Friday, June 17, 2011

Family Budgeting - The 3 Key Secrets to Success

While there is some truth in the fact that it can prove to be a time consuming task that requires a little patience and diligence, it can result in many rewards. Here are just some of the basic secrets of success in creating your family budget.

Family Budgeting - Secret 1

The first secret of success when it comes to budgeting for the family, is to develop a goal (or more than one goal if you like!). Without a goal, or something to work towards, you will find that it is difficult to stay motivated enough to stick to your personal finance budget.

A goal that is appropriate to a family budget, may be something like, say, accumulating enough cash to pay off any outstanding debts; saving for a down payment on a home; buying a new family car even.

The choice is yours when it comes to setting goals, but it is a choice that must be made, to ensure success when it comes to disciplining yourself to a budget for your family.

Family Budgeting - Secret 2

The second secret to creating a successful family budget is making certain that you take the time to carefully outline all of your recurring expenses, as well as any other spending that you may take part in.

You will want to outline all of the money that goes out on a monthly basis, such as utility costs, mortgage and/or rent payments, and any type of insurance coverage that your family may have.

Once you have done this, it is important to take the time to create a detailed list of all the other spending that you engage in. This may include eating out, family entertainment, and various other expenses.

The whole idea is to get a glimpse of what you have coming in, and to ensure that what you have going out is relatively less.

Family Budgeting - Secret 3

The third way that you can create a successful family budget, is by ensuring that all of your previous debt is handled in an appropriate manner. If you are unable to completely cover the debt that you have, you should take the time to make certain that the budget that you create allots a certain amount towards those vital financial goals.

It really is not possible to step ahead until all of your previous steps have been covered. You should elect a certain percentage of your total income in order to do this. Once you have done this, you will find more and more funding becoming free for you to use towards your financial goals.

Once you have carefully outlined your goals, written down all of your spending and are committed to working off your past debts, you will find that creating a family budget that you can be successful at is not difficult at all!

It will take a little time, and quite a bit financial action and in the end, creating and delivering a successful family budget will be one of the most rewarding experiences that you can benefit from for many years to come!

Thursday, June 9, 2011

Finances For Having a Baby

Summer brings more than just warm weather... it brings new life. More babies are born in July and August than in any other months of the year. Bringing a baby into the world can be one of the most fulfilling and exciting times for a family but, in the midst of the joy and excitement, don't forget about the financial responsibilities that go along with parenthood.
Here are some things new parents should do to ensure a sound financial future for themselves and their families.
1. Budget for your baby. Having a baby means a whole new financial plan has to be made. Hospital bills, taking leave from work, new furniture, and a bevy of baby necessities will soon put a big dent in your wallet. So, plan your spending accordingly. Will both parents work? Who will stay home? Will one income be enough? Ask yourself these questions and be sure of what your income will be.
2. Make a will. This allows you to designate not only how your possessions and finances are handled, but also who will be the guardian of your child in the event of your death. There are a number of online resources to help you with finances and planning, but it's best to consult with a lawyer.
3. Get life insurance. In the same vein as the will, you want to have something to leave your family if something should happen to you. You generally want to have enough to cover about 5 times your annual income. Depending on your job, you may also want to consider disability insurance.

4. Save for retirement before college. Some would think that the kid's college fund is more important. There are loans and scholarships to help with college tuition, but not for retirement. You can put your kid through college, but he or she may end up bearing the burden of your elder care because you'll be broke. You can still save for their college, but try to put 10% of your income towards retirement first and any extra money can go into the college fund. If necessary, you can withdraw money from a Roth IRA with no tax penalties if the money is used for college expenses.
Having a child will change your life. It will be a joy and, if not properly prepared, a financial burden. If your stork is on her way, now is the time to put a plan in place so that when your bundle of joy joins your family, you are financially prepared. A little planning for your family finances goes a long way.

Monday, June 6, 2011

5 Tips For Managing Your Family Finances Successfully

Day by day as inflation is increasing but real income decreases, it is important to make sure you have a plan to maximize your financial resources. With a plan like a family budget, this helps to ensure that every cent you earn is well spent.

When is the best time to do this? The answer is now. Now is the best time to start the process of looking over your family finances in terms of spending and savings. By taking time to access and setting up a budget can affect the way you use your income as well as helping you and your family to be on your way to economic stability.

In accessing your situation and planning a budget, there are many factors to be considered. Factors such as your source of income, lifestyle, spending habits, current jobs, cost of living, debts and loans. All these factors will determine your budget needs and how successful your budget will be.

