Bugeting for Personal Finances

I am often asked how to budget for personal finances.

First, I use mint.com to track spending, see all my account balances at once, and watch the trends of my investments.

I also use a very simple Excel spreadsheet to track my fixed and variable expenses. If you haven't done this before, I'd highly recommend it.

First, enter your total bring home income at the top of the spreadsheet.

Next, list out all your fixed expenses with the largest first (an example list is below). If you are making extra payments, include those in the variable expenses section.

Total your fixed expenses. This is how much money you need to make minimum payments.

Below this, list your variable expenses. This is how much you anticipate spending each month.

Subtract the fixed and variable expenses from your pay. This is how much is left for savings.

In the columns to the right, start tracking how much you actually spend per month. This will uncover discrepancies between how much you expected to spend and how much you actually spent. From this information, you can adjust your spending to match your goals.

Here is an example. (If you'd like this template I've made, leave a comment and I will email it to you.)



In tools like mint.com, you can link your checking account, credit card, and other accounts to the software, so it automatically tracks your spending. Below is a snapshot of how it works. You can see I haven't hit my budget for Gas & Fuel yet, but I've overspent on Bills & Utilities. When you click on the category, it lists the details of the transactions that make up the total. This makes it easy to see where you over or under spent.



If you find you are in the negative, please see my blog post about "Making Basic Financial Decisions".

As always, feel free to ask any questions you might have about personal finance.

Setting Yourself up to Succeed

Back when I was a junior in college, I worked a full-time job as a call center representative. At the time, nine dollars an hour seemed like a ton of money. After paying rent, utilities, and a minimal car payment, I really didn’t have enough left for groceries.

I lived in a constant state of fear. I’d been swamped with stories of college graduates not being able to attain jobs paying any more than what they had before they went to college. One question ringed over and over in my head. If I could barely afford to live now, how could I afford a student loan payment if I failed a getting a good job out of college?

And the fear didn’t stop there. What if I failed my classes? What if I didn’t graduate?

Not only was I working a full-time job, I was also taking a full-time load of accounting college courses. Subsidized student loans barely covered tuition and books, and I was too worried about failing to take out the unsubsidized ones so I could work less.

Bad turned to worse, and with mandatory overtime at my job, I missed more classes and my grades reflected it.

I failed a class. Straight up got an F. The first F in my life.

My fears intensified. I felt like the failure I feared I’d become. I doubted myself and my abilities even more.

I stood at a crossroads. I could quit school and work full-time. Or I could quit my job, find a new part-time one, take out more student loans, and focus more on school.

The root of my life’s future was held in one simple question. Did I believe in myself?

I decided yes. I found a part-time job as a bank teller and went back to school with more focus than ever before. And I did well.

My self-confidence increased. I no longer struggled with my classes. I felt more able to handle difficult professors and tests. I became a more positive person.

What caused this shift?

I set myself up to succeed.

Sometimes in life we can let fear get such a hold of us, we set ourselves up to fail. Then this negative cycle keeps spiraling down until there’s little hope left. We only see our failures piling up and this can be incredibly discouraging.

If you are struggling in life, take a step back and analyze if you’re holding yourself back.

If you have a goal you want to achieve, set yourself up to succeed.

Remember also a lot of fears are unfounded. Little did I know at the time that accounting degrees were in high-demand and finding a job would be easy. I also had no idea what I’d make when I graduated. Had I known these two things, a lot of my fears would’ve vanished.

One way to search for in-demand jobs in your area is to look in job searches. Right now Indeed.com is very popular. This gives you an idea of what talent companies are looking for and what salary ranges are.

Also, this website below gives averages on pay for jobs via state.

http://www.payscale.com/research/US/Country=United_States/Salary

I know the same worries I had plague many minds. One of my friends, a single mom, struggled to make ends meet, even with government assistance. The fear of student loan payments held her back from finishing her degree. After I explained the income-based student loan option, her fears significantly decreased. She finished school, got a job, was able to purchase a town home and now supports her family fully on her own. But above all that, her stress is so much lower.

