3 Reasons Why Your Budget Isn’t Working And How To Fix It

Image result for budget iconWhen you think about the word ‘budget’, it has such a negative connotation associated with it, the same as treating it like that awful diet.

First things first, if it gives you that blah feeling, change the name. I personally like to address mine as my “glow up” plan because it holds me accountable and my dollars are flowing in my favor. I know you’re probably saying “I already tried, but it didn’t work.” Was it that it didn’t work for you or was it that you weren’t realistic with it?  Budgets work, but you have to be willing to be transparent with yourself. The goal is to have every dollar work for you vs. the other way around.

To be clear not every budgeting method works for everyone. You have to find your style and flow that works for you. Whether it’s the envelope method, the zero-sum method or the cash diet method something has got to stick. I personally like to use a little bit of all three based on my current system, it works and it makes sense. If you’re still figuring out why your budget is not working. Here are 3 possible reasons:

  1. You didn’t count all of your real expenses

Budgets are not meant to be restrictive. In fact, it’s an important document that tells you your input and output of funds. If you aren’t including things such as your Netflix or Amazon Prime subscription or any other, you’re probably going to go over every month. If your monthly expenses aren’t real then your budget isn’t either.

Make sure you take the time to add every single expense every month. A great way to do that is to take out a piece of paper and start looking at your debit and credit card recurring expenses. One of my favorite apps that can help you do that is Clarity Money. It identifies your recurring expenses once you connect all of your accounts and the best part is that you can click a button and they’ll even cancel them for you. Mint is another popular app to use.

  1. Spending more than you’re making

Often we make the mistake of creating a budget where the income doesn’t match our expenditures. If your income doesn’t match, it’s time to not only go through your expenses to see what you need but also what you can live without. If you need every single item in your budget it’s time to decide how you can make extra money to cover your expenses so you’re not in the red all the time.

Making extra money can be as simple as selling the clothes in your closet on OLX or creating a side hustle that brings you an extra income. Figure out what you’re good at and start selling. It won’t hurt to start with a t-shirt shop via Spreadshirt without even having to hold inventory. Make those coins!

  1. You forgot to make room for ‘fun money’

If you have the cushion in your budget you should, of course, make a line item for ‘fun money’.

Let’s keep it real here, no one wants to not have any money to do some of the things that they love. Every month, I allocate a specific amount of money in my budget for going out to eat, entertainment, etc. It allows me to not feel deprived as I pay my bills and prioritize paying down debt and saving money.

Note that although you have ‘fun money’, there are times where you will need to cut it down as you prioritize some of your other expenses, but the line item is there for you.

Budgeting is only a piece of the puzzle when it comes to managing your money. Money can be an emotional trigger for most, but working through that towards changing your mindset and beliefs can help you as you move through your financial journey.

As you figure out what budgeting method works for you, remember that pivoting is ok. Pivoting is necessary for every aspect of your life when something is not working. Once you find something that is seamless for you, stick with it.

#Budgeting #Saving #GirlPower #AspirePFS # PersonalFinance #Mymoney

Credit: clevergirlfinance.com

How To Make Time For Your Finances With a Busy Life

How To Make Time For Your Finances With a Busy LifeStaying on top of your finances plays a major role in whether you achieve your money goals. When you have a life full of career, family and personal demands on your plate, a regular review of your spendings, savings, and debts can fall by the wayside.

If you feel like all the responsibilities in your life keep you from creating a budget or logging into your online financial account, even once a week, use these hacks to help you manage your money.

You’ll never be able to get more than 24-hours in a day, but with a few strategic moves, you can easily prioritizing the time you need to maintain your financial well being.

1. Add Money Reminders to Your Calendar

Spending time on your finances deserves to be prioritized like every other important event in your life. Consider adding recurring money check-in dates to your calendar as you set up a meeting at work, or a doctor’s appointment for yourself or your family.

For example, you can schedule a time to check your financial accounts daily, update your actual spending in your budget bi-weekly, get competitive quotes for vehicle insurance coverage quarterly, and review your retirement contribution and tax withholding amounts annually.

 2. Review Your Money From Your Phone

It can be challenging to routinely log in to all your different banking, creditor and service provider accounts to maintain a full understanding of where your money stands.

Overcome this challenge by using mobile apps, like Mint, that pull together all your account balances, upcoming bills, summarize the progress towards financial goals and offer the ability pay bills right from your phone.

Also, explore signing up for text alerts from your financial institution, to receive messages with account balances, transaction activity, and even bill due dates to your mobile phone, when it’s available.

3. Tackle Major Money Tasks Separately

Important financial tasks like switching financial institutions, updating beneficiary designations, disputing charges, changing payment account information, rolling over an old retirement account or changing your legal name after a marriage, take more time and effort than a quick review of your account activity.