Below are 5 tips and recommendation that will provide some details to you on how you can manage your family finances successfully. Hopefully with this you will look at budgeting differently and become more responsible in spending money.

1. Try your best to save as much as you can when you are doing your shopping. There are many ways to do this and one of them is to do comparison-shopping using the Internet before your usual shopping. You can also do that while you are shopping too. By practicing this as a habit, this will save you money in the long run.

2. Another tip is to purchase in bulk if possible. Then you can use coupons or wait for special sales or when the stores are offering discounts. Again you can do this online or make phone calls.

3. Do not gamble. This might seems obvious but it is a known fact that gambling is one main factor that causes financial ruins. Gambling not only waste your hard earned money but may even results in unpleasant legal action which eventually leads to bankruptcy over the long run.

4. Learn to differentiate what are your needs and wants. Always practice to limit your spending to things that you really need and not things considered as want. Studies had shown that luxuries are only second to gambling in terms of the money wasting capability.

However it does not mean that you cannot purchase things that you want. Just make sure that you had planned ahead for the said purchase and that the purchase does not over shoot your budget and laden you with debts.

5. Do not over spend. What this means is not to spend more than what you earned. Again this tip is very obvious but sometime we just do not heed what is obvious and logic. If you spend more than you earn, where will there be money left to save and invest? This is why making a budget is important.

With a budget, this will help you to consider the amount of the purchase and how it will impact your finances and life. Do take time to create your budget and as well to think before you buy and living within plus sticking to your budget will be easier.

Hopefully with the above 5 tips, you had found them useful so that you can successfully manage your family finances and be on your way to achieve your family financial goals.

Saturday, June 4, 2011

Family & Marriage Finances 101 - The 14 Essentials Everyone Must Know

There are two words that are very closely synonymous with the two words 'family happiness' - those two words are 'family finances'! Notice I did not say 'family wealth' - happiness in a home, marriage, and family is most often directly correlated with the ability of the parents to properly manage (not necessarily accumulate) and budget their finances. It is unfortunately true that over 80% of all divorces result, in some way or another, because of finances. More tragic than the divorce is the fact that families are torn apart, children suffer, and society is feeling the negative ramifications of this all too common reality.

At the outset, it is absolutely important to note that the 14 essential principles described below are not designed to teach people how to accumulate wealth through the application of the principles described. The sole objective in revealing and explaining these principles if for one purpose - to help marriages and people everywhere experience the family happiness that results from the application of simple financial principles. Will applying these principles require effort and a change? Certainly! But does not everything good and worth while in life also require change and consistent effort?

Fortunately, with a little education, self-discipline, and effort, we truly can ensure that our 'family finances' result in 'family happiness.' May I suggest 14 ways on how to accomplish this:

1) Establish a budget and live within your means: First, do you even have a budget? If so, do you actually live by it? Do you actually record every expenditure, so that at the end of the month (when you sit down and go over finances ... right) you know where every penny has gone? At the end of the month as you look over the finances, did you purchase something you did not need? Stick to the budget and live within your means!

2) Never accumulate consumer debt: Do you know the difference between Good Debt vs. Consumer Debt? Good debt is when you have to borrow money for some type of an investment: a house, your education, or to start a business, etc. Consumer debt is simply purchasing anything on credit outside of these three areas. If you don't have the money to buy it - don't buy it!

3) Credit cards are NOT bad: Now, above on point 2 I mentioned to never purchase anything on credit you don't need or have money for. That does not mean you can't purchase your groceries or other expenditures on a credit card (in fact, I encourage you to do that). Using credit cards, properly, is essential to your financial success. What is the proper way to use a credit card? It is simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month.

4) Understand the importance of building and protecting your credit: In my opinion, protecting your credit is just as important as protecting your social security number. Your financial future and success hinges upon that report/score. Do you want lower rates, better jobs, larger loans, better pay, etc.? Than you better protect your credit. I tell people all the time that investing in Identity Theft Protection is just as important as any Life Insurance program in our day and age. Now, do you know how to build and improve you score/report? It really is simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month (sound familiar)!

5) 'Wealth' is not the accumulation of money, it is the proper management of it: Our culture and society certainly has a skewed perception of what true wealth is. If, for example, an individual makes 1 million dollars a year, we assume they are wealthy. Well, if that person spent 1.2 million dollars that same year, that certainly is not wealth is it? In fact, the promotions and pay raises we all seek in our jobs will do little if we increase our spending as our income increases. Robert Kiyosaki refers to this habit as the 'rat race.' We need to learn how to properly budget, manage, save, and invest our money - not just spend it. Thus, true 'Wealth' is getting out of this 'rat race,' it is financial independence, it is passive income, and it is time freedom. Learn now how to manage your money before it manages you! Both men and women would do well to change their perception from 'how much can my spouse make' to 'how well do they manage their finances.'

