The following is a Financial success testimonial from Alison! Enjoy!
This year I had a goal of depositing two full paychecks directly into my savings account on top of my regular monthly 10% savings. I was discussing my budgeting and savings plans with a credit counselor and she told me she had never known someone to be successful at what I was planning…challenge accepted! This past month I was able to successfully do this and wanted to share with other frugal minded individuals how I did it so you can too.
My employer pays me bi-weekly, which means I receive two paychecks every month except for two wonderful months of the year when I receive three paychecks. At first this provided an interesting budgeting challenge because there are a few ways to calculate a monthly salary:
1. Take the overall yearly salary and divide it by 12 months.
For example, if I made $39,000 per year and divided that by 12 months, I would get a monthly salary of $3,250. This number is valuable for certain financial situations, but unrealistic for my monthly budgeting.
2. Add up the paychecks received in a month.
In this scenario, if I made $39,000/year, 10 months of the year I would be paid $3,000 and the other two months of the year I would be paid $4,500.
When creating a budget, what was I supposed to do with these three different amounts: $3250, $3000, and $4500? I started by making a decision: I do not want to live paycheck to paycheck. I wanted to create a system that always had me ahead of the game. I also decided to live off the amount of money I am paid for those 10 months of the year involving two paychecks and was determined to put those additional two paychecks, in their entirety, directly into my savings account. Saving 10% of my regular monthly salary is great, but I wanted a better security net.
Here’s what I did:
Took my lowest monthly income number to create a realistic budget.
Used helpful tools such as “Budgeting Basics – How to Get Started” found on Simply Frugal and tracked my expenses to determine what was sustainable.
Created an overall budget that allotted every dollar of my two paychecks per month.
Determined what money I would need as cash on hand during a month and what I could leave in a separate bank account. For example, grocery money is cash I need to take out of the bank. (I love these cash envelopes to organize the cash I need each month!) Gift purchases or dental appointments, while budgeted for, are not necessarily money spent every month. I’ll call these my “planning ahead expenses.”
Once the budget was nailed down, I totaled all my “planning ahead expenses” and my savings, then divided those numbers in half. This is what I transfer out of my main chequing account every paycheck into sub-accounts. For example, $20 per month is budgeted for gifts, of which $10 is transferred every paycheck to a “Gifts Account.”
Leave the rest of the money needed for cash on hand or for bills directly debited out of my chequing account to build up my monthly float. My monthly float is every dollar that I will spend during the next month.
Through the month as I deposit each paycheck, I transfer out all of my “planning ahead expenses” and let the rest remain to build up for the next month. Because each paycheck that I deposit into my account is not needed for any immediate expenses, I am released from my dependence on it. When I deposit a paycheck, I have no thought of spending it because I know I do not need it for the current month. This freedom is essential because when one of those three paycheck months comes along, I treat the first two checks just like any other normal month by transferring out my “plan aheads” and building up my float. Those two checks set me up for the next month and that third one can go straight into my savings account without a second thought.
Using this system of building up a float is how I stay away from living paycheck to paycheck. I did sacrifice a bit of savings to set myself up in this way, but the benefits are worth it:
Eliminated the stress of relying on my next immediate paycheck.
An extra month’s cushion of money if I lost my job, in addition to my emergency fund.
At the end of every month, I have exactly the amount of money I need in my account to pay my bills and variable expenses for the coming month.
Sticking to this takes planning and discipline, but it is worth it when I see the big jump in savings a couple times a year! It is also worth it to know that being frugal and wise with my money allows me to do something that someone in the financial world thought wasn’t possible.
Money is meant to be spent, but it’s also meant to be saved. It can be hard to balance saving money and spending it. Use the following tips to get a firm grip on how to use your hard-earned money wisely, while still being able to get enjoyment out of life.
How to Balance Saving Money & Spending It
Pay yourself first
You will never save up money, if you don’t pay yourself first. If you put all your money towards paying bills and such it will be hard to build up any savings. Create a special account just for you. Be sure that each week a small portion of your check gets deposited into that savings account.
Give yourself an allowance
As an adult, it’s hard to work so hard and only pay bills. Sometimes you want a little spending money. If you’re all caught up on your bills, it’s okay to give yourself an allowance. You don’t need to spend your whole paycheck, but $20-$30 per paycheck is a fair amount to give yourself. Treating yourself to a new gadget, outfit, or even a restaurant, that you rarely make it to, will be a great refresher that you sometimes need. Life isn’t meant to be all work and no play.
