Tag: Paying Down Debt

How to Include Some Guilt-Free Spending in Your Budget
Here are ways to keep expenses guilt-free to bring joy without breaking the bank and why having some fun money is a wise financial move.
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The post How to Include Some Guilt-Free Spending in Your Budget appeared first on MintLife Blog.
Tagged 50/30/20 budget, All, budget, Budgeting, buildingWith so many of us dealing with the coronavirus pandemic (plus the financial fallout from it) and spending more time at home this year, thereâs a very good chance your family budget looks different. Our own budget had some big adjustments (transportation costs went down to basically nothing) along with some minor changes (buying supplies and items around the house for projects).
Our money dates have had us reevaluate some things and redirect money to other expenses and savings. Besides making sure that youâre taking care of essential expenses and building up your financial cushion, you want to want to make sure you include another key area in your budget – some guilt-free spending in there as well.
Why Budgets Need to Include Some Guilt-Free Spending
First off what exactly is guilt-free spending? And why should families include it when planning out their budget. Basically, it covers the expenses that you enjoy. Every family has different ways they use that money. It could be travel, eating out together, adding another pair of shoes to your collection, or gadgets. With families having to deal with so many decisions and challenges, there has been an increasing awareness of having proper self-care as part of the routine. Families are now including that in their budgets.
The key part of keeping these expenses guilt-free is that they bring you joy without breaking the bank. These arenât frivolous spending sprees. They can be meaningful purchases such as supplies for a hobby like painting that enriches your life. Second, these expenses are planned ahead of time and baked into your budget so youâre not taking on debt or upsetting your familyâs cash flow.
Why Budgets Typically Fail
One of the reasons why I think having some fun money in your budget is a wise move is because itâll help make your budget more sustainable. How? If I asked you what the point of a budget is, what would you say? Most tell me itâs to keep their spending in check.
It makes sense to believe that because for most families thatâs what itâs about – restrictions. However, the best budgets Iâve seen are geared towards the direction of the money. Iâve interviewed families who have retired early or have knocked out a ton of debt and something they had in common was that their budgets reflected their priorities and circumstances.
Before they put pen to paper (or tap the app), they sat down and defined what goals they wanted to achieve. If you had to break down a budget the three key areas are basically:
- Paying your essential bills.
- Building long term financial stability.
- Have the money you can use now to enjoy.
Many times, the disagreements, arguments, and sometimes sabotage with budgets come from friction on finding a balance between spending money with long term stability and enjoying now. If you skew too much to saving up for the future, one or more of you in the family could start getting resentful. Financial infidelity or set back with keeping the budget can occur for many reasons, but some spouses say one reason is thereâs absolutely no wiggle room in the budget for fun. If youâre only focused on the now when something comes up – hello 2020! – youâre left without a safety net.
For families with kids, thatâs an additional source of stress they donât need. I noticed that the families who hit their goals had found a way to balance things. They save towards their long term goals as well as set aside money to enjoy now. How? By redoing how they approached their budgets.
Easy Budget Framework to Use
Letâs go back to those three key goals of any budget – taking care of essentials, saving for the future, and spending on the present. Families looking to include all of these goals need a budget that can weave them together. If youâre just starting out with a budget and are still trying to figure out a framework, an easy foundational budget is the 50/20/30 budget. It divides up your money into those three key goals, with 50% going to necessary expenses, 20% towards financial stability and wealth, and 30% towards discretionary or fun money.
Feel free to adjust the percentages based on your circumstances, but for many families that three-bucket approach is easy enough to set up and it gives them enough wiggle room where there can enjoy some of their money now. Once youâve created that budget, you can then take the next step – automating your money. Weâve done this for over a decade and it has been incredibly helpful. We have our bills automated every paycheck plus our savings and investments are scheduled monthly. With those necessary things taken care of first, we know whatever spending we do wonât harm our expenses.
Staying on Top of Your and Budget – The Easy Way
Now that you have a budget and youâre including some guilt-free spending, how do you make sure youâre staying on track? There are some wonderful options out there including money apps like Mint. You can stay on top of your money without losing your mind because the apps can pull that data from your accounts and give you an easy and clear way to see where your money is going. You can also use Mint to track your goals like paying down debt or saving up for a house. With that information in front of you can quickly and easily see how youâre doing anytime.
Another handy tool with Mint is how simple it is to set up alerts on certain spending. So if you have set aside $200 for your âfunâ account, Mint can notify you when your spending is getting close to your limit. Itâs a more proactive and real-time way to manage your money without having to worry about every single penny.
Your Take on Budgets
As you can see, with a little planning you can be financially savvy and enjoy some fun now. Iâd love to get your thoughts – how do you approach your budget? What are some must-have expenses in yours?
The post How to Include Some Guilt-Free Spending in Your Budget appeared first on MintLife Blog.
