John and Sarah had been married for five years and had just welcomed their first child. Despite having steady jobs, they felt overwhelmed by the added financial strain that came with having a baby. They created a household budget to help them stay on track with their finances to better provide for their growing family. With an organized budget, they could make sure their bills were paid on time and have enough money saved for a rainy day. Creating a household budget gave them the peace of mind of knowing that no matter what unexpected expenses came up, they could handle it financially.

I often ask clients if they have a budget. If they say no, I will ask them, “Do you think your employer has a budget”? My point is businesses operate on a budget. Don’t you think running your family finances like a business is a good idea? Household budgets can be a pain to stick to, but the savings are worth it in the end. Here are some tips and tricks to help you stay on track without feeling like you’re depriving yourself.

Here are the keys to creating a successful household budget:

• Know Where Your Money is Going
• Make a budget and stick to it
• Cut Back on Unnecessary Expenses
• Find Ways to Saving Money on the Budget Big 3
• Stay Disciplined with your Spending
• Review your Budget Regularly and Make Changes as Needed

Know where your money is going – Track all spending for one month to get an idea of where your money goes

Whether you’re trying to build savings for the future or make your way out of debt, knowing where your money is going is the key to success. It’s best to track all spending

for at least one month to get the most accurate picture. An overview of expenses such as groceries, rent, and monthly subscription services will help you decide which costs can be cut and which are necessary. Once you’ve got a clear idea of your financial habits, you’ll be able to start making smarter decisions with your money – or even reap some rewards from that new budget plan!

Make a budget and stick to it – Include paying yourself first (saving) in your budget so you can reach your financial goals

Have you ever felt overwhelmed by financial obligations? Do you want to make the most of your hard-earned money? When taking control of your finances, there’s no better place than a budget. It may feel unromantic or intimidating to set aside time and energy for managing our finances, but if there was ever an investment worth making, this is it! On top of that, don’t forget to make saving (paying yourself first) part of the budget. That way, no matter how small the amount may seem initially, you will be well on your way to growing your nest egg. Think of it as buying peace of mind, not to mention savings down the road! So don’t just dive right into paying off bills and never look back. Invest in yourself today!

Cut Back on Unnecessary Expenses – Do you need that daily coffee or to play golf every week?

Our society tells us often that it’s okay to borrow and buy things we don’t truly need, making it even harder to cut back on those extra expenses. In today’s world, it has become increasingly easier to splurge on things that might not be necessary. From our daily coffee run or pizza night with friends, it can quickly add up over time. While these expenses may seem small, over time, they can make a huge difference in our wallets if we’re not careful! The next time you feel the urge to splurge on something you want but don’t need, like playing golf every week, take a second and consider whether you could be putting that money to better use. You’ll thank yourself later!

Find ways to save money on the Budget Big 3 – Groceries, Transportation, and Entertainment.

Saving money on groceries, transportation, and entertainment (the Budget Big 3) can be challenging because these may be some of your most significant expenses. However, you can see some monthly savings with a little effort and planning. When it comes to groceries, try making a shopping list before you go to the store so that you only buy what you need. If you have access to a carpool or public transportation system, give ridesharing or public transit a try. It could save you quite a bit compared to driving alone. Finally, when it comes to entertainment and having fun, there are often ways to save on activities, like checking for discounts online and attending free events near you. Another example is checking out a book from your local library vs. buying it. With just a few tweaks, your wallet will thank you!

Stay Disciplined with Your Spending – it’s easy to overspend when you use credit cards or have cash in hand.

Sticking to your budget isn’t always easy. However, self-restraint is a must in today’s world of swipe-and-go. Credit cards can make overspending worry free – well, not so worry-free for your wallet! Especially if you have had a hard time battling temptation in the past. With that said, know when it is okay to give into small guilt-free pleasures here and there, but don’t let those tiny purchases slowly snowball into something much bigger than you expected. And even with cash on deck, consider limiting yourself to just what you need rather than letting yourself get caught up in the moment. Happy spending!

Review Your Budget Regularly and Make Changes as Needed – Life happens, and budgets should be flexible. Don’t forget to create at least a $1000 emergency fund and try to grow it to at least 3 months of expenses.

Making and sticking to a budget can be hard work, but it’s worth the effort. While life is unpredictable, having a flexible budget gives you power and control over your finances. After all, if you need to double-check the contents of their wallet five times before leaving the house, this is for you! Setting aside an emergency fund for that inevitable rainy day becomes even more critical in these uncertain times. Aim for at least $1000 to start rebuilding faster; then, once you’ve settled in, expand your safety net until it covers at least three months’ worth of expenses. This way, whatever life throws at you, you’ll be ready.