Don’t blow your money
Spend your money wisely, don’t just blow it. This is a good way to balance saving money and spending it. Don’t blow your money. In other words, if you have found yourself swooning over an item, go ahead and treat yourself, on occasion. Before splurging, though, ask yourself, “Is this practical?” If the answer is no, then it is best to wait until you find something that you really want, but also have a use for. Buyer’s remorse is no fun. So, when you walk by a New Kids on the Block poster that has you reminiscing over your childhood, be sure to consider your purchase wisely, before jumping the gun right away.
Stick to the budget
A budget allows you to give yourself spending money and to pay your bills. By sticking to the budget, you’re going to do a good job of balancing and saving money. Start out by reassessing your budget, if you already have one. Make sure that your bills are covered, as well as other necessities, like fuel, groceries, and clothing.
Whatever is left of your paycheck can be divided between gifting and saving. Once your budget is finalized, it is important to adhere to it. If your allotted grocery money for the week has been consumed and you then find out that Cadbury Mini Eggs have just hit the shelves, don’t even think about digging into your wallet. Wait until next week, when your grocery budget has reset. Practicing this self-control can be hard, but very rewarding.
Save your money, watch it grow
The more money you save, the more motivating it is to keep saving. Don’t be afraid to save up for something you want. Instead of running out and buying it on credit, you can save up for it. The result is much sweeter, when you save money for something you want, instead of making a spontaneous purchase.
I’d love to know, how do you personally balance saving money and spending it?
Do you have a lot of debt? Want to get it paid off? You can get serious about paying off debt. In fact, you can pay as much off as you want. Starting with $1,000 in just one month. It may sound crazy, but lots of people have done this and so can you.
How to Pay off $1,000 of Debt in One Month
Only Keep $1,000 in Savings, Use the Rest
Unless you are planning a big purchase, where you will need a hefty down payment, there is no reason to leave thousands of dollars sitting in a savings account. The average savings account yields very little interest. One $1,000 creates a pretty comfortable safety net in case of emergencies. Any extra money that remains would be best spent chipping away at your debt.
Sell Expensive Items in Your Home
How many TVs do you have in your household? Two, three, or even four? Chances are that they don’t all get used, frequently, if at all. So, why hang onto all of them? Sell the ones that don’t get much use and put the profit towards one of your bills. Do you have a piano or organ collecting dust in the spare room?
The money you could make from selling it will get more use by hacking away at your bills, than if you were to keep it. Look around. We all have items sitting in our homes that are used so rarely, they are often forgotten about. If it doesn’t have much value to you, list it for sale and see what you can get out of it.
Stop Using Credit Cards
Credit cards can be useful in an emergency. However, if you are using them for everyday groceries and shopping sprees at your local mall, then you will likely be finding yourself getting deeper in the hole. Credit cards are borrowed money. Generally, borrowed money doesn’t come free. When it comes to credit card companies, they intend on you paying just the minimum amount back, so they can hit you with interest.
This is how they make their money. Just remember that each time you use your credit card, you are really paying more than the retail price of your purchases, by the time you add in the interest. Even when used in an emergency, you are still going to be paying interest. It is best to build up your savings, so that you don’t have to pay more than asking price for anything.
Make as Many Payments as You can in One Month
Credit reports don’t show how many payments you make in one month, but they do note how much you have paid, total. If you find yourself having leftover money at the end of the week, make a payment. These payments will accumulate throughout the month, bringing down your total debt faster. Doing so, will also make sure that your money goes somewhere important and doesn’t accidentally get spent on a random purchase.
Tighten Up Your Budget in Every Other Area
Cable is one of the most common cuts that people make in their budget. Many people replace cable or satellite tv with much cheaper options, such as Netflix. Eight to ten dollars for either really doesn’t sound like much, but it adds up. Every little bit counts and by getting rid of Netflix, you will also have more time to focus on more important things in your life. It’s not just TV though. What about the fast food that you may be eating frequently? Meal prepping has become quite popular.
Using these tips are great ways to pay off $1,000 of debt in one month. When you really look into your budget, you may be surprised at how much money you’re really spending.
