One thing about being a parent: You have no time. Another thing about being a parent: You’re responsible for keeping your family safe and cared for, and that includes managing your money smartly.
No time plus needing to look after the ones you love equals a quarterly checklist to help keep you on track so you can get back to wiping boogers and giving snuggles.
Here are our favorite ways to stay on top of your money and your life this winter.
1. Make Solid New Year’s Resolutions
Studies have shown that we’re likelier to stick to our resolutions when they are tangible and actionable. So instead of “spend less money on takeout,” you might try something like “cook dinner one extra night each week, saving $60 a month.”
Next time you want to make a new year’s resolution for your family, try an implementation intention. That’s an if/then statement laying out how you’ll change your behavior. The key isn’t to focus on not taking a certain action, but to replace it with something else.
For example, maybe you have a tendency to impulse buy something online whenever you’re in a bad mood. You might resolve: “If I’m having a bad day, then I’ll take a warm bath to relax.” This focuses not on the shopping, but on what you’ll do instead to take your mind off of it. That’s the key.
2. Assess Your Life Insurance Needs
The new year is a good time to take stock of your family situation and whether anything has changed. It’s also a good time to finally tackle those to-dos you’ve been meaning to address but haven’t quite managed to get around to.
The main reason people get life insurance is to help protect those who depend on them financially. For lots of people, this starts becoming important when they have kids or other financial dependents. If something happened to you while you were covered, the life insurance company would pay a benefit to the people you chose in your policy, such as your spouse or children. They could use this money for expenses and other costs in your absence.
Spend a few minutes understanding how life insurance works, how much coverage you might need and what you should know if you’re a stay-at-home parent.
3. Budget for Future Travel Plans (the Pandemic Will Lift Eventually!)
As COVID-19 restrictions begin to lift, our travel dreams are becoming a reality again. Now’s a good time to start coming up with ideas on where you want to go once travel is more doable again, and figuring out what it might cost. At any rate, a little travel-related daydreaming may make stay-at-home orders that much more bearable!
Once you have a rough budget in mind, do a little math: Do you already have that amount saved without sacrificing other goals? If not, when do you imagine you might go on vacation, and how much additional money do you need? Take that number and turn it into a weekly (or even daily) savings goal.
It may feel early, but if you start watching airfares now, you’ll have more time to monitor any drops in costs. Websites like Kayak offer alert features to let you know when the trip you’re eyeing is available at a particularly good price (Tip: Search in incognito mode to keep the site from remembering your trip details and showing higher fares). Make sure any flight you book is refundable so you’re covered if you have to cancel unexpectedly.
4. Check Your Credit Report
It’s a good idea to check your credit report regularly to make sure that there are no fraudulent charges. Mistakes on your credit history could wrongly bring down your credit ratings, after all. If you do find any mistakes or errors on your report, you can notify the credit bureaus to get the record changed.
Legally, you’re entitled to your credit report for free once a year. The best and only recommended place to get it is AnnualCreditReport.com. That’s because there are several copycats out there that claim to be free but actually may roll you into paid subscriptions over time. Only AnnualCreditReport.com is operated by the three major credit bureaus: TransUnion, Equifax and Experian.
5. Start Thinking About Enrollments for Next Year
Holy cow, right?! Especially with the uncertainty in the world, it can be daunting to plan a month in advance, not to mention a whole year. If your school/daycare/childcare arrangement doesn’t require this much advance notice, you are lucky. Still, even if they haven’t officially asked you yet, it’s smart to begin thinking about your childcare arrangements for the coming year, so there’s less chance of being forced to make any flash decisions down the road (or forced to join a waitlist).
As you bundle up for the rest of winter and dream about spring to come, taking care of just a few important to-dos can make a big difference for your family’s future — and for your own state of mind.
Want to see what’s coming up next? Here’s a sneak peek at your spring financial to-dos.
Related:
This article originally appeared on MeetFabric.com and was syndicated by MediaFeed.org.
Fabric exists to help young families master their money. Our articles abide by strict editorial standards.
This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific financial advice or to serve as the basis for any decisions. Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want an easy and fast way to purchase life insurance.