Another friend of mine worked a minimum wage job and worried about succeeding at her dream of becoming a physical therapist assistant. She not only feared student loans but also feared failing at school. After a short discussion of believing in yourself and explaining student loan debt and repayment, she decided to quit her job and go for her dream. She graduated with honors and got the job she wanted. She recently had a baby and is able to work part-time because of her increase in pay.

No matter what your situation or your dream, remember…

Set yourself up to succeed.

Don’t let fear hold you back.

And most importantly - believe in yourself!

Making Basic Financial Decisions

After attending a women’s conference on money management, I realized a dire need in communities for a basic financial understanding.

The majority of the lectures centered around living within your means, spending less than you make. While this is a good basis of thought, there are some holes in it.

First, if you don’t make enough to fund the basic necessities of life, no matter how much you pinch pennies, your income will never be enough.

Two, you can cut costs until your lifestyle is miserable.

Three, there are better options.

The first step to understanding personal finances is to track where your money is going. There are great apps and website accounts available for free that will help you set up budgets. Personally, I love mint.com and use their app.

https://www.mint.com/

It is eye opening to see where your money goes and how much you really spend on unnecessary things. This is where you can cut – the unnecessary items. By unnecessary I mean pedicures, eating out, and excessive shopping, to name a few.

If you cut out all unnecessary items and still are in the negative, stop.

If you cut anymore, this is where the miserable factor comes into play. You can always live on less, eat the notorious Ramen, cut your heating bill by small amounts, or wear the same clothes for ten years. However, to me this is not ideal.

So what are other options?

There’s really only one. Make more money.

How do you make more money? Make yourself more valuable. How do you do this? Take risks and invest in yourself. One option is to go to school, another is to find a better job, work more hours,  become an entrepreneur, or many others for your specific situation. Don't limit yourself on possibilities. Sometimes there are more than you realize. Below, I discuss the school option.

For example, if currently you make $10 an hour that equates to $20,800 a year. While student loans can be discouraging, not all debt is bad. A degree or technical certificate in an in-demand field will usually yield at minimum $40,000 a year starting out. This is $19,200 more in income a year. Even if student loans costs you $40,000 (which a community college associates degree or a local university can be much less) you still come out ahead. Here’s how.

On the $10 an hour job, you bring in $1200 a month. With a $40,000 a year job, you’ll bring in at minimum $2000 a month. If you have two children, your student loan payment based on income, could be less than $100 a month.

See this website for details on estimated repayment amounts.

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

You might be asking yourself, but is all the school work worth it?

Here’s another benefit. Usually, degree based fields receive higher raises. This means your income will grow more rapidly. For example, in five years you might make $50,000 a year, having earned a $10,000 yearly increase, compared to making $14 an hour, an $8,320 yearly increase.

Ask yourself this question. In five years would you rather be making $50,000 or $29,120 a year ($14 an hour)?

Believe in yourself, in your ability to achieve. Don’t hold yourself back.

Budgeting for Maternity Clothes

I consider myself a thrifty shopper when it comes to clothes. I admit when I find something cute on a clearance rack, I get a surge of excitement. However, shopping for maternity clothes proved to be a whole different ball game. First, I never once found any maternity clothes on sale. I paid full price my entire pregnancy. Second, when I tried to use a coupon on maternity clothes, it was nicely pointed out that the tiny print at the bottom excluded them. After that, I noticed every coupon I ran into excluded maternity clothes. Maternity clothes were proving to be a specialty product. Stores did not have to mark them down in order to sell.


When I mentioned this to a coworker, she recommended stopping by a couple nearby thrift stores that specialized in maternity and infant clothing. I stopped at these stores on my way home from work about once a week. During my pregnancy, I found one pair of shorts, a pair of capris, and one pair of dress pants. Yes, they were significantly less, between $5-$12 each, but they were hard to find. The maternity clothes at these stores had been picked over and it’s easy to understand why. A lot of other women were having the same problem I was, unexpectedly having to pay full price for maternity clothes, and it was getting expensive quick.


