Tag Archives: Finance

Feb 13 2012

Week Two: Budget, Budget, Budget

budget

budget (Photo credit: 401K)

Continuing along with February Financial Resolutions

Week Two: Budget, Budget, Budget

Week Two of my February Resolution, and it has become clear I definitely need to budget, budget, budget (or win the lottery, but that is still a financial dream) to meet my financial goals. I am determined to make my top three goals: the two-week trip with my grandchildren, staying at home so I can offer myself as an alternative to daycare for my children and grandchildren, and having a really big anniversary party for myself and my husband to celebrate 40+ years, including getting him the big gift he has his eye on – a new free-weight set.

That of course means cutting some corners and living frugally for me, because the way our family budget works, I only get an established piece of the whole.  That means I must start living in control of the finances I can control. I have some tried and true methods for organizing finances in a way that contributes to financial success, and I’d like to share them with you below.

This guide will help you to:

  1. Track Your Spending
  2. Create a Budget
  3. Determine Your Net Worth

1. Track Your Spending

Do you know how much you spend each month? If not, now is the time to find out. Many great advisors will tell you to track spending over a one-month period to find out exactly where all of your money goes. This is good, it does help, but we are humans, and lots of people change the way they spend when they start writing stuff down, and often expenses pop up in one month that aren’t always there (think: registration for your car, a visit to the doctor, a child’s birthday), so just writing one month of spending down does not really give the whole picture. How can I change that? you may ask…

If you participate in on-line banking, you can expand this to a three or six month retrospective review, and really get a quick-start on this part of the goal.  Just log on and create a print out of the last 90-180 days.  If you do not e-bank, you can get the same information if you stop by your local branch and ask a teller for a 180 day print out.  This will give you a great history of what you have been up to lately. I like color, so I highlight: Green is rotating bills, orange is groceries, pink is out to eat, yellow is gas, purple is entertainment, etc. Then I add up the specific areas and see what is going on and how I flex from month to month.

After you have either tracked your spending this month real-time, or used the bank print outs to give you a jump start, ask yourself – Are you spending too much on incidentals? Are you falling behind on your savings goals? Spending more than you make? By the time you finish this exercise you should have an answer to all of these questions. Below is a link from an excellent planner at frugalliving.com.  She has developed a worksheet that is visually appealing to use and very helpful:

2. Create a Budget

Once you’ve established a list of financial goals (week one) and taken a close look at your spending habits, it’s time to create a budget that reflects how you want to spend your money.

3. Determine Your Net Worth

Another very important part of budgeting is knowing what you have, not just what you want.  No point in attaining a goal if it risks your long-term future.  Understanding your net worth can tell you a lot about your current financial health, and help you to plan for your financial future. Find out what your net worth is now, and then get in the habit of recalculating your net worth yearly or whenever there is a significant change to your finances. This worksheet is also from the planner at frugalliving.com, and just as great as the monthly planner she created.

 

I wish you luck in Week Two – this is always the hardest part for me, and usually where I fall apart, so I am counting on my newly created Top Three Financial Goals to pull me through the adjustments – I love my morning coffee and I can’t help but want a few nice extras like my hair color or manicures.  So finding a way to not break the bank and attain all that I hope to this year is definitely an exercise in stepping out of my comfort zone!

 

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Feb 7 2012

Low-Cost Field Trips to Boost Your Grandchild’s Financial Know-How

Seal of the Bureau of Engraving and Printing. ...

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I live in a sunny area, it is pretty easy to get out most days thanks to the beautiful weather we have year-round.  I know that this is not the case in many areas, I grew up in Chicago, where for a good part of the year we stood in circles trying to keep warm as the wind cut through our jackets and gloves nipped at our calves and noses.

Even a little cold weather should not stop you from taking your grandchildren on low – cost field trips that teach them about Financial Know-How.  Many of these places are familiar to you if you have been around the block a couple times, but perhaps you never thought of making them field trips.

Your Local Bank or Credit Union

Our local credit union actually will give your grandchildren a free tour. You just have to call in advance, and be a little flexible on the time of day you go, as like most businesses they have busy times and not-so-busy times.  Friday afternoons are probably a non-starter for this trip.  But the advantages of visiting your local bank with your grandchildren are many: they can learn about the services they have available for them, they can open their own savings account, they can see what happens to their money when they make transactions, some even have special presents for visiting children, just like if you went to the dentist and got to pick from the prize box.  It really is a fascinating business, and maybe you will get a little something out of it too.

