TRACK YOUR SPENDING

Each of us has a limited amount of money to spend. Being able to manage spending is critical to achieving financial success. More importantly, when you spend wisely you have more money available to save and invest. That means a brighter and richer future for you, your family, and your friends.

• Tracking Fixed Expenses. First account for all your fixed expenses. Fixed expenses are the bills toward which you pay the same amount each month, like rent, car payment, and insurance. Write down the fixed monthly bills. Better yet create an Excel spreadsheet adn enter them there.
• Next, account for the fixed expenses you pay annually: car registration, gym membership dues, or anything else you pay each year. Enter these expenses into your budget by taking the annual payment and dividing in by 12. For example, if your gym dues are $240 each year, your monthly payment is $20
• Tacking Variable Expenses. Most of us have cash that vanishes each month into unknown voids, like stops for pop or a burger. To really get a handle on spending, write down every dollar you spend–every latte’, every burger, every bus or taxi fare–everything. Keeping a “money diary” helps you understand where your money really goes.

If you’re like most people, over time you’ll identify areas where you tend to overspend, and possibly other areas where you want to spend more. You may be able to pinpoint those times when you have no idea where your money went.

Once you become aware how you spend your money, you can start building a workable budget.

CREATING YOUR BUDGET

Budgetting is simple. From your income:

• Set money aside into savings accounts and investments first.
• Pay your necessary expenses (needs).
• Leftover money is yours to spend as you wish (wants).

SAVING

The goal of creating a budget is to save money for the things you want now, while making sure you have enough for later. Saving money is the cornerstone of a financially secure lifestyle. Setting aside money each month builds a foundation for establishing future wealth while still leaving you able to enjoy time with your friends now. Putting away your hard-earned dollars will free you from the emotional stresses of everday bills.

Maybe you want a computer or new clothes. Well, saving allows you to purchase the luxuries you want. The best part is that you can afford it!

Life is about experiences. By saving money for the things you like to do, you’ll be able to partake in more activities and holidays, adn invest in those things you dream of having.

SEPARATE YOUR SAVINGS

Having real goals in mind makes the choice to save–rather than spending–much easier. Try saving money according to what you want to do with it. Divide and allocate your savings into three specific categories: emergency (contingency) fund, fun fund and long-term savings.

Emergency Fund. Your emergency fund is your first priority. Emergency funds should equal six months of your living expenses. Ths is, if your bills are $500 per month, you need to save $3000 for emergency purposes. Unexpected problems may arise, and your emergency savings fund helps reduce your worry. For example, say your car breaks down and needs expensive repairs. If you have no money saved, how will you get to work? Take the bus? Walk? Bum rides from friends? If you have emergency savings funds, you’ll get back in the driver’s seat with little or no stress or panic.

If saving six months of living expenses sound too difficult, here are two ways to save more:

• Earn more money
• Cut down expenses

Easier said than done, right? But that’s really as straight forward as the answer gets. Cutting down is something that can be done immediately and should be addressed first. Increasing income may take a bit more time and resources than cutting expenses, but the combination of the two really create a power-house opportunity to achieve financial security.

PREPARING TO INVEST CHECKLIST

• Before you consider investing be sure to have six month’s worth of expenses put away in your emergency fund.
• Be free of credit card debt and have a working budget in place that allows you to save money each month.
• Only use risk capital for investments. Risk capital refers to money that you can afford to lose without putting you in dangerous financial circumstances.
• Have a team of trusted advisors and mentors at your disposal.
• Create an overall investment plan and determine how the investment you are considering fits into your plan.
• Gain expert knowledge on each specific investment you are considering by conducting due diligence research. Due diligence means you educate yourself on the investment and do your homework before committing your hard-earned money.
• Determine the ristk and potential reward. All investments hace a certain amount of risk and reward. Ideally, you want to earn the highest return (reward) with the least amount of risk.
• Have an exit plan in place in case the investment doesn’t go as planned.

RETIREMENT PLANNING

Retirement planning should include tax planning as a critical component. Many financial products and strategies exist to help you retain more of the money you earn. Some investments that may provide tax benefits include 401K plans; IRAs; home ownership; starting a business; and municipal bonds. Here are two important points to consider:

1. Do not base your entire financial plan on the current Tax Code. The Tax Code can change at any time, and politicians are regularly trying to adjust the code.
2. Find a highly qualified tax planner.
   • Locate a tax planner who’s available for year-round questions.
   • Before you make any financial decisions, always consult your tax advisor.
   • It is also suggested that you connect your financial team with your tax planner so your entire team is in the loop on your financial decisions.

There are financial products and strategies that allow you legally to pay fewer taxes, and locating a qualified tax planner is essential to your long-term success. A good tax planner will help you use tax laws to your advantage and play an instrumental role in your overall financial team.

Less than one-quarter of students and only 20% of parents say students are very well-prepared to deal with teh financial challenges that await them after graduation according to Keybank.

Dealing with student loan debt does not have to be tough. In the beginning, the student loans felt like free money or something to deal with at a later date. It may not feel like it now, but that debt was for a necessary and worthwhile cause: your education. Whether you completed your degree or not, the education received was a terrific investment.

• Take advantage of your grace period- each student typically has six months from graduation or 6 months from the last semester you attended class before student loan payments are due. If you can afford to, begin paying as soon as possible. IF not, save as much money as you can prior to your official start repayment date.
• Understand your loans- review your loans to ensure you are aware of the amount you owe. Keeping track of all of your student loans may be a chore but it is worthwhile. If you no longer have access to the original paperwork, pull your credit report. This will provide additional details such as lender information. This will help inform decisions such as payment options that work best for you and your budget today.
• Stick to a budget-consistency is key. Development of a smart repayment plan will help you deal with your debt.
• Figure out how to earn more money- Yes, but where there is a will there’s a way. Do whatever you need to do to pay the debt. There are several articles on the web that discuss earning more income. Do the research to determine the best fit for you and your lifestyle.
• Tax Season-deduct eligible student loan interest. Work with a financial adviser to ensure the maximum benefits are realized.
• Sign up for auto payments-this will elliminate the need to remember to to pay a bill on a monthly basis. No more late fees. There is also the option of interest rate deduction (if offered by your lender).