is one of the craziest ways to waste money. Get an account that reimburses you for these fees or plan your cash purchases for the week and just go make one withdraw.

3: Throwing away coupons

      Check the backs of store receipts and the local paper for coupons and you might be surprised what you can find here. It only takes a few minutes before tossing these in the garbage and saving around a thousand dollars a year is not an unreasonable goal.


4: Buying magazines one at a time.

      This is an easy one. Lots of magazines that sell for five dollars an issue are only fifteen to twenty dollars for a whole year. Make the  decision to save that extra forty bucks. It may only seem like it's five bucks but over time that's money that could be compounding for you instead of against you.
      
5: Not trying generic

       There are lots of products,  aspirin, tissue, cereal, etc. where there isn't much difference between brand names. I agree that sometimes there is as well. Try a generic name once in awhile and if you don't see a marketable difference you've just found some permanent future savings.

Teaching children about saving is easy

  Teach children the habit of saving early, and they will carry the habit into adulthood. Start a passbook savings account for them. They can visually see the results of saving at a young age this way. Use different envelopes or cans to separate savings from things they want to buy like toys or gadgets. Make them save some of their allowance or lawn mowing money, and it will become a habit they enjoy permanently. I like the idea of charting long term savings and short term wants. They can see how far they are from getting that new toy or game while still having the ability to keep something for a rainy day in the future. Teaching them this kind of balancing is going to be an invaluable life time lesson. See you next time. Finwiz.

The only answer to true independence: Managing our personal finances

  

  
   It's essential to our long term wellbeing to manage our personal finances and know that this responsibility starts and ends with us. It's more important than ever to grasp the reality that no one can manage our finances better, it is up to us.

 1. Never borrow money if you don't understand the risks.
 2. We can't spend more than we earn.
 3. Separate what you want from what you need.
 4. Set aside time to read about money management.
 5. Money management skills are learned through trial and error, don't get frozen out of the process due to fear.

    See next week. Finwiz.

Three ideas for my college friends

                                                          1: Live below your means

    You don't have to play the role of starving artist, but you do need to keep track of where your money is going. The key is making and keeping a budget. Quicken and mint.com are perfect and free services to stay on track.

  2: Work too

    I worked part time during the school year and full time in the summer. Keeping at least a part time job helps with unexpected expenses or allows you to enjoy a social life and to go out a little.

 3: Start saving now

    It's never too early to start saving. I suggest opening a Roth IRA and funding it at least partially during your college years. Putting as little as ten dollars a month in a retirement account will, if nothing else, teach you the tenacity it's going to take to retire young.

See you next time. Finwiz.