The Mint

If you are lucky enough to live in Pennsylvania or Colorado take advantage of the Mint.  These are amazing tours of not just the banking industry, but also of our American History and Heritage.  If you do not live in these areas, or if it is an especially cold day out and you are stuck at home, try this link Mint Tours (http://www.usmint.gov/mint_tours/?action=VTShell), and show the grandbabies from home.

Your Local Financial District on a Busy Day

That’s right – most of the days, or half days, my Grandchildren have off school are working days for most folks.  Take them down to your local financial district at lunch time and let them see the people hustling around.  Just the knowledge of the sheer number of people who work in financial careers can surprise kids.  There are places, like New York where you can take Wall Street Tours, and learn about the history of Wall Street, the Financial Crisis, or you can do a little research yourself at the following websites and provide your own information in your city and amaze the kids by how much you know:

History of The Stock Market

http://www.hermes-press.com/wshist1.htm

 

History of Wall Street (Library of Congress)

http://www.loc.gov/rr/business/wallstreet/wallstreet.html

Wall Street (Wikipedia)

http://en.wikipedia.org/wiki/Wall_Street

 

Federal Reserve Banks

There are Federal Reserve Banks in 12 different US cities including Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. This means no matter where you live, a Federal Reserve you can tour isn’t far off. You’ll have to make reservations in advance to tour one, leave your cells and cameras at home and bring along proper ID…but getting a tour isn’t a big problem. You will get to see how cash is processed through the facility, the gold vault and have time to explore the Bank’s on-site museum.

American Numismatic Society

No matter the time period or the culture, this organization is dedicated to studying their currency. Visitors to this New York museum can see coins from ancient times to the modern, including relics from Roman, Greek, Byzantine and South Asian cultures, as well as some amazing collections from more recent mintings. Care to do a little research of your own? The ANS building is complete with library and archives that anyone can use. No items may be checked out, however.

Chicago Mercantile Exchange

Founded in 1898 at the Chicago Butter and Egg Board, today this thriving marketplace deals with a whole lot more than just butter and eggs. Trading at the CME now involves everything from alternative investments, like weather, to more traditional ones, such as commodities. Visitors to my home town will find two visitors’ centers at the CME, both containing viewing galleries to the trading floor below. Additional resources on hand will help you learn about the history of the CME and see how it’s expanded and evolved into the large marketplace it is today.

Bureau of Engraving and Printing

If you haven’t gotten enough of seeing how money is made, venture to this Washington, DC landmark to see where it all begins. A tour will take you through the process of printing new money, starting with blank paper and ending with loads of cash. In addition to money, the facility also prints security badges, passports, White House invitations and materials for Homeland Security. If you can’t make it to DC, don’t worry – there’s another facility you can tour, located in Fort Worth, Texas.

 

I hope this has given you some ideas to help increase the burgeoning knowledge base of the grandchildren in your home.  I think activities like this are important because they introduce new minds to the ever-changing economy around us, and if you can spark an interest at 5, think about the possibilities for your financial whiz at 13 –

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Feb 6 2012

Setting Top Priorities Using Financial Goals

 
English: Everything starts from needs or desir...

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Week one of my February Financial Resolution involved setting my top Financial Priorities and that to me means developing some Financial Goals.

Contrary to what may be one of my most treasured thoughts, a financial goal is not winning the lottery.  That is a financial dream.  A financial dream come true if you are the lucky 1:489,000,000.  A Financial Goal is something you’ve planned for. And it’s the planning – not sheer luck– that turns financial desires into financial reality.

As I stared at my piece of paper, I thought, what does a Financial Goal look like?

A financial goal lays out:

  • what you plan to accomplish
  • what resources you’ll need to make it happen
  • how much time you’ll need to make it happen
  • how you plan to make your goal fit into your overall budget and life

So hopefully, now that you have the key components, you are also ready to take this week to create your own financial goals.

