Are the Little Things Eating Your Budget Away?

I've written often enough about saving money. There are some standard tips just about anyone will give you - cut the cable bill, drop to either just land line or cell phone, spend less at the grocery store. And of course, quit buying coffee at the coffee shop.

Each of the above can seem like such a small thing, especially if you spread the cost out over the month. But when you put them together for the month, you may find they're a lot of money. That's why they are so often recommended for the chopping block.

If that's not enough, now what?

The tighter your budget gets, the more creative you need to be about saving money. You need to look at some of the less obvious little things that also can add up.

1. Cut down on your energy use.

Turn off those excess lights! Put up a clothesline if you can, and dry clothes outside in warm weather. Find ways to block more heat from coming in during the summer, and take advantage of any sunlight during winter.

You can also unplug electronics that aren't in use. Many electronics continue to draw just a little power even when you turn them off.

2. Get on Freecycle.

Thrift stores are great for saving money, but free (aside from the gas to go get it) is even better. You might be amazed what people will give away. You can reciprocate when you have something to get rid of that someone else might like.

You can also sell the things you don't need anymore, whether through eBay or a garage sale, but offering things for free when you're getting other things for free is strongly encouraged.

3. Share resources with friends and neighbors.

You may know several people in financial situations similar to your own. If you can borrow things that aren't needed daily you may be able to save the expense of buying them.

This obviously takes a lot of trust and/or tracking. You can't have one person borrowing things and never returning them or reciprocating, not to mention the potential for damage. But if you can avoid buying garden tools if you decide to start a garden, for example, you can cut your costs down nicely.

4. Ask for a credit card rate reduction.

Often enough it works, and it only takes a few minutes. Talk to a supervisor if you need to.

5. Drink more tap water.

It's the cheapest drink in the house! It's even cheap if you count buying filters if you don't like the way your tap water tastes.

I like to keep a bottle of tap water in the fridge so that it's already cold. Works wonders for the taste, and if it's a really hot day ice cubes can help to keep it cold.

Creating an Emergency Savings Fund in a Few Easy Steps

Having an emergency fund is not a luxury - it is a necessity. Most personal finance experts recommend that people have emergency savings to cover at least between three and six months' worth of regular household expenses. Even if you think you don't need such an account, it's true that eventually you will. You can't predict if you're going to become disabled, have a devastating house fire, or lose your job.

Let's look at how much savings you need, and how you can get started saving today.

How much do you need?

Starting an emergency savings account is something you need to do, but it's also something that you need to put effort into doing. This is a task that you're going to have to want to do.

The first step in starting your emergency fund is figuring out how much you spend each month. According to the U.S. Department of Labor, each person spends about $40,817 each year (as of 2003, the most recent year for which data is available).

On average, you'll need about $3,400 at one month, $6,800 at two months, and more than $10,000 at three months. By six months, those cumulative expenses can jump to more than $20,000.

Even if you spend more or less than these numbers, it's easy to tell that three months' worth of living expenses is a large number. Your first reaction may be, "How on earth am I going to come up with that amount of money?"

Why that much?

It's certainly true that the amount of money you'll need for a proper emergency savings account is a significant figure. This amount is necessary, however, because we do live in uncertain times and are in the midst of a recession. A company having loyalty to you is sadly a thing of the past, and you can lose your job at any time. Other emergencies can be sudden and very expensive. No matter how you cut it, there's never an opportune time for these emergencies to happen.

We know that you probably don't have an extra $10,000 tucked under your mattress. But even six months' worth of expenses, however, is a small amount compared to what you will need for retirement. Very few people don't doubt that they should save for retirement; three or six months' of expenses doesn't look like much when compared to the retirement savings you'll need for 20 years' worth of retirement.

Figuring out the numbers

It's time to start saving now that you've put things in perspective. You should approach this goal the same way that you would approach any other financial task. You need to create a plan and then put it into action.

The first step is to figure out how much money you and your family will spend each month. The three largest categories for most people are housing, transportation, and food. Multiply this monthly figure by three to figure out what you need for three months. Saving this amount of money should be your first goal.

The amount that you will need to save over five years or 2 ½ years is doable for many people. Over five years, the amount each month is less than many people spend on their cell phone. The savings each month for the 2 ½ -year plan is about the same as you'd spend on a monthly car payment.

Put your plan to work

There are many small steps that you can take to come up with your monthly or yearly savings goals. You may want to consider canceling your cell phone (or your land line) or buying a less expensive car. You can also skip your two-week vacation, save your next bonus, or reduce the amount of money you spend at restaurants and coffee shops.

You should treat your emergency fund like a bill that you pay every month. It might be a good idea to always remember to pay you first. Even though many people don't have problems sending money to their credit card companies every month, it is harder for some people to remember to send money to themselves. Figure out how much you need from your paycheck, and set that aside each month.

There is no time like now to start savings. Even if you can't afford to make large monthly payments to your account, you can take other steps. You can empty the change from your pockets at the end of the day and put it in a jar. You can eat at home instead of out, and "tip" yourself by adding to your emergency account. You can save $5 a day, and find yourself with more than $9,000 in only five years.

The Benefits of Saving

Saving money is a problem for a lot of people, and in the U.S. today, personal savings are at record lows. If you want a comfortable future for your family, it is imperative that you learn to save. If you plan to save, you must first plan how you spend. Developing a monthly budget is key for ensuring you have money left for savings.

