How to Start an Emergency Fund – It’s Not That Hard!

How to Start an Emergency Fund

One of the best things you can do for your personal economy is to start an emergency fund.

Your emergency fund can help protect you against financial setbacks, since it provides you with a little extra cushion to draw on.  Rather than turning to debt, you can use money in your emergency fund to cover unexpected costs.

Experts recommend that you save at least six months’ worth of expenses in an emergency fund.  So, if you spend $3,000 a month, you need to have $18,000 in an emergency fund.

Notice here that I’m talking about expenses and not income here.  What you need to save in an emergency fund is money to cover what you normally spend in expenses each month, not how much you make.

Anyway, that’s a daunting task.

How can you get started when you have that huge amount of money hanging over your head?

Here’s How to Start an Emergency Fund

Continue Reading

Is Your Money Mindset Killing Your Finances?

Is your money mindset killing your finances?

Millions of Americans are struggling to pay their bills and meet their financial obligations. 

The last eight years have taken a toll on Americans economically, and many are still feeling the financial repercussions.  According to one study, indebted Americans owe $14,517 on credit cards on average (Forbes).

But how much they owe isn’t the only problem.

The other half of that equation is how much they’re saving. . .or not.

According to TIME, only 1/3 of Americans have at least $1,000 saved in an emergency fund.  Of course, logically, if they’re not saving for the short term, they’re also not saving for the long term.   As CNN Money reports, “About 49% of Americans say they aren’t contributing to any retirement plan, according to a new survey conducted by LIMRA, a trade association for the financial services industry.”

Americans are in bad shape financially.

But what if the secret is not learning how to live more frugally?  What if the secret is instead to look at your money mindset?

If you’re stuck in a financial rut, could one of these reasons be the cause?

4 Crucial Places Your Money Mindset is Killing Your Finances

Continue Reading

What Should You Do With a Cash Windfall?

What should you do with a cash windfall?

Quick—if you got a serious cash windfall what would you do with it?

What’s a serious cash windfall?  That number is different for everyone but I think any amount that would make a significant dent in your life (or more).  I’m thinking an amount starting at $1,000 and going up from there.

It’s fun to think about this question, not the least of which since windfalls do happen, at least from time to time.  And when they do come, it never hurts to have some ideas or a plan for what you’d do with it.  This way when the money comes you can act rationally.  A cash windfall is a great opportunity that you don’t want wasted.

The way I see it, there are three basic choices—spend it, save or invest it, or use it to pay down (or pay off) debt.

Which you choose depends on your circumstances.

Let’s take a look at three options for a cash windfall:

Continue Reading

How to Teach Your Children to Be Financially Responsible

How to teach your kids to be financially responsible.

As parents, we all want what is best for our children.

You may often hear parents boast, “I want my kids to have what I didn’t have.”  We want the next generation to be more successful than we are.

Yet, more and more that’s not happening.

“Johnny” is a 54 year old man who still lives with his parents.  He moved out briefly when he married and had two children, but 8 years into the marriage, he and his wife divorced, and he moved back home with his parents.  That was 20 years ago.  He is unemployed and has been for over a decade.  His parents pay his living expenses.

“Renee” is a 27 year old college graduate.  She went to college at an expensive school to get an art history degree.  She is now paying back over $40,000 in student loan debt.  She’s working at the local coffee shop while she looks for a job in her field, though in her small town, such jobs are nearly non-existent.

Unfortunately, these types of situations are more and more common.  As parents, we want to do everything we can for our kids, but often that turns into enabling, which can lead to the situations above.

A far better response is to teach our children to be financially independent at a young age.

Remember, the earlier you start, the more adaptable your children are.  Consider these strategies below…

Here’s How You Help Your Children Be Financially Responsible

Continue Reading

When Does It Make Sense to Automate My Finances and How Do I Get Started?

When does it make sense to automate your finances?

Automating your finances is one way of simplifying your financial life.

When your automate your finances you use your bank, credit card, or service provider’s website to set up automatic transactions on your behalf.  You can automate paying your utility bills, paying your credit card, investing your retirement funds, and many other tasks.

Finance automation is often touted as one of the top ten things you should do to improve your finances.

While having your bills paid on time does help you save time and avoid late fees, completely automating your finances is foolish and nearly impossible to do.

How Automating Your Finances Improves Your Finances

Late fees.  Overdraft fees.  High interest rate penalties.  Missed payments.

All of these items are the result of mismanaging your finances.  Missing one payment can result in your interest rate on your credit card going sky high.  Missing the payment due date on any bill will automatically reward you with a late fee on top of what you already owed.

In short, mismanaged finances end up costing you thousands of dollars with all the fees and higher interest rates you pay.
Continue Reading

7 Reasons We Have Trouble Sticking to Our Budget

Reasons We Can't Stick to Our Budget

Every month, I diligently write out our budget and track how we spend our money. 

Most months we stay close to our target budget.  However, there are some months, especially the winter months when we have a number of expenses due at once, where we struggle to make ends meet.

I’m sure you’ve experienced this as well.

If you struggle with your budget, you’re not alone.  Turns out, there are many reasons why most of us spend more and save less than we should.

Here’s Why We Have So Much Trouble Sticking to Our Budget

Continue Reading

These Big Financial Wins Will Put a Lot of Money in Your Pocket!

these big financial wins put money in your pocket

A look around the personal finance blogosphere will show you a number of different approaches to living a financially rewarding life. 

Some bloggers like Ramit Sethi from I Will Teach You to Be Rich scoff at little cost cutting measures like making your coffee at home instead of stopping by Starbucks, arguing that the way to truly become wealthy comes from making more money, not cutting little corners.

Others like Crystal Paine at Money Saving Mom advocate a frugal lifestyle.

She regularly advertises free deals and ways to be frugal such as using coupons when shopping, menu planning, and taking advantage of free summer activities with kids.  While she does advocate having a side gig if you’re able, her main focus is saving money by spending less money.

Of course, these two strategies combined — earning more money and saving money in all the little ways you spend on a daily basis — are important to growing your net worth.

But there’s also another strategy that may be even more important than cutting corners on routine, small expenditures–cutting corners on large purchases that can save you thousands in one fell swoop.

Saving on large purchases isn’t discussed as much because there’s not an opportunity to save as frequently.  After all, you may go to the coffee shop every day, and you may go out to eat a few times a week, but you’ll likely only buy a new car every five to ten years.

Still, the big purchases can save you as much in one fell swoop as a year’s worth of savings by making your coffee at home.

These Big Financial Wins Rock!

Continue Reading

Free Newsletter to Keep you Free From Broke!Name: Email: We respect your email privacyPowered by AWeber email marketing