Although you might be tempted to procrastinate, pacing yourself and tackling these tasks separately, is a better approach.

Take into account how much time you’ll need for each task and aim to complete one task each or every other week.

4. Take a Personal Day for Your Finances

Whether your employer offers an official Financial Fitness Day or not, taking some personal time off to tend to your finances is well worth it.

Use this time to schedule your money reminders for the next 6 months, develop your budget, open separate savings account at a brick and mortar location one town over, or tackle those long overdue financial tasks, all in one day.

#Budgeting #Saving #GirlPower #AspirePFS # PersonalFinance #Mymoney #Money

Credit: clevergirlfinance.com

7 Ways to Raise Financially Empowered Young Women

Image result for mother and daughter indian pictures

Came across this beautifully written article by  Fran Pastore, founder and CEO of the Women’s Business Development Council so thought of sharing it with you all.

When my daughters were just toddlers, I made a commitment to raise them to be economically independent and empowered to make their own financial decisions. I wanted them to become financially secure, self-reliant women; this is a skill that is taught.

“As parents, we can educate our children to be financially independent so that they learn how to protect themselves from the vulnerability of economic insecurity.”

Here are 7 impactful ways to raise financially empowered young women:

  1. Open a saving account for your child

What better way for kids to understand money than to have and manage their own? I gave my girls an allowance starting at age five and committed to paying it weekly through college as long as they invested half of it into their personal savings accounts.

Parents can make a household rule that savings—money from allowance and other income including gifts—stay untouched until it affords its owner a valuable opportunity. Your kids will one day be amazed at the doors that their saving will open for them.

  1. Advocate the importance of education

Every day at the Women’s Business Development Council, I witness the empowerment that education offers. Simply put, knowledge is power, and it will give your daughters the opportunity to make choices and follow dreams.

Put education at the top of your parenting priorities by setting expectations and celebrating educational success. Set up a college savings account as soon as possible, research scholarships and take advantage of low-cost after-school enrichment and tutoring programs that allow your daughters to explore interests and get extra help to build confidence.

  1. Increase perspective-taking in children

Show your girls the world that is waiting at their door. When my children were young, we didn’t let our meager budget get in the way of creating excitement around travel. We’d pack our bags and drive to Grandma’s house, which was on the way to an international airport.

We’d detour through the airport, giddy with anticipation of all the places planes would one day take us. Find ways to bring the world to you, too. Our family hosted young women from around the globe in our home as exchange students and au pairs. Their cultures and perspectives broadened my daughters’ views of the world and made them excited to leave their mark on it.

  1. Challenge gender stereotypes

Traditionally, girls are encouraged to take on roles to care for others, an emphasis placed on their nurturing capabilities rather than on their earning potential. Help girls become more comfortable with pursuing their ambitions and unabashed about their desire to make money.

Teach them to be in control and effect change. Help them understand that they can care for others with their own wealth, using it to invest in their families, communities, and in causes they support.

  1. Teach your daughters to be strong

While the completion of chores wasn’t linked to my kids’ allowance, household tasks played an important role in teaching them independence and responsibility. Each child was responsible for making her bed, keeping her bedroom clean, setting the dinner table, and putting her laundry away at the end of the night.

Keeping the cracks in our long driveway free from weeds—a task I felt encouraged a strong work ethic and was definitely not appreciated by them – was also on the list! At summer camp they were required to clean toilets, wash clothes or do dishes. While they often grumbled about the work, they later thanked me for giving them the skills necessary to live on their own.

  1. Don’t underestimate the importance of mentoring

Opportunities are often left untapped when there isn’t a supportive mentor to share them, make an introduction or show you the ropes. Business success is often attributed to the support and mentorship of others who are willing to give their time and pass along skills.

When our family was young, my daughters experienced the satisfaction of helping others, for instance seeing our au pair explore her veterinary career ambition through an internship we helped her land at our local vet.

Today, my girls are early in their careers—one a lawyer and the other a social worker—and see mentorship as critical to their success. Knowing its power, they are also quick to offer support to others.

  1. It takes a village to raise a child

This last strategy is for you. Raising children is hard work and it’s not meant to be done alone. Create a reliable support system of committed individuals and organizations to help you achieve the goals you have for your children.

My village was a lovingly cobbled together mix of savvy female friends who shared with me their professional acumen (to help me start a business to support my family and others), offered parenting advice, and gave me access to their nannies and babysitters to care for my kids while I worked. My girls benefited from their support and perspectives as much as I did.

Economic self-sufficiency is one of the most important and perpetuating lessons you can teach your daughters. With education and know-how, broader perspectives and the support of others, your children will be able to better explore their dreams, get to know their world, and help to forge change that will empower and inspire others to do the same.