This is why I’d recommend a budget for maternity clothes of around $500. If I had been a little savvier, I figure I could’ve purchased all mine for around that much. This includes both professional and casual clothes. If you only need casual clothes, you could cut back some. While you can cut costs by purchasing a belly band that fits over unzipped pants, I kept noticing my zipper hanging out and my belly band riding up. I know this method works for a lot of women, but I gave up on it and purchased traditional maternity pants at about $35 each.


I wore a lot of my regular shirts and simply stretched them out. This was cost effective until after childbirth when I had to buy new shirts because they looked horrible without a pregnant belly.


A couple other cost areas I didn’t see coming were bras and underwear. Yep, I said it. I went through three different bra sizes and two different underwear sizes during pregnancy. And if that wasn’t enough, I found out I needed nursing bras and tanks for breastfeeding after delivery too.


Then there came the moment that my feet hurt so bad while walking at the mall, I went and bought an expensive pair of comfort sandals. I was so miserable that after my purchase, I changed my shoes right there in the store. To me this was a necessity, so if you can, work it into your budget.


These were some of the things that caught me off guard. Hopefully, my experience will you help you better plan on what to expect when budgeting for maternity clothes.

Financial Planning for Pregnancy

Pregnancy was an incredibly exciting time in life for me, but the financial impacts were a bit daunting. As a financial analyst, I wanted to plan and figure out my financial attack beforehand. What I found was little to no information on this. The age-old saying, “it will happen, when it happens” seemed to trump any planning. When my doctor informed me that the majority of women will get pregnant within three months of trying, I was a little surprised. I thought it took a bit more effort than that, but for me it didn’t. I was pregnant within three months, just like the majority of other women, the rule not the exception.


For financial reasons, this is great. It gives many women a choice over when to get pregnant.  I’ll write on financial planning for IVF and other pregnancy options later on.


Why is this important financially? Three big reasons, medical insurance deductible, FMLA, and short-term disability insurance.


First, most medical insurance deductibles reset in January, while others reset at other times in the year. Being able to conceive in three months, gives women the option to plan their entire pregnancy under one deductible. For example, if you wanted to have a baby in 2015 and you have a calendar year medical deductible, you could get pregnant between November 2014 through March 2015 and almost all your costs would go toward one deductible during 2015.

Note that your first doctor appointment after conceiving is six weeks after you have a positive pregnancy test.


If you have a high deductible, like 5,000 or 10,000, this is well worth planning out.
Second, FMLA lets you take off twelve weeks of leave from your employer without repercussions. To qualify for FMLA, you need to work for your employer for twelve months before taking leave. For more information on the exact rules, go here. http://www.dol.gov/dol/topic/benefits-leave/fmla.htm


Third, short-term disability is usually provided through your employer and will pay you 60% of your income while you are out on leave. Most policies have a 9-10 month probation period, which means you need to have short-term disability insurance in place  before conceiving for it to be effective.
Also, there are a few financial things to take into account when calculating how much bring home income you will receive from short-term disability insurance.


First, week one after delivering your baby you do not get short-term disability insurance. It does not kick in until week two. Second, you get six weeks short-term disability for a vaginal delivery and eight weeks for a cesarean, but you only get paid for five weeks and seven weeks, respectively. Third, figure out how much your short-term disability check will actually be. When I received my first short-term disability payment, it was lower than I expected. I thought I would get 60% of my bring home paycheck.


For example, if I made $1500 every two weeks and paid $200 for insurance and $300 for taxes, my usual bring home check would be $1000. I thought 60% of this, $600, should be my short-term disability payment, but it wasn’t. So where did I go wrong?


Here’s the math.
$1500 x 60% = $900
Less insurance $200
Less taxes ($300 x 60%) =$180 roughly
Actual bring home = $520


Insurance, flexible spending accounts and other paycheck deductions are not decreased by the 60% payout. So your short-term disability paycheck will be lower than 60% of your usual paycheck, if you have any of these types of deductions.


I hope this information helped you. I will continue to write on ways to mitigate costs and grow wealth. Have a great day!