Source: mint.intuit.com

Affording a Second Child: How to Make Your Budget Work
Having kids is anything but cheap. According to the USDA, families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college. The cost of raising a child has also increased since your parents were budgeting for kids. Between 2000 and 2010, for example, the cost of having children increased by 40 percent.
If you’ve had your first child, you understandâfrom diapers to day care to future extracurricular activities, you know how it all adds up. You’ve already learned how to adjust your budget for baby number one. How hard can it be repeating the process a second time?
While you may feel like a parenting pro, overlooking tips to prepare financially for a second child could be bad news for your bank account. Fortunately, affording a second child is more than doable with the right planning.
If your family is about to expand, consider these budgeting tips for a second child:
1. Think twice about upsizing
When asking yourself, “Can I afford to have a second child?”, consider whether your current home and car can accommodate your growing family.
Kimberly Palmer, personal finance expert at NerdWallet, says sharing bedrooms can be a major money-saver if you’re considering tips to prepare financially for a second child. Sharing might not be an option, however, if a second child would make an already small space feel even more cramped. Running the numbers through a mortgage affordability calculator can give you an idea of how much a bigger home might cost.
Swapping your current car out for something larger may also be on your mind if traveling with kids means doubling up on car seats and stowing a stroller and diaper bag onboard. But upgrading could mean adding an expensive car payment into your budget.
“Parents should first decide how much they can afford to spend on a car,” Palmer says.
Buying used can help stretch your budget when you’re trying to afford a second childâbut don’t cut corners on cost if it means sacrificing the safety features you want.
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Families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college.
– USDA
2. Be frugal about baby gear
It’s tempting to go out and buy all-new items for a second baby, but you may want to resist the urge. Palmer’s tips to prepare financially for a second child include reusing as much as you can from your first child. That might include clothes, furniture, blankets and toys.
Being frugal with family expenses can even extend past your own closet.
“If you live in a neighborhood with many children, you’ll often find other families giving away gently used items for free,” Palmer says. You may also want to scope out consignment shops and thrift stores for baby items, as well as online marketplaces and community forums. But similar to buying a used car, keep safety first when you’re using this budgeting tip for a second child.
“It’s important to check for recalls on items like strollers and cribs,” Palmer says. “You also want to make sure you have an up-to-date car seat that hasn’t been in any vehicle crashes.”
3. Weigh your childcare options
You may already realize how expensive day care can be for just one child, but that doesn’t mean affording a second child will be impossible.
Michael Gerstman, chartered financial consultant and CEO of Gerstman Financial Group, LLC in Fort Lauderdale, Florida, says parents should think about the trade-off between both parents working if it means paying more for daycare. If one parent’s income is going solely toward childcare, for example, it could make more sense for that parent to stay at home.
Even if this budgeting tip for a second child is appealing, you’ll also want to think about whether taking time away from work to care for kids could make it difficult to get ahead later in your career, Palmer adds.
“If you stay home with your child, then you’re also potentially sacrificing future earnings,” she says.
4. Watch out for sneaky expenses
There are two major budgeting tips for a second child that can sometimes be overlooked: review grocery and utility costs.
If you’re buying formula or other grocery items for a newborn, that can quickly add to your grocery budget. That grocery budget may continue to grow as your second child does and transitions to solid food. Having a new baby could also mean bigger utility bills if you’re doing laundry more often or running more air conditioning or heat to accommodate your family spending more time indoors with the little one.
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Gerstman recommends using a budgeting app as a tip to prepare financially for a second child because it can help you plan and track your spending. If possible, start tracking expenses before the baby arrives. You can anticipate how these may change once you welcome home baby number two, especially since you’ve already seen how your expenses increased with your first child. Then, compare that estimate to what you’re actually spending after the baby is born to see what may be costing you more (or less) than you thought each month. You can then start reworking your budget to reflect your new reality and help you afford a second child.
5. Prioritize financial goals in your new budget
Most tips to prepare financially for a second child focus on spending, but don’t neglect creating line items for saving in your budget.
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“An emergency fund is essential for a family,” Palmer says. “You want to make sure you can cover your bills even in the event of a job loss or unexpected expense.”
Paying off debt and saving for retirement should also be on your radar. You might even be thinking about starting to save for your children’s college.
Try your best to keep your own future in mind alongside your children’s. While it feels natural to put your children’s needs first, remember that your needs are also your family’sâand taking care of your future means taking care of theirs, too.
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“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family.”
– Kimberly Palmer, personal finance expert at NerdWallet
The key to affording a second child
Remember, the earlier you begin planning, the easier affording a second child can be.
“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family,” Palmer says. Plus, the more you plan ahead, the more time you’ll have to create priceless memories with your growing family.
The post Affording a Second Child: How to Make Your Budget Work appeared first on Discover Bank – Banking Topics Blog.
Source: discover.com
Planning budget-friendly date nights can keep your relationship and your finances healthy.
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