6) Self-Discipline and Self-Restraint are essential: Self-discipline in regards to money is far more important than any advanced course in accounting or financial management. Parents would do well to develop this ability, and they would be wise to teach this to their children. However, please don't mis-understand - 'self-discipline' does not translate into self-denial or impoverishment. There is nothing wrong with buying 'things' that are fun, entertaining, or that the kids would enjoy. Where the line must be drawn is in the questions 'can we afford this' or 'is this in our budget' or 'do we actually need this' etc. And, ironically, self-discipline in financial matters will translate into self-discipline in other areas and aspects of life.

7) Saving Saves: That's it - just save! Learn now to discipline yourselves and budget 10% of all earnings. Save for a rainy day, for retirement, for kid's college funds, vacations, investments, etc. Avoid consumer debt, prepare for disasters or unemployment, and save 10% of all earnings - ALWAYS!

8) The importance of Insurance: Do you have proper and adequate home insurance, life insurance, health insurance, and car insurance? If not, you are potentially setting yourself up for financial disaster. And, in our day and age, do you have Identity Theft Protection? This type of insurance is just as, if not more important.

9) Wants vs. Needs: Wise is the wife, husband, parent, or child who can discipline themselves financially. The ability to sacrifice, go without, save, be patient, and determine wants compared to needs is an absolutely necessary attribute to develop; ironically, this attribute is not only necessary for finance-related issues, but every aspect of our lives!

10) Money is NOT Evil: Unfortunately, the majority of people have engrained into their minds that money is evil. Money is NOT evil; it is the pride people develop from possessing and accumulating money that causes others to perceive money as being 'evil.' A wealthy person's snobbish attitude, condescending comments, assumed superiority, and arrogant actions are what is 'evil' - not the money! 'But the money created the pride,' some may wrongfully say; no, the choice to become prideful is what created the pride. Money is absolutely necessary for our daily survival; and if we choose, our excess money can also free up our time and create opportunities and resources that help and bless other people's lives. We need more people who choose to acquire wealth for charitable purposes, and less people who develop the strength to financially suffer because they ignorantly believe 'money is evil.'

11) Communication & Involvement is Essential: If you are married, are both of you involved in, informed about, and joint decision makers in the financial affairs of the family? If not, the very question should reveal the necessary changes needing to be made. Are children simply given money, or are they expected to work for and earn it? Grateful will be the child, and wise would be the parent for teaching their child this reality of life in the real world. And perhaps just as important, are children taught the very principles described in this article - saving, compound interest, credit, insurance, wants vs. needs, etc.? The fact that this article even needs to be written should suggest that our educational system fails to teach these important principles, which should suggest that if any parent is dependent upon others to teach their children these necessary financial principles - they will pay for it, literally!

12) Investing in Appreciating Assets, Not Depreciating Liabilities: How often are we personally guilty of ensuring that our car is loaded with the best features, our clothes are updated with the latest fashions, or our sheds and garages are filled with all the fun toys and tools? There is nothing necessarily wrong with having these (see point #13 below); however, how unfortunate it is when excess funds (or what's worse - funds/debt obtained from credit) goes to obtain more toys, cars, and clothes rather than assets that will appreciate over time. The key to financial independence is not obtained through pay-raises, promotions, 401(k)'s, or even the lottery - it is obtained by applying the principles discussed in this article, and more importantly, buying appreciating assets rather than depreciating liabilities.

13) Be balanced and enjoy life also: Sometimes I read articles of couples who save every penny (literally) so they can retire at age 40. Some are able to do this, and good for them. But, let's be realistic and also enjoy life as well. Perhaps it is setting aside a few hundred dollars a month, or just $20 - but take your wife on a date, treat your kids to pizza, go out to a movie, etc. Have fun and be balanced!

14) Give and you shall receive: Ironic that this is on the list - but it is not last suggesting it's least important. In fact, it should be number one on this list! Learn now the great truth that when you give, you will receive. The 'giving' will be different for everyone. For some, it may mean giving to a charity, giving to a neighbor, to a church, to a family member, etc. But, give with no expectation or thought of reward or return, and you will receive much more in return, somehow in someway, but it will happen!

In conclusion, never forget that this is not about saving, budgeting, or investing properly - this is about happiness in your marriage and family life. A great credit score, a large bank account, an excellent insurance policy, and even a healthy retirement account are comparatively insignificant compared to the marital and family happiness, which can be achieved by applying the principles above.