Summary

Now that you know where your money has been going, it’s time to take control and make a budget. But not just any budget, a solid budget that includes savings so you can reach your financial goals. And don’t forget to cut back on unnecessary expenses like that daily coffee habit or extra rounds of golf every week. You may even be surprised at how much money you can save by making small changes in your spending habits. Stay disciplined with your spending. It’s easy to overspend when you use credit cards or have cash in hand. Review your budget regularly and make changes as needed. Life happens, and budgets should be flexible. Let Stalwart Financial Planning help you create a personal budget that makes sense for you and your family.

The post Do I Need a Household Budget? first appeared on Stalwart Financial Planning.

Have you ever asked yourself the question, “At what rate should I be saving for retirement?”  If so, you should keep reading.    With this question, you are probably wondering if you need to save  5%, 10%, 15% or more for retirement.  .

I think a better way to phrase and think of the question is:

What is the MINIMUM percentage of my current income, I need to save to retire to the lifestyle I am accustomed to living now?

• Is it the amount to receive the full company match on my 401K?
• Is it 10% of my income?
• Is it 15% of my income?
• or is it a higher percentage of my income? 

(Click here if the video does not display on your device)

To determine the saving rate needed to fund your retirement lifestyle, you first need to establish how much of your current income, you will need to replace.  You have to ask yourself, if you need to replace 50%, 70% or even more of your pre-retirement income.  The next step is to determine the percentage of your income you need to save during your remaining working years, so you can reach your retirement goal.  No matter what percentage of your income you can start saving now, you have 3 keys to establishing a retirement savings plan that will end in success.

1. Save consistently
2. Increase savings as your income grows
3. Monitor your progress

You can read some of the latest research on how much you should save for retirement  by Massi De Santis Ph.D.  & Marlena Lee Ph.D.

At what rate do you save for retirement?  You can leave your response at the end of this blog.  Also do not forget to follow me on Twitter @IfAdvice or on Facebook StalwartFinancialPlanning

The post At What Rate Should I Be Saving For Retirement? first appeared on Stalwart Financial Planning.

What can you do when you have 6 people over for dessert and two uninvited guest arrive just as you cut into your favorite pie?  This is exactly what happens to your monthly budget when you need to repair the transmission on your minivan.  And in addition, you find out, your spouse must unexpectedly travel across the country to visit their Mother who is having surgery.

Let us take a moment and consider what options we have.  We should only consider options where everyone that wanted a slice of pie got one.  To do this we might select one of the following:

• Slice the pie into smaller pieces
• Hope someone is on a diet
• Immediately start baking another pie

If you slice the pie into smaller pieces, sure, everyone gets some pie.  However, it will probably leave most feeling a little unsatisfied.  The same would be true, with your monthly budget if you decided to pay only part of your mortgage, part of your water bill and so on.

You could hope that someone is on a diet and therefore not want any pie.  You might get lucky and have this happen.  But, the people I know and hang around are not going to turn down pie!  This is probably the case with your monthly budget too.  I cannot remember a time the electric company decided they did not want me to pay my bill for the month.

Another idea would be to start immediately baking another pie.  This could work if you have all the ingredients handy and do not have to go to the market to purchase more sugar.  To boot, your guest will probably not be interested in waiting around for you to cook another pie.  They are busy people with things to do and places to go.

A solution that would work for both the uninvited guests and your budget woe is an emergency fund.  For your guest desiring dessert, you could offer them some of the butter pecan ice cream you were saving for a rainy afternoon.  You were stashing the ice cream for when you had the entire house to yourself (just you, the couch, and an old movie).  As for your budget, this is a good time to break out the ole emergency fund.  Your emergency fund should be 3 to 6 months of after tax living expenses.  You can even use a money market account to store these funds.  If you are self-employed, your emergency fund should be 6 to 9 months of expenses.

My wife makes this wonderful pie she calls Carolina Dark Pecan.  One taste of it and you will see why it is my favorite dessert.Here is the recipe:

1 cup dark corn syrup

½ cup butter (melted)

½ cup whole or chopped pecans

½ cup sugar

3 eggs

½ tsp. vanilla

Brush melted butter on piecrust. Arrange pecans in desired pattern in bottom of pie shell. In a separte bowl beat eggs until foamy. Add sugar, syrup, remaining melted butter and vanilla.  Beat until mixture thickens. Pour into unbaked pie shell, and bake 8-10 minutes at 450. Reduce heat to 325 and bake until filling is firm (about 35 minutes).

Until next time, and remember at Stalwart Financial Planning you do not have to have a fortune to start creating one!

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