A new school year can often feel like the start of a brand new calendar year. Perhaps a time when many people resolve or set goals to improve their financial situations. I thought I would compile a list of some of the personal finance books that I think could help inspire you along with your goals! Let me know if there are any books you could recommend and I’ll add them to the list for others to enjoy!
Debt-Free Forever – I just had to put the book written by one of our favourite Canadian financial writers at the top! Debt-Free Forever by Gail Vaz-Oxlade “will help readers take responsibility for, and control of, their money. Gail’s rules are simple: you can’t spend money you don’t have, you must save something, and if you’re in debt, you must get the albatross off your back. But Gail knows following the rules can be tough. That’s why Debt-Free Forever gives you a road map to getting out of the red in 36 months or less.”
Money Making Mom – I love pretty much anything Crystal Paine of MoneySavingMom.com does. And this book is no exception. “The nuts and bolts of how to make more money from home are revealed in clear steps that can be immediately and easily put into practice. But more than just a how-to book for earning extra income, Money-Making Mom is a challenge to dream big and create a pathway for life. Paine offers examples and insights about what “finding your purpose” can look like in family, career, and service to others.”
The Total Money Makeover – Dave Ramsay has become very popular, especially in the US, with his strategies that have enabled countless families to change their financial situations. Dave has written The Total Money Makeover in “7 organized, easy-to-follow steps that will lead you out of debt and into a Total Money Makeover. Plus, you’ll read over 50 real-life stories from people just like you who have followed these principles and are now winning with their money. It is a plan designed for everyone, regardless of income or age.”
Your Money: The Missing Manual – Written by Get Rich Slowly blogger JD Roth, you’ll find his book written in easy to understand language, with concise and clear whys and why nots to all the different aspect of personal finance. You’ll get the info you need to make sensible decisions on saving, spending, and investing, learn the best ways to set and achieve financial goals, set up a realistic budget framework and learn how to track expenses and much more!
The Wealthy Barber – “David Chilton offers Canadians a common sense guide to successful financial planning with his charming story about a small-town barber with financial genius. Roy is the wealthy barber who offers Dave, Sue, Tom and Cathy great financial advice by giving them simple — and realistic — guidelines to follow.” With more than 1.5 million copies sold to date, The Wealthy Barber is the best-selling book ever of any kind in Canada!
Your Money Or Your Life – This is an essential read for those wanting to get out of debt and develop savings, reorder material priorities and live well for less, resolve inner conflicts between values and lifestyle, save the planet while saving money, and much more! In Your Money or Your Life, Vicki Robin shows readers how to gain control of their money and finally begin to make a life, rather than just make a living.
Smart Cookies: Making More Dough – “Inspired by an episode of The Oprah Winfrey Show on personal finance, the Smart Cookies, five dynamic young women who weren’t always so savvy about money, formed a “money club,” and together developed strategies for turning their financial lives around – without surrendering their sanity or their social lives. In this guide, the Cookies demonstrate how women of all ages can achieve financial security. They share their own stories, offer easy-to-follow steps, and lay out simple plans for meeting any goal, whether it’s eliminating debt, making good investments, becoming a smart spender or saving up for a big-ticket purchase.”
Smart Couples Finish Rich – David Bach provides couples with easy-to-use tools that cover everything from credit-card management to investment advice to long-term care. From this updated, newly revised Canadian edition, couples will learn how to work together as a team to identify their core values and dreams, and to create a financial plan that will allow them to achieve security, provide for their family’s future financial needs, and increase their income.
Have you indulged in some poor spending habits lately? If so, then it’s time to get your budget back on track. I find once I’m on the spending train, it’s hard to get off! However, I do manage to disembark eventually with a few tips I’ve used over the years. Take a look below at these 7 surefire ways to get your budget back on track and find your way to financial freedom.
7 Surefire Ways to Get Your Budget Back on Track
1. Go on a spending freeze.
First and foremost, if you’re stuck in the vicious spend cycle, you have to just stop. Begin by vowing not to spend any money for 10-14 days. In this time, use what you have on hand and refuse to buy anything new. See how much money this spending freeze can save you. You might be surprised! You might also be surprised to find that you can be content without spending money on “stuff” because you’ve discovered new ways to occupy yourself.
Following your freeze, track your spending for 10-14 days. If you spend so much as a dime, write it down. At the end of your tracking period, see where your money is going. This visual data will help you see where serious cuts need to be made.