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The 5 best budgeting systems for every income
More Americans are realizing that budgeting is an essential tool to reach any financial goal. Eighty percent of Americans now keep a budget, and 97% of Americans think everyone needs a budget, according to a recent CFP Board survey. For those who don’t budget, the top-cited reason is not having enough income. But if you’re a low-income earner, it’s even more important to actively learn how to manage your money because you have less discretionary income to put toward a financial emergency.
About 25% of survey respondents also said budgeting was too time-consuming, and 21% said that budgeting brought on anxiety. But we’re here to tell you that budgeting and money management don’t have to be a headache. And the financial benefits are universal: More control, greater resiliency, better spending habits — and most likely, a boost to your credit score. Here’s how to save money without the headache.
Related: Recession checklist: 7 things you need to survive an economic downturn
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Before you even start establishing a budget, you’ll need to collect some basic information. That includes adding up your family’s monthly income from various sources, including employment, side hustles, passive income, investment income and gifts. Your total take-home pay will be the starting point from which you subtract your various expenses.
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You probably have a variety of bills you can expect monthly. These include living expenses like utility bills, rent or a mortgage, phone bills and cable/streaming services. You should also list any monthly debt payments you’ll need to make, including student loans and personal loans. If you’re carrying a credit card balance, you should decide on a monthly amount to put toward paying down your credit card debt, in addition to the minimum payment owed.
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Down the road, you’ll want to set spending limits for expenses that can vary. A good place to start is to track what you’re already spending and make adjustments from there. Get into the practice of logging your expenses in each category. You can do this manually with pen and paper, set up a spreadsheet, or use a budgeting app (we’ll discuss these in greater detail later on).
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There are a variety of ways to go about building a budget, and some are more stringent or complex than others. You should decide how much time you can devote to budgeting each month, and select a plan you know you can be successful with.
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Zero-based budgeting involves finding a purpose for every dollar you earn. You start by subtracting your necessary expenses from your income. That includes budgeted amounts for things like groceries as well as your car payment, rent/mortgage and utilities.
Next, move onto your financial goals. These might include saving for retirement, getting out of debt, or funding a major purchase. With zero-based budgeting, you’ll allocate some money to each of these goals.
Everything left can be used for the things you enjoy but don’t necessarily need. Essentially, this is your budget for dining out, entertainment and shopping.
Zero-based budgeting ensures you never overspend, but it also requires frequent maintenance. If you need to overspend in one category because of an unexpected expense one month, the rest of your budget needs to be adjusted, unless you can use leftover income to cover it.
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The 50/30/20 budget requires you to allocate money to just three separate categories, like so:
- 50% of your income for necessities
- 30% of your income for discretionary spending
- 20% of your income for saving
Although this is super simple, it will only work if 50% of your income will cover your essential bills. If it doesn’t, you may have to make your own version of the 50/30/20 budget. For example, you might decide that only 15% of your income should be reserved for nonessentials, like dining out. You may also want to consider adding a category for charitable giving. You’ll want to keep the 20% savings goal relatively fixed, however. This may mean you’ll have to find some ways to trim your budget.
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The 80/20 budget is an even simpler version of the 50/30/20 budget. It involves putting 20% of your income into savings (emergency fund, retirement account, future purchase goals, etc.) and spending the other 80% on everything else.
This budget works well with the pay-yourself-first rule of budgeting that many financial planners recommend. Every time you receive a paycheck, put 20% of it into savings. You’ll be able to spend only what’s leftover. It can also help to automate your savings through automatic contributions to your retirement account and automatic deposits into a high-yield savings account.
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Envelope budgeting requires the most effort but gives you the greatest level of control over where your money goes. If you tend to live paycheck to paycheck or spend more than you earn, you could benefit from this type of money management.
