Archives for August 2020

Budgeting is supposed to take the guesswork out of spending money. By following a budget and developing a financial routine, individuals should –– in theory –– be able to save capital on a monthly basis. However, life has a funny way of ruining even the best-laid financial plans. So often, the best budgets are an exercise in expecting the unexpected. On that note, today we’ll share four surprising (yet somehow common) expenses that could very well derail your budget. Mark them down today so you can account for them moving forward:

Medical Bills

Accidents happen. In fact, they happen all the time. No matter how careful you are, everyone should have a backup plan for dealing with unexpected medical expenses. Keep in mind also that some medical conditions could worsen over time if you don’t take care of them now. Take for instance, bunions. If you don’t monitor your foot health closely, you could end up developing painful bunions and asking your doctor questions like, “what is a bunionectomy?” before you can finally resolve the problem. In such a scenario, you may even wonder what you could’ve done differently. The answer, of course, is to budget in advance for medical bills and to secure quality insurance now.

Failed Investments

Not every investment delivers a return, and young professionals should learn this lesson ASAP. Don’t ever count on an investment providing money you really need and always prepare for losing money on an investment. This might seem like a pessimistic view, but it will ensure that you’re never caught cold when a “sure thing” goes belly-up.

Repairs/Upgrades

Over time, sinks clog. Transmissions break. Computers get viruses. You may not always be able to predict when an essential product you own will break, but you can be sure that even the best-made items will eventually show wear and tear. Nothing outlasts time. Rather than playing this guessing game, set aside some extra money for handling repairs or upgrades on an as-needed basis. Also, be sure to handle these repairs/upgrades as soon as possible. Waiting to deal with a seemingly small issue –– like cracks in your basement walls –– can lead to a huge issue –– like serious foundation damage.

Increased Rates

It’s important to pay attention to your monthly statements and emails for many reasons. One of the benefits of doing this often is that you’ll have the ability to identify when a service begins to increase their rates. Streaming services, eclectic companies, and other businesses may begin to charge you more for certain membership fees or service rates. Don’t ignore these increases even if they seem “minimal” at first. A quality budget accounts for these sorts of expenses so you can build a better financial future for yourself and your family!

Budgets are not written in stone tablets and handed down to individuals from a higher power. Yet, the way some people treat budgeting, you could be forgiven for thinking that it’s a terrible idea to alter your budget in any way. However, the reality is that budgets can and should be temporary measures, and they should change according to your personal and financial situation. As such, today we’re going to explain how frugal individuals can review and adjust their budgets effectively to ensure they protect their financial well-being and live life to the fullest at the same time. Check it out here:

Evaluate Your Expenses Regularly

Let’s say that you set a monthly food budget for yourself at $290. Yet, month after month, you exceed that figure by $30 or $40. Instead of beating yourself up over this, consider looking at how you spend your money elsewhere. Perhaps you spend less money on entertainment than you originally thought. In such a situation, it makes sense then to shift that extra money you “saved” toward other areas of your life. Plus, by taking a look at your expenses on a regular basis, you can identify bad habits that you may have picked up without realizing it.

Factor in Revenue Sources

Saving money is an important aspect of ensuring your financial standing for years to come. On the other hand, if you get a new job and start making $5,000 more per year than you did before, then you can naturally alter your budget. When you have a higher income, for instance, you can try to pay off debt more aggressively. Don’t feel compelled to stick to a budget just because you’ve done so for months or years at a time. Rather, be sure to factor in external factors like your revenue sources, return on investments, or windfalls that have come your way recently.

Plan for Trouble

Setting a tight budget is rarely a good idea. That’s because unexpected problems happen all the time, and it’s impossible to assume that you won’t have to spend any extra capital than your budget specifies in a given week or month. After all, if you develop painful bunions, you’ll need to see a chiropodist to remove them. Or, if you get into a car accident, your insurance rates could go up. As such, it’s best to alter your budget to give yourself wiggle room each month to deal with any curveballs life throws your way.

Conclusion

Just as people grow and change, so too should their budget. By increasing or decreasing your spending habits to match your financial standing, you’ll be able to pay off debts quicker, build a better credit score, and avoid massive, long-term debt.

We are in a world where faces of big companies are young professionals excelling in their field of choice. This is no longer surprising as more and more companies are welcoming young professionals due to their innovation and fresher ideas that can contribute to the company’s growth.

However, young professionals also face various financial problems amidst their successful careers. The capability to handle and manage finances is a challenge for many, and in fact, even working adults still struggle with it. None of us are born experts when it comes to budgeting and using our money efficiently.

Tips You Can Live By

Young professionals have a lot of room to improve when it comes to handling their finances. In their case, they often need an outline to follow, a set of guidelines and tips that they can refer to when it comes to borrowing money.

We have come up with five wise tips that every young professional should know.

Never Borrow Money You Can’t Afford To Pay

This one is very straightforward. Don’t take a loan if you can’t pay for it. Young professionals tend to be more aggressive and impulsive when it comes to spending. Hence, it is essential to put in mind that borrowed money incur interests, and late repayments will result in a higher total accountable.

Not to mention, late repayments contribute to having a bad credit score. Moreover, rebuilding your credit score can be a difficult task. You need to be responsible and wise before you jump into taking out loans or borrowing money.

However, that doesn’t mean you should refrain from borrowing at all. There are smart debts that young professionals should take on. A mortgage loan is a type of smart debt. Taking this type of debt might be difficult at first, but you will discover that it is worth it in the long-run.

Borrow Money Only When You Need It The Most

Emergencies are inevitable, and taking out loans is the easiest way to solve such issues. Borrowing money during emergencies justifies that, especially if you haven’t started saving for your emergency funds yet.

There is only one rule to remember when taking out loans: make sure you pay them on time and, as much as possible, never miss a repayment schedule.

Pro-tip: Building your emergency fund saves you trouble in asking or borrowing money from banks or friends. Young professionals should start building emergency funds the moment they start earning money. The earlier, the better and the more they can save for future purposes.

Defining The Real Reason Why You Need To Borrow Is Important

Whether it is for leisure or your dream house, determining why you need to borrow money is crucial. This is where your needs and wants enter the premise. Moreover, your budgeting skills are involved, too. This has a lot to do with how sensitive you are in handling your finances. You need to always check with your spending capacity.

The quote that plays here is “live within your means.”

Instead Of Borrowing, Save!

It is gratifying to get those dream shoes or luxury bags you have been eyeing for months now. You might be thinking that since you have a credit card, why shouldn’t you just grab it? Of course, you can.

But wouldn’t it be more satisfying if you pay for it using your hard-earned money? A credit card gives us that instant gratification, which gives us impulses to grab anything we like. But if you practice such a habit, you might lose your ability to save, which is an ideal life skill for every individual.

If you can save for that item, why not do it. But if you insist on using your credit card, make sure you can pay it in full when the bill arrives. You’ll hate yourself splurging when that bill comes over, asking for more than the price of the bag or shoes you have purchased.

Be Smart With Your Finances

There is no other way to put it; you need to be smart about where your money goes. Some experts say that creating a spending plan helps you have an overview of where you are spending your money. This plan will help you not only with your budgeting but also keeps track of your outstanding loans. It keeps your money monitored and controlled all the time, and you just need to be honest and diligent in updating it.

Takeaway

Every young professional needs to practice accountability and responsibility at their age, and that starts in handling their finances. With a little guidance and training, there could be many more smart and diligent young professionals who know where they will spend their money and how to control their spending. This might reduce the number of individuals drowned in the nightmare of being in a debt cycle.