Before You Start

* Discuss your plan to save with the rest of your family and make sure they agree and understand the importance. If they recognize the purpose behind any sacrifices they must make, they are more likely to stick with the plan.

* Calculate your savings for prior year. How much did you set aside, if any?

* Make debt a priority. Use your tax refund, etc. to pay off expenses in order to pave the way for greater savings.

Pay Yourself First

When creating your budget, plan to pay yourself first. In other words, pay your bills and then pay your savings account - BEFORE you buy that new TV or take that weekend trip. Saving money now will ease financial strain when something big, like college or a new home, comes up in the future.

Get Started

It takes some effort to construct a family budge. There are many computer programs and other electronic aids to help you, and of course, you can always opt for the old faithful pen and paper. Find a good example of a budget worksheet online to give you a guideline to go by, but most of all, choose a plan that will be easy and efficient for use and compliments your needs.

You will first need to consider your monthly income. You should calculate every penny that goes into your pocket. This information will help prevent you from spending more than you make.

After you know your exact income, you should track your spending. Take at least a month to determine how your money disappears. Make a record of everything from bills to bowling in order to plan the most efficient budget.

Organize your spending into categories to include both the things you need and must pay for, like your food and your mortgage, and also the things you enjoy but could live without if you had to, like a monthly manicure or eating out twice a week.

Spend less = Save more

After you've looked at your detailed spending list, you can determine whether your debt is greater than your means. If you don't make enough to cover you car and house payments, you may need some aggressive action. For most people however, the overspending comes with the 'incidentals' and the luxuries we've all grown accustomed to.

Your incidental spending will be the easiest place to cut back and make room for saving. You can start by canceling magazine subscriptions and going out to eat less often. Rent movies instead of going to movies to avoid the snack bar pitfall. You can always pop popcorn at home.

Earned Income Credit - How to Become Eligible

Families that are considered to be poor or low income are given assistance through the earned income credit, or EIC. The EIC is a tax credit that helps such families with low earnings to have a better standard of living. An EIC can translate into a tax refund of anywhere between $400 and $4,500. This article will explain how you can figure out if you are eligible for the EIC.

The earned income credit is not only for families with children. Even single individuals can be eligible to receive this credit from the IRS, even though it will be for less. Many such single people are not aware that they could receive the EIC and do not even apply.

Although it is open to many people, some individuals will not meet the requirements to earn the EIC. People who obtain the EIC must be United States citizens, have a social security number, earn a taxable income, be over twenty-five years old, not file for taxes under the Married Filing Separately category, and have a child that qualifies. Meeting these requirements is the first step in receiving the earned income credit.

In order to obtain the EIC, you need to make a sustaining income. This income can come from freelance or self-employed work. The EIC program benefits people who are willing to work for their money.

This tax credit is easier to obtain if you have a child, but that does not mean that you will automatically get it. In order to receive the EIC on the basis of your child, the child must be under eighteen years of age, under age twenty-four and currently taking post-secondary classes, or over eighteen years of age with disabilities that are cared for by a parent.

Children will allow you to qualify for the EIC if they live with you for at least six months of the year. If the child's parents are separated, the only parent who can claim the child towards the earned income credit is the parent who currently lives with the child. The EIC can be qualified for by means of foster children as well. Any and all children who are used to obtain the EIC must have a valid social security number.

If a married couple wishes to receive the tax benefits of the EIC, they must file their taxes jointly. Separated couples cannot both claim their children for the EIC, so they will have to decide who will claim them. You can claim the earned income credit on any 1040 tax form.

You may qualify for the earned income tax credit without even being aware of it. You might very well be missing out on money that you are entitled too because of misconceptions regarding the EIC.

Find the Right Financial Advisor For You

We all need getting done a suitable financial plan if we want to live happily after retirement. This oft overlooked necessity requires in-depth consultations from a financial advisor; however, it's our forced ignorance that bars us from looking deep into the fact and understands the concept that gives a financial advisor his entity. The following paragraphs are a humble effort to let you know all about the financial advisors and their importance.

What is Financial Advisor?

A financial advisor is a trained and certified professional who makes your finances flow into the right channels and yield more in terms of money. Not all of us know how to achieve a certain financial goal within a specified period; we are also sometimes ignorant about analyzing the risks that an investment can bring. A financial advisor calculates all those risks and tallies them with your investment objectives to make you a gainer in the future.

How to find the Right Financial Advisor!

Experience comes first in this regard. A financial advisor, how much ever well trained and educated, needs a certain amount of hands on experience to enter the practical field. Experience is important since it also proves how long he is into the business as well. Without a certain amount of experience, a financial advisor won't be able to mold and fine-tune a financial plan as per your need.

Experience brings the clientele to a financial advisor; so when you are choosing one, always ask about whom he has served so far by being into the industry. To the one who has held a good record overall, it shall come as a matter of pride; to the one who is not, it's the toughest test he'll have to go through.

Next comes the registration part. Almost all reliable and honest financial advisors are registered with a regulatory body. It's not that the one who is not is dishonest, but being so brings about that extra surge of credibility.

So when all are done, it's time that you should check his credentials before getting interested in his fee structure. Credential provides certain stated facts by the clients that reinforce the goodwill; once you are satisfied with that, concentrate on the financial advisors fee arrangements.

There are some who charge a direct fee and there are some who works for a commission. Find out what suits you most and whether a third kind of arrangement can be made.