My daughters’ financial savvy and their childhood savings accounts eventually grew to offer opportunities they could have otherwise not afforded—study abroad, extensive international travel, and a year of income while holding out for a dream job in a new city.

Fran Pastore is the founder and CEO of the Women’s Business Development Council (www.ctwbdc.org), a leading organization for championing female entrepreneurship.

 

The biggest benefit of mutual funds is liquidity!

With the fund industry brainstorming hard to woo fence-sitting investors into mutual funds, suggestions have been flying to and fro on what mutual fund features should be highlighted in mutual fund advertisements. The power of equities, the benefits of compounding, the wealth-creation potential of SIPs and explaining market risks seem to be some popular choices. But mutual funds offer one big benefit that makes a big difference to investors and leaves all other asset classes in the dust. That feature is anytime liquidity.

Open-end mutual funds are the only investment product where the vendor offers to buy back your entire investment at a transparent price at the time of your choosing. As investors in open-end funds, we often take anytime liquidity for granted. But we realise its true value only when we try to liquidate our other assets and come up against a wall.

Really illiquid
The months after demonetisation have shown us how the property market can malfunction during sudden shocks to the financial system. However, buying or selling apartments or plots of land was never easy even before this event.

Illiquidity is also the primary problem most of us encounter when we try to cash in on the jewellery stashed in our bank lockers. During the six-year bull run in gold from 2006 to 2012, I know of quite a few folks who were keen to lock into their hefty profits by selling their old jewellery. But this entailed suffering a 20-30 per cent discount towards poor caratage, stone charges and wastage levied by the jeweller. Mostly you didn’t receive cash either; you had to buy new jewellery in exchange.

Liquidity at a stiff price
Insurance products, as many sufferers will testify, extract a stiff penalty on anyone who tries to discontinue their investments or sell them before term. ULIPs allow you to exit with a nominal penalty but you are forced to stay locked in them for five years, even if you discontinue paying premiums earlier. Endowment plans, money-back plans and other traditional insurance policies extract extremely stiff surrender charges on any attempt to terminate them before your committed period so much so that most people prefer to sink good money into them year after year, rather than suffer huge losses on surrender.

Red tape
Most of the retirement vehicles where we Indians save towards our sunset years suffer from illiquidity on account of their onerous rules for premature exit. Taking an advance from the EPF account requires you to meet a number of conditions on end-use of that money. The NPS allows you to withdraw a fourth of your contributions before retirement, but that’s only after a ten-year lock-in and compliance with a plethora of nit-picky rules. Ditto with long-term small-savings vehicles such as the NSC and the PPF, which have long lock-ins and convoluted formulae to calculate your redemption amount in case of an early exit.

Fair-weather friend
Instruments such as bonds and bank deposits rank somewhat better on liquidity. Savings bank accounts offer you anytime exit, but they really cannot be counted as ‘investments’ given their measly returns – usually below inflation rates. Bank FDs offer you a premature exit option if you break the deposit, provided you cough up a penalty of 0.5 or 1 percent in interest.

Bonds offer premature exit through the secondary market route and many of the fancied tax-free bonds currently register very decent trading volumes in the debt market. But the Indian bond market is a fair-weather friend. Domestic bond buyers queue up mainly for top-quality bonds and that too mainly when we’re in a bull market (interest rates are falling). Volumes can be quite thin in less favourable market conditions and for issuers who are less than top quality.

Why do you need liquidity?
But why do you need liquidity at all? Surprisingly, quite a few investors make this argument. Many of them actually believe that forced lock-in periods and high penalties for premature exit are good for them because they inculcate saving discipline and force them to be ‘long-term’ oriented. Well, forced lock-in may be okay to live within an assured return product because you know exactly what you are getting when you invest. But it can be quite injurious to your wealth in a market-linked product.

For one, not all managers of market-linked products manage to protect your capital or consistently beat the benchmark. Given that your money manager can really mess up your investment plans in a market-linked product by underperforming the benchmark or making risky moves that expose you to losses, you need the flexibility to switch to better performers at the time of your choice.

Two, the asset-allocation decision that investors make is often based on the relative attractiveness of different asset classes at the time of their investment. But over the long term, these equations can change. So it helps to have the flexibility to exit mid-way based on changing regulatory or market conditions.

Three, exit at a time of your choice is also important for you to optimise returns from volatile market products. Investors who are working towards a goal may also like to take a phased exit to shield their final portfolio value from market volatility.
Finally, all of us may face situations like a family emergency or altered family circumstances which force us to rethink our investment goals and plans. Anytime liquidity is a great attribute for your investment to have in such times.

So, the facility to exit at any time at market price is the big benefit of open-ended mutual funds that the fund industry should shout out from the rooftops, especially when most other investments in India are like that line from the famous Eagles song Hotel California: ‘You can check out anytime you like, but you can never leave.’

Credit: Valueresearchonline