3. Start cutting!
Use the data from your spending tracking to see where cuts need to be made. Get serious about seeing these cuts through. Find ways around these purchases and then stick to it. Some examples may be eliminating eating out, turning cable off, buying less clothing for your kids or giving up monthly magazine purchases.
4. Bring friends on board.
If you need to get your budget back on track, be honest with your friends. Let them know about your goals so they aren’t trying to convince you to spend money when you shouldn’t. This way, you will also have a support system in place.
5. Celebrate small victories.
When you complete your spending freeze or tracking, or make bug cuts, celebrate! Plan a family fun day or go on a cheap date. Or, if you can, put aside $5 into a vacation fund each time you save $50. Knowing there is a reward each time you accomplish something, can be enough to keep you pressing onward.
6. Track your progress.
Each time you make a successful cut or save a dollar or two through your hard work, write it down. Track your savings so you can see how much your hard work is paying off. At the end of the week, check out your total savings and give yourself a well deserved pat on the back.
7. Don’t quit.
Even when you see the savings add up and the budget gets back on track, don’t stop! It will be important that you keep these tips in mind and perform regular check ups on your budget to stay on track.
See how simple it can be to get your budget back on track? With these tips and a bit of hard work you’ll soon be seeing a difference in your budget.
Do you have any tips that help you get your spending under control? Please share in the comments!
Are you living paycheck to paycheck? Do you feel like you never have money? Are you terrified that unexpected expenses will come up? Here are some ideas for getting your finances under control and feeling more in charge of your money. You can do it!
#1. Evaluate Your Budget
If you don’t have a budget, make one! The best way to know where your money goes is to write it down and keep track. Always keep in mind that paying for your essentials (shelter, food, water, electric, etc.) should be first priority.
Once you know where your money is going, look at each line item and ask yourself if it’s necessary. If it IS a necessity, is it possible to make the payment smaller? Do your research and call your providers, assess everything from your cable/satellite and cell phone, home, health and auto insurance. You can even look into refinancing your mortgage and call to ask for discounts or change your plan. Meal planning is a great way to start spending less on groceries. Changing cell phone providers can give you amazing savings. If you have student loans, check into student loan forgiveness programs or income based repayment programs.
#3. Have an Emergency Fund
If you don’t have a savings account for emergencies, open one! It’s best to have at least $1,000 saved. If you are starting from scratch, start with a goal of $500 in savings. This will keep you from using credit cards and racking up more debt when emergencies pop up.
#4. Become Debt Free
Examine your debt (student loans, credit cards, car payment, mortgage, etc.). Commit to paying off your loans starting with the highest interest rate. When creating your budget, think about throwing any extra money you have at your loans. If you can buckle down for a few years, you’ll be surprised how much money can be freed up by paying off debt. Plus you’ll feel amazing! Your mortgage should be the last debt you pay off.
#5. Stick To It
This is the hardest part! Try using cash for a while, if you need a visual of your money leaving your hands. Talk to a trusted (financially capable) friend and have them hold you accountable to your budget. You might also want to read this post for ideas on how to stick to your budget.
If you’ve tried all these steps and still feel like you’re not in control, you may need to look into ways to earn more money (ask for a raise, look into part-time work or freelancing, etc.) or talk to a professional financial planner. Make sure you look into investing in your future, too (don’t forget about retirement!). Talk to people who are financially responsible and ask for advice. Taking control of your finances can be tough, but extremely rewarding.
If you’ve paid off debt, how did you do it? What was the one thing that really helped you to get it paid off? Let me know in the comments!
– Dave Ramsay has become very popular, especially in the US, with his strategies that have enabled countless families to change their financial situations. Dave has written The Total Money Makeover in “7 organized, easy-to-follow steps that will lead you out of debt and into a Total Money Makeover. Plus, you’ll read over 50 real-life stories from people just like you who have followed these principles and are now winning with their money. It is a plan designed for everyone, regardless of income or age.”
– Written by 
– This is an essential read for those wanting to get out of debt and develop savings, reorder material priorities and live well for less, resolve inner conflicts between values and lifestyle, save the planet while saving money, and much more! In Your Money or Your Life, Vicki Robin shows readers how to gain control of their money and finally begin to make a life, rather than just make a living.