Here’s How:

List your financial goals. Start by using the four steps above and write out what you want to accomplish. I created an example to share:

  1. What I want to accomplish: I want to take my grandchildren on a two-week national park vacation this summer. 
  2. The resources I will need are: Information on where we are going, money for hotels, meals, and gas, entrance fees for the national parks, souvenir money, emergency money, and perhaps additional resources I am not able to put in writing now, but should put some thought against as my plans develop. 
  3. How much Time I need to make it happen: I will need perhaps thirty hours to plan the trip, and I will need sixteen days to complete the vacation I have in mind. I am not sure the amount of lead time I need to save for the trip until I have a better idea of which parks I would like to visit.
  4. Plan into my overall budget and life: I will need my children and their spouses to agree to allow me to take the grandkids for two weeks; I will likely have to make some personal choices to save the amount needed to take the trip. I will have to save for the vacation, and perhaps make some sacrifices in my personal expenditures to have the financial resources for this trip.

Prioritize your Goals
Place goals that can be accomplished in under six months under “Short-Term Goals,” goals that can be accomplished in six months to a year under “Medium-Term Goals,” and goals that will take more than a year to accomplish under “Long-Term Goals.”

Estimate the cost.
How much money will it take to reach each goal? Create an estimate, and write down the resulting figure.

Set a target date.
When do you hope or need to meet your goals? Set a target date for each goal on your list, and use this as your deadline to meet or beat.

Determine how much you need to save.
Divide the estimated cost of your first goal by the number of weeks until your target date. This will show you how much money you need to save each week to meet your goal. Write down the resulting figure as an “Amount to Save Weekly”, and repeat for all of the other goals that you’ve listed.

Budget for your goals.
Rework your budget to include the money that you need to meet your goals. Then, put your plan into action, and watch those financial goals turn into financial reality!

Tips:

  1. Be realistic about how much time and money it will take to accomplish each goal – an estimate that is too low will only frustrate you.
  2. Keep your motivation by revisiting your list frequently to check on your progress.
  3. Setbacks will happen. If something throws you off of your target date, don’t give up – set a new date.
  4. Have more goals than you can work on at once? Then, determine which ones are most important to you, and make those your first priority.
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Feb 3 2012

Make A February Financial Resolution

Almost like clockwork, one month into the New Year and many of the resolutions that my husband and I make are often pushed to the wayside as life seems to be ever pushing it’s own agenda on us.  I have therefore resolved this year to try a different tact: a monthly resolution.

I did surprise myself and actually followed through with my January resolution of creating this blog to start a grandparent community that more closely reflects my interests with my grandchildren (spending time, saving and having fun), and I appreciate all of you who have taken the time to read through items that you may find valuable.

February is a whole different ballgame for me, now that taxes are in full swing and I am forced to itemize my income and expenses in detail for the IRS, I am resolving to use this opportunity to create a financial plan for 2012 that will allow me to live my best retired grandparenting days yet.

I am going to take the following steps, one each week, and hopefully you can follow my example, share what works, and doesn’t and we can head into March with a financial fitness plan that will open all kinds of fun doors for us.

Week 1: Setting  top priorities

What do you most want to do with your money this year – pay down debt, save for the grandkids education, take a family vacation, or something else? Put a dollar amount on your priorities, divide by the number of months you have to achieve them (now 11, whoops… maybe I should have started in January!), and make a plan to set aside funds each month.

Week 2: Budget, budget, budget!

Since you have to do it for your taxes, track your monthly expenses – from your mortgage payment to a pack of gum. Now, subtract those expenses from your income. Any surprises? Is there enough left for your goals? If not, it’s time to reevaluate spending or your goals.

Week 3: Create a balance.

Ask yourself some tough questions that will make your life easier: Can you maintain your lifestyle within your current income? Could you cut back on certain spending habits while maintaining a happy and healthy balance? What bad financial habits do you have – and how can you change them?

Week Four: Seek professional help for wealth planning.

Funny, but this is sort of like the doctor going to the doctor for me.  I used to do this ten years ago! But as Mary Poppins delightfully says: A spoon full of sugar helps the medicine go down.  Now that in weeks 1-3 I have taken my medicine, it is time to have some sugar.

Buyer beware, when you seek professional advice: Your financial professional should provide personal solutions and adaptive investing when discussing your lifestyle planning and goals. He or she should have a clear picture of where you want to be with your finances and provide the vehicles to get you there – but always be realistic. Anyone who does otherwise does not deserve your business.

With the economy in a state of uncertainty and volatility, you need to grab the reins and control your own wallet. The first step is getting a clear understanding of where you are, and where you want to be. Onward we go!

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