Advantages Of A Budget

Do you have a budget? If you don’t have a budget, it may be time to create one. Budgeting plays a large part in personal financial planning and how to manage your money.

Why should you create a budget? There are a number of reasons why people create budgets, but the main reason is to get control of you money.

In addition to more control over your money, there are many others reasons you should create a budget. If you don’t see the advantages of budgeting, here are six things a budget can help you with.

• Set Goal – There are always things that you want to do, but a budget helps you plan for things. Instead of continuously saying you want to do something, a budget forces you to take action and actually save toward your goals. Keeping track of your progress also serves as a motivator when saving toward a specific goal.
• Overspending – It is easy to spend money, but how often do you look at how much you have to spend. A budget helps you keep track of spending. When you have a predetermined amount to spend on different areas of your life, it is hard to overspend without noticing. The key is to stick to your budget.
• Save For Retirement – Using your money responsibly is important. Not only does your budget help you to spend responsibly, but if you don’t leave out things like investments and retirement you will be able to live comfortably in the future.
• Prepare For Emergencies – 3 to 6 months of expenses is the recommended amount to save for retirement. If you don’t know your expenses than you cannot prepare for this. Setting up a budget helps you to become familiar with your expenses as well as set up an emergency fund.
• Bad Spending Habits – Creating a budget is enlightening and you may find that you spend way more money on unnecessary things than you thought. Creating a budget puts all of your spending into perspective and you may discover that you need to cut down in some areas.
• Sleep – When you have a budget you can sleep peacefully. Know worrying about your finances, because you have them planned out. Your budget can help you live a more peaceful and stress free life.

Not everyone likes budgeting, even with all the advantages. Some people find it restricting, and it can be. If you make realistic saving goals and leave room for some fun, a budget can make life much easier.

How to Manage Your Money

Managing your money properly is not just important for those who are older and ready fore retirement.  Managing money properly should be just as important when you are young and at the beginning of your career.  Setting up these values early can make saving at all stages of life easier and less shocking.  There are benchmarks that one should hit at each stage of life.  These stages are your 20s, 30s, and 40s.  Investing properly should be started in your 20s despite the issue of lower wages and higher student loan or other kind if debt issues.  If you miss out on saving early you will miss out greatly on the exponential effects of compounded interest over time.

Your 20s are your time to start becoming aware of the broad options and viabilities available in the investing and money management world.  It is the time to truly research and find investment and management tools to start to build your investment portfolio.  This is the time to start saving very conservatively in an emergency savings fund.  This fund should be made up of risk free savings vehicles and saving up to six months of living expenses is a good goal.  This savings can also provide a cushion to life problems such as illness or job loss.  The second thing to do is set up a retirement savings account.  This means investing in your company’s 401(k) program or starting a Roth IRA.

Your 30s is the time to invest as much as possiblein your 401(k) of Roth IRA.  It is useful to set up automatic deposits so that it becomes something that happens and isn’t questioned.  This is also the time to purchase a home by using some of the money saved in your 20s.  However, instead buying the house you can afford, buy a house that has less than expense.  This will allow you to pay whatever down payment you have place on the house to own it as your own and have a solid asset in your possession.  Also, do not fall into the trap of spending more than you can afford to pay for a family and a home and watch your expenses carefully as to stay out of debt.  Finally, starting a savings plan for your children’s college expenses should be begun at their birth to build up the most amount of savings as possible in these accounts.

Your 40s should be the time when your retirement becomes your number one concern, over spending money on your children’s’ college and higher education.  The number one person you need to take care of in this age needs to be yourself.  Also, this is the time to reevaluate your children’s college savings funds, adding what you can and even subtracting some to take care of yourself.  This is the time you have a realistic conversation with your children on the amount your can help with paying for college and what schools best fit their intended ability to pay for different tuitions.  Finally, for those that have money beyond their emergency expenses, it is recommended to invest very robustly in an index fund that can grow significantly over time.

Reduce the Burden of Your Educational Loans

As students, most of us avail of some financial help for our higher studies. The reason for the same is that with increasing cost of living as well as high tuition fees, it becomes difficult for students and their parents to fund their education. However, since these loans run for a long time, most of us are saddled with the same well into our adult life.

So the question before all of us is – Can we Consolidate student loans?   Luckily the answer is yes.  Today most financial organizations have recognized this and they offer individuals a combined payment plan. However the question is how to choose the correct plan and company to pay off these loans.

The first point that you should consider is what is the terms and conditions of the consolidation plan. Each and every company has its own set of rules. Whatever the set of rules being applied, one point has to be remembered without fail. It should not push you deeper into debt. If you are going to struggle just to meet the repayment amount, then it is not the correct way to go.

The second point that you should consider is what is the time period and interest rate. Once we enter into adult life, we have a whole new set of responsibilities. These come with their own financial burden. Hence it always makes sense to  pay-off your educational loans in the shortest possible period of time.  At the same time, the monthly instalments should not interfere into your regular financial commitments.

The third point is that you should pick companies that provide a fixed rate of interest. Most people avoid this since it means that the rate may be higher than existing market values. However, in the long run, even if the interest rates shoot up, your interest percentage and amount to be paid will be fixed thus saving you a ton of cash.

The fourth point you should look at is the popularity of the Student loan consolidation companies. Most companies make a name among the student community by offering attractive interest rates and easy repayment plans. These companies structure the loan repayment factoring in increase in income and family size base on the exiting industry statistics.

So the next time, you want to restructure your educational loan, go ahead and approach them without fear.  check out www.finlit.com to know more details.

Money Management – First Step Towards Smart Student Life

More than half of the students worry more about spending their money instead of preparing for the exams. It is very important to become financially literate because a little money management can make a big difference. Student loans are available to help students in paying off their tuition fees. Sticking to a limited amount of money can be difficult for students.

Sharing expenses with roommates can play an important role in reducing the cost of living at college. Understand the difference between your wants and needs. Instead of spending money on non – essential items like movies, shopping etc., spend this portion of money for buying products for everyday use. Adopt a new habit of saving money every day. Doesn’t matter if the amount is more or less, the main thing is the devilment of an essential skill of saving.

College life can be expensive but by learning basic money managements skills can help you in paying off your loans easily. Textbooks share a big part in college expenses. Look for these books online or at some old bookstores and save a big amount of money. Use cash instead of credit cards. Use your student discount whenever available and save some money.