Envelope budgeting is traditionally a cash-based system. It’s similar to the zero-based budget but involves setting spending caps for every category, even discretionary spending categories. You start by adding up your income and subtracting any fixed monthly bills. If you have quarterly or annual bills, don’t forget to include the monthly amount for these. You’ll also choose an amount to save each month and subtract that. All the cash that’s leftover should be divided into envelopes labeled with various spending categories, such as:
- Groceries
- Clothing
- Household items
- Personal care items
- Dining out
- Entertainment
- Gas
- Pets
- Fitness expenses
- Giving to charity
- Miscellaneous
You should track your spending and keep a record inside the envelope. When the money’s gone, you can no longer spend in that category. If you have money leftover in any of your envelopes at the end of the month, deposit it into savings or add it to one of next month’s envelopes.
If this sounds like a great way to stay on track, but you don’t want to use cash, you can use a budgeting app that works similarly. That way, you can still take advantage of credit card rewards. You’ll just need to hold yourself accountable for sticking to your spending caps in each category.
MARHARYTA MARKO
This monthly budget is ideal for someone who wants to join the FIRE movement and retire early, someone who has lost a job and needs to temporarily adopt a frugal lifestyle, or someone who is drowning in debt.
It’s very simple: you only buy absolute necessities. You pay your rent/mortgage, utility bills, car payment, health insurance, and other expenses you can’t avoid. You buy only the groceries, household items and personal care items you can’t live without. And anything leftover goes to savings and paying off debt. This is also sometimes called a spending freeze, and it can be helpful during times of financial hardship or while trying to achieve a lofty financial goal.
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Depending on your financial situation, a budgeting app could be worth considering. When used wisely, budget apps can help you avoid overspending. And the best part? You can track spending right from your smartphone, which makes these solutions more convenient than traditional budgeting software. Here are five great options for your personal budget.
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Mint is a personal finance app that securely connects to your credit card and debit card accounts so you can get a comprehensive, real-time overview of your spending. You can even track your investments and outstanding loans, so you can tell at a glance if you’re above or below water. It also automatically tracks your spending by category to help you identify where your money is going. There’s a web version, and it’s also available for iOS and Android. Mint is free to use.
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YNAB combines the concepts of zero-based budgeting and envelope budgeting with a digital budgeting platform that’s available for web, iPhone, Android, iPad, Apple Watch and Alexa. You manage cash flow by assigning every dollar you get to a spending category, and it’s easy to make adjustments as you go. It also makes it easy to share your budget with your family. YNAB costs $11.99 per month or $84 per year, but you can try it free for 34 days, and the average user that is new to budgeting saves $200 in the first month.
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Goodbudget is a spending tracker based on the envelope system. You digitally allocate your income to different spending categories, and you can share your budget with your partner as well, which makes it simple to track your cash flow as a family. It’s available on the web and for Apple and Android. There’s a free plan that comes with a limited number of envelopes and only one account on two devices, and there’s a premium version that costs $7 per month or $60 per year.
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Dollarbird is a calendar-based budget app that’s perfect for tracking your spending prior to creating a budget or for keeping track of a 50/30/20 or 80/20 budget. Because you enter every expense manually, it forces you to always have an eye on your finances. You can add past, future and recurring transactions and categorize them. You also add your income as you receive it. Dollarbird keeps a running total of how much available cash you have, so you won’t be tempted to overspend. There’s a free version for individuals, but if you want to collaborate with multiple accounts, you’ll need to purchase Pro. It’s $3.33 per month or $39.99 per year. It’s available on the web and for Apple and Android.
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PocketGuard is a free budgeting app that works similarly to Mint. It keeps track of your upcoming bills, automatically categorizes your spending, and connects all your accounts in one place. It’s an easy way to keep track of your net worth, and there’s even an autosave feature to help you grow your savings. PocketGuard is available for iPhone and Android.
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Saving is key to any budgeting plan, and the best savings accounts can help you grow your nest egg effortlessly. Keep your emergency fund and other savings in a high-yield savings account. These accounts typically offer higher interest rates than traditional savings accounts. If you hoard all your money in your checking account or a traditional savings account, you’ll miss out on the opportunity to accrue interest.
Learn more:
- 5 must-have apps that will completely change how we invest
- 5 money apps that can help women save more
This article originally appeared on FinanceBuzz.com and was syndicated by MediaFeed.org.
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Featured Image Credit: